NEW ISSUE- BOOK-ENTRY ONLY RATING: S&P: "AA+" (See "RATING" herein.)
In the opinion of Orrick, Herrington & Sutcliffe LU', Bond Counsel to the Authority, based on an analysis of existing laws, regulations, rnlings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the further opinion ofBond Counsel, interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax. 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 Bonds. See "TAX MATTERS" herein.
$45,705,000 ANAHEIM HOUSING AND PUBLIC IMPROVEMENTS AUTHORITY SEWER REVENUE BONDS, SERIES 2018
Dated: Date of Delivery Due: February 1, as shown herein This cover page contains certain information for general reference only. It is not intended to be a summary of the security or terms of this issue. Investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision. Capitalized terms used on this cover page not otherwise defined shall have the meanings set forth in Appendix C.
The Anaheim Housing and Public Improvements Authority Sewer Revenue Bonds, Series 2018 (the "Bonds") are being issued by the Anaheim Housing and Public Improvements Authority (the "Authority") pursuant to an Indenture, dated as of January I, 2018 (the "Indenture"), between the Authority and US. Bank National Association, as trustee (the "Trustee"). The Bonds are limited obligations of the Authority and will be payable solely from the Authority Revenues and the other assets pledged under the Indenture. The Bonds do not constitute a debt or liability of the City of Anaheim (the "City") or of the State of California (the "State") and neither the faith and credit of the City nor of the State are pledged to the payment of the principal of, or interest on the Bonds. Authority Revenues consist of all Installment Payments made by the City, which are paid solely from System Net Revenues of the City's sanitary sewer collection system (the "System") pursuant to the Instalhnent Purchase Agreement, dated as of January I, 2018 (the "Agreement"), by and between the Authority and the City. See "SOURCES OF PAYMENT AND SECURITY."
The Bonds are being issued to provide funds to (i) refund, on a current basis, all of the outstanding Anaheim Pubic Financing Authority Sewer Revenue Bonds, Series 2007 (the "Prior Bonds"), (ii) finance certain capital improvements to the System, and (iii) pay costs of issuance of the Bonds. See "PLAN OF FINANCE" Interest on the Bonds will be payable on February I and August I of each year, commencing August I, 2018. The Bonds are subject to redemption prior to maturity as described herein. See "THE BONDS-Redemption of Bonds."
The Bonds will be issued in book-entry form only and will be initially issued and registered in the name of Cede & Co., as nominee for The Depository Trust Company, New Yark, New Yark ("DIC"). DIC will act as securities depository for the Bonds. Individual purchases of the Bonds will be made in book-entry form only. Purchasers will not receive physical delivery of the Bonds purchased by them. Payments of the principal of and interest on the Bonds will be made by the Trustee, to DIC for subsequent disbursement to DIC Participants, who will remit such payments to the beneficial owners of the Bonds. See "APPENDIX D-DTC and the Book-Entry System."
The Bonds are subject to optional and mandatory sinking fund redemption as described herein.
The Bonds are limited obligations of the Authority and will be payable solely from the Authority Revenues and the other assets pledged under the Indenture. The Bonds do not constitute a debt or liability of the City or of the State of California and neither the faith and credit of the City nor of the State are pledged to the payment of the principal of, or interest on the Bonds.
The 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 LU', Los Angeles, California, Bond Counsel to the Authority. Certain legal matters will be passed upon for the Authority by Orrick, Herrington & Sutcliffe LU', Los Angeles, California, as Disclosure Counsel to the Authority; and for the Underwriter by Norton Rose Fulbright US UP, Los Angeles, California, as Underwriter's Counsel Certain legal matters will be passed upon for the Authority and for the City by the City Attorney. It is anticipated that the Bonds, in definitive form, will be available for delivery through the facilities ofDTC on or aboutJanuary 25, 2018. Wells Fargo Securities
Dated: January 11, 2018. MATURITY SCHEDULE BASE CUSI P1: 03255C
$45,705,000 ANAHEIM HOUSING AND PUBLIC IMPROVEMENTSAUTHORITY SEW ER REVENUE BONDS, SERI ES 2018
$36,890,000 Serial Bands
Maturity Date Principal Interest (February l) Arrount Rate Yield CUSIP1 2019 $1,080,000 5.000% l.320% AA? 2020 l, 170,000 5.000 l.430 ABS 2021 1,230,000 5.000 l.470 AC3 2022 1,295,000 5.000 l.510 ADJ 2023 1,355,000 5.000 l.570 AE9 2024 1,430,000 5.000 l.640 AFG 2025 1,495,000 5.000 l.740 AG4 2026 1,575,000 5.000 l.870 AH2 2027 1,645,000 5.000 l.970 AJB 2028 1,730,000 5.000 2.070 AKS 2029 1,820,000 5.000 2.180' AL3 2030 1,910,000 5.000 2.30Cf AMI 2031 2,005, ()(X) 5.000 2.40Cf AN9 2032 2,110,000 5.000 2.470' AP4 2033 2,215,000 5.000 2.550:: AQ2 2034 2,320,000 5.000 2.610:: ARO 2035 2,435,000 5.000 2.640:: ASS 2036 2,560,000 5.000 2.670' AT6 2037 2,690,000 5.000 2.70Cf AU3 2038 2,820,000 5.000 2.730' AVl
$8,815,000 5.000% Term Bonds due February l, 2048-lnterestRateS.000% -Yield 2.870% -CUSIP 1AW9
t CU SIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association lJ,,I S&P Capital IQ. Corvright© 2018 CUSIP Global Services. All rights reserved. CUSIP® data herein is pro,;ided by CU SIP Global Services. Thi sdata is rct interded to createadatabaseard does mt serve in any way asa substitute for the CGS database. CUSI P® numbers are provided for cotl\/enierr::e of refererr::e only. None of the Authority, the City, the Urderwriter or their agents or counsel assume resp:msi bi Ii ty for the a:::curacy of such numbers. c Yield to call at par on FebruaJV l, 2028. ANAHEIM HOUSING AND PUBLIC IMPROVEMENTSAUTHORITY
Anaheim City Council and Authority Board of Directors
Tom Tait, Mayor and Chairman of the Authority Jose F. Moreno, Mayor Pro Tern and Vice-Chairman of the Authority Kris Murray, Merrber James V anderbi It, Merrber Denise Barnes, Merrber Lucille Kring, Merrber Stephen Faessel, Merrber
City /Authority Staff
Linda Andai, Interim City Manager and Authority Executive Director Greg Garcia, Deputy City Manager Deborah A. Moreno, Finance Director ;City Treasurer, Authority Treasurer and Authority Auditor Kristin Pelletier, Acting City Attorney and Authority Counsel Theresa Bass, Acting City Clerk and Authority Acting Secretary
SPECIAL SERVICES
Bond Counsel & Disclosure Counsel Orrick, Herrington & Sutcliffe LLP Los Angeles, California
Municipal Advisor PFM Financial Advisors LLC Los Angeles, California
Trustee U.S. Bank National Association Los Angeles, California No dealer, broker, salespersoo or other person has been authorized lJy' the Authority, the City or the Underwriter to give any infonnation or to make any representatioos in coonectioo with the offer or sale ct the Bands otherthan those contained herein and if given or made, such other infonnati oo or representati oo must not be relied upon as having been authorized lJy' the City or the Underwriter. This Official Statement does not constitute an ctfer to sell or the solicitatioo ct an offer to buy nor shall there be any sale of the Bonds lJy' any person in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification underthe securities laws ct suchjurisdictioo.
Statements cootained 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 coostrued as representations ct fact. The information set forth herein has been f umi shed lJy' 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 lJy' the Underwriter.
The information and expressioos of opinioos herein are subject to change without nctice, and neither the delivery of this Official Statement nor any sale made hereunder shall create, under any circumstances, any implicatioo that there has been no change in the affairs ct the Authority, the City or the City's sanitary se.ver collection system since the date herect. This Official Statement, including any supplement or amendment thereto, is intended to be deposited with one or more repositories.
The Underwriter has submitted the follCM1ing statement for inclusioo in this Official Statement. The Underwriter has revie.ved the information in this Official Statement in accordance with, and as a [Brt of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances ct this transaction, but the U nderwriter does nct guarantee the accuracy or completeness of such infonnati oo.
I n coonecti oo with the offering ct the B oods, the U nderwriter may aver-al Ict or effect transactions that stabilize or maintain the market price of the Boods at a level abave that which might otherwise prevail in the open market. Such stabi Ii zing, if commenced, may be discontinued at any ti me. The U nderwriter may offer and sell the Boods to certain dealers, institutional investors and others at prices ICM1erthan the public ctfering price stated oo the caver [Ege herect and such public offering price may be changed from time to time lJy' the Underwriter.
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 coostitute "forward-looking statements." Such statements are generally identifiable lJy' the terminology used such as "plan," "expect'' "estimate," "budget'' or other similar words. Forward-looking statements in this Official Statement are subject to risks and uncertainties, which could cause actual results to differ materially from those contemplated in such forward-looking statements.
The achievement ct any results or the realization of ether expectatioos cootained in such forward looking statements involve knCM1n and unknCM1n risks, uncertainties and ether factors that may cause actual results, performance or achievements to be materially different from any future results, perfonnance or achievements expressed or i mpl i ed lJy' such forward-I ooki ng statements. Neither the City nor the Authority plans to issue any updates or revisioos to those forward-looking statements if or when expectatioos or events, conditions or circumstances on which such statements are rnsed occur.
The City maintains a website. HCM1ever, the infonnation presented there is nct [Brt of this Official Statement and should nct be relied upon in making an investment decision with respect to the Bonds. TABLE OF CONTENTS
Page
INTRODUCTION ...... 1 Authority for Issuance of the Bonds ...... 1 Use of Proceeds of the Bands ...... 1 The City ...... 1 The System ...... 1 Sources of Payrrent and Security ...... 2 I nstal Irrent Purchase A greerrent ...... 2 Other Matters ...... 3 THE AUTHORITY ...... 3 PLAN OF FINANCE ...... 4 New Money Corrponent ...... 4 Refunding Corrponent ...... 4 ESTIMATED SOURCES AND USES OF FUNDS ...... 5 DEBT SERVICE REQUIREMENTS FOR BONDS ...... 6 THE BONDS ...... 7 General ...... 7 Rederrr,4:i on of the Bands ...... 7 SOURCES OF PAYMENT AND SECURITY ...... 9 Pledge of Authority Revenues ...... 9 The Agreerrent ...... 1O Allocation of System Revenues ...... 11 Rate COJenant ...... 13 Additional Parity Obligations ...... 14 THE SYSTEM ...... 16 General ...... 16 M anagerrent ...... 16 Regulation ...... 17 Custorrer Base ...... 18 System Fees and Charges ...... 19 B ii ling and Collections ...... 20 Outstanding I ndebtedness ...... 21 Historical Revenues and Expenses ...... 21 Corrparative Sewer Fees and Charges ...... 23 Capital Requirerrents ...... 24 Debt Service COJerage ...... 24
--i- TABLE OF CONTENTS (continued) Page
CERTAIN RISK FACTORS ...... 25 Li nited Obi igations ...... 25 Statutory and Regulatory Corrpliance ...... 26 System Demand ...... 27 System Expenses ...... 27 Constitutional Li nit on Fees and Charges ...... 27 Rate-Setting Process Under Proposition 218 ...... 28 Earthquakes, Floods and Other Natural Disasters ...... 28 H azarck:Jus Substances ...... 28 Change in L -ii - OFFICIAL STATEMENT $45,705,000 ANAHEIM HOUSING AND PUBLIC IMPROVEMENTSAUTHORITY SEW ER REVENUE BONDS, SERI ES 2018 INTRODUCTION This Introduction is qualified in its entirety b,t reference to the rrore detailed inforrration included and referred to elsewiere in this Official Staterrent. The offering of the Bonds is rrade only b,t rreans of the entire Official Staterrent. Capitali:zed term; used in this Official Staterrent and not other½ise defined shal I have the respective rreani ngs assigned to them in Appendix C. The purpose of this Official Staterrent (which includes the cOJer page and the appendices) is to prOJide inforrration concerning the sale and delivery b,t the Anaheim Housing and Public I mproverrents Authority (the "Authority") of $45,705,000aggregate principli amount of its Sewer Revenue Bonds, Series 2018(the "Bonds''). Authority for Issuance of the Bonds The Bonds are being issued pursuant to the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 of Chapter 5 of Division 7 of Title 1 of the Governrrent Code of the State of California, and an Indenture, dated as ofJ anuary 1, 2018(the "Indenture''), between the Authority and U.S. Bank National Association, as trustee (the ''Trustee"). Use of Proceeds of the Bonds The proceeds of the sale of the Bonds will be used to (i) refund, on a current basis, all of the outstanding Anaheim Public Financing Authority Sewer Revenue Bonds, Series 2007 (the" Prior Bonds''), (ii) finance certain capital irrprOJerrents to the System, and (iii) l'.0-Y costs of issuance of the Bonds. See "PLAN OF FINANCE." The City The City of Anaheim, California(the "City") is a charter city of the State of California(the "State'') consisting of approxirrately 50 square niles and located in Orange County, approximately 28 niles southeast of cbvntcwn Los Angeles and approxirrately 90 niles north of San Diego. The City lies on a coastal pain, which is bordered b,t the Pacific Ocean to the west and the Santa Ana Mountains to the east. The City is the oldest city in Orange County. The City has over 25,500 active business licenses, of which approximately 23,000 are businesses operating within the City's boundaries, and it is home to rrore than 8,500 manufacturing plants. As of sumrrer 2017, the City has a resident population of nearly 359,000. For rrore inforrration on the City, see "APPENDIX B - The City of Anaheim" The System The sanitary sewer collection system of the City (the "System'), which began operation in 1911, is a gravity sanitary sewage and wastewater col Iecti on system consi sti ng of approximately 578 mi I es of pipes together with related faci I iti es and equi prnent. As of October 2017, the System served 87,713 customers. The City's Departrrent of Public Works is responsible for the operation of the System The function of the System is to collect sewage and wastewater discharged 0y businesses, industries and residents of the City and a smal I acjj acent uni ncorporated area of Orange County. The effl uent col Iected 0y the System is transported to the trunk lines of the Orange County Sanitation District ("OCSD") which transports such effl uentto its treatment pl ants and disposes of the treated effluent. See "THE SYSTEM." Sources of Payment and Security The Bonds are linited obligations of the Authority and will be pe1yable solely from the Authority Revenues and the other assets pledged underthe Indenture. The Bonds do not constitute a debt or liability of the City or of the State of California and neither the faith and credit of the City nor of the State are pl edged to the pe1yment of the pri nci pe1I of, or interest on the Bands. Under the Indenture, al I Authority Revenues and amounts on deposit in the funds and accounts estabi i shed underthe I ndenture ( otherthan the Rebate Fund) are i rrevocabiy pl edged to the i:avment of the interest on and principal of the Bonds as prOJided herein, and the Authority Revenues will not be used for any other purpose while any of the Bonds remain Outstanding. Authority Revenues means all Installment Payments made 0y the City pursuant to the I nstal I ment Purchase Agreement, dated as of January 1, 2018 (the "Agreement"), 0y and between the City and the Authority. Installment Payments are to be pe1id from System Net Revenues, which means, for any period, the System Revenues for such period, less the Operation and Maintenance Expenses for such period. The amount of the Installment Payment pe1yable 0y the City is to be equal to the interest on, orthe pri nci pe1I of (incl udi ng mandatory si nki ng fund redempti ans) and interest on, as appl i cable, the Bands due on the follcwing Interest Payment Date (as defined herein). Pursuant to the Indenture, the Installment Payments are to be applied to the pe1yment of the principal of (including mandatory sinking fund redemptions) and interest on the Bonds, and the Installment Payments will be made in amounts that are sufficient, but no more than sufficient, to pe1y the scheduled pe1yments of pri nci pe1I of ( i ncl udi ng mandatory sinking fund redempti ans) and interest on the Outstanding Bands. If and to the extent that, on any Payment Date, there are amounts on deposit in the Payment Fund established underthe Indenture, said amounts are to be credited against the Installment Payment due on such date. Each Installment Payment is to be pe1idto the Trustee, as assignee of the Authority, no laterthan the applicabie Payment Date, in lawful money of the United States of America, in funds which will be available not later than the Business Day follcwing i:avment. For a further description of the sources of pe1yment and security for the Bands, see "SOUR CE S OF PAYMENT AND SECURITY." Installment Purchase Agreement The City is the sole and exclusive cwner of the Purchased I mprc,,1ements as described in the Agreement. Pursuant to the prc,,1isions of the Agreement, the Authority is purchasing from the City, and the City is selling to the Authority, the Purchased Improvements. All right, title, and interest in the Purchased I mprovements wi 11 i mmedi ately vest i n the Authority on the CI osi ng Date without further action on the part of the Authority or the City. On the Closing Date, theAuthoritywill i:av to the City, the purchase price of the Purchased I mprc,,1ements, which wi 11 be pal d from the proceeds of the Bands. The City is purchasing from the Authority, and the Authority is selling to the City, for the Installment Payments, the Purchased I mprc,,1ements in accordance with the prc,,1isions of the Agreement. All right, title and interest in the Purchased Improvements will immediately vest in the City on the Closing Date without any further action on the part of the City ortheAuthority. 2 The obligation of the City to rrake the Installment Payments and other payments required to be rrade b,t it as described in the Agreement is a special obligation of the City i:ayable, in the rranner prOJided underthe Agreement, solely from System Net Revenues and other funds provided for underthe Agreement, and does not constitute a debt of the City or of the State of California or of any political subdivision thereof in contravention of any constituti anal or statutory debt Ii rri tati on or restriction. Neitherthe faith and credit nor the taxing pcwer of any City or the State or any political subdivision thereof is pledged to the payment of the I nstal I ment Payments or other i:ayments required to be rrade underthe Agreement. For a further description of the City's obligations under the Agreement, see "SOURCES OF PAYMENT AND SECURITY." Other Matters The sumrrari es of and references to al I documents, statutes, reports and other instruments referred to herein do not purport to be complete, comprehensive or definitive, and each such sumrrary and reference is qualified in its entirety to each document statute, report or instrument. Attached to this Official Statement as Appendix C is a sumrrary of certain prc,,1isions of the Indenture and the Agreement. Copies of the Indenture and the Agreement are available for inspection at the offices of the Trustee, and copies of the I ndenture and the Agreement wi 11 be prOJi ded b,t the Trustee upon request and payment of costs. THE AUTHORITY The Authority was created pursuant to the Joint Pcwers Act and a Joint Exercise of Pcwers Agreement, datedJ uly 1, 2014(the "Joint PcwersAgreement"), between the City andtheAnaheimHousing Authority. Pursuant to theJ oi nt Pcwers A ct and the J oi nt Pcwers Agreement, the Authority exercise pcwers in connection with financing, refinancing, development, provision, and support of residential housing, public buildings, infrastructure facilities and programs, and facilities and services relating to any of the foregoing. The Authority al so has the authority to issue bonds for financing and refinancing public capital imprc,,1ements or prqjects wheneverthere are specific public benefits as determined b,t the City. The members of the City Council of the City serve as the members of the Board and Di rectors of the Authority. See APPENDIX B - "THE CITY OF ANAHEIM - City Council." The City Manager serves as the Executive Director of the Authority and the City Clerk serves as Secretary of the Authority. The Anaheim City Attorney serves as Authority Counsel. UndertheJ oint Pcwers Agreement, the Authority is a public entity, sei:arate from the City and the Anaheim Housing Authority. The debts, I i abi I iti es and obi i gati ans of the Authority do not constitute debts, liabilities or obligations of the City or the Anaheim Housing Authority. The Authority shall continue in effect so long as any bonds of the Authority rerrain outstanding or any material contracts to which the Authority is a i:artv rerrain in effect. The Authority has assisted the City in financing various other prqjects through the issuance of bonds. U pan the issuance of the Bonds and defeasance of the Prior Bonds, only the Bonds are i:ayable from or secured the Authority Revenues and the other assets pl edged underthe I ndenture. 3 PLAN OF Fl NANCE Ne.v Money Component The City is in the process of updating the M PSS based on updated census data to identify in detail necessary i rrprOJerrents to address the existing condition of the System The City expects to finance these i mprOJerrents with approximately $1 5,000,000 from proceeds of the B ands. Refunding Component A portion of the proceeds from the sale of Bonds that are paid b,t the Authority to the City under the Agreerrent will be used b,t the City to redeem the Prior Bonds in full. The Prior Bonds were issued under an Indenture, dated as of May 1, 2007 (the" Prior Indenture''), b,t and between the Anaheim Public Financing Authority and The Bank of Ne.v York Mellon Trust Corrp3.ny, N.A. (forrrerly, The Bank of Ne.vY ork Trust Corrp3.ny, N.A.), as trustee (the "PriorTrustee''). A portion of the proceeds of sale of the Bonds, together with certain other funds and amounts on deposit in the funds and accounts created under the Prior Indenture will be transferred to The Bank of NewY ork Mellon Trust Company, NA., as escrcw bank(the "Escrcw Bank''), in accordance with the Escrcw Agreerrent, dated as ofJanuary 1, 2018, b,t and between the Escrcw Bank and the Anaheim Public Financing Authority. Monies deposited in the Escrcw Fund established under the Escrcw Agreerrent will be sufficient to l'.0-Y the redemption price of the Prior Bonds on February 12, 2018 (the "Redemption Date'') at an aggregate rederrption price equal to the princii:al amount of the Prior Bonds, plus the accrued but uni:aid interest on the Prior Bonds to the Rederrption Date. Samuel Klein and Comi:any, Certified Public Accountants (the "Verification Agent"), will verify as to the Escrew Fund that the cash on deposit therei n wi 11 be sufficient to pay al I of the pri nci i:al , i nterest and redemption prenium, if any, with respect to the Prior Bonds on the Redemption Date. See "VERIFICATION OF MATHEMATICAL COMPUTATIONS." The monies deposited in the Escrcw Fund are pledged to the payrrent of the Prior Bonds and will not be avai Iable for the i:ayrrent of the Bands. 4 ESTIMATEDSOURCESANDUSESOF FUNDS The estirrated sources and uses of funds in connection with the issuance of the Bonds are set forth in fdlcwingtable. SOURCES OF FUNDS: Par Amount of the Bonds $45,705,000.00 Original Issue Preni um 9,036,102.90 Additional Sources: Debt Service Fund for Prior B ands 2,045,978.13 TOTAL SOURCES OF FUNDS $56,787,081.03 USES OF FUNDS: Deposit to Escrcw Fund for Prior Bonds $41,497,587.84 Deposittothe Construction Fund 15,000,000.00 Costs of I ssuancel 11 289,493.19 TOTAL USES OF FUNDS $56,787,081.03 (7l I rr::I Ldes urderwriter's disccunt of $70,333.15, rating agency ard legal fees, municipal advisory ard ether consultitl'J fees, printitl'J costs ard other miscellaneous expenses for the Bards. 5 DEBT SERVICE REQUIREMENTS FOR BONDS Fiscal Year Ending Total June 30, Principal Interest Debt Service 2019 $ 1,080,000.00 $ 2,323,337.50 $ 3,403,337.50 2020 1,170,000.00 2,231,250.00 3,401,250.00 2021 1,230,000.00 2,172,750.00 3,402,750.00 2022 1,295,000.00 2,111,250.00 3,406,250.00 2023 1,355,000.00 2,046,500.00 3,401,500.00 2024 1,430,000.00 1,978,750.00 3,408,750.00 2025 1,495,000.00 1,907,250.00 3,402,250.00 2026 1,575,000.00 1,832,500.00 3,407,500.00 2027 1,645,000.00 1,753,750.00 3,398,750.00 2028 1, 730,000.00 1,671,500.00 3,401,500.00 2029 1,820,000.00 1,585,000.00 3,405,000.00 2030 1,910,000.00 1,494,000.00 3,404,000.00 2031 2,005,000.00 1, 398,500.00 3,403,500.00 2032 2,110,000.00 1,298,250.00 3,408,250.00 2033 2,215,000.00 1,192,750.00 3,407,750.00 2034 2,320,000.00 1,082,000.00 3,402,000.00 2035 2,435,000.00 966,000.00 3,401,000.00 2037 2,560,000.00 844,250.00 3,404,250.00 2037 2,690,000.00 716,250.00 3,406,250.00 2038 2,820,000.00 581,750.00 3,401,750.00 2039 2,960,000.00 440,750.00 3,400,750.00 2040 530,000.00 292,750.00 822,750.00 2041 560,000.00 266,250.00 826,250.00 2042 585,000.00 238,250.00 823,250.00 2043 615,000.00 209,000.00 824,000.00 2044 645,000.00 178,250.00 823,250.00 2045 680,000.00 146,000.00 826,000.00 2046 710,000.00 112,000.00 822,000.00 2047 745,000.00 76,500.00 821,500.00 2048 785,000.00 39,250.00 824,250.00 $45,705,000.00 $33,186,587.50 $78,891,587.50 6 THE BONDS General The Bands wi 11 be dated the date of delivery and wi 11 bear interest atthe rates per annum ( cal cu lated on the basis of a 360-day year comprised of twelve 3o-day months) and wi 11 mature, sul::ij ect to prior redemption as described herein under "Rederrption of the Bonds," on February 1, in the years and in the principc1.I amounts, set forth on the inside front cover pc1.ge hereof. The principll of the Bonds is pc1.yable in lawful money of the United States of America upon presentation and surrender thereof upon maturity or earlier redemption at the Office of the Trustee. Interest on the Bonds will be payable on February 1 and August 1 of each year, commencing on August 1, 201 S(each an" Interest Payment Date''). Interest on the Bonds will be pc1.yable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event interestthereon is pc1.yable from such Interest Payment Date, (ii) a Bond is authenticated on or before the first Record Date, in which event interest thereon is pc1.yable from the Closing Date, or (iii) interest on any Bond is in default as of the date of authentication thereof, in which event interest thereon is pc1.yable from the date to which i nterest has previously been pli d or duly provided for. U nderthe I ndenture, " Record Date" means the fifteenth day of the month preceding an Interest Payment Date, whether or not such day is a Business Day. Interest will be pc1.id in lawful money of the United States on each Interest Payment Date. Interest will be pc1.id b,t check of the Trustee mailed b,t first class mail, postage preplid, on each Interest Payment Date to the owners of the Bonds at their respective addresses shewn on the Registration Books as of the close of business on the precedi ng Record Date. Notwi thstandi ng the foregoing, interest on any B and which is not punctually paid or duly prc,,1ided for on any Interest Payment Date will, if and to the extent that amounts subsequently become available therefor, be pc1.id on a pc1.yment date established b,t the Trustee to the Person in whose name the cwnership of such Bond is registered on the Registration Books at the close of business on a special record date to be established b,t the Trustee for the pc1.yment of such defaulted interest, notice of which is to be given to such owner not less than ten days prior to such special record date. The Bonds will be issued in fully registered form without coupons in Authorized Denoninations. The Bonds will initially be issued as Book-Entry Bonds and the Bonds of each maturity will be in the form of a sepc1.rate single fully registered Bond. Except as provided in the Indenture, the registered owner of all of the Book-Entry Bonds is DTC and the Book-Entry Bonds will be registered in the name of Cede & Co., as noninee of DTC. Notwithstanding anything to the contrary contained in the Indenture, pc1.yment of interest with respect to any Book-Entry Bond registered as of each Record Date in the name of Cede & Co. wi 11 be made b,t wire transfer of same-day funds to the account of Cede & Co. on the pc1.yment date for the Book-Entry Bonds at the address indicated on the Record Date for Cede & Co. in the Registration Books or as otherwise provided in the Lener of Representations. So long as any Book-Entry Bond is registered in the name of DTC, or its nominee, all pc1.yments with respect to the principc1.I, premium, if any, and interest with respect to such Book-Entry Bond and all notices with respect to such Book-Entry Bond are to be made and given, respectively, as provided in the Lener of Representations. Redemption of the Bonds Optional Redemption. The Bonds maturing on and after February 1, 2029, are sul::iject to optional redemption, in whole, or in part in Authorized Denominations, on any date on or after February 1, 2028, upon the exercise b,t the City of its rightto cause the redemption of Bonds in accordance with the Section 7 descri bing the right to redeem the B ands i n the Agreement, from and to the extent of any source of avai I able funds, at a Redemption Price equal to the principc1.I amount of the Bonds to be redeemed, plus accrued interestthereon to the date of redemption, without prenium Mandatory Redemption. The Bonds maturing February 1, 2048 are sul::iject to mandatory sinking fund redemption, in pc1.rt, on February 1 in each year, commencing February 1, 2039, at a Redemption Price equal to the principc1.I amount of the Bonds maturing February 1, 2048 to be redeemed, without prenium, pl us accrued interest thereai to the date of redemption, in the aggregate respective pri nci pc1.I amounts in the respective years as fol I cws: Date Principal Amount (February 1) To Be Redeemed 2039 $2,960,000 2040 530,000 2041 560,000 2042 585,000 2043 615,000 2044 645,000 2045 680,000 2046 710,000 2047 745,000 20481 785,000 t Maturity date If some but not al I of the Bands maturing on February 1, 2048 are redeemed pursuant to the mandatory redemption section of the Indenture, the principal amount of the Bonds maturing on February 1, 2048 to be redeemed pursuant to such section of the Indenture on any subsequent February 1 will be reduced, 0y $5,000 or an integral multiple thereof, as designated 0y the Authority in a Written Certificate of the Authority fi I ed with the Trustee; prOJi ded, hcwever, that the aggregate amount of such reductions does not exceed the aggregate amount of the Bands maturing on February 1, 2048 redeemed pursuant to the mandatory redemption section of the I ndenture. Notice of Redemption. The Trustee on behalf and at the expense of the Authority is to mail (Or first cl ass mai I) notice of any redemption to the respective owners of any Bands designated for redemption at their respective addresses appearing on the Registration Books, at least 30 but not more than 60 days prior to the date fixed for redemption. 5 uch notice is to state the date of the notice, the redemption date, the redemption pl ace and the redemption price and designate the CUSIP numbers, the Bond numbers and the maturity or maturities (except in the event of redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to be redeemed, and require that such Bands be then surrendered atthe Office of the Trustee for redemption at the redemption price, givi ng notice al so that further interest on such Bands wi 11 not accrue from and after the elate fixed for redemption. Neither the failure to receive any notice so mailed, nor any defect in such notice, wi 11 affect the validity of the proceedi ngs for the redemption of the Bands or the cessation of accrual of interest thereon from and after the date fixed for redemption. With respect to any notice of any optional redemption of Bonds, unless at the time such notice is gven the Bonds to be redeemed will be deemed to have been pc1.id in accordance with such section of the Indenture, such notice is to state that such redemption is conditional upon receipt 0ythe Trustee, on or prior to the date fixed for such redemption, of moneys that, together with other available amounts held 0y the 8 Trustee, are sufficient to l'.0-Y the rederrpti on price of, and accrued i nterest on, the B ands to be redeerred, and that if such moneys have not have been so received said notice is of no force and effect and the Authority is not be requi red to redeem such B ands. I n the event a notice of redemption of Bands contai ns such a condition and such moneys are not so received, the redemption of Bonds as described in the conditional notice of redemption will not be made and the Trusteewill, within a reasonabletirre afterthe date on which such rederrption was to occur, give notice to the Persons and in the manner in which the notice of redemption was given, that such moneys were not so received and that there wi 11 be no redemption of Bands pursuantto such notice of rederrption. Selection of Bonds for Redemption. Whenever provision is made in this Indenture for the redemption of Iess than al I of the B ands, the Trustee wi 11 select the Bands to be redeerred from al I Bands not previously cal I ed for rederrpti on, with respect to any opti anal redemption of Bands pursuant to the Indenture, among maturities of Bonds as directed in a Written Request of the Authority, and 0y lot among Bonds with the sarre maturity in any manner which the Trustee in its sole discretion deems appropriate. For purposes of such selection, al I B ands wi 11 be deemed to be comprised of separate $5,000 denominations and such sei:arate denoni nations wi 11 be treated as separate Bands which may be sei:arately redeemed. Partial Redemption. Upon surrender of any Bonds redeerred in i:art only, the Authority is to execute and the Trustee is to authenticate and del iver to the OWnerthereof, at the expense of the Authority, a ne.v Bond or B ands of the same maturity in Authorized Denominations equal i n aggregate pri nci pal amount representing the unredeerred portion of the Bands surrendered. Effect of Notice of Rederrpti on. Notice havi ng been mai Ied as descri bed above, and moneys for the redemption price, and the i nterest to the applicable date fixed for redemption havi ng been set aside, the Bands wi 11 become due and payable on said date and, upon presentation and surrender thereof at the Office of the Trustee, said Bands wi 11 be pal d at the redemption price thereof, together with i nterest accrued and uni:ai d to said date. If, on said date fixed for redemption, moneys for the redemption price of all the Bonds to be redeerred, together with interest to said date, is held 0y the Trustee so as to be available therefor on such date and, if notice of redemption thereof has been mai Ied as descri bed above, then, from and after said date, interest on said B ands wi 11 cease to accrue and become i:ayabl e. A 11 moneys held 0y or on behalf of the Trustee for the redemption of Bonds will be held in trust for the account of the owners of the Bonds soto be redeemed without I i abi Ii ty to such owners for i nterestthereon. All Bonds paid at maturity or redeerred priorto maturity pursuantto the provisions hereof will be canceled upon surrender thereof and destrO{ed. SOURCES OF PAYMENT AND SECURITY Pledge of Authority Revenues All Authority Revenues and amounts on deposit in the funds and accounts established under the Indenture (other than the Rebate Fund) are irrevocably pledged to the payrrent of the interest on and pri nci i:al of the Bands as prOJi ded i n the I ndenture, and the Authority Revenues are not be used for any other purpose while any of the Bonds remain Outstanding. Under the Indenture, "Authority Revenues" means all lnstallrrent Payrrents. Under the Agreerrent, "lnstallrrent Payrrents" rrean the lnstallrrent Payrrents required to be made 0y the City from System Net Revenues pursuant to the Agreerrent, and "System Net Revenues" rreans, for any period, the System Revenues for such period, less the Operation and Maintenance Expenses for such period. "System Revenues" rreans for any period, all gross incorre and revenue received or receivable 0y the City from the cwnership or operation of the System, deternined 9 in accordance with Generally Accepted Accounting Principles, including the City's Sewer Maintenance Fee and all other fees (including connection fees), rates, charges and all armunts paid under any contracts received b,t or cwed to the City in connection with the operation of the System and al I proceeds of insurance relating to the System and investment income allocable to the System and all other income and revenue hcwsoever derived b,t the City from the cwnership or operation of the System or arising from the System, together with amounts, if any, transferred during such period from the Rate Stabilization Account to the System Revenue Fund; prOJi ded, hcwever, that System Revenues shal I not include (a) refundable deposits made to establish credit and acwances or contributions in aid of construction, or (b) any development fees which b,t Iaw are not avai I able, or any grants which b,t I aw or the terms of the grant are not avai I able, to pay Operation and Maintenance Expenses or Obligations Payments. I n orderto secure the pl edge of the Authority Revenues underthe I ndenture, the Authority transfers, conveys and assigns to the Trustee, for the benefit of the owners, all of the Authority's rights under the Agreement (excepting its ri ghtto i ndernnifi cation and its ri ghtto receive notices thereunder), including the right to receive Installment Payments and the right to exercise any remedies provided therein in the event of a default b,t the Authority thereunder. The Trustee accepts said assignment for the benefit of the owners, sul::ij ect to the prOJi sions of this Indenture. The Trustee is entitled to and will receive all of the Authority Revenues, and any Authority Revenues collected or received b,t the Authority will be deemed to be held, and to have been collected or received, b,t the Authority as agent of the Trustee and will forthwith be paid b,ttheAuthoritytothe Trustee. The Bonds are linited obligations of the Authority and are be payable solely from the Authority Revenues and the other assets pledged underthe Indenture. The Bonds do not constitute a debt or liability of the City or of the State of California and neither the faith and credit of the City nor of the State are pl edged to the payment of the pri nci pal of, or interest on the Bands. The Authority is not required to acwance any money derived from any source of income otherthan the Authority Revenues as prOJi ded in the Indenture for the payment of the interest on or principal of or redemption preniums, if any, on the Bonds or for the performance of any agreements or covenants described in the Indenture. The Authority may, hcwever, acwance funds for any such purpose so long as such funds are derived from a source legally available for such purpose without incurring an indebtedness. For a summary of certain prc,,1ision of the Indenture, see APPENDIX C - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE AND THE AGREEMENT." The Agreement The City is the sole and exclusive cwner of the Purchased I mprc,,1ements as described in the Agreement. Pursuant to the prc,,1isions of the Agreement, the Authority is purchasing from the City, and the City is selling to the Authority, the Purchased Improvements. All right, title, and interest in the Purchased I mprovements wi 11 i mmedi ately vest i n the Authority on the CI osi ng Date without further action on the part of the Authority or the City. On the Closing Date, theAuthoritywill pay to the City, the purchase price of the Purchased I mprc,,1ements, which wi 11 be paid from the proceeds of the Bands. The City is purchasing from the Authority, and the Authority is selling to the City, for the Installment Payments, the Purchased I mprc,,1ements in accordance with the prc,,1isions of the Agreement. All right, title and interest in the Purchased Improvements will immediately vest in the City on the Closing Date without any further action on the part of the City ortheAuthority. The Installment Payments paid b,t the City to the Authority in accordance with the Agreement are payable from System Net Revenues. The amount of the Installment Payment payable b,t the City are equal 10 to the interest on, or the principal of (including mandatory sinking fund redemptions) and interest on, as applicable, the Bands due on the fol I cwi ng Interest Payment Date. Pursuant to the Indenture, the Installment Payments are to be applied to the i:ayment of the principal of (including mandatory sinking fund redemptions) and interest on the Bands, and the I nstal I ment Payments are to made in amounts that are sufficient, but no more than sufficient, to l'.0-Y the scheduled i:ayments of pri nci i:al of ( i ncl udi ng mandatory sinking fund redemptions) and interest on the Outstanding Bands. If and to the extent that, on any Payment Date, there are amounts on deposit in the Payment Fund established underthe Indenture, said amounts will be credited against the Installment Payment due on such date. Each Installment Payment will be paid to the Trustee, as assignee of the Authority, no laterthan the applicable Payment Date, in lawful money of the United States of America, in funds which will be available not later than the Business Day follcwing payment. The Agreement constitutes a Senior Obligation. The Installment Payments constitute Senior Obligation Payments. The obligation of the City to make the Installment Payments and other payments required to be made b,t it undertheAgreement, from System Net Revenues, is absolute and unconditional, and until such ti me as the I nstal I ment Payments and such other i:ayments are pal d in ful I ( or the agreements, cOJenants and other obligations of the City under the Agreement have been discharged and satisfied), the City will not discontinue or suspend any I nstal Iment Payments or other payments required to be made b,t it underthe Agreement when due, whether or not the Purchased I mprc,,1ements or any part thereof are operating or operable, or their use is suspended, interfered with, reduced or curtailed or terninated in whole or in i:art, and such Installment Payments and other payments will not be sul::iject to reduction whether b,t offset or otherwise and will not be conditional upon the performance or nonperformance b,t any i:artv of any agreement for any cause whatsoeJer. The City is not required to advance any moneys derived from any source of incorre other than System Net Revenues and the other funds prOJided herein for the i:ayment of the Installment Payments and other i:ayments required to be made b,t it hereunder, or for the performance of any agreements or covenants required to be performed b,t it contained herein. The City may, hcwever, but in no event is obligated to, advance moneys for any such purpose so long as such moneys are derived from a source legally available for such purpose and may be legally used b,t the City for such purpose. The obligation of the City to make the Installment Payments and other payments required to be made b,t it as described in the Agreement is a special obligation of the City i:ayable, in the manner prOJided underthe Agreement, solely from System Net Revenues and other funds provided for underthe Agreement, and does not constitute a debt of the City or of the State of California or of any political subdivision thereof in contravention of any constituti anal or statutory debt Ii ni tati on or restriction. Neitherthe faith and credit nor the taxing pcwer of any City or the State or any political subdivision thereof is pledged to the payment of the I nstal I ment Payments or other i:ayments required to be made underthe Agreement. For a summary of certain prOJision of the Agreement, see APPENDIX C - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE AND THE AGREEMENT." Allocation of System Revenues Under the Agreement, the City irrevocably pledges and grants a security interest in, the System Pl edged Revenues as security for the i:ayment of the Obi i gati on Payments and the other i:ayments requi red to be made b,t the City underthe Agreement. This pledge of, and security interest in, the System Pledged Revenues constitutes a first lien on System Pledged Revenues. 11 Pursuant to the Agreement, the City agrees to rraintain, so long as any Obligations rerrain outstanding, the System Revenue Fund. "System Revenue Fund," as defined in the Agreement, means the account designated as the Se.ver Maintenance Revenue Account or such other fund or account established and held b,t the City for the deposit of System Revenues pursuant to the Indenture. The City agrees and cOJenants that all System Revenues received b,t it will be deposited when and as received in the System Revenue Fund. The City will pay from the System Revenue Fund all Operation and Maintenance Expenses (including amounts reasonably required to be set aside in contingency reserves for Operation and Maintenance Expenses, the i:ayment of which is not immediately required) as and when the same is due and i:ayabl e. After having i:ai d, or havi ng made prOJi si on for the payment of, Operation and Mai ntenance Expenses, the City wi 11 set aside and deposit ortransfer, as the case may be, from the System Revenue Fund the amounts set forth belcw at the follcwing times and in the follcwing order of priority: (1) Senior Obligation Payment Account. On or before each Payment Date, the City is to transfer legally available System Net Revenues to the Senior Obligation Payment Account, an amount which, together with other amounts on deposit therein, is at least equal to Debt Service due and i:ayable on all Senior Obligations before the follcwing Payment Date; prc,,1ided, hcwever, that no such deposit need be made if the amounts on deposit in such Senior Obligation Payment Account are at least equal to the amount of such Debt Service. In the eventthatthe City has insufficient System Net Revenues to rrake all of such transfers, then such transfers are to be rrade, as nearly as practicable, pro rata, based on the respective pri nci i:al amounts of the Senior Obligations, payments with respect to which are required to be made. (2) Senior Obligation Reserve Funds. After having rrade the transfers to the Senior Obligation Payment Account described abOJe, the City, on or before each Payment Date, is to transferto each Obligation Trustee for Senior Obligations, for deposit in the applicable Obligation Reserve Fund, legaily available System Net Revenues in an amount equal to the amount, if any, required to be deposited therein to build up or replenish such Obligation Reserve Fund as and to the extent required b,t the applicable instrument pursuant to which such Senior Obligation was incurred and to reimburse the issuer of any Reserve Facility on deposit in such Obligation Reserve Fund for any claims i:aid thereunder, as and to the extent required b,t the Reserve Facility Agreement pursuant to which such Reserve Facility was issued. In the event that there are insufficient System Net Revenues to rrake all of the transfers to the Senior Obligation Reserve fund, then said transfers are to be made, as nearly as practicable, pro rata, based on the respective principll amounts of the Senior Obligations, deposits to the Obligation Reserve Funds for which are required to be made. There is no reserve fund created in connection with the Bonds. (3) Subordinate Obi i gati on Payment Account. After having made the transfers to the Senior Obi i gati on Payment Account and the Senior Obligation Reserve Funds as described abOJe, on or before each Payment Date, the City is to transfer legaily available System Net Revenues to the Subordinate Obi i gati on Payment Account in an amount which, together with other amounts on deposittherei n, is at Ieast equal to Debt Service due and payable on al I Subordinate Obi i gati ons before the fol I cwi ng Payment Date; prOJided, hcwever, that no such deposit need be rrade if the amounts on deposit in such Subordinate Obligation Payment Account are at least equal to the amount of such Debt Service. In the eventthatthe City has insufficient System Net Revenues to rrake all of such transfers, then such transfers are to be rrade, as nearly as practicable, pro rata, based on the respective pri nci i:al 12 amounts of the Subordinate Obi i gati ons, i:ayrrents with respect to which are required to be rrade. There are currently no outstanding subordinate obligations. (4) Subordinate Obligation Reserve Funds. After having rrade the transfers to the Senior Obligation Payrrent Account, Senior Obi i gati on Reserve Funds and Subordi nate Obi i gati on Payrrent Account as described abo.ie, the City, on or before each Payrrent Date, is to transfer to each Obligation Trustee for Subordi nate Obi i gati ons, for deposit in the applicable Obi i gati on Reserve Fund, Iegal ly available System Net Revenues in an amount equal to the amount, if any, required to be deposited therein to build upor replenish such Obligation Reserve Fund, as and to the extent required 0y the applicable instrurrent pursuant to which such Subordinate Obligation was incurred, and to reimburse the issuer of any Reserve Facility on deposit in such Obligation Reserve Fund for any claims i:aid thereunder, as and to the extent required 0y the Reserve Facility Agreerrent pursuant to which such Reserve Facility was issued. In the event that there are insufficient System Net Revenues to rrake all of these transfers, then said transfers are to be rrade, as nearly as practicable, pro rata, based on the respective princii:al amounts of the Subordinate Obligations, deposits to the Obligation Reserve Funds for which are required to be rrade. There are currently no outstanding subordinate obligations. (5) Rate Stabilization Account. After having rrade the transfers to the Senior Obligation Payrrent Account, Senior Obligation Reserve Funds, Subordinate Obligation Payrrent Account and Subordinate Obligation Reserve Funds as described abo.ie, the City rray, on or before the Interest Payrrent Date imrrediately follcwing the date on which said transfers are required to be rrade, transfer all or a portion of the System Net Revenues rerraining in the System Revenue Fund to the Rate Stabi Ii zati on Account; prOJi ded, hcwever, thatthe City is not to rrake any such transferto the Rate Stabilization Account if and to the extent that such transfer would result in there being insufficient amounts in the System Revenue Fund to pay Reserve Facility Costs then due and payable. (6) Surplus. After having rrade the transfers to the Senior Obligation Payrrent Account, Senior Obligation Reserve Funds, Subordinate Obligation Payrrent Account, Subordinate Obligation Reserve Funds and Rate Stabl Ii zati on Account as descri bed abo.ie, amounts in the System Revenue Fund may be applied for any purpose permitted 0y law, including i:ayrrents for capital i rnprc,,1errents to the System and Reserve Faci Iity Costs. For a sumrrary of certain prOJision of the Agreerrent, see APPENDIX C - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE AND THE AGREEMENT." Rate COJenant The City, to the extent permitted 0y applicable law, agrees in the Agreerrent to fix, prescribe and collect rates and charges for the services of the Systemwhichwill be at least sufficient to yield during each Fiscal Year (a) System Revenues sufficient to rrake all i:ayrrents required here0y, including payrrents of Operation and Maintenance Expenses and any amounts payable under any Reserve Facility Agreerrent, (b) System Net Revenues equal to the sum of (i) 11036 of Annual Debt Service on Senior Obligations for such Fiscal Year, and (ii) 10036 of Annual Debt Service on Subordinate Obligations for such Fiscal Year, and (c) Aqjusted System Net Revenues equal to the sum of (i) 10036 of Annual Debt Service on Senior Obligations for such Fiscal Year, and (ii) 10036 of Annual Debt Service on Subordinate Obligations for such Fiscal Year. The City rray rrake acjjustrrents from tirre to tirre in such rates and charges and rray rrake such classification thereof as it deems necessary, but will not reduce the rates and charges then in effect unless 13 System Revenues and System Net Revenues from such reduced rates and charges will at all times be sufficient to meet the requi rements under the Agreement. For a summary of certain prOJi si on of the Agreement, see APPENDIX C - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE AND THE AGREEMENT." Additional Parity Obligations Additional Senior Obligations. Under the Agreement, the City may at any time incur additional Senior Obligations. In order to incur additional Senior Obligations, no Event of Default (as described in the Agreement) can have occurred and be continuing. Further, the City is to prOJide to each Obligation Trustee for Obi i gati ons a W rinen Certificate of the City demonstrating that either: (1) the Aqjusted System Net Revenues, calculated on Generally Accepted Accounting Principles, as shewn b,t the books of the City for the latest Fiscal Year or any 12 consecutive month period within the last completed 18-m:Jnth period ended not more than one month before the incurrence of such additional Senior Obligations; or (2) the estimated System Net Revenues for the first complete Fiscal Year when the imprc,,1ements to the System financed with the proceeds of such additional Senior Obi igations are to be in operation as estimated b,t and set forth in an opinion of an independent consulting engineer or firm of independent consulting engineers employed b,t the City, plus, at the option of the City, either or both of the items designated under clauses (x) and (y) in the paragraph belew, amounted to at least 11036 of Assumed Maximum Annual Debt Service on all Senior Obligations to be outstanding immediately subsequenttothe incurring of such additional Senior Obligations. Under the Agreement, "Acjjusted System Net Revenues" means, for any period, the System Net Revenues for such period, less amounts, if any, transferred during such period from the Rate Stabilization Account to the System Revenue Fund. For purposes of demonstrating compl i ance with the foregoi ng, Adj usted System Net Revenues may be acjjusted for (x) any increase in System Net Revenues (including, without limitation, a reduction in Operation and M ai ntenance Expenses) which may arise from any additions to and extensions and i mprc,,1ements of the System to be made or acquired with the proceeds of such addi ti anal Senior Obi i gati ons or with moneys from any other source which, during all or any part of such Fiscal Year or such 12 consecutive month period within the I ast completed 18-m:Jnth period were not in service, al I in an amount equal to the estimated additional average annual net revenues to be derived from such additions, extensions and imprc,,1ements for the first 36-m:Jnth period in which each addition, extension or imprc,,1ement is respectively to be in operation, all as shewn b,t the certificate or opinion of an independent consulting engineer or firm of independent consulting engineers employed b,t the City, and (y) earnings arising from any increase in the charges made forthe use of the Systemwhi ch has become effective prior to the incurring of such additional Senior Obligations but which, during all or any part of such Fiscal Year or such 12 consecutive month period within the last completed 18--rmnth period, was not in effect, in an amount equal to the amount b,t which theAcjjusted System Net Revenues would have been increased if such increase in charges had been in effect during the whole of such Fiscal Year or such 12 consecutive month period within the last completed 18-m:Jnth period, as shewn b,t a Written Certificate of the City. In the event that all or a portion of such Senior Obligations are to be issued for the purpose of refunding and retiring any Senior Obligations then outstanding, interest and principal payments on the Senior Obligations to be so refunded and retired from the proceeds of such refunding Senior Obligations being issued are to be excluded from the foregoing computation of Assumed Maximum Annual Debt Service. 14 Notwithstanding the foregoing, the City rray at any tirre incur Senior Obligations to be incurred for the purpose of refunding and retiring any Senior Obi i gations then outstanding without compliance with the conditions set forth abo.ie if the Assurred Debt Service for each Fiscal Year during which any Senior Obligations that are outstanding both before and after the incurrence of such refunding Senior Obligations will not be increased 0y reason of the incurrence of such refunding Senior Obligations. Any required transfer of Net System Revenues for replenishrrent of an Obligation Reserve Fund for such Senior Obligations or for reimburserrent of a claim paid under a Reserve Facility on deposit therein, other than from delinquent Senior Obligation Payrrents with respect thereto, is to occur only on Payrrent Dates. Additional Subordinate Obligations. Under the Agreerrent, the City rray at any tirre incur additional Subordinate Obligations. In order to incur additional Subordinate Obligations, no Event of Defau It ( as descri bed in the A greerrent) can have occurred and be conti nui ng. Further, the City is to prOJi de to each Obi i gati on Trustee for Obi i gati ans a W ri tten Certificate of the City demonstrating that either: (1) the Aqjusted System Net Revenues, calculated on Generally Accepted Accounting Principles, as shewn 0y the books of the City for the latest Fiscal Year or any 12 consecutive month period within the last completed 18-m:Jnth period ended not more than one month before the incurrence of such additional Subordinate Obligations; or (2) the estimated System Net Revenues for the first complete Fiscal Year when the imprc,,1errents to the System financed with the proceeds of such additional Subordinate Obligations are to be in operation as estirrated 0y and set forth in an opinion of an independent consulting engineer or firm of independent consulting engineers employed 0y the City, plus, at the option of the City, either or both of the items designated under clauses (x) and (y) in the follONing paragraph, amounted to at least 11036 of Assurred MaxirnumAnnual Debt Service on all Senior Obligations and Subordinate Obligations to be outstanding imrrediately subsequent to the incurring of such additional Subordi nate Obi i gati ons. For purposes of demonstrating compl i ance with the foregoi ng, Adj usted System Net Revenues rray be acjjusted for (x) any increase in System Net Revenues (including, without limitation, a reduction in Operation and M ai ntenance Expenses) which rray arise from any additions to and extensi ans and imprc,,1errents of the System to be rrade or acquired with the proceeds of such additional Subordinate Obligations or with moneys from any other source which, during all or any part of such Fiscal Year or such 12 consecutive month period within the last completed 18-m:Jnth period were not in service, all in an amount equal to the esti rrated additional average annual net revenues to be derived from such additions, extensiais and imprOJerrents for the first 36-mJnth period in which each addition, extension or i mprc,,1errent is respectively to be i n operation, al I as shewn 0y the certificate or opi ni on of a qualified independent engineer employed 0y the City, and (y) earnings arising from any increase in the charges rrade for the use of the System which has become effective priortothe incurring of such additional Subordinate Obligations but which, during all or any part of such Fiscal Year or such 12 consecutive month period within the last completed 18--rmnth period, was not in effect, in an amount equal to the amount 0y which theAcjjustedSystem Net Revenues would have been increased if such increase in charges had been in effect during the whole of such Fiscal Year or such 12 consecutive month period within the last completed 18- month period, as shewn 0y a Written Certificate of the City. I n the event that al I or a portion of such Subordi nate Obi i gati ans are to be issued for the purpose of refunding and retiring any Subordinate Obligations then outstanding, interest and principal payrrents on the Subordinate Obligations to be so refunded and retired from the proceeds of such refunding Subordinate 15 Obi i gati ans being issued are to be excl uded from the foregoi ng computation of Assumed Maxi rrum Annual Debt Service. Notwithstanding the foregoing, the City may at any time incur Subordinate Obligations to be incurred for the purpose of refunding and retiring any Subordinate Obligations then outstanding without compliance with the conditions set forth abo.ie if the Assumed Debt Service for each Fiscal Year during which any Subordi nate Obi i gati ons that are outstandi ng both before and after the i ncurrence of such refunding Subordinate Obligations will not be increased b,t reason of the incurrence of such refunding Subordi nate Obi i gati ons. The Subordinate Obligation Payments for such Subordinate Obligations are not sul::iject to acceleration in the event of a default b,t the City. Any required transfer of System Net Revenues for replenishment of an Obligation Reserve Fund for such Subordinate Obligations or for reimbursement of a claim paid under a Reserve Facility on deposit therein, otherthan from del i nquent Subordinate Obi i gati on Payments with respect thereto, is to occur only on Payment Dates. THE SYSTEM General The System dates back to 1911 and consists of approximately 578 niles of gravity sewer and wastewater pipelines and appurtenant facilities and equipment. The average current daily demand on the System is approximately 50 million gallons per day(" mgd"). The majority of the System's sewer pipes are made of vitrified clay pipe ("VCP") and are at least is' in diameter. The City's use of gravity sewers allcws the System to operate without the use of pump stations or force mains. The System does not include any private laterals (i.e., sewers that solely serve one private property or privately cwned complex). Additionally, "trunk lines" are not included in the System The trunk lines serving the System are cwned and operated b,t the OCSD. Al I sewage and wastewater discharged b,t the City's customers is ultimately transported through the System to OCSD's trunk lines, where it then flews to and is treated b,t OCSD's Sewage Treatment Plant#2. The treated effluent is then disposed of b,t OCSD. OCSD cwns and operates two large sewage andwastewatertreatment plants, serving 2.6 nillion people in northwest and central Orange County, ranki ng among the I argest wastewater dischargers i n the U ni ted States. OCSD submits its bil Is fortreatment and disposal costs directly to residents and businesses through the County Assessor. Management The City Manager is responsible for OJerall management and supervision of the System. The City Manager reports to the City Council, which apprc,,1es all policy matters, including major expenditures and financial comni tments. Day-to-day management, operation and maintenance of the System are OJerseen b,t the City's Department of Public W arks. The Department of Public W arks provides services, including, but not Ii mited to, financial management, contract and staff OJersi ght and management, equipment acquisition and upkeep, sewer line and wastewater cleanup and repair, sewer line and wastewater inspection and documentation, sewer spill prevention and response and regulatory reporting and documentation. 16 Regulation The Santa Ana Regional Water Quality Control Board (the "Regional Board') is the regional agency which irrplerrents the Clean Water Act forthe Southern California region, including the City. In 2002, the Regional Board required that all cities within its jurisdiction upgrade their sewer maintenance and repair programs to prevent sewer spills and failures b,t adopting the Sewer Waste Discharge Requirerrent for Orange County (the"SewerWDR"). The SewerWDR rrandatedthateach City ;Sanitation District within Orange County develop and irnplerrent a Sewer Master Plan, which includes extensive studies to deternine the locations and degree of existing and future sewer capc1.cities. The increasingly stringent requirerrents under the Sewer WDR were a prirrary cause for increases in the System-wide Systern Wastewater Col I ecti on and Di si:osal Systern Maintenance Fee (the "Sewer Fee") to date. Subsequently, Order No. 2006-0003 was issued b,t the State Water Resources Control Board (the "State Water Board'), which superseded the Regional Board's Sewer WDR and establishes Waste Discharge Requirerrents for puri:oses of irrplerrentation throughout California Under Order No. 2006- 003, the City is required to allocate adequate resources for the operation, maintenance, and repair of its sanitary sewer systern, b,t establishing a proper rate structure, accounting rrechanisrns, and auditing procedures to ensure an adequate rreasure of revenues and expenditures. These procedures must be in compliance with applicable laws and regulations and comply with generally acceptable accounting practices. The requirerrents irrposed b,t the Regional Board and the State Water Board are substantially sinilar. In addition, the Systern is sul::iject to the National Pollution Discharge Elinination Systern ("NPDES") perrnit issued as Order No. 2002--0010 b,t the Regional Board, which becarre effective in 1991 to control and protect the quality of urban runoff in the City from the discharge of pol Iutants such as sewage from the Systern to the water of the State. The perrnit al lcws the Systern to discharge storrn water to the storrn drai n systern and requi res that systern capc1.ci ty be sized to reduce the i:ossi bi Ii ti es of sewage spi 11 s, prirrarily in connection with storrn runoff. The City adopted the Master Plan of Sanitary Sewers (the "M PSS") b,t resolutions in December 2005 andJanuary 2006 to comply with the SewerWDR. At the tirre, the MPSS identified existing and build-out sewer flews and sewer needs of the Systern based on census data frorn 2000. In connection with the 201 O census data, the City is in the process of updating the M PSS to address the current sewer needs of the System $15,000,000 of the proceeds frorn the Bonds will go to prqjects and irrprc,,1errents to address the existing condition of the Systern as will be identified in the updated M PSS. See "PLAN OF Fl NANCE" and ''THE SYSTEM - Capital Requirerrents." The City is responsible for obtaining all California Environrrental Quality Act apprc,,1als as well as various construction pernits and apprc,,1als for the capital irnproverrent prqjects that will be funded b,t the Bonds. The City does not expect any of the activities required for its environrrental and regulatory compliance to acwersely irnpc1.ct Systern Revenues or its ability to pay the lnstallrrent Payrrents. The City believes that it is currently in rraterial compliance with all gOJernrrental regulations applicable to the System 17 Customer Base Apm from approximately 200 residential septic users and a few properties on City boundaries that are served b,t acjjacent cities, the System serves the entire City, and a smal I unincorporated territory within Orange County located acjjacenttoWestAnaheim(the "ServiceArea''). As of summer 2017, the population of the City included nearly 359,000 residents, with approximately 23,000 businesses and industries of various sizes, i ncl udi ng more than 8, 500 manufacturi ng pl ants. Each residential d.vel I i ng connected to the System represents a billing unit for the System Each toilet facility (or, "Water Closet") located inside a commercial cr industrial estal:Hshment, including, motels, hotels, restaurants, professional offices, club houses, places of entertainment, manufacturing plants, public and private schools, and any other organization or business whether of a service, wholesale or retail variety, including non-profit organizations, represents a billing unit to the System. Lastly, each recreational vehicle park with a Water Closet located therein and each recreational vehicle space equipped with a sewage disposal connection represents a billing unittothe System (collectively," Billing Units"). TABLE 1 CITY OF ANAHEIM SANITARY SEWER COLLECTION SYSTEM Number of Billing Unitsl 11 Customer Class Billing Units Residential Users Residential 57,626 Residential Multi-family 45,093 Residential Total 102,719 Commercial & Industrial Users 46,705 Totali21 149,424 Source: City of Anaheim. (7l AsofJune2017. (2l ExclLdes 484 Bi llitl'J Units for RV ccnnections. The fol Io.vi ng table sho.vs the percentage of total bi 11 i ngs of the System for each cl ass of customer. TABLE 2 CITY OF ANAHEIM SANITARY SEWER COLLECTION SYSTEM Percentage of Total B ii lings by Customer Class1 11 Customer Class Percent of Total Residential Users 52.33% Commercial & Industrial Users 47.67% Total 100.0036 Source: City of Anaheim. (7l AsofJune2017. 18 The fdlcwing table sets forth the top ten largest sewer accounts for Fiscal Year endedJ une 30, 2017. TABLE 3 CITY OF ANAHEIM SANITARY SEWER COLLECTION SYSTEM Ten Largest Sewer Accounts User Type ofB usi ness Water CI osets Disneyland Resort Hotel / Resort 4,541 Makar Anaheim LLC-OBA (Anaheim Hilton) Hotel 1,739 Marriott Corp. Hotel 1,093 Ken Real Estate Lease(AnaheimSheraton) Hotel 521 Sheraton ParkAnaheim Hotel 513 Fairfield Inn Hotel 481 Worldrrark, TheClub Condorriniums, Tcwnhomes, 437 Timeshares J P Edmonson DBA (HowardJ ohnson Motor Hotel) Motel 361 Good Hope I nt'I (Anaheim Plaza Hotel) Hotel 320 AHMC Healthcare, Inc. (Anaheim Regional Medical Center) Hospital 320 TOTAL 10,326 Source: City of Anaheim. (71 AsofJune2017. System Fees and Charges PursuanttotheAnaheimM unicipll Code (the "City Code"), the City Council shall fix 0y resolution or ordinance, fees and charges to be collected 0y the City for the collection and transportation of sewage and wastewater 0y the System. For purposes of the City's audited financial statements, the Sewer Fee is combined with all City charges for solid waste collection and street cleaning under the general heading of "Sanitation Services." See APPENDIX A - "THE CITY OF ANAHEIM AUDITED FINANCIAL STATEMENTS." 19 The fol I cwi ng table sets forth the rmnthly Sewer Fee b,t user category from fi seal year 2012-13 to fiscal year 2017-18. TABLE 4 CITY OF ANAHEIM SANITARY SEWER COLLECTION SYSTEM Sewer Fee By User Category(ll Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Year Year Year Year Year Year 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 Monthly Residential & Multi- Farrily--lnsideCity Lirrits $5.04 $5.17 $5.17 $5.17 $5.43 $5.70 Percentage I ncrease 036 2.636 036 036 5.036 5.036 Monthly Residential & Multi- Farrily-OutsideCity Lirrits $7.59 $7.79 $7.79 $5.17 $5.43 $5.70 Percentage I ncrease 036 2.636 036 -33.636 5.036 5.036 Annual Residential & Multi- Farrily-OutsideCity Lirrits without Water & Electric $91.24 $93.61 $93.61 (1) (1) (1) Percentage I ncrease 036 2.6036 036 Monthly Residential Water & Electric with Penalty for Non-Payment $61.55 $63.15 $63.15 (1) (1) (1) Percentage I ncrease 036 2.6036 036 Monthly Comnercial / Industrial /Mixed-Use per Water Closetl 21 $10.10 $10.36 $10.36 $10.36 $10.88 $11.42 Percentage I ncrease 036 2.636 036 036 5.036 5.036 Monthly Recreational Vehicles with Sewage Disposal $10.10 $10.36 $10.36 $10.36 $10.88 $11.42 Percentage I ncrease 036 2.636 036 036 5.036 5.036 Source: City of Anaheim. rn Fee was consolidated on m:mthly schedule, same fee as Residential inside City Limit. Billing and Collections The City bills the Sewer Fee on the City utility bill, which includes solid waste collection, street cleaning, electric and water as well as sewer services. The Sewer Fee for residential custorrers is billed bi monthly on the utility bill. Cornrrercial and Industrial customers are billed monthly on the utility bill. All utility bills are due upon receipt and become past due 15 days after the initial issue date. Partial i:avrrent b,t a customer of the arnountthen cwed underthe Sewer Fee is applied ratably to each service represented on the utility bill. A past due notice is rrai I ed approxi rrately 21 days after the issue date. A second notice is rrai I ed to the custorrer approxi rrately 19 days from the plSt due date notice; this notice al so i ncl udes a cut off date for electric and water service. If i:ayrrent is not received b,t 5:00 p.m on the date of the disconnect notice, the electric or water service is disconnected. Full payrrent of the bill, plus any reconnection charges, is required prior to any restoration of service. Also, a deposit rray be required to re-establish the credit. 20 The City esti rrates thatthe annual uncol I ecti bl e revenues total less than 2% of Sewer Fee revenues. Outstanding Indebtedness In May 2007, the Anaheim Public Financing Authority issued the Prior Bonds as the initial financing for the System i:ayabl e from System Net Revenues. The Bands are being issued b,t the Authority to refund and defease the Prior Bonds and will be payable from System Net Revenues. For more inforrration on the debt service requirements for the Bonds, see "DEBT SERVICE REQUIREMENTS FOR BONDS." Historical Revenues and Expenses The fdlcwing table shews the System's revenues and expenses for Fiscal Years endedJ une 30, 2012 through 2017. The City's audited financial statements for Fiscal Year ended June 30, 2017 are contained in Appendix A to this Official Statement, which include the System's financial inforrration, combined with the financial inforrration with the solid waste collection and street cleaning charges collected b{ the City. See APPENDIX A - "CITY OF ANAHEIM AUDITED FINANCIAL STATEMENTS - Basic Financial Statements." 21 TABLE S CITY OF ANAHEIM SANITARY SEWER COLLECTION SYSTEM Summary of Revenues and Expenses Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year 20ll-l2 2012-13 2013-14 2014-15 2015-16 2016-17 Revenue Sewer Maintenance Fee $11,716,568 $11,894,120 $11,869,160 $12,220,527 $12,182,438 $12,888,888 I nter-Oepartmental Revenues & I ntra--Governrrent Services 3,510 14,567 42,828 47,666 35,791 21,207 Sewer Spill Collections /Fees& PerrritsOl 2,160 14,256 382,668 830,218 665,998 860,740 I nter-Governrrental & OCS D Revenues 1,021,696 905,677 67,773 Loss on Disposal of Capital Assets (17,814) (9,254) (14,732) Interest I ncorre 209,988 183,257 278,437 274,143 405,84 l 222,387 Capital Contribution 261,279 467,497 541,475 Transfer in from Other Funds of the Cityrn 4,863,797 Transfers to General Fund (414,624) (480, 179) (483,894) (500,229) (495,023) (500,440) Total 12,782,763 12,522,444 17,488,266 13,413,800 12,795,045 13,478,050 Operating Expenses Personnel 2,424,361 2,449,229 2,616,522 2,564,199 2,354,370 2,756,748 Other Operating 4,418,272 5,257,447 5,363,181 5,939,921 5,814,655 5,748,257 Capital (I nfrastruc:ture Maintenance) 1,454,202 1,354,483 1,206,767 1,399,493 1,313,093 1,390,025 Capital (Equiprrent) Total 8,296,835 9,061,159 9, 186,470 9,903,613 9,482,118 9,895,031 NET OPERATING INCOME 4,485,928 3,461,285 8,301,796 3,510,187 3,312,927 3,583,019 Beginning Net Position, as restatecJCll 79,970,592 84,456,520 87,917,805 90,634,353 94,144,540 97,457,467 4 Prior Period Adjustrrent' ' (5,585,248) Ending Net Position for Fiscal Year, as restated $84,456,520 $87,917,805 $90,634,353 $94,144,540 $97,457,467 $101,040,486 Source: City's Comprehensive Annual Finan:::ial Rep::111 fer fiscal years 2011-12 throUJh 2016-17. (7l OnJ uly l, 2012, the System adopted Governmental Accountitl'J Stardards Board (GASB) Statement No. 65, Items Pre.;iously Reported as Assets ard L iabi I ities. This Statement establishes accounti tl'J ard fi nan:::ial reporting stardards that classify certain items that were pre.;iously rep::11ted as assets ard liabi Ii ties as deferred outflCM1s of resources or deferred inflOvVS of resources, ard rec(XJnizes certain items that were previously reported as assets and liabi Ii ties as outflOvVS of resources or inflCM!s of resources. Accountitl'J changes adcpted to conform to the provisions of this Statement caused the System to restate the beginnitl'J net p::isition lJ,,I the aJTDunt of the unaJTDrtized debt issuan:::e costs of $298,199, as these costs shculd tl'.Jv\/ be recognized as an expense in the period irr::urred. Certain reclassifications have been made to prior year data to conform to the current year presentation. 2 ( 1 Effective fiscal year 2014 collections of the development impact fees related to 561\ier system constru:tion is rep::irted in Other Revenues of the Wast61\/ater Segment. Priorto fi seal year 2014, this revenue was reported in the City's Governmental Furd. (3l Transfer in from other Furds of the City in fi seal year 2014 related to restricted resources collected from developer impact fees in prior years. (4l OnJ uly l, 2014, the System adopted Governmental Accountitl'J Stardards Board (GASB) Statement No. 68, Accountitl'J ard Finan::::ial Rep::irtitl'J for Pension; an amerdment of GASB Statement No. 27; ard Governmental Accounti tl'J Standards Board (GASB) Statement No. 71, Pension Transiticn for Contributions M cele Subsequent to the Measurement Date, an amerdment of GASB Statement No. 68. Implementation of these Statements caused the System to restate the beginning net p::isiticn by a redu:::ticn of the net pensicn liability net of the deferred outflCM1s of resources related to pensicn for a total of $5,585,248. 22 Comparative Sewer Fees and Charges The current monthly Sewer Fee for each residential unit in the City is $5.70. The City charges a flat fee for monthly sewer discharge, which does not include the cost of treatrrent. The follcwing table compares the System residential Sewer Fee to the residential sewer fees and charges of various entities within Orange County that, like the City, also charge a flat fee for monthly sewer discharge which does not include the cost of treatrrent. Agencies that i ncl ude treatrrent costs and/or other costs in thei r sewer fees and charges orthat have a variable rate structure are not included belcw. While the other agencies shewn in Table 6 are located in a sinilar geographic and climate reg on as the City, it is difficultto present a true comparison given the varying I eve Is across j uri sdi cti on, for treatrrent and opportunities for future reuse. TABLE 6 Comparison of Estimated Current Monthly Sewer Fees Monthly Residential for Sanitary Sewer Collection1 11 Agency ,City Monthly Residential Fee Stanton'" $5.25 Anaheim $5.70 Fountain Valley $6.37 Yorba Linda Water Di strict $6.94 Midway CitiesC3> $7.25 Costa Mesa Sanitary District $7.70 Brea $8.08 Huntington Beach $1Q69 Orange $14.04 Villa Park $16. l 5 Sunset BeachC 4l $16.67 SanJ uan Capistrano $24.34 Irvine Ranch Water District $25.75 Moulton Niguel Water District $26.22 EI Toro Water Di strict $28.56 Average<• $14.57 Source: City of Anaheim. (7l As of October 6, 2017. (2l $62.% per year on property tax bil I. (3l $87 per year on property tax bi II; also irr::ludes Westminster. (4l $200 per year. (sl City's S61\/er Fee not irr::ILded for purp:Jses of calculatitl'J average. 23 Capital Requirements The City is in the process of updating the M PSS to address the current sewer needs of the System For fiscal year 2016-17, the City's capital expenditures for the System totaled $6,758,205. The follcwing sets forth the City's prqj ected capital requi rements for i mprc,,1ements to the System overt he next five fi seal years. TABLE 7 Prqjected Capital Requirements for I mprc,,1ements to the System Fiscal Years 2017-18 through 2021-22 Fiscal Year Ending Uune 30) Capital Expenditures 2018"' $8,141,795 2019 7, (X)(), (X)() 2020 9, (X)(), (X)() 2021 9, ()(X), (X)() 2022 2, (X)(), (X)() Total $35,141,795 Source: City of Anaheim. (7l I rr::luded in City's adopted budget for fiscal year 2017-18. The estimated costs of, and the prqjected schedule for, the expected capital imprOJements to the System are sul::iject to a nurrber of uncertainties. The ability of the City to complete such capital i mprc,,1ements may be acwersely affected b,t various factors incl udi ng: ( i) esti mating errors, (ii) design and engineering errors, (iii) changes to the scope of the prqjects, (iv) delays in contract awards, (v) material and/or labor shortages, (vi) unforeseen site conditions, (vii) acwerse weather conditions, (viii) contractor defaults, (ix) labor disputes, (x) unanticipated levels of inflation, (xi) environmental issues, (xii) the ability to access the capital markets at particular times and (xiii) delays in apprc,,1als of rate increases. No assurance can be given that the proposed prqj ects wi 11 not cost more than the annunt budgeted for the prqjects in the updated MPSS. The updated MPSS is sul::ijecttothe City Council's apprc,,1al. Any schedule delays or cost increases could result in the need to issue additional obiigations and may result in increased costs to the City. Debt Service COJerage The follcwingtable sets forth the City's prqjected Net System Revenues, the debt service for both the refunding and new money components of the Bands, and the debt service coverage for fi seal years 2017 -18 through 2021-22. The financial forecast represents the City's estimate of prqjected financial results based upon its judgment of the prolbabl e occurrence of future events. The assumptions set forth i n the fol I cwi ng paragraphs and in the footnotes to Table 8 are material in the development of the City's financial prqjections, and variations in the assumptions may produce substantially different financial results. Actual operating results achieved during the prqjection period may vary from those presented in the forecast and such variations may be material . 24 The City has deterni ned the fol lcwi ng factors to be rel evantto its prqjecti ons and assumptions with respect to sewer fees and charges and revenues: • Revenue groMh. Financial prqjections assume 5.0% revenue grcwth in fiscal year 2017-18 and 3.0% annually thereafterto factor in potential increases in sewer fees and charges, which are sul::iject to City Council approval, potential customer grcwth, and inflation. • Capital prqject cost certainty. The updated MPSS will contain estirrates of future prqject costs. The actual costs will not be kncwn until the prqjects are designed, bid, and built. TABLE 8 Prqjected Net System Revenue, Debt Service, and Debt Service Coverage Fiscal Years 2017-18 through 2021-221 11 Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2017-18 2018-19 2019-20 2020--21 2021--22 Net System Ra-enuel 21 $5,874,599 $6,169,391 $6,378,146 $6,590,592 $6,530,110 Debt Service on the Prior 2,996,956 3,403,338 3,401,250 3,402,750 3,406,250 Bonds and the B onds Debt Service CCNerage 1.96x 1.81x 1.88x 1.94x 1.92x B egi nni ng U nrestri cted Cash Balance $29, 175,000 $28,001,496 $26,767,550 $25,744,446 $24,932,288 Net System Ra-enue1 21 5,874,599 6,169,391 6,378,146 6,590,592 6,530,110 Debt Service (2,996,956) (3,403,338) (3,401,250) (3,402,750) (3,406,250) Capital (4,051,147) (4,000,000) (4,000,000) (4,000,000) (4,000,000) Ending Unrestricted Cash Balance $28,001,496 $27,767,550 $25,744,446 $24,932,288 $24,056,148 Source: City of Anaheim. rn Projections are unaudited. m Assumes 5.0% gravvth in fiscal year 2017-18 ard 3.0% gravvth amLBlly fer e,;ery year thereafter. CERTAIN RISK FACTORS Investment in the Bonds involves risks that rray not be appropriate for certain investors. The follcwng is a discussion of certain risk factors that should be considered, in addition to other rratters set forth herein, in evaluating the Bonds for investment. The inforrration set forth belcw does not purport to be an exhaustive listing of the risks and other considerations that rray be relevant to an investment in the Bonds. In addition, the order in which the follcwng inforrration is presented is not intended to reflect the relative importance of any such risks. Limited Obligations The Bonds are linited obligations of the Authority and are to be payable solely from the Authority Revenues and the other assets pledged underthe Indenture. The Bonds do not constitute a debt or liability of the City or of the State of California and neither the faith and credit of the City nor of the State are pl edged to the payment of the pri nci pal of, or interest on the Bands. Authority Revenues consist of the Installment Payments paid b,t the City to the Authority in accordance with the Agreement. The I nstal Iment Payments are payable solely from System Net Revenues. The amount of the I nstal Iment Payment payable b,t the City is equal to the interest on, or the pri nci pai of 25 (including rrandatory sinking fund rederrptions) and interest on, as applicable, the Bonds due on the fol I cwi ng Interest Payment Date. The City is not required to advance any moneys derived from any source of income other than System Net Revenues and the other funds prOJi ded underthe Agreement for the i:ayment of the I nstal I ment Payments and other i:ayments required to be made b,t it under the Agreement, or for the perforrrance of any agreements or covenants required to be performed b,t it contained in the Agreement. The City rray, hewever, but i n no event is obi i gated to, acwance moneys for any such purpose so I ong as such moneys are derived from a source legally available for such purpose and rray be legally used b,t the City for such purpose. The obligation of the City to rrake the Installment Payments and other payments required to be made b,t it as described in the Agreement is a special obligation of the City i:ayable, in the manner prOJided underthe Agreement, solely from System Net Revenues and other funds provided for underthe Agreement, and does not constitute a debt of the City or of the State or of any political subdivision thereof in contravention of any constitutional or statutory debt I irritation or restriction. Neither the faith and credit nor the taxing pcwer of any City or the State or any political subdivision thereof is pledged to the payment of the I nstal I ment Payments or other i:ayments required to be rrade underthe Agreement. The realization of the System Net Revenues is sul::iject to, among other things, the cai:abilities of management of the City, the ability of the City to prc,,1ide sewer services to its users, and the ability of the City to establish and rraintain sewer fees and charges sufficient to prc,,1ide the required debt service cOJerage as wel I as pay for Operation and Mai ntenance Expenses. Among other matters, weather, general and local econorric conditions and changes in law and 9'.)Vernment regulations (including initiatives and moratoriums on grONth) could adversely affect the amount of System Net Revenues realized b,tthe City. Statutory and Regulatory Compliance The System is sul::ij ect to a variety of federal and State statutory and regulatory requirements. Laws and regulations gOJerning its operation. These include regulations of the Regional Water Quality Control Boards (the "RWQCBs") concerning the quality of effluent that rray be discharged from the System, the disposal of sludge generated b,t the System, operation of the collection system, and the nature of waste material (particularly industrial waste) discharged into the collection system; the Clean Water Act requirement that the System to treat al I wastewater discharged into the ocean to a secondary treatment I e.,,el; the requirements of the City's NPDES perrritwhich sets effluent I irritations on what is discharged into any publ i c waters and prohibits any non-authorized discharges such as sewer system overfl cws from the collection system that transports the sewage to the Treatment Plant; the Porter Cologne Act of 1969, as amended, which is the pri rrary I egi sl ati on for regul ati ng water quality and water use, and gOJerns Cal i forni a State Water Board the standards for al I discharges to State Ocean Waters (the System must comply with Porter Cologne in rranaging Collection System spills); and the regulations under the City's Permit to Operate issued b,t the Orange County Air Pollution Control District ("APCD"), which regulates operation of standb,t diesel generators as well as the concentration of hydrogen sulfide in the biogas generated in the anaerobic di gesters. The City's failure to comply with applicable laws and regulations could result in significant fines and penalties. Such claims are i:ayable from assets of the System or from other legally available sources. In addition to claims b,t private parties, changes in the scope and standards for public agency Systems such as that operated b,t the City rray also lead to adrrinistrative orders issued b,t federal or State regulators. Future comp! iance with such orders can also impose substantial additional costs on the System Revenues. 26 No assurance can be given that the cost of corrpliance with such laws, regulations, and orders would not acwersely affect the abi Ii ty of the System to generate System Net Revenues sufficient to l'.0-Y the debt service on account of any Obligation on a i:arity with the Installment Payments. Although the City has cOJenanted in the Agreement to fix, prescribe and collect sewer fees and charges forthe services of the System which will be at least sufficienttoyield during each Fiscal Year (a) System Revenues sufficient to make all i:ayments required under the Agreement, including payments of Operation and Mai ntenance Expenses and any amounts payable under any Reserve Faci I ity Agreement and (b) System Net Revenues equal to 11036 of Annual Debt Service on Senior Obligations and Subordinate Obligations for such Fiscal Year, the realization of future System Net Revenues is sul::iject to, among other things, the cai:abilities of management of the City, the ability of the City to comply with applicable laws and regulations, the failure of which could in turn acwersely imi:act the timely payment of the princii:al of and preni um, if any, and interest on the Bands. System Demand There can be no assurance that the local derrand for the services provided 0y the System will be maintained at levels described in this Official Statement. Because of changes in demographics within the boundaries of the City, it is possi bl e for the derrand for water services to decl i ne OJerthe term of the Bands. A significant decline in derrand night create a situation in which the City could not increase sewer fees and charges sufficiently to offset the decrease in subscribers or usage. This would reduce the City's ability to rrake the I nstal I ment Payments, which could in turn acwersely i mi:act the timely payment of the pri nci pll of and preni um, if any, and interest on the Bands. System Expenses There can be no assurance that the City's Operation and Maintenance Expenses will be consistent with the descriptions in this Official Statement. Increases in Operation and Maintenance Expenses could require a significant increase in sewer fees and charges in orderto l'.0-Y for City sewer prqjects and corrply with the rate cOJenant. It is possible that the City could not increase sewer fees and charges sufficiently to offsetthe i ncrease in Operation and M ai ntenance Expenses. This would reduce the City's abi Ii ty to rrake the Installment Payments, which could in turn acwersely impact the timely i:ayment of the princii:al of and preni um, if any, and interest on the Bands. Constitutional Limit on Fees and Charges If a portion of the sewer fees and charges imposed 0y the City in connection with the System were deternined 0y a court to exceed the reasonable costs of providing service, any fee which the City charges rray be considered to be a "special tax," which under ArticleX I I IA of the California Constitution must be authorized 0y a two-thi rds vote of the affected electorate. This Ii ni tati on is applicable to the sewer fees and charges for service prc,,1ided 0y the System The reasonable cost of service provided 0y the System has been determined 0y the State Controller to include depreciation and allcwance for the cost of capital imprc,,1ements, including debt service. In addition, the California courts have deternined that fees such as connection fees (capacity charges) will not be special taxes if they approximate the reasonable cost of constructing enterprise i mprc,,1ements contemplated 0y the I ocal agency i mposi ng the fee. Such court deterninations have been codified in the California GOJernment Code (Section 66000 et seq.). The City believes that the sewer fees and charges imposed in connection with the System do not exceed the costs it reasonably bears in prc,,1iding such services. 27 Under Article XIIIB of the California Constitution, state and local go.1ernment entities have an annual "appropriations lirnit" which Ii nits their ability to spend certain moneys called "appropriations sul::iject to linitation," which consists of tax revenues, certain state sul:wentions and certain other moneys, including user charges to the extent they exceed the costs reasonably borne 0y the entity in providing the service for which it is levying the charge. In general terrns, the "appropriations Ii nit" is to be based on certain fi seal year 1978-79 expenditures, and is to be aqj usted annually to reflect changes in the consumer price index, population and services prOJided 0y these entities. Among other prc,,1isions of Article X 111 B, if an entity's revenues in any year exceed the arnount pernitted to be spent, the excess would have to be returned 0y revising tax rates or fee schedules OJerthe subsequent two years. See also "CONSTITUTIONAL LIMITATIONS ON TAXES AND SEWER FEES AND CHARGES." Rate-Setting Process Under Proposition 218 As described in this Official Statement, the City covenants in the Agreement to fix, prescribe and col Iect sewer fees and charges consistent with its rate cOJenant underthe Agreement. Hcw ever, Proposition 218, which added Articles XIIIC and XIIID to the California Constitution, affects the City's ability to i rnpose future sewer fees and charges increases, and no assurance can be given that future sewer fees and charges increases will not encounter majority protest opposition or be challenged 0y initiative action authorized under Proposition 218. If future proposed sewer fees and charges increases cannot be i rnposed as a result of majority protest or initiative, the Systern night thereafter be unable to generate Systern Net Revenues in the amounts required 0y the Agreement to pay the Installment Payments, which could in turn acwersely irnpact the Authority's ability to rnake payments of the principal of and interest on the Bonds. See "CONSTITUTIONAL LIMITATIONS ON TAXES AND SEWER FEES AND CHARGES-Article XI I IC of the California Constitution" and" - ArticleX 111 D of the California Constitution." Earthquakes, F loads and Other Natural Disasters The City, like all California communities, rnay be sul::iject to unpredictable seismic activity, 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 seisnic event. Kncwn active fault corridors within the Orange County area include the Newport-Inglewood-Offshore fault that is approximately 10 rniles westerly, the Whittier Fault, and the Chino Fault located to the northeast. Earthqualkes, floods cr other natural disasters could interrupt operation of the Systern and cause increased ca;ts and there0y interrupt the ability of the City to realize Systern Net Revenues. Recently, there have been two fires near and within the City. The first fire broke out on September 25, 2017, and burned approximately 2,600 acres (only a portion of which was inside City Ii nits) and damaged one structure in the City of Corona("Canyon Fire 1"). Canyon Fire 1 did not result in any darrage to hornes or structures within the City of Anaheim The second fire brolke out on October 9, 2017, and burned approxirrately 9,200 acres (only a portion of which was inside City Ii nits) and destrO{ed or damaged 46 structures within the City ("Canyon Fire 2"). Canyon Fire 1 and Canyon Fire 2 did not result in any darrage to the Systern or have a rraterial effect on Systern Net Revenues. Hazardous Substances OWners and operators of real property rray be required 0y I a1v 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, sometimes referred to as "CERCLA" 28 or the " Superfund A ct," is the rrost wel 1--kncwn and widely appl i cable of these I.M'S, but California Iaws with regard to hazardous substances are also stringent and sinilar. Under many of these I.M's, the cwner ( or operator) is obi i gated to rerredy a hazardous substance whether or not the cwner ( or operator) has anything to do with creating or handling the hazardous substance. Further, such liabilities rray arise not sirrply from the existence of a hazardous substance but from the rrethod of handling it. All of these possibilities could significantly and acwersely affect the operations and finances of the City. The City kncws of no existing hazardous substances which require rerredial action which may irrpact operation of the System. Hcwever, it is possible that such substances do currently or potentially exist and that the City is not aware of them. Change in Law There can be no assurance that the State Legislature will not at some future tirre enact legislation that will arrend or create I.M's the intent of which is to reduce System Net Revenues available to pay the lnstallrrent Payrrents. Similarly, the California electorate could adopt initiatives or the State Legislature could adopt legislation with the approval of the electorate amending the State Constitution the intent of which is to reduce System Net Revenues available to P3-Y the I nstallrrent Payrrents. The City is unable to predict at this tirre the enforceability of any such legislation or initiative and what effect, if any, it night have on System Net Revenues available to pay the I nstallrrent Payrrents. The City has cOJenanted to preserve and protect the security of the I nstal I rrent Payrrents and the rights of the Authority to the lnstallrrent Payrrents and other pc1.yrrents required to be rrade 0y the City under the A greerrent. The City has al so covenanted to punctually P3-Y the I nstal I rrent Payrrents and other pc1.yrrents required to be made under the Agreerrent in strict conformity with its terms, and faithfully observe and perform al I the agreerrents, conditions, cOJenants and terms contained herein required to be observed and performed 0y it, and has cOJenanted to not terminate the Agreerrent for any cause including, any acts or circumstances that rray constitute failure of consideration, destruction of or damage to the Purchased I mprc,,1errents, comrrercial frustration of purpose, any change in the tax or other I.M's of the United States of Arrerica or of the State or any political subdivision of either or any failure of the Authority to observe or perform any agreerrent, condition, cOJenant or term contained herein required to be observed and performed 0y it, whether express or irrplied, or any duty, liability or obligation arising out of or connected here.vith or the insolvency, or deemed insolvency, or bankruptcy or liquidation of the Authority or any force majeure, including acts of God, tempest, storm, earthquake, war, rebellion, riot, civil disorder, acts of publ i c enemies, blockade or embargo, stri kes, industrial disputes, I ock outs, I ack of transportation faci Ii ti es, fire, explosion, or acts or regulations of gOJernrrental authorities. Loss of Tax Exemption on Bonds As discussed underthe caption "TAX MATIERS," interest on the Bonds could become included in gross income for purposes of federal income taxation, retroactive to the date the Bonds were issued, as a result of future acts or omissions of the City or the Authority in violation of their respective cOJenants in the I ndenture and the A greerrent. Limitations on Remedies and Bankruptcy The ability of the City to increase sewer services fees and to corrply with its cOJenants under the Agreerrent and to generate System Net Revenues suffi ci entto P3-Y I nstal I rrent Payrrents rray be acwersely affected 0y actions and events outside of the control of the City and rray be acwersely affected 0y actions 29 taken ( or not taken) b,t voters, property ewners, taxi:avers or i:ayers of assessrrents, fees and charges. See "CONSTITUTIONAL LIMITATIONS ON TAXES AND SEWER FEES AND CHARGES - Article XI I IC of the California Constitution" and" - ArticleX 111 D of the California Constitution." Furthermore, any rerredies available to the ewners of the Bonds upon the occurrence of an event of default under the Indenture are in many respects dependent upon judicial actions which are often sul::iject to discretion and delay and could prove both expensive and ti rre consuming to obtain. I n addition to the Ii ni tati ons on remedies contai ned in the I ndenture and A greerrent, the rights and obligations under the Bonds, the Indenture and the Agreerrent may be sul::iject to bankruptcy, insolvency, reorganization, arrangerrent, fraudulent conveyance, moratorium and other I aws relating to or affecting creditors' rights, to the appl i cation of equitable pri nci pl es, to the exercise of j udi ci al discretion i n appropriate cases and to limitations on legal rerredies against go.1ernrrental entities in the State. Various legal opinions to be delivered concurrently with the issuance of the Bonds will be so qualified. A corrplete copy of the proposed form of opinion of Bond Counsel is set forth i n Appendix F. I n the eventthe Authority fails to comply with its covenants underthe Indenture orto i:av princii:al of or interest on the Bonds, or the City fails to comply with its cOJenants under the Agreerrent, there can be no assurance that available remedies wi 11 be adequate to fully protect the interests of the owners of the Bands. The enforcerrent of the rerredi es provided in the I ndenture and the A greerrent could prc,,1e both expensive and ti rre consuni ng. I n addition, the rights and rerredi es provided in the I ndenture and the Agreerrent may be limited b,t and are sul::iject to prc,,1isions of the federal bankruptcy laws, as new or hereafter enacted, and to other I aws or equitable principles that may affect creditors' rights. If the Authority were to file a petition under Chapter 9 of the Bankruptcy Code (Title 11, United States Code), the owners and the Trustee could be prohibited or severely restricted from taking any steps to enforce thei r rights under the Indenture and the Agreerrent, respectively. Secondary Market for Bands There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that any Bands can be sold for any particular price. Occasional ly, because of general market con di ti ons or because of adJerse hi story or econoni c prospects connected with a i:arti cul ar issue, secondary marketi ng practices i n connection with a i:arti cul ar issue are suspended or terni nated. A dditi aial ly, prices of issues for which a market is being made will depend upon then-prevailing circumstances. Such prices could be substantially different from the original purchase price. CONSTITUTIONAL LIMITATIONS ON TAXES AND SEWER FEES AND CHARGES Article XI I IA of the California Constitution ArticleX I I IA of the State Constitution prc,,1ides that the maximum advaloremtax on real property cannot exceed 1% of the "full cash value," which is defined as "the county assessor's valuation of real property as shewn on the 1975--16 tax bill under 'full cash value' or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ewnershi p has occurred after the 1975 assessrrent," sul::ij ect to exceptions for certai n ci rcumstances of transfer or reconstruction and except with respect to certain voter apprc,,1ed debt. The "full cash value'' is sul::iject to annual acjjustrrent to reflect increases, not to exceed 2% per year, or decreases in the consurrer price index or comparable local data, or to reflect reduction i n property val ue caused b,t damage, destruction or other factors. ArticleX I IIA requires a vote of two-thirds of the qualified electorate to impose special taxes, while generally precluding the imposition of any additional advalorern sales or transaction tax on real property. 30 As amended, Article XI I IA exerrpts from the 1% tax limitation any taxes above that level required to l'.0-Y debt service on certai n voter-approved general obi i gati on bonds for the acquisition or improvement of real property. In addition, Article XIIIA requires the apprc,,1al of two-thirds of all members of the State Legislature to change any State laws resulting in increased tax revenues. Under California liM', any fee that exceeds the reasonable cost of providing the service for which the fee is charged is a "special tax," which under ArticleX I I IA must be authorized b,t a two-thirds vote of the electorate. Under ArticleXIIID, fees and charges for water, sewer, and refuse collection services are sul::iject to majority protest, but are not sul::iject to the two-third vote requirement of Article XI I IA. The reasonable cost of prc,,1iding water services has been determined b,t the State Controller to include depreciation and allcwance for the cost of capital imprOJements. In addition, the California courts have deterni ned to date that fees such as cai:acity fees wi 11 not be special taxes if they approximate the reasonable cost of constructing the water or wastewater capital improvements contemplated b,t the local agency i mposi ng the fee. Article X 111 B of the California Constitution Article X 111 B of the Califcrnia Constitution Ii nits the annual appropriations of proceeds of taxes b,t State and local gOJernment entities to the amount of appropriations of the entity for the prior fiscal year, as acjjusted for changes in the cost of living, changes in population, and changes in services rendered b,t the entity. User fees and charges are considered proceeds of taxes only to the extent they exceed the reasonable costs incurred b,t a gOJernmental entity in supplyi ng the goods and services for which such fees and charges are i mposed. The City is of the opinion that its sewer fees and charges do not exceed the costs it reasonably bears in providing such services and therefore are not sul::iject to the limits of ArticleX 111 B. ArticlesX 111 C of the California Constitution On NOJember 5, 1996, the voters of the State apprOJed Proposition 218, a constitutional initiative, entitled the" Right to Vote on Taxes Act'' (" Proposition 218''). Proposition 218 added Articles XI I IC and X 111 D to the California Constitution and contained a number of interrelated prOJisions affecting the ability of local gOJernments, including the City, to levy and collect both existing and future taxes, assessments, fees, and charges. Section 1 of Article XIIIC requires majority voter apprc,,1al for the imposition, extension, or increase of general taxes and Section 2 thereof requires two-thirds voter approval for the imposition, extensiai, or increase of special taxes. These voter apprc,,1al requirements of Article XI I IC reduce the flexi bi I ity of the City to raise revenues b,t the I evy 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 ArticleX I I IC expressly extends the initiative pcwertogivevoters the pcwerto reduce or repeal I ocal taxes, assessments, fees, and charges, regardless of the date such taxes, assessments, fees, or charges were imposed. Section 3 expands the initiative pcwerto include reducing or repealing assessments, fees, and charges, which had previously been considered administrative rather than legislative rraners and therefore beyond the initiative pcwer. This extension of the initiative pcwer is not limited b,t the terms of Article XI I IC 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 NOJember 6, 1996. 31 "Fees" and "charges" are not expressly defined in ArticleX I I IC 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 XI I IC and Article X 111 D ("SB 919"). Such terms are, hcwever, defined in Article XIIID, discussed belcw. On July 24, 2006, the California Supreme Court ruled in Bighorn-Desert View Water Agencyv. Virjil (Kelley) (the "Bighorn Decision") that charges for ongoing water delivery are property,elated fees and charges within the meaning of Article X 111 D and are also fees or charges within the meaning of Section 3 of ArticleX I I IC. 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 ArticleXIIIC. In the Bighorn Decision, the Supreme Court did state that nothing in Section 3 of ArticleXIIIC authorizes initiative measures that impose voter--apprOJal requirements for future increases in fees or charges for water del ivery. The Supreme Court stated that water prOJi ders may deterni ne rates and charges upon proper action of the governi ng body and that the governi ng body may increase a charge that was not affected b,t a prior i ni ti ative or impose an enti rely new charge. The Supreme Court further stated in the Bighorn Decision that it was not holding thatthe initiative pcwer is free of all linitations and was not deternining whether the initiative pcwer is sul::iject to the statutory prOJi si on requi ri ng that water and wastewater service charges be set at a Ieve I that wi 11 pay debt service on bonded debt and operating expenses. Such initiative pcwer could be sul::iject 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 pcwer prOJided for in Proposition 218 "shall not be construed to mean that any cwner or beneficial cwner of a municipal security, purchased before or after NOJember 5, 1996 (the date of adoption of Proposition 218), assumes the risk of, or in any way consents to, any action b,t initiative measure that constitutes an irrpairment of contractual rights" protected b,t 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, i ncl udi ng the City's sewer fees and charges, which are the source of System Net Revenues to make the I nstal I ment Payments and, in turn, payments of the principal of and interest on the Bands. Notwithstanding the fact that water service charges may be sul::iject to reduction or repeal b,t voter initiative undertaken pursuantto Section 3 of ArticleX I I IC, the City will covenantto levy and charge fees that meet the requirements of the Agreement in accordance with applicable I aw. Under the Agreement, the City will covenant to impose fees and charges at specified levels. No assurance can be prOJided that the City wi 11 be able to meet such cOJenant if any proposed increased sewer fees and charges cannot be imposed as a result of a majority protest under Proposition 218. ArticlesX 111 D of the California Constitution ArticleX I I ID defines a "fee'' or "charge'' as any levy otherthan an ad valoremtax, special tax, cr assessment, imposed upon a parcel or upon a person as an incident of property cwnership, including a user fee or charge for a property,elated service. A "property,elated service" is defined as "a public service having a direct relationship to a property cwnership." As discussed above, in the Bighorn Decision, the Cal i forni a Supreme Court held that a publ i c water agency' s charges for ongoing water del ivery are fees and charges wi thi n the meani ng of Article X 111 D. Article X 111 D requi res that any agency i mposi ng or i ncreasi ng any property,el ated fee or charge must provide written notice thereof to the record cwner of each identified parcel upon which such fee or charge is to be i mposed and must conduct a publ i c hearing with respect thereto. The proposed fee or charge may not be imposed or increased if a majority of cwners of the identified parcels filewrinen protests against it. As a result, the local government's ability to increase such fee or charge may be limited b,t a majority protest. 32 While the City Attorney currently believes, based upon thejudicial precedent in place during the period of these prior fee increases, that a reviewing court could reasonably uphold the validity of those increases, none of the Authority, the City, orthe City Attorney can prc,,1ide any assurances as to the outcorre of a challenge to the prior increases in the sewer fees and charges of the System that were not apprc,,1ed in accordance with the notice and hearing requirerrents of ArticleX 111 D if one were brought. In addition, Article XIIID also includes a number of limitations applicable to existing, new, or increased fees and charges, i ncl udi ng prOJi si ons to the effect that ( i) revenues derived from the fee or charge shall not exceed the funds required to prc,,1ide the property,elated service; (ii) such revenues shall not be used fcr 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 cwnershi p shal I not exceed the proportional cost of the service attributable to the parcel ; and ( iv) no such fee or charge may be i mposed for a service unless that service is actually used b{, or immediately available to, the cwner of the property in question. Property,elated fees or charges based on potential or future use of a service are not pernitted. ArticleXIIID establishes procedural requirerrents for the imposition of assessrrents, which are defined as any charge upon real property for a special benefit conferred upon the real property. Standb,t charges are classified as assessrrents. Procedural requirerrents for assessrrents under ArticleX 111 Di ncl ude conducting a public hearing and mailed protest procedure, with notice to the record cwner of each parcel sul::ij ect to the assessrrent. The assessrrent may not be imposed if a majority of the bal I ots returned oppose the assessrrent, with each ballot weighted according to the proportional financial obligation of the affected parcel. The Authority, the City, and the City Attorney believe that as of the date of this Official Staterrent that current residential, comrrercial and industrial wastewater collection fees and charges that are sul::iject to Proposition 218 materially comply with the prc,,1isions thereof. Should it become necessary to increase the sewer fees and charges above current levels, the City would be required to comply with the requirerrents of Article XI I ID in connection with such proposed increase. California Senate Bill 231 ("SB 231 "), enacted b,t the Governor on Octolber 6, 2017, defines the word "sewer" for purposes of Proposition 218 to include systems, all real estate, fixtures, and personal property cwned, controlled, operated, or managed in connection with or to facilitate sewage collection, treatrrent, or disposition for sanitary or drainage purposes, including lateral and connecting sewers, interceptors, trunk and outfal I Ii nes, sanitary sewage treatrrent or disposal pl ants or works, drai ns, conduits, out Iets for surface or storm waters, and any and al I other works, property, or structures necessary or convenient for the collection or disposal of sewage, industrial waste, or surface or storm waters. Further, SB 231 clarifies that sewer is to be interpreted broadly to include services necessary to collect, treat, or dispose of sewage, i ndustri al waste, or surface or storm waters, and any entity that col Iects, treats, or disposes of any of these necessari ly prOJi des sewer service. SB 231 is intended to al I cw I ocal gOJernrrents to i mpose or increase property related fees and charges for surface and storm water services i n the sarre manner that property related fees and charges for other sewer or water services are imposed or increased and without the need to hold an election under Article XIIID. SB 231 will go into effect on January 1, 2018. The interpretation and application of Proposition 218will continue to be deternined b,t the courts and through i mpl errenti ng Iegi sl ati on such as SB 231. It is not possi bl e at this ti rre to predict with certai nty the outcome of such determinations or whether SB 231 or other implerrenting legislation will be rret with legal opposition. 33 Proposition 26 Proposition 26, a State ballot initiative airred at restricting regulatory fees and charges, was approved 0y the California voters on November 2, 2010. Proposition 26 broadens the definition of "tax'' in Article XI IIC of the California Constitution to include levies, charges and exactions imposed 0y local 9'.)Vernrrents, except for charges i mposed for benefits or privi Ieges or for services or products granted to the i:ayor (and not prc,,1ided to those not charged) that do not exceed their reasonable cost; regulatory fees that do not exceed the cost of regulation; fees for the use of I ocal 9'.)Vernrrental property; fi nes and penal ti es imposed for violations of law; real property developrrent fees; and assessrrents and property,elated fees imposed under Article X 111 D of the California Constitution. California local taxes are sul::iject to approval 0y two-thirds of the voters voting on the bal I ot rreasure for authorization. Proposition 26 applies to charges imposed or increased 0y local gOJernrrents after the date of its apprc,,1al. The City is assessing whether Proposition 26 may affect future se.ver fees and charges. 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 0y the State Legislature through the pcwers of initiative and referendum, respectively. For exarrple, Article XI I IA, Article X 111 B and Articles XI I IC and X 111 D and Proposition 26were adopted pursuanttothe State's constitutional initiative process. U nderthe City Charter, the voters of the City can restrict or revise the pcwers of the City through the apprc,,1al of a charter amendrrent. From ti rre to ti rre, other initiative rreasures could be adopted or I egi slative rreasures could be approved 0y the Legislature, which may place limitations on the ability of the City to increase revenues or to increase appropriations. Such rreasures may further affect the City's ability to collect taxes, assessrrents 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 arrendrrents night be submitted to or approved 0y the voters, the nature of such initiatives or charter arrendrrents, or their potential imi:act on the City or the System Net Revenues. TAX MATTERS 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 assuning, among other matters, the accuracy of certain representations and cornpl i ance with certain covenants, interest on the Bonds is excluded from gross incorre for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California personal incorre taxes. Bond Counsel is of the further opinion that interest on the Bonds is not a specific preference item for purposes of the federal alternative mini mum tax. A cornpl ete COP{ of the proposed form of opi ni on of Bond Counsel is set forth i n Appendix F hereto. To the extent the issue price of any maturity of the Bonds is less than the amount to be i:aid at maturity of such Bands ( excl udi ng amounts stated to be i nterest and i:ayabl e at I east annual ly OJerthe term of such Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each Beneficial OWnerthereof, is treated as interest on the Bonds which is excluded from gross income for federal incorre tax purposes and State of California personal income taxes. For this purpose, the issue price of a i:articular maturity of the Bonds is the first price at which a substantial amount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers, or sinilar persons or organizations acting in the cai:acity of underwriters, placerrent agents or wholesalers). The original issue discount with respect to any maturity of the Bonds accrues daily OJer the term to maturity of such Bonds on the basis of a constant i nterest rate compounded semi annually (with strai ght--1 i ne i nterpol ati ons between compounding dates). The accruing original issue discount is added to the acjjusted basis of such Bonds to 34 deternine taxable gain or loss upon disposition (including sale, redemption, or i:ayment on maturity) of such Bonds. Beneficial owners of the Bonds should consult their cwn tax acwisors with respect to the tax consequences of cwnership of Bonds with original issue discount, including the treatment of Beneficial OWners who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public. Bands purchased, whether at original issuance or otherwise, for an amount higher than thei r princii:al amount payable at maturity (or, in some cases, attheir earlier call date) ("Premium Bonds") will be treated as having arnortizable bond premium No deduction is allcwable for the amortizable bond prenium in the case of bonds, like the Prenium Bonds, the interest on which is excluded from gross income for federal income tax purposes. Hcwever, the amount oftax-€Xernpt interest received, and a Beneficial OWner's basis in a Premium Bond, will be reduced b,t the amount of amortizable bond prenium properly allocable to such Beneficial owner. Beneficial owners of Prenium Bonds should consult their cwn tax ad.ii sors with respect to the proper treatment of arnorti zabl e bond preni um i n their particular ci rcumstances. The Code i mposes various restrictions, condi ti ans and requi rements rel ati ng to the excl usi on from gross income for federal income tax purposes of interest on obligations such as the Bonds. The Authority has made certain representations and cOJenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these cOJenants may result in interest on the Bands being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compl i ance with these covenants. Bond Counsel has not undertaken to deterni ne ( or to inform any person) whether any acti ans taken ( or not taken), or events occurring ( or not occurring), or any other matters coning to Bond Counsel's attention after the date of issuance of the Bonds may acwersely affect the value of, or the tax status of interest on, the 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 Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the cwnership or disposition of, or the accrual or receipt of amounts treated as interest on, the 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 B enefi ci al owner or the Benefi ci al 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 Bonds to be sul::iject, directly or indirectly, in whole or in part, to federal income taxation or to be sul::ij ect to or exempted from state i ncome taxation, or otherwise prevent B enefi ci al OWners from realizing the ful I current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may affect, perhaps significantly, the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their cwn tax acwisors regarding the potential imi:act 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, cOJers certain matters not directly addressed b,t such authorities, and represents Band Counsel's judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("I RS") or the courts. Furthermore, Band Counsel cannot give and has not given any opinion or assurance aboutthe future activities of the Authority, or about the effect of future changes in the Code, the applicable regulations, the 35 interpretation thereof or the enforcerrent thereof b,t the I RS. The Authority has covenanted, hcwever, to comply with the requi rerrents of the Code. Bond Counsel's engagerrent with respect to the Bonds ends with the issuance of the Bonds, and, uni ess separately engaged, Bond Counsel is not obi i gated to defend the Authority or the Benefi ci al owners regarding the tax-exempt status of the Bands in the event of an audit examination b,t the I RS. Under current procedures, i:arti es otherthan the Authority and thei r appoi nted counsel , i ncl udi ng the Benefi ci al owners, would have little, if any, rightto participlte in the audit exanination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the Authority legitimately disagrees, may not be practicable. Any action of the I RS, i ncl udi ng but not I i ni ted to selection of the Bands for audit, or the course or result of such audit, or an audit of bonds presenting sinilar tax issues may affect the market price for, or the marketability of, the Bonds, and may cause the Authority or the Beneficial owners to incur significant expense. CERTAIN LEGAL MATTERS The validity of the Bonds and certain other legal matters are sul::iject 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 F. Bond Counsel takes no responsibility for the accuracy, completeness or fairness of this Official Staterrent. Orrick, Herrington & Sutcliffe LLP, as Disclosure Counsel, will prc,,1ide certain other legal services for the Authority and the City. Certain legal matters wi 11 be passed upon for the Authority and for the City b,t the City Attorney. Certain legal matters will be passed upon for the Underwriter b,t Norton Rose Fulbright US LLP, Los Angel es, California. Except for the City Attorney, such counsel wi 11 receive compensation con ti ngent upon the sale and delivery of the Bands. CONTINUING DISCLOSURE AGREEMENT Pursuant to a Continuing Disclosure Agreerrent, the City will cOJenant for the benefit of owners and Beneficial owners of the Bonds to prc,,1ide certain financial information and operating data relating to the City and the System b,t not Iaterthan six months afterthe end of each of the City's fi seal year (presently, b,t each December 31), comrrencing December 31, 2018, for the report for the fiscal year endingJ une 30, 2018 (the "Annual Report") and to provide notices of the occurrence of certain enurrerated events. The Annual Report and notices of material events will be filed b,t U.S. Bank National Association, the Dissenination Agent, on behalf of the City with the Municii:al Securities Rulemaking Board through the EMMA System. These cOJenants have been made to assist the Underwriter in complying with Rule 15c2-12 of the Securities and Exchange Commission (17 C.F.R. § 240. l 5c2-12) (" Rule 15c2-12"). For the specific nature of the i nformati on to be contai ned i n the Annual Report and the notices of enurrerated events to be made b{ the City, see "APPENDIX E-FORM OF CONTINUING DISCLOSURE AGREEMENT." For the last five years, the City has tirrely filed its annual reports forthe System obligations. The annual report for fi seal year 2014-15, fi I ed on December 28, 2015, did not include certain information relating to its largest System customers. The City has filed an addendum to the annual report for fiscal year 2014-15 to reflect such information. In addition, the City did not independently file a specified event notice in connection with an October 2015 upgrade b,t Moody's Investors Service of the underlying rating on certain of its obligations relating to its electric system issued through the Anaheim Public Financing Authority, which upgraded rating was posted on EM MA directly b,t the rating service prc,,1idingthe rating. The City has filed a sei:arate notice of such rating change. The City believes it has implerrented procedures to assure prompt filings of future notices of enurrerated events. 36 The Authority has deternined that no financial or operating data concerning the Authority is rrnteri al to an evaluation of the offeri ng of the Bands or to any decision to purchase, hold or sel I the Bands, and the Authority will not prOJide any such inforrration. The City has undertaken all responsibilities for any continuing disclosure to owners as described abo.ie, and the Authority shall have no liability to the OWners of the Bonds or any other persai with respect to Rule 15c2-l 2. ABSENCE OF LITIGATION To the best kncwledge of the Authority and the City, there is no action, suit, proceeding or investigation at law or in equity before or b,t any court or gOJernmental agency or body pending or threatened agai nstthe Authority to restrai n or enj oi n the authorization, execution or delivery of the Bands, the pledge of the Trust Estate or the collection of the payments to be rrade pursuant to the Indenture, the obiigation of the City to pay the Installment Payments from the System Net Revenues made pursuant to the Agreement, or in any way contesting or affecting the validity of the Bonds, the Indenture, the Agreement or the agreement for the sale of the Bands. In addition, there is no litigation pending or threatened againsttheAuthority, or the City which, in the opinion of the City Attorney of the City, would rraterially acwersely affect the System or the sources of payment for the Bands. RATING S&P Global Ratings ("S&P") has assigned the Bonds the rating of "AA+." Such rating reflects only the views of such organization and is not a recommendation to buy, sell, or hold the Bonds. Explanations of the significance of the rating may be obtained only from the organization assigning the rating. There is no assurance that the rating wi 11 rerrai n in effect for any given period of ti me or that the rating will not be revised, either dONnward, or up.vard, orwithdriM'n entirely, b,t the rating agency, if, in its judgment, circumstances so warrant. The Authority and City undertake no responsi bi Ii ty to bri ng to the attention of the owners of the Bands any dONnward revision or withdrawal of the rating. Any dONnward revision orwithdriM'al could have an acwerse effect on the rrarket price of the Bonds. Maintenance of the rating will require periodic review of current financial data and other updating inforrrntion b,t the rating agency. VERIFICATION OF MATHEMATICAL COMPUTATIONS Samuel Klein and Company, Certified Public Accountants will verify the rratherrntical accuracy as of the date of the cl osi ng on the B ands of the computations contained i n the provided schedules to deterni ne thatthe amounts on deposit i n the Escrew Fund shal I be suffi ci entto pay, when due, the pri nci pal amount of the Prior Bonds, plus the accrued but unpaid interest on the Prior Bonds to the Redemption Date. The report of Samuel Klein and Company, Certified Public Accountants will include the statement that the scope of thei r engagement was Ii ni ted to veri fyi ng the rratherrnti cal accuracy of the computations contai ned in such schedules prOJi ded to them and that they have no obi i gati on to update thei r report because of events occurring, or data or i nforrrati on coming to their anenti on, subsequent to the date of thei r report. MUNICIPAL ADVISOR The City has retained PFM Financial Acwisors LLC, Los Angeles, California as Municipal Acwisor in connection with the Bonds. The Municipal Acwisor is not obligated to undertake and has not undertaken to rrake, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the inforrration contained in this Official Statement. PFM Financial Acwisors LLC is a full 37 service m.micipli acwisor and is not engaged in the business of underwriting, trading or distributing m.micipli or other public securities. UNDERWRITING The Bonds are being purchased 0yWells Fargo Bank, N.A. (the" Underwriter"). The Underwriter has agreed to purchase the Bonds, sul::iject to certain conditions, at a price equal to $54,670,769.75 (representing the principal arrount of the Bonds, less Underwriter's discount of $70,333.15 and plus original issue premium of $9,036,102.90). The Underwriter is committed to purchase all of the Bonds if any are purchased. The Bonds are offered for sale at the initial prices stated on the inside cOJer page of this Official Statement, which may be changed from time to time 0y the Underwriter. The Bonds may be offered and sold to certain dealers at prices Iewer than the publ i c offeri ng prices. Wells Fargo Securities is the trade name for certain securities,elated capital markets and investment banking services of Wells Fargo& Company and its subsidiaries, includingWells Fargo Bank, National Association, which conducts its municipli securities sales, trading and underwriting operations through the Wells Fargo Bank, NA. Municipli Products Group, a separately identifiable department of Wells Fargo Bank, National Association, registered with the Securities and Exchange Comnission as a municipli securities dealer pursuantto Section 1SB(a) of the Securities Exchange Act of 1934. Wells Fargo Bank, National Association, acting through its Municipal Products Group ("WFBNA"), the sde underwriter of the Bonds, has entered into an agreement (the "WFA Distribution Agreement'') with its affiliate, Wells Fargo Clearing Services, LLC (which uses the trade name "Wells Fargo Acwisors") ("WFA"), for the distribution of certain municipli securities offerings, including the Bonds. Pursuant to the WFA Distributiai Agreement, WFBNA will share a portion of its underwriting or remarketing agent compensation, as applicable, with respect to the Bonds with WFA. WFB NA has also entered into an agreement (the "WFSLLC Distribution Agreement") with its affiliate Wells Fargo Securities; LLC ("WFSLLC"), fcr the distribution of municipli securities offerings, including the Bonds. Pursuant to the WFSLLC Distril:ution Agreement, WFB NA pays a portion ofWFSLLC's expenses based on its municipal securities transactions. WFBNA, WFSLLC, andWFA are eachwholly--o.vned subsidiaries of Wells Fargo& Company. Certain subsidiaries of Wells Fargo& Company (parent company of Wells Fargo Bank, National Association, serving as underwriter for the Bonds through the Wells Fargo Bank, NA. M unicipli Products Group) have prOJided, from time to time, investment banking services or commercial banking services to the Authority and/or City, for which they have received customary compensation. W el Is Fargo & Company or its subsidiaries may, from ti me toti me, engage in transactions with and perform services fortheAuthority and/or City in the ordinary course of their respective businesses. 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 Installment Payments orto otherwise pay debt service on the Bonds. Additionally, the City has not requested nor did the City obtain pernission from KPMG 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 any post-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." 38 MISCELLANEOUS References are rrade herein to certain docurrents and statutes which are brief sumrraries thereof which do not purport to be corrplete or definitive and reference is rrade to such docurrents and statutes for ful I and corrpl ete staterrents of the contents thereof. Copies of the I ndenture, the A greerrent and other docurrents ref erred to herein rray be obtained from the Trustee or from the Authority. Any staterrents in this Official Staterrent involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Staterrent is not to be construed as a contract or agreerrent between the Authority and the purchasers or cwners of any of the Bonds. The execution and delivery of this Official Staterrent has been duly authorized b,t the Authority. ANAHEIM HOUSING AND PUBLIC IMPROVEMENTS AUTHORITY By: ---~/s~/~D~e~bor~a~h~A~-~M~or~en~o~--- Treasurer 39 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX A CITY OF ANAHEIM AUDITED FINANCIAL STATEMENTS The Financial Staterrents include inforrration regarding certain funds of the City, including its General Fund, wiich are not pledged to rrake lnstallrrent Payrrents or to other½ise PW debt service on the Bonds. Additionally, the City has not requested nor did the City obtain pemission from KPMG LLP (the" Auditor") to include the audited financial staterrents and the report thereon as an appendix to this Official Staterrent. Accordingly, the Auditor has not perforrred any post-audit ra,iew of the financial condition or operations of the City. In addition, the Auditor has not reviewed this Official Staterrent. A-1 [THIS PAGE INTENTIONALLY LEFT BLANK] • I I I YEAR ENDED JUNE 30, 2017 Anaheim, California •I ii Tom Tait James Vanderbilt Kris Murray Mayor Pro Tem {At Large) Council Member Denise Barnes Jose F, Moreno Lucille Kring Stephen Faessel Council Member 1) Council Member frlistrict 31 ,m,mril Member IOi,strict 4) Council Member /District 5J I \ Introductory Section f CITY OF ANAHE 1\11 Comprehensive Annual Financial Report Table of Contents J une 30, 201 7 INTRODUCTORY SECTION Page Letter ofTransmitt:,1.I l CFOACerbficate of-Achievement for Excellence in F111anc1al Reporbng (J Organizat:lon Chart II Adrrnnistrative Personnel 12 FINANCIALS ECTION Independent Auditor's Report 13 Management's D1scuss1on and Analysis 15 Basic Financial S t:at:ements Covernment-',,JVide Statements Statement of Net Position 27 Statement of Activities 29 Fund Financial St:at:ement:s Balance Sheet --Governmental Funds 31 Reconc11iatio11 of the Governmental Funds Balance Sheet t:o the S t:at:ement of Net PosItIon 32 Statement of Revenues, Expenditures and Changes 111 Fund Balances --Governmental Funds 33 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Govemment:,1.I Funds to the Statement of Activities 34 Statement of Revenues, Expenditures and Changes in Fund Balances -Budget and B udgetarv Basis Actual -General Fund 35 Statement of Revenues, Expenditures and Changes in Fund Balances -Budget and Budgetary Basis Actual -Housing Authority 36 Statement of Net: Position -P ropriet:arv Funds 37 Statement of Revenues, Expenses and Changes 1n Net Pos1t1on -- Proprietary Funds 39 Statement of Cash Flmvs -Propriet:arv Funds 40 Statement of Fiduciary Net Position (Deficit; -Fiduciary Funds 42 Statement of Changes in Fiduciary Net Position (Deficit; -Fiduciary Funds ,13 Notes to Financial Statements 45 R equ1red S upplement:arv Information Schedule of Changes in the Net Pension L1abll1tyand Related Ratios 87 Schedule of Pension Plan Cont:ribut1ons 89 Schedule of-Funding Progress for Od1er Post --E rnplovment Benefits 90 Combining individual Fund Statements and Schedules Government Funds Combining Balance Sheet -Non major Governmental Funds by Fund Type 91 Combining Statement of Revenues, Expend1t:ures and Changes in Fund Balances -- Non major Governmental Funds bv Fund Type 92 Combining Balance Sheet --NonrnaJor S pec1al Revenue Funds 93 Combining Statement of Revenues, Expend1t:ures and Changes in Fund Balances (Deficit) --NonmaJorSpec1al Revenue Funds 94 Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits) -Budget and Actual -All Nonmajor Special Revenue Funds 95 Combining Balance Sheet -Non major Debt Service Funds 99 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Debt Service Funds 100 CITY OF ANAHEIM Comprehensive Annual Financial Report Table of Contents J une 30, 201 7 (continued) Page Schedule of Revenues, Expend1l1Jres and Changes in Fund Balances---Budget and Actual --All Debt Service Funds IOI Combining Balance Sheet -Non major Capital Projects Funds 103 Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits) -NonmajorCapital Projects Funds 11}1 Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits) -Budget and Budgetary Basis Actual -All Capital ProJects Funds 105 I nte mal Service Funds Combining Statement of Net Position --Internal Service Funds 109 Combining S t:atement: of-Revenues, Expenses and Changes in Net: Position --Internal Se1v1ce Funds 110 Combining Statement of Cash Flmvs --Internal Service Funds 111 Fiduciary Funds Statement of Changes in Fiduciarv Assets and Liabilities -Agency Fund -Mello-Roos 113 STATISTICAL INFORMATION (Unaudited) Net Position by Component -Last Ten Fiscal Years 116 Changes in Net Position -LastTen Fiscal Years 117 Governmental Activities Tax Revenues By Source -Last Ten Fiscal Years 119 Fund Balances of Governmental Funds --Last Ten Fiscal Years 120 Changes 111 Fund Balances of Governmental Funds --Last Ten Fiscal Years 121 General Government Tax Revenues By Source ---Last Ten Fiscal Years 122 Assessed Value and E st:lmated Actual Value of Taxable Property -- Last Ten Fiscal Years 123 Property Tax Rates -Direct and Overlapping Governments -Last Ten Fiscal Years 124 Principal Property Tax Payers -Current Year and Nine Years Ago 125 Property Tax Levies and Collections -Last Ten Fiscal Years 126 Ratios of Outstanding Debt: by Type -- Last Ten Fiscal Years 127 Rabos of-Net General Bonded Debt Outstanding --Last Ten Fiscal Years 128 Direct: and Overlapping Governmental Activities Debt --As of-June 30, 2()"17 129 Legal Debt Margin -Last Ten Fiscal Years 131 Pledged-Revenue Coverage -Last Ten Fiscal Years 132 Demographic and Economic Statistics -Last Ten Fiscal Years 134 Principal Employers ---Current Year and Nine Years Ago 135 Full--t1rne E qu1valent City Government Employees bv F unction,Program --Last Ten Fiscal Years 136 Operating Indicators bv Function ---Last Ten Fiscal Years 137 Capital Assets S t:at:lst:ics by Function --Last Ten Fiscal Years 139 OTHER INFORMATION Summary of Pension Obligation Funding Progress Hl City of Anaheim Map 142 City of Anaheim, California on a coastal plain, which is bordered by the Pac1f1C Ocean to the west and the Santa Ana Mountains to the east. The City is the oldest and most populous city in Orange Finance Department County'. Anaheim is home to the Disneyland Resort, the Anaheim Convention Center, t:he /\nahe1m Regional Transportation lnte1modal Center (ARTIC), and two maJOr league professional sports t:eams-----the Angels Major League Baseball team, which utilizes Angel Stadium of Anaheim, and the Anaheim Ducks National Hockey League team, which utilizes Honda Center. Anaheim is a significant contributor to the diverse Orange County economy, which is home to more than 8,500 manufacturing plant:s. Product manufacturers include December 20, 2m 7 notable firms focused on detense and aerospace, biomedical, electronics, machinery, and computer products. The Citv has over 25,500 active business licenses, of which over 17,500 are businesses operating vvithin the City's To the Honorable Mavor and City Council boundaries. City of Anaheim Anaheim, California The eco11011l\1 contmues to grow moderate Iv and while there 1s litt:le reason t:o believe that a recession is on the immediate horizon, vve are cautious of the possibility in the In accordance with tl1e Charter of t:he City of- Anaheim (City), please accept coming years.Job grmvth nationally and locally has had a significant impact on the submission of the Comprehensive Annual Financial Repo1t (CAFR) for the fiscal economy and should continue to bolster the economic outlook over the next fevv year ending June 30, 2017. Responsibility for the accuracy of the data, years. completeness, and fairness of the presentation, including all disclosures, rests with the City. \!Ve believe the data included 1s accurate in all material aspect:s, and 1s The unemployment rate in Anaheim for June 2cr17 \1vas 4.9¾, while the national presented in a manner designed to f"21irly set: forth tl1e financial position and average is at 1-1.'-l% and the state average at 4_go/o. operational achievements of the City, as measured by the financial activity of its various funds. in addition, all disclosures necessary to enable the reader to gain The City will continue to build on the successes and achievements realized in the maximum understanding of the Cit\/s financial activ1t1es have been included. current year, and remain committed to efforts to grovv service levels. The City's "Big Three" revenue sources of-t:rans1ent occupancv tax, prope1ty t:ax, and sales and use The City Chart:er requires an annual audit of t:he City's financial statements by an t:ax, have all shO\IVll steadv grmvth this vear. As the City moves through fiscal vea1 independent: Certified Public Accountant. Accordingly, this vear's audit was 2017/18, we are optimistic about continued grO\lvth but will remain attentive to the completed by f....PMC LLP. in addition to meeting the requirements set forth in the prevailing economic climate and mindful of managing enhanced services within the Cit\/ Cha1ter, the audit: \1vas also designed t:o meet the requ1rement:s of the Single limits of the City's General Fund. Audit: /\ct Amendments of ·1996 and the Uniform C u1da11ce. The auditors' report: on the basic financial statements is included in t:he financial section of t:his repo1t The MAJ OR INITIATIVES auditors' reports related specifically to the single audit are presented as a separate document. With direction from the Mavor and C1tv Council, CilV management identifies the priorities that shapes the path for Anaheim's TIJture. City initiatives are reevaluated Management's discussion and analvsis (MD&/\) 1mmed1ately follO\lvs the regularly, and new items are frequently added to ensure that City' efforts are independent auditors' report and provides a narrative introduction, overview, and consistent with the priorities of our policy body and the community'. The City' strives analysis of the City's basic financial statements. MD&A. complements this letter of each vear to better TIJlf1II its mission of de live ring out~t:a nd1ng municipal services that transmittal and should be read in conjunction with it. are responsive to our entire community' by continuing its tradition of fostering innovation, ingenuity, an opportunity in its operations. This helps achieve the primary ECONOMIC CONDITION AND OUTLOOK goals of focusing on community' needs, building neighborhood connections, and governing for results that strengthen communities. The City's dedication to Anaheim is located in northwestern Orange Countv, approximately 28 miles southeast ofdowntovvn Los Angeles and 90 miles north of San Diego. The City lies CITY OF ANAHEIM improvement: and modernization creat:es an environment: where residents and Fiscal year 2017 /18 welcomes t:he opening of the Ponderosa Park Family Resource businesses are free to choose how best to enjoy all thatAnaheim has to offer. Center, one of three Family Resource Centers the City of Anaheim currently operates. Family Resource Centers are familv friend Iv facilities vvhere local residents INVESTING IN OUR NEIGHBORHOODS along with public and private organizations come toget:her to plan and provide services that: promot:e and support t:he satetv, stability and healthy development of Investing in our neighborhoods is a critical component to ensuring Anaheim has Anaheim families. This much needed community facility' includes the addition of a public spaces that enrich the lives of res1de11t:s 1n our city. Anaheim's approx1matelv new gymnasium and increased space for communitv activities and programs, SO square-miles is home to '.)7 parks, 1O community facilities, 10 library locations, 6 doubling in size to approximately 16,400 square feet. The expansion includes an skate parks, and 2 dog parks. While these open spaces and facilities provide places outdoor special event cou1tyard, receptmn and lobby, six office spaces, a dance for residents to gather, rest and rejuvenate themselves, continued preservation and room, a multi-purpose room, a classroom, a teen center room, an outdoor class developments are an essential aim f-ix Anaheim's quality of life. This desire is room area, a kitchen, a gymnasium, a vvorkroom, an indoor public restrooms, and a evident in the many projects planned for fiscal year 20"I 7/18 111cludi11g improving designated room and plav area for the contracted Orange Countv Health Care aging facilities and adding more public spaces. Together vvith the current upkeep, /\gency's VVomen, Infant:& Children program. the new additions contribute to Anaheim's vibrant parks and communitv centers and provide more oppo1tu11ities for residents to engage in healthy outdoor living. Anaheim makes great effort in maintaining park services and seeking resources to continue investing in our neighborhoods. With the direction and approval from City Anaheim \1velcomed many ne\1\/ additions this past fiscal year 111cludi11g skate parks at Council in February 2017, Anaheim directed $830,000 towards park restroom Ponderosa, Schweitzer, and Palm Lane parks. Skate parks serve as an add1tmnal renovations, athlet:ic field renovabons and a c1t\Nvide park assessment:. The citywide outdoor alternative for youth not enrolled in team sports such as soccer or baseball. park assessment 1s a t\velve-rnonth process that: evaluated all existing park facilities Recognizing that skate parks are a highly requested amenity, Anaheim S.T.A.R.S and sought input from the community' in regards to future park improvements. (StudyTime, Alts, Recreation, and Spol1s) brought the new Ramp n' Roll Mobile Current improvements include seven park restroom renovations at Boysen, John Skate Park t:o neighborhoods t:hroughoutAnahe11n The mobile skate park can be Marshall, Brookhurst, Pearson, Ma,-well, Peralta, and Edison Parks comprising of set up in multiple configurations, providing a greater breadth of access to the interior and exterior painting, lightmg upgrades, updated fixtures, flooring and \Vall community. surface improvements, and signage. Anaheim's parks vvill also get an increase in restroom cleaning from once a day to tvvice a dav and three times a day in our larger Additionally, forty years since opening in 1976, tl1e Euclid and Sunkist library parks, to ensure optimal use of- park rest:rooms bv our community. 111 addition, five branches under\1\/ent their first renovations and reopened to the public in Oct:obe1 top priority park athletic fields will also receive a comprehensive turf renovation, with 2016. The libraries feature an upgraded int:erior with ne\,v technologv and features that are aesthetically pleasing and durable enough to withstand heavy accessibility improvements, providing a fresh look and environment that boosts the sports activity'. The athletic fields include Edison, Schweitzer, Pioneer, Riverdale, experience for all residents. and ModJe ska Parks. Moreover, the city made significant improvements to Little People's Park, Manzanita V\/hen it comes to parks, KaBOOMI, a nonprofit organization dedicated to building Park, and Edi son Park. Lrltle People's Park, a popular I acre neighborhood park active plav spaces for kids, 1s no stranger to Anaheim. In the past t\,vo years alone, that opened in 1970, received a complete renovation 111cludi11g a new gazebo and KaBOOMI has brought together sponsors and volunteers to upgrade worn out and picnic areas, basketball court, decorative perimeter fencing, and irrigation and outdated playgrounds at John Marshall Park, Lincoln Park, Mod1eska Park, and landscaping improvements. Through a series of community' meetings, residents most: recently Imperial Park. rv'lore than 300 Disney VoluntE/\RS, Girls Scouts of helped design the renovations and select:ed its amenities. Over by state route 91 Orange County', and ot:hers Joined forces 011 build day at Imperial Park in February and Harbor Boulevard, Manzanita Park received a ne\,v recreation center after an 2017. Anaheim can look forward to an additional four Disney-sponsored KaBOOMI arson fire severelv damaged the building in 20H. The spacious new center is now playgrounds over the next three years at Willovv Park, Julianna Park, Pearson Park home to the Boys and Girls Club of Anaheim vvith a library, music room, game room and Barton Park. and computer lab. The center provides a pos1bve and safe space for the youth of /\nahe1m and provides social services to families nearby. Over at Edison Park, Add1t1onally, the C1tv invests significant financial resources to provide supplemental community residents recommended improvements including new vollevball courts, support to Anaheim schools. Over S l 0.6 million is included in the fiscal vear 201 7/l 8 exercise equipment, and lighting along the exercise trail. 2 CITY OF ANAHEIM adopted budget: to support local schools bv providing after school programs, campus reunIt:1ng them with f"21rnily or placing t:hem in affordable housing. Anaheim Is home to support and programming, and pedestrian and infrastructure investments. 12 affordable housing communities with rent-voucher assistance from the citv's Housing Authority, including one of the most nevvly available communities, the SUPPORTING OUR COMMUNITY Rockwood /\partrnents. Rockwood Apartment:s is locat:ed near Lincoln E lementa1v School and provides on--site assistance 1nclud111g after--school tutoring, clinical The Anaheim community is rich in diversity' vvith a multi-cultural demographic. To services, career development and more. Anaheim's affordable housing communities ensure effective support for t:he community, the City is devoted t:o engaging coupled with the rent-voucher assistance program are ways of helping to provide resident~ through various methods ofcornrnunication. One avenue br residents and long-term stability t:o families and others confront:ed w1t:h homelessness. stakeholders to provide their input and share their concerns is at the Neighborhood F u1thermore, die citv has contributed $500,000 in funding for the County of Orange's Services District Community' Meetings, vvhich occur three times a vear in each first vear-mund shelter, called Bridges at Kraemer Place. The 21-1,390-----square--fuot district. These district community meetings serve as an opportunity br res1dent:s 1n shelter will host 200 beds. The first phase, with l 00 beds spanning 6,000 square each district to engage w1d1 cilV staff by addressing concerns and ident1fy1ng actions feet opened in rv'lay 2017, with the remaining beds expected in 2018. to resolve them. For the first time, the city also held six additional neighborhood services district community meetings for residents to learn more about the city's ENSURING PUBLIC SAFETY budget and to provide input: 011 their priorities. Ensuring a sate /\nahe1m remains a high priority for t:he women and men at: the For those unable to attend the meetings, another avenue for res1dent:s t:o provide frontlines of the Anaheim Police Department (AP D) and Fire & Rescue Department input Is on the Citv's \1vebsite. For budget: related input, resident~ can explore where City Council's approval of the hiring of 40 police officers over 4 years supports this the city's money comes from and vvhere it goes through an online tool called priority. The fiscal year 2017 ;18 budget completes the fourth and final year of this OpenGov. Residents can also run a simulation to balance the budget through the commitment~ w1t:h the maJorilV of the new officers assisting with reducing response Balancing /\ct tool. The s1mulat1on \Iva lks use rs through the d1ff1Cult act of- balancing a times and enhancing customer service in the Patrol Division. Responding to over budget by choosing what: programs are ImpoIta11t or less critJCal within the 200,695 calls for service during fiscal year 2016/17, the APO welcomes the framework of the citv's resources. To supplementthese resources, a budget previevv additional officers to support its commitment and responsibility' of delivering the document providing educational material and a snapshot of the budget is also highest: levels of- public safety service t:o the residents, visitors and businesses available in print and online at V\l\'V\1\/.anaheim.netJnycitybudget:. An add1t1onal t:hroughout t:he City To assist w1di t:he large volume of-calls, APO added a business mediod for prov1d1ng input is through the online Anaheim /\nytime system. process improvement allowing callers who dial the non-emergency line to self---select Residents can include photos and extra detail with their concerns. Anaheim service options. The nevv autopilot feature provides callers vvith a menu of options to continues to receive and address more than 1-14,000 requests annuallv through the get to the app,opnate staff quicker, ensunng that dispatch staff handle urgent system and anticipate rolling out the ability to translate the app for our Spanish emergency calls. speaklng community members in 2017. The APO remains focused on communitv policing and continues to build strong, In add1t:ion to multiple out:reach and communication effort~, Anaheim recognizes the trusting relationships with the residents it serves. Over the past five years, the need to support all residents, including some of the most vulnerable community department has focused on engaging the community t:o build mul1Jal understanding members faced with homelessness. Anaheim is proud of its pioneering efforts in and to form die relationship needed t:o reduce and prevent crime while improving Orange Countv to address this concern in our community. \IV 1th Council's support, qualitv of- life in neighborhoods throughout Anaheim. The contmued support /\nahe1m has engaged 111 numerous etT01ts to better 1dentih/ the resources that go demonstrated bv the Citv Council through the allocation of additional resources into helping the homeless in Anaheim. Our existing level of commitment is indicative directly and positive Iv impact~ the department:'s ability and capacity to deliver on It:s of our collaboration with over 70 non-profits and 49 faith-based groups and commitment to delivering excellence In police and public satetv seIvIce. As an government: agencies, as part of the Anaheim Homeless Collaborative that formed example, In 2crI6, with APO leadership, the Orange County Human Trafficking Task inJ anuaIv 2014. Force (OCHTFF) took dozens of dangerous suspects off the streets, arresting 48 for human trafficking and 17 for pimping. The District Attorney successfi_1lly filed all 65 The Anaheim Homeless Collaborat:ive conduct:s weekly outreach in /\nahe1m, cases, leading to the rescuing of 31 adult and 36juvenile victims who were forced to working to get people off the streets and connecting them to the services thev need. live a lite of abuse, subJugat1on and despair. As of mid-2017, the collaborative has assisted more than 761 homeless persons, 3 CITY OF ANAHEIM At the start: of 2017, APO launched Drug Free Anaheim, an innovative and practitioner with a paramedic t:o address low-level, non--urgent: medical calls. This collaborative approach to providing a safe space for substance abusers to get the approach not only saves time and money for the patient, but reduces the impact of help they need. As ofJ une 2017, over 50 people have sought assistance with their the out--of---service time for fire and rescue companies vvho can focus on responding add1ct1on to drugs since the launch. Modeled after a similar program in t:o more serious emergencies. Over 8'.)% of the department's 38,000 calls br service ~ilassachusett:s, those individuals who are notwant:ed for another unrelated matter, are medically related. As of March 2017, the C:CRU has been able to diver! are not under the influence to the degree they pose a risk to themselves or others, transferring 49'¾ of patients to a hospital. Anaheim Fire & Rescue is proud of the and who come forvvard seeking help are eligible for assistance. A person simply pilot program's success and looks fof\,vard to continuing this service for the residents \Valking into an APO station or contacting anv APO ernplovee seeking help with of Anaheim. addiction will not: be prosecuted or incarcerated, but: will rad1er receive assistance from a non-profit organization that provides drug treatment placement and 111 late 2crI6, Council approved the relocatmn and replacement of the aging S t:at:lon '.) prevention services. APO believes in providing alternative assistance to the public from Kraemer Boulevard to La Palma Avenue and Sunklst: St:reet. The proJect \1vlll \1v1t:hout crim1naliz111g those who want help. help the department meet optimal response times near the 91 Freeway and Sk1.te College Boulevard and vvill reduce the demand on the downtown station on The cItv recognizes that homelessness Is a complex social concern that has Broad\,vay. The new St:at:lon 5 will teature t:houghtful and 1mpactful designs, such as become increasingly prevalent. 111 2016 alone, APO responded to over 15,000 using b1--fold111g doors that: open from t:he side leading to the apparatus bay, as homeless related calls for service representing a ff¾ increase over 2015. opposed to using roll up doors into the ceiling. Some roll-up doors take about 25 Understanding that there are many contributing causes to homelessness, APD's seconds to open while the side-opening doors ta.ke 4--6 seconds. The extra seconds Homeless Outreach Team (HOT), a participant 111 the county-wide Homeless not only save time, but can pote11t:1allytranslat:e into saving lives. Collaborabve consIstmg of police services, mental healt:h cl1nic1ans, fi::lith--based organizations and non-governmental service providers, works on a holistic approach In add1tmn to responding t:o emergencies, Fire & Rescue works dil1ge11dy t:o educate by balancing compassion and outreach in ensuring public safety' and quality of life. and engage the public in order to prevent or reduce the effects of emergencies and APO manages this from multiple angles including out:reach w1d1 nonprofits to provide risks in the first place. This is done through the Community Risk Reduction (CRR) immediate assistance with clothing, food, and hvgiene as well as working with t:he division. The department proactively vvorks to accomplish risk-reducing goals county mental health services clinicians to set up longer-term assistance for shelter t:hrough community event:s, outreach at schools, station tours, \1vat:er safety or menta.l health services. Along with the social concern of homelessness, APO education, and the Readyl, Seti, Col and Horne Safety Visit Programs. Over a lwo-- recognizes the impacts to residents, visitors, and business O\lvners and works on an year period, Fire & Rescue will insta.II 12,000 smoke alarms and provide Home individualized basis with residents and local businesses to identifv' and implement Safety Visits to approximately 3,000 homes with the support of a grant from the design techniques and strategies to prevent and minimize associated safetv and federal government. A staggering statistic by the National Fire Protection quality' of life concerns. Additionally, at the requests of residents, security cameras Association shows that the risk of- dying in a home fire Is reduced by 50 percent were installed at Brookhurst, Twila Reid and Maxwell parks t:o enhance public safety vvhen a working smoke alarm is in the home. by providing the abilitv, in real bme, for the APO to address criminal and unwant:ed behavior. IMPROVING OUR INFRASTRUCTURE Anaheim's public safety efforts include the excellent service and dedication of Anaheim enters fiscal year 2017/18 vvell---situated to mainta.in the city's extensive Anaheim Fire & Rescue. The Anaheim Fire & Rescue Strategic Plan, updated for system of sidewalks, road\1vavs, and infrastructure. Maintaining our city's 20172022, helps guide the depa11rne111's focus on programs and projects that will infrastruct:ure is vital to ensuring Anaheim's quality of seIvIce. At t:he forefront of have a posItIve impact: 011 service delive1y and the depa1tment's ability to respond to maintaining and improving our existing infrastructure are the men and women in our and manage anticipated events in the city. This continuous planning effort is a critical Public VVorks Department and Public Utilities Department Theirvvork translates into element in helping the departmentto accomplish the identified goals and objectives the provision of a safe and efficient street: net\1vork, competitive and reliable water to provide the be st service possible. and electric utilities, and sanit:abon services. In line with the city's desire to introduce innovative and customer cost--savings The City is pleased with our continued effo1ts t:o maintain and rehabilitate our street:s program, Anaheim Fire & Rescue has successfully implemented the pilot CCRU or and roadways. In fiscal year 2016;17, the City pruned over 18,000trees and planted the Community Care Response Unit The CCRU, the first in California, pairs a nurse over 200 trees. The TreePovver Program gave an additional 1,273 shade trees to CITY OF ANAHE 1\11 local residents, businesses and schools. VVe improved our street~ with over4 million that: will relieve exIstmg congestion on t:he electric system. Anot:her planned project square feet of crack fill and slurry seal along with over 5.6 million square feet of involves expanding the Lenain Water Treatment Plant's capacity from 15 to 20 pavementrehabilik1.tion. The City provided over 5.9 million square feet of landscape million gallons of water per dav, allowing Utilities to treat less--costiy raw vvater maintenance and complet:ed sidewalk gap closures 011 Ball Road, Broad\1vav, Dale instead of-having to import expensive treated water. Avenue and La Palma Avenue. Ne\1\/ sewer and storm drain improvements were also made on Cerritos Avenue, Dale Avenue, Lincoln Avenue, and Harbor Boulevard. ENCOURAGING BUSINESS GROWTH Additional work is planned for fiscal year 2017/18 including street and sidewalk Not only Is Anaheim a vibrant and robust cItv t:o live 111, Anaheim is a premieI maintenance, tree maintenance, pavement rehabilitation projects, sidewalk gap destination citv hosting over 25 million visitors, providing over 23 thousand active closures, street \1v1de11ing, and se\1ver and storm drain improvements. Other projects Anaheim business licenses, and showcasing hundreds of events atcitv venues. The include traffic signal modifications and upgrades along Euclid Avenue and Daffie number and success of- businesses Is a crucial economic engine in Anaheim, signal svnchronization along the State College Boulevard, Orangevvood Avenue, tra11slat111g into many posIt:ives for our cilV bv contributing I11to our Big 3 revenue Anaheim Boulevard, La Palma Avenue, Magnolia Avenue, and Brookhurst Street sources: transient occupancv tax, propert\,1 tax, and sales tax. As we support corridors. development and construction in our citv, we foster improvement and encourage business growth. Crucial to maintaining our city's infrastructure are t:he vital seIvIces of- our Public Utilities Department (Utilities), the only customer-owned, not---foriJrofit water and At City Council's direction and with support from residents in the area, the city Is power utility' in Orange County. In fiscal vear 2016/17, Utilities continued engaging working on a Beach Boulevard Initiative. West Anaheim residents generally live In with schools and students, mentoring 23 seniors from Loara High School, hosting vvell--maintained neighborhoods. However, many residents report feeling unsafe due, over 40 sl1Jdents from Anaheim High School for a career pad1 svmposium, and in large part, to the negative impacts associated witi1 the Beach Boulevard corridor. welcoming 35 students from Canyon High School for an engineering tour of utility The purpose of the Beach Boulevard Specific Plan is to improve the image and facilities. Additionall\1, Utilities sponsored community-oriented events like the 2017 economic potenbal of West Anaheim's corridors bv creating the framework to guide Fire Hydrant Event benefiting local youth organizations and offered schools an and encourage future public and private investment in the area. Plans are already oppoItu11ity to have a solar shade st:rucl1Jre on their campus without incurring the underway, with the citv's sale of what is known as the Westgate site, clearing the large financial risk associated with such a project. way for the development of a shopping center on a long--vacant: plot: of land at: the northeast corner of Beach Boulevard and Lincoln Avenue. Once a former landfill, the The city also offered money-saving efficiencv programs to residential and business site is now designated for a 250,000- square-foot shopping center with a Main customers through the Weatherization Program, where income-qualified customers S treet---style paseo vvith outdoor dining, plazas and public art. Other projects include receive home improvement services like attic insulation, A,C tune-up, and potential acquisition of 13 acres of land and property along Beach Boulevard south replacement: of 1neffic1ent devices at no charge. Over 6'.)0 income-<1ual1tied of Lincoln for future sale and development: such as housing w1t:h retail space; customers have participated in this program, collectivelv saving over 632,000 kWh providing flexibilitv in fees and development rules to encourage preferred projects of energy and $100,000 in bill savings. The City also provided customer service along the corridor; and allovving for the deferral or waiver of fees for preferred enhancements and regulatory relief as service reconnection fees were reduced; off project~. hour service request:s were expanded to 111clude evenings, weekends, and holidays; monthlv billing was oftered to all ne\1\/ customers, and call wait times have been The center of- ouI city, CTRCilV Anaheim, has seen explosive development t:hese reduced by 55% from one year ago to approximately 1.8 minutes on average today. past: few years with new homes, rest:aurant:s, and businesses corrnng to the area. We are seeing a healthy balance of urban residential and commercial uses as well Utilities continues to invest in its infrastructure for a safe and reliable water and as additional retail on Center Street Promenade. Such as The Dudes, a 6,000 electnc svst:em. lnfrastruct:ure Improvement:s include undergrounding project:s on square foot brew pub and Alex.an at: CTR City, development of220 apartment homes M1raloma Avenue, Lincoln Avenue, and Orangewood Avenue, which will place that: feature h1gh--level amenibes and approximate Iv ·18,500 square feet of retail on a overhead electric lines underground to beautif\i the community and improve 5--acre site at Lincoln and Anaheim Boulevard. BARN or Business Arts Residential reliability. Capit:,1.I improvements also include seismicallv retrofitting a 4 million gallon Netvvork is also being developed on Center Street Promenade. The new t\!\/o---storv reservrnr at:the La Palma Complex, a 60-vear old water facilitv. Planned projects br building Is being designed to include 13,000 square feet of retail and restaurant fiscal vear 2017(18 111clude construction of t:he Harbor S ubstat1on, a new substabon uses, as well as 13,000 square feet of-office space. A unique component of BARN is CITY OF ANAHEIM a mult:1-level 36--room boutique hotel. More additions are expected in the area, accepted accounting principles. Internal control is designed to provide reasonable, including tvvo commercial buildings named Greenhouse and Farmhouse which will but not absolute, assurance that these objectives are met. The concept of house t\No restaurants on Farmers Park in the Packing District. Other developments reasonable assurance recognizes that: (l) the cost of a control should not exceed include Home MADE and Le1suretmvn. HorneM/\DE will feat:ure up t:o 80--townhouse t:he benefits likely to be derived; and (2) the valuation of costs and benefits requires stvle, l1ve--work units. The project will have garden spaces that:open towards Santa estimates and Judgments by management Ana Streetto create an inviting neighborhood porch along the street with the unique ability' to open to the public on occasion for communal dining. Leisuretown consists This report consists of management's representations concerning the finances of of a small production bre\1verv, t:asbng room, retail kiosks and outdoor gardens. The the City. As a result, management assumes full responsibility for the completeness proJect requires the adaptive re--use of a 6,000 square foot barrel-vault:ed celling and reliability of all of the information presented in this report Management asserts building and historic restoration ofa 2,500 square foot Craftsman house. t:hat, t:o die best of their knowledge and belief, this financial repo1t 1s complete and reliable in all material respects. The Anaheim Convention Center continues its impact in our local economic grmvth. In 2016, the center experienced a record attendance of 106,000 participants at the BUDGETARY CONTROLS National /\ssoc1atio11 of ~ilus1c Merchants (NAMM) Show, an annual event: that brings together one of the largest: music t:rade--shows in the world, as well as record The City maintains budget:,1.ry controls, the objective of vvhich is to ensure breaking attendance of over 80,000 attendees from the Natural Products Expo We st compliance with legal provisions embodied in the annual appropriated budget trade show. With the recent completion of the Convention Center's Betterment VII approved bv the City Council. Activ1t1es of the Ceneral Fund, special revenue funds, expansion, the Anaheim Convent:ion Center secured 1t:s pos1t:ion as the largest debt se1v1ce funds, capital projects funds, and all the proprietary funds are included exhib1t:ion facilitv 011 the \1vest: coast, opening 600 additional parking spaces to in tl1e annual appropriated budget The level of budgetary control (tl1at is, the level at attendees and 200,000 square feet of new, flexible event space. The expansion vvhich expenditures cannot legally exceed the appropriated amount; is established allows the facility' to grow with its largest events, while attracting new groups for at t:he depa1tme11tal level. The C1tv also maintains an encumbrance accountmg spec1al1zed conterences, break-out sessions, workshops and galas. system as one technique of accompl1sh111g budgetary control. Encumbrances generally are re-appropriated as part of the following year's budget. There are over ·1 SO hotels 111 Anaheim, 1nclud1ng 80 in the Anaheim R.eso1t, and more coming soon. In November 2016, t:he Planning & Building Comm1ss1on RELEVANT FINANCIAL POLICIES approved the Cambria Hotel & Suites, a 12-cStory, 350-rnom hotel with 15,000 square feet of rest:,1.urant space. The project vvill have a wide range of guest Through sound fiscal management, the City of Anaheim positions itself to provide a amenities including a water park, outdoor movie screening wall, sport~ court:s, positive atmosphere for economic development and the flexibility to strategically meeting space, and fitness cent:er. 111 January 2017, the Planning & Building address budgeta1v challenges that result from fluct:uations in the local, nabonal, and Commission approved the ElementAnaheim hotel, a five-story 174--mom hotel that global markets. As of June 30, 2017, the C:i1V's General Fund has a spendable, will redevelop the former Bergstroms Childrens Store. In March 2017, the Planning unassigned fund balance of 542.3 million, which represents 14% of the General & Building Commission approved the Hampton Inn & Suites hotel at the southwest Fund total fiscal year 2016/17 expenditures. Traditionally, the policy has been to corner of Katella Avenue and Haster StTeet. It will feature a five--storv, 178-rnom maintain General Fund reserves at a minimum of 7 to l 0% of expe11d1t11res. hotel that will replace the Arena Inn & Suites motel. Recently opened hotels are the Fu1ther, t:he City has a long--sta11d111g practJCe ofrecog11iz111g and reserving for known Country inn & Suites on Clementine Street and Staybridge Suites on Ball Road. All of t:hese exc1tmg additions are sure to encourage and expand economic grO\vth 1n and anticipated liabilities. The City fully funds its compensated absences and at an our city. actuarially acceptable level for selfansurance. Additionally, the Ci1Y has established an irrevocable trust for other post-employment benefits (also known as retiree FINANCIAL INFORMATION medical) and continues t:o make the annual required cont:ribut1on (ARC) to ensure this future obligation is fully fi_mded. Management of the City is responsible for establishing and maink1.ining internal control designed to ensure that the assets of the government are protected from loss, theft, or misuse, and to ensure d1at adequate accounting data are compiled to allow for the preparation of- financial statements in conformitv with U.S. generallv CITY OF ANAHEIM LONC TERM FINANCIAL PLANNINC ACKNOWLE DCMENTS On June 20, 2017, the City Council adopted the fiscal year 2017 /18 budget. The preparation of this report on a timely basis is a team effort: involving many Add1tmnally, as a companion to approving the budget: plan, a five--year Capital 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, Improvement Plan was presented to the Citv Council. The five--vear plan links Financial Accounting Manager. Appreciation is also expressed to Mavor Tom Tait, anticipated expenditures for infrastructure development vvith community needs and Mavor Pro Tern James Vanderbilt, and Assistant City' Manager Kristine Ridge for desires, and provides a perspective of recommended projects and c1tvw1de t:he1r significant contributions as members of the Audit: Committee. In closing, without proposed funding sources. The Capital Improvement Plan \1vas finalized in June the leadership and support: of- the CilV Council, preparation and results of- this report 2017, and totaled $679.2 million for the five-year fiscal period ending June 30, 2022. would not have been possible. It~ leadership has made possible the 1mplement:at1on The five--vear Capital improvement Plan has been submitted and annually updated, ofthese important and innovative concepts in fiscal management by the City'. in its present form, since 1982, for effect:ive long--range planning purposes. It 1s Crty Management's bel1efthat:these t\i\iO plans give C1tv Council members an expanded Respectfully submitted, opportunity' to set policy and provide direction for implementation, resulting in improved management efficiency and improved financial results. AWARD Linda N. Anda I Deborah/\. Moreno COVERNMENT FINANCE OFFICERS ASSOCIATION OF THE UNITED STATES Interim City Manager Finance Direct:orK:ityTreasure1 AND CANADA (CFOA) CERTIFICAIE OF ACHIEVE ME NT AWARD The CFOA 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, 2016. This was die 41 st consecut:ive year that: the C1tv has achieved d1is prestigious award (fiscal vears ended June 30, ·1976 through 2016). 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 requirements./\ Ce1tif1Cate of Achievement: 1s 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 requirements and \1ve are submitting 1t to CFOA to det:ermine its eligibility for anot:her ce1tificat:e. I (This page left blank intentionally) 8 CITY OF ANAHE l!VI 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 Anaheirn, California for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2016. The Certificate Government Finance 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 Ce1tificate of Achievement, a Achievement governmental unit must publish an easily readable and 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 California For its Comprehensive Annual Financial Report for tho Fiscal Year Ended June 30, 2016 Exccuti vc Director/CEO 9 (This page left blank intentionally) 10 CITY OF ANAHE l!VI Citizens of Anaheim Elected Policy .A/inker I thE11yHrnr I I I I I I I I I PLANNI\IG& HU/1/\AN ANANCE CO.'W\.1UNITY & POl.JCE PU!ll.lC COMV!UNITY ECONOMK: BJl!.Dfl!G RESOUFOC:E'S lflU11ES SERVICES Budget and lEVELOPMENT Special Enforcerr,ent Recruim,ent Planning Servkes Supp mt Services Er,gir,eering fl As ofJ une 30, 201 7 ll CITY OF ANAHE l!VI Administrative Personnel As of December 20, 2017 Interim City Manager Linda N. Andal Ass is tant City Manager Kristine A. Ridge Deputy City Manager Greg Garcia Acting Chief of Police J ulian Harvey Acting City Attorney Kristin A. Pelletier Acting City Clerk Theres a Bass Community & Economic Development Executive Director John E. Woodhead IV Community Services Director Brent Dennis Convention, Sports & Entertainment Executive Director Thomas Morton Finance Director;City Treasurer Deborah A. Moreno Fire Chief Randy R. Bruegman Acting Human Resources Director Jason Motsick Planning & Building Director David B elmer Public Utilities General Manager Dukku Lee Public Works Director Rudy Emami 12 I Financial Section j KPMC; LL.P Su1rn 70C: 20 Pac,f:ca "WH, CA '.?2618-3Jr!1 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 assessments, the auditor considers internal control relevant to the fund, and the aggregate remaining fund information of the City of entity's preparation and fair presentation of the financial statements Anaheim, California (the City), as of and for the year ended June 30, in order to design audit procedures that are appropriate in the 2017, and the related notes to the financial statements, which circumstances, but not for the purpose of expressing an opinion on collectively comprise the City's basic financial statements as listed in the effectiveness of the entity's internal control. Accordingly, we the table of 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 fair presentation of these financial statements in accordance with U.S. generally We believe that the audit evidence we have obtained is sufficient accepted accounting principles; this includes the design, and 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 referred to above present Auditors' Responsibility fairly, in ail material respects, the respective financial position of the governmental activities, the business-type activities, each major Our responsibility is to express opinions on these financial fund, and the aggregate remaining fund information of the City of statements based on our audit We conducted our audit in Anaheim, California as of June 30, 2017, and the respective accordance with auditing standards generally accepted in the United changes in financial position and, where applicable, cash flows States of America and the standards applicable to the financial thereof and the respective budgetary comparison for the General audits contained in G overnmentAuditing Standards, issued by the Fund and Housing Authority Fund for the year then ended in Comptroller General of the United States. Those standards require accordance with U.S. generally accepted accounting principles. that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Other Matters information has been subjected to the auditing procedures applied in Required Supplementary Information the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information U.S generally accepted accounting principles require that the directly to the underlying accounting and other records used to management's discussion and analysis on pages 15-25, the prepare the basic financial statements or to the basic financial schedule of changes in net pension liability and related ratios on statements themselves, and other additional procedures in page 87-88, the schedule of pension plan contributions on page 89 accordance with auditing standards generally accepted in the United and the schedule of funding progress for other post-employment States of America. In our opinion, the combining and individual fund benefits on page 90 be presented to supplement the basic financial financial statements and schedules are fairly stated, in all material statements. Such information, although not a part of the basic respects, in relation to the basic financial statements as a whole. financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial The introductory, statistical information, and other information reporting for placing the basic financial statements in an appropriate sections have not been subjected to the auditing procedures applied operational, economic, or historical context We have applied certain in the audit of the basic financial statements, and accordingly, we do limited procedures to the required supplementary information in not express an opinion or provide any assurance on them accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management Other Reporting Required by Government Auditing Standards about the methods of preparing the information and comparing the In accordance with Government Auditing Standards, we have also information for consistency with management's responses to our issued our report dated December 20, 2017 on our consideration of inquiries, the basic financial statements, and other knowledge we the City's internal control over financial reporting and on our tests of obtained during our audit of the basic financial statements. We do its compliance with certain provisions of laws, regulations, contracts, not express an opinion or provide any assurance on the information and grant agreements and other matters. The purpose of that report because the limited procedures do not provide us with sufficient is soley to describe the scope of our testing of internal control over evidence to express an opinion or provide any assurance. financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial Supplementary and Other Information reporting or on compliance. That report is an integral part of an audit Our audit was conducted for the purpose of forming opinions on the performed in accordance with G overmnentAuditing Standards in financial statements that collectively comprise the City's basic considering the City's internal control over financial reporting and financial statements. The accompanying introductory section, the compliance. combining individual fund statements and schedules, the statistical information, and other information sections as listed in the table of contents are presented for purposes of additional analysis and are LL-P not a required part of the basic financial statements. Irvine, California The combining and individual fund financial statements and December 20, 2017 schedules are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such • ' I • I I CITY OF ANAHE 1\11 Management's Discussion and Analysis The Statement of Net Position presents information on all of the City's assets, deferred outflows of resources, l1abll1t1es and deferred 111flows of-resources, including (Unaudited) capital assets and long-term liabilities, with the difference reported as net position. Overtime, increases or decreases in net position may serve as a useful indicator of As management of the CilV of Anaheim (City), we offer readers of the City's basic whether the financial position of the City as a \1vhole Is improving or deter1orat111g. financial statements this narrative overview and analysis of the financial activities of The Statement of Activities presents information showing how the City's net position the C::1tv as of- and brthe fiscal vear ended June 30, 2()"17. \!Ve encourage readers to consider the information presented here in conjunction with additional information changed during the most: recent: fiscal year. Functional activities are highlighted in that \1ve have furnished in our letter of transmittal, which can be found in t:he this statement, whereby direct and indirect functional costs are shown net of re lated introductorv section of this report, and the City's basic financial statements in the program revenue. This statement: shows the extent to which the various functions depend on general taxes and noniJrogram revenues for support. financial secbon of this report. All amounts, unless othe1\vise indicated, are expressed in thousands of dollars. The government-\1v1de financial stat:ements distinguish functions of-the City that are OVERVIEW OF THE BASIC FINANCIAL STATEMENTS principally supported by taxes and intergovernmental revenues (governmental activ1t1es) from ot:her fimctions t:hat are int:ended to recover all or a significant poItIon This discussion and analysis are intended to serve as an introduction to the Citv's of their costs through user fees and charges (business-tvpe activities). The basic financial stat:ements. The City's basic financial statements are comprised of governmental activities of t:he City include general government, Police, Fire & three components I) government-wide financial statements, 2) fund fmanc1al Rescue, CommunilV & E conornic Development, Planning & Building, Public Works, statement~, and 3) not:es to financial statements. This report also contains other Community Services, Public Utilities (street lighting), Convention, Sports and supplementary information in addition to the basic financial statements themselves. Entertainment (Visitor and Convention Bureau and the Honda Center), and interest on related long-term debt The business-1ype activities of the City include the COMPONENTS OF electric:, water and sanitation ubllt1es, golf- courses, convention, sports and entertainment venues (Anaheim Convention Center, Angel Stadium of Anaheim, and THE ANNUAL FINANCIAL REPORT The City National Grove of Anaheim) operations, and the Anaheim Regional Transportation lntermodal Center (ARTIC) operation. 'I r------A'-----~ '\ The government-\1v1de financial statements include not only the CItv itself~ but also the Anaheim Housing Authority', Anaheim Public Financing Authority, and Anaheim Basic Financial Housing and Public Improvement /\uthorilv. /\lthough these e11tities are legally Siaternenis separate, they function for all practical purposes as a part of the Cil_\.1, and therefore have been included as blended component units as an integral part of-the primary government The government---\,vide financial statements can be found on pages 27-29 of this report. Not.,, to the Fund Flnanelal Fund financial statements. The fund financial statements focus on current Financial statarnanis available resources and are organized and operated on the basis of fimds, each of Statements vvhich is defined as a fiscal and accounting entity vvith a self-balancing set of account~, established br the purpose of- canving on spec1f1C activIt1es or attaining certain objectives in accordance with special regulations, restrictions or limitations. All of the funds of the City' can be divided into t:hree categories governmental fimds, Summary..------Detail proprietary funds, and fiduciary fi_mds. Government-wide financial stat:ements. The government-wide financial Governmental funds. Governmental funds are used to account br essenbally the statements are comprised of the Statement of Net Position and the Statement of same functions reported as governmental activities in the government---\Nide financial /\ctivItIes. These two statements are designed t:o provide readers with a broad statements. However, unlike the government---\,vide financial statements, the overview of the City's finances utilizing the full accrual method of accounting, in a governmental funds financial statements utilize the modified accrual basis of manner similar to a private--sector business. Under the full accrual met:hod of accounting, which focuses on near--term 111flow and outflow of spendable resources, accounting, transactions are reported as soon as the underlying event giving rise to as well as 011 balances of- spendable resources available at the end of-the fiscal vear. the change occurs, regardless of- die timing of related cash f10\lvs. Thus, assets, Such information may be useful in evaluating a government's near-term financial liabilities, revenues and expenses are reported in these statements for some items requirements. that will only result In cash flows in fut:ure fiscal periods (e.g. uncollected revenues and accrued but unpaid interest expense). l') CITY OF ANAHE 1\11 Because t:he focus of the governmental funds 1s narrO\lver than t:hat of- the Fiduciary f-unds. Fiduciarv funds are used to account fo1 resources held for the governrnent-\1v1de financial statements, 1t: 1s useful to compare the information benefit of parties outside the government. F iduc1arv funds are not refiected in the presented for the governmental funds with similar information presented for government---\Nide financial st:,1.tements because the resources of those funds are not governmental activities in the government-vvide financial statements. By doing so, available to support the Cit\,t's own programs. readers may better understand the long--term impact of-die government's 11ear--te1m financing decisions. Both the governmental funds Balance Sheet and the The CilV maintains t:hree different types of fiducia1y fonds. The lnvesbiient Trust governmental funds Statement of Revenues, Expenditures and Changes in Fund Fund is used to account for the e-..ternal portion of the Citv's investment pool: the Balances provide a reconciliation to facilitate this comparison bet\,veen governmental Private-Purpose Trust Fund is used t:o account for the asset~ and l1ab11it1es held in funds and govermnent:al activ1t1es. trust for the Successor Agency to the former Redevelopment Agency (Successor Agency): the /\gency Fund Is used to account for monies collected and disbursed In The City maintains 20 individual governmental funds. information is presented a custodial capacit\,1 for the rv1ello--Roos districts in the Cit\,1• separately in the governmental funds Balance Sheet and in the governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances for the The f1duc1ary fund financial statements can be found 011 pages 42--43 of-t:his report. General Fund and the Housing Authority Special Revenue Fund, which are considered to be major funds. Data for the remaining 18 governmental funds are Notes to the financial statements. The notes provide add1t:1onal information t:hat Is combined into a single, aggregated presentatmn. Individual fund dat:a for each of essential to a full understanding of the data provided in the government---\Nide and these nonmajor governmental funds is provided in the form of supplementary fund financial statement~. The notes to the fmancial statements can be found on combining statement:s 011 pages 91--94, 99----100, and l 03--l 04 of this report pages 45-<36 of this report. The City adopts an annually appropriated budget for all governmental and Other supplement:ary informat:ion. In add1t1on to die basic financial statement:s proprietary funds. Budgetary comparison statements for the General Fund and the and accompanying notes, this report also presents combining individual fund major special revenue fund (Housing /\uthority) are required to be present:ed, t:hese statements referred to earlier 111 connection w1di nonmajor governmental fonds and 1 schedules are included in the basic financial st:atement:s 011 pages 33--34 of this internal service funds. Also included are the budgetary comparison Schedules of report Add1t1onally, budgeta1y schedules for the odier governmental funds have Revenues, Expenditures and Changes in Fund Balances for all nonmajor special been provided to demonstrate compliance with the budget and can be found as part revenue fonds, all debt service fonds, and all capital projects fonds. These of otl1er supplementary schedules on pages 95 98, I 01 102, and 10', I 08 of thrs statements and schedules can be found on pages 91--l 12 of-t:his report. report FINANCIAL HIGHLIGHTS (Amounts in thousands) The governmental funds financial st:atement:s can be found on pages 31--34 of this The City's total assets and deferred outflows of resources exceeded its report. liabilities and deterred 111fiows of resources at the end of die current: fiscal Proprietary f-unds. The CIly maI11t:ains two different types of proprietary funds. year by $1,958,920. Enterprise funds are used to report the same fimctions presented as business-type The C:itv's governmental activIt:1es represent $838,288 (43%) and the activities in the government---\,vide financial statements. The City uses its enterprise business-'lype activities represent $1,120,632 (57%) of the City's total net funds to account: for its electric, water and sanitation ubllt1es, golf courses, posIt:1on. convention, sports & ent:ert:ainment venues and ARTIC: operations. Internal service funds are an accounting device used to accumulate and allocate costs internally The Cit\,t's net position increased by $86,400 (5%) as a result of the current among the City's various functions. The Citv uses internal service funds to account fiscal year's operations. The net position of the Citv's governmental for It:s general benefits and insurance, motorized equipment~ 1nformat1on services, activities increased 576,453 (lcr/o) and the business-type activities net and municipal facilities maintenance functions. Because these services posIt:1on increased $9,94-?(less dian 1%). predominantly benefit governmental radier than business--tvpe functions, they have The Cit\,t's restricted net position of $358,641 represents amounts available been included with governmental activities in the government---\Nide financial for ongoing programs and obl1gat1ons \1v1t:h ext:ernal restrictions. statements. The City's total capital assets increased by $86,090 (3%). Capital assets in Proprietary funds provide the same t\,1 pe of information as the government-vvide t:he Citv's governmental activIt1es decreased by $4,857 (less than 1%) and financial statements, only In more detail. The proprietary funds financial statements bus1ness--type activItIes capital assets increased by $90,947 ('.)%) during the provide separate information for all of the enterprise fonds, which are considered to current fiscal year. be maJor fi.1nds of-t:he City. Conversely, all of the internal seIvice fonds are combined into a single, aggregated presentation in the proprietary fimds financial st:,1.tements. The City's total longterm lrabrlities increased by S20'i,024 (8%) during the Individual fund data for the internal service funds Is provided 111 the form of current fiscal year: of this amount, long-term liabilities in the Citv's combining statements elsevvhere in this report governmental activities increased by $97,399 (8%), and business--lvpe activities increased by $107,625 (&6). The proprietarv funds financial statements can be found on pages 37-----'-11 of this report:. Hi CITY OF ANAHE 1\11 At:t:he close of the current fiscal vear, the Citv's governmental funds reported At the end of die current fiscal year, unrestricted fimd balance (total of a combined fund balance of- $445,850, an increase of $92,951 in committed, assigned and unassigned fund balance) for t:he General Fund comparison with the prior fiscal vear. Approximately 7% of this amount vvas 544,392 or 14% of total General Fund expenditures. Unassigned fund ($30,134) is available for spending attl1e City's discretion (unassigned fund balance was 542,336 or 14% oftot:,1.I General Fund expenditures. balance) . . GOVERN ME NT WIDE FINANACIAL ANALYSIS NET POSITION I UNE 30, 2017 AND 2016 Governmental Business-type Total Activ1t:1es Ac t:ivitie s CovernI11ent 2017 2016 2017 2016 2017 2016 Current and other assets s 715,483 s 629,710 s 825,077 s 794,529 $ 1,540,560 $ l,'124,239 Capital assets, net 1,375,030 1,379,887 1,997,602 I,906,65'i 3,372,632 3,286,542 Total assets 2,090,513 2,009,597 2,822,679 2,701,184 4,913,192 4,710,781 Deferred outflows ofresources 127,970 47,112 55,044 27,806 183,014 74,918 Total assets and deferred outflmvs of resources 2,218,483 2,056,709 2,877,723 2,728,990 5,096,206 •1,785,699 Other liabilities 84,790 79,606 117,579 94,132 202,369 173,738 Long-term liabilities l ,250,21)4 l, 152,805 1,524,354 1,416,729 2,774,558 2,'i69,534 Total liabilities l,334,99'1 1,232,411 1,641,933 1,510,861 2,976,927 2,743,272 Deferred inflows ofresources 45,201 62,463 115,158 l 07,444 I 60,359 169,907 Total liabil1bes and deferred inflows of resources 1,380,195 1,294,874 1,757,091 1,618,305 3, l3 7,286 2,913,179 Net position Net invesb11ent in capital assets 974,071 968,473 1,016,113 997,292 1,990, 1&1 1,965,765 Restricted 274,830 211,338 83,811 76,749 358,641 288,087 Unrestricted (410,613) (417,976) 20,708 36,64•1 (389,905) (381,332) Total net position s 838,288 s 761,835 $ I, 120,632 s I, 110,685 $ 1,958,920 $ 1,872,520 At the end of fiscal year 2017, the City's net: posItIon totaled Sl,9'i8,920 wh,ch properly mvners pursuant to the issuance of the CommunilV Facility District: No. 08--l reflects a net increase of $86,400 or 5% from prior fiscal veaL (CFO 08-1, Platinum Triangle, the "District''), Special Tax Bonds, Series 2016 for the purpose of providing financing for the acquisition and construction of public facilities The largest portion of the C 1ty's net posIt:ion of .S 1,990, 184 reflects its II1Ve strnent In necessarv for the continued development of the District; 58,089 increase is from the capital assets (e.g. land, buildings, utility plant machine,y, equipment, and unspent proceeds from the sale of a 7.07 acre vacant land parcel on Anaheim Wav, infiast:rucl1Jre), net of any related out:stand1ng debt: that \Ivas used to acquire t:hose $8,611 increase is from the sale of land for housing development; $3,460 increase in assets. The Citv uses these assets to provide services to citizens; consequentl\1, unspent: developer impact: fees, $2,748 increase in amounts rest:rict:ed for debt these assets are not: available for ful1Jre spending. /\lthough the City's InvestmeI1t In services; and the remaining increases are attributable to funds for grant purposes. capital assets is reported net of related debt, it should be noted that the resources needed t:o repay this debt must be provided from ot:her sources, since the capital The remaining balance deficit of- $389,905 Is t:he unrestricted net posItIon, ohvhich assets themselves cannot be used to liquidate these liabilities. Net investment in the unfimded pension liabilities and the related deferred inflows and outflows of capital assets increased bv $24,4-19 ( 1%) primarily due to capital asset: additions resources account: for $563,'.)54. The unrestricted net: posIbon deficit increased by from unrestricted and grant fimded resources, offset by reduction of the related $8,573 from prior fiscal year reflecting uses for current year operations. The out:stand1ng debt due to current vear principal payments. unfunded net pension l1ab11it1es are long--te1m obligat:lons t:hat at a minimum will be funded annually in accordance with actuarially determined contribution rates. The An additional portion of the City's net position of $358,641 represents re sources that positive component of the unre st:ric t:ed net: position, excluding the effects of pension are subject to external restrictions on how they may be used. The increase in liabilities and the related deferred inflows and outflows ofresources is .Sl 73,649 and restJ·icted net position of $70,554 Is primarily due to unspent: restricted resources for may be used to meet:the Citv's ongoing obligations t:o cIt:izens and creditors. debt services, grant, developer impact fees, housing development and other capital projects. $3'.),636 of- the increase Is attributable t:o unspent contributions from 17 CITY OF ANAHE l!VI CHANGE IN NET POSITION YEAR ENDED _I LINE l0. 2017AND 2016 Governmental B us1ness---tvpe Total Activities Activities Government 2017 2016 2017 2016 2017 2016 REVENUES Program revenues Charges fo1 se1vices $ 99,170 $ 76,981 $ 610,358 $ 592,355 $ 709,528 $ 669,336 Operating grants and contributions 109,989 108,131 425 776 110.414 108,907 Cap1lal granls and conlribut1ons 65,937 85,782 4,381 11,743 70,318 97,525 General revenues Taxes Propert/ taxf_•s 72,909 70,646 72,909 70,646 Sales and use taxes 77,732 76,975 77,732 76,975 Trans1enl occupancy taxes 149,566 137,570 149,566 137,570 Motor vehicle license fees 161 142 161 142 Other t::.wes 8,946 8,731 8,946 8,731 Unrestricled investment earnings 2,116 3,692 4,001 5,710 6,117 9.402 Other 106 87 106 87 Tola! revenues 586,632 568,737 619,165 610,584 1,205,797 l.l 79,l2l EXPENSES Program activities Governmental actf\/ities General government 11,825 10,331 11,825 10,331 Police 151,559 132,889 151,559 132,889 Fire & Rescue 70,365 62,520 70,365 62,520 Commurntv & Economic Development 100,720 110,618 100,720 110,618 Planning & Building 21,944 19,862 21,944 19,862 Public Wo1ks 61,806 tJ8,7l 9 61,806 48,719 Commurntv Se1vices 34,799 3tl,2l 2 34,799 34,212 Public Ulllities 2,530 2,687 2,530 2,687 Convention, Sports & E nterla1nmenl 19,238 18,503 19,238 18,503 Interest on long-term debt 34,876 35,185 34,876 35,185 Business-type activ1lles Electric Utilitv 412.424 390,732 412.424 390,732 Water Utilitv 72,715 61,620 72,715 61.620 Sanitation Utilitv 58,218 56,564 58,218 56,564 Golf Courses 4,465 4,405 4,465 4.405 Convention, Sports & Entertainment Venues 47,321 44,285 47,321 44,285 ARTIC Management 6,l74 6,235 6,l74 6,235 Total expenses 509,662 475,526 601.517 563,841 1,111.179 l.039,l67 Excess before transfers 76,970 93,211 17,648 46,743 94,618 ll9,954 Transfers in (out) 7,701 10,856 (7,701) (10,856) Special item (8,218) (8,218) Increase in net position 76.453 104,067 9,947 35,887 86.400 139,954 Net position at beginning of year 761,835 657,768 l.l 10,685 1,074,798 l.872,520 1,732,566 Net position at end of year $ 838,288 $ 761,835 $ l, 120,632 $ 1,110,685 $ 1,958,920 $ 1,872,520 18 CITY OF ANAHE 1\11 REVENUES BY SOURCE - GOVERNMENTAL ACTIVITIES Department:: and $8,6"11 In realized gain on the sale of land for housing development In the Housing Authority otl-,e, <1% Operating grants increased $1,858 (2%) mainly due to an increase of $4,116 in federal funding for Section 8 rent:,1.I assistance, one-time FE MA C~arges fer services 17% grant revenue of 5989 in the Fire & Rescue Department; partially offset by a decreases of S1,031 in Narcotic Asset Forfeiture revenues from the U.S. T1c,ns:enl ,,ccur,ancy Treasury and a $2,632 decrease In Urban Area SecurilV Initiative (UASI) iCJXSS 26% grant due to the nature and timI11g of projects. Capital grants and contributions decreased by $19,8•15 (23%) primarily due to a one-time capital asset and land held for resale transfer of $68,825 from the Successor Agencv in the prior fiscal year; partially offset by increases of $36,864 for one--time contribution from property owners from the CFO 08--l Sal,~, c,i-,d ,Jse tmes bond issuance, an increase of $5,584 in developer impact: fees: 53,029 of a I~% one--time transfer of the unspent bond proceeds from the Successor Agency lo complete the bond funded eligible capital projects. Unrestricted interest earnings decreased by Sl,576 due to unrealized investment loss in the current fiscal vear. Covemment:al act1vit1es. Governmental activities increased the City's net pos1tmn Governmental act:ivities net transters In decreased $3,-15'.) primanlv due t:o the by 576,453. f....ey elements of this increase are as follows followings The most signifJCant revenues of the governmental activities are general taxes Transfers out to the Convention, Sports and Entertainment Venues fund (53% ), which include transient occupancy taxes (26% ), property taxes (12% ), sales increased 56, l l l. The increase was a budgeted transfer for Convention and use taxes ("13%), and other taxes (2%). Program revenues are 47% of the total revenues of the governmental activities, which include operating grants and Center debt service. The Lease Revenue Bonds for the Honda Center Land co11t:ribut1ons ( 19¾), capital grants and contribubons (11%), and charges for services had been paid in full and this funding vvas redirected to the Convention (l ?¾); unrestricted investment earnings is less than 1% of the tota.l revenues. Center w1t:hout: increasing the Ceneral Fund's outlay for debt service. Public safetv (Police and Fire & Rescue) expenses are the most significant (,-14%) of Transter In decreased by $1,674 due to a one--time land cap1t:al asset all governmental activities expenses, followed by Community & Economic transferred from the Electric Utility' in the prior fiscal year. Development (20%), Public Works (12%), interest on long-term debt (7%), CommunilV Services (7%), and various ot:her programs (10%). Included In t:hese Special item amounts is depreciation expense, which is 8¾ of the total expenses for gove mrne nt:al ac:tivIt:1e s. One-time charge in transferring the unfi_mded pension obligation ($7,8•15) Governmental activities revenues increased Sl 7,895 (3%) as compared to the prior and its related deferred inflows (Sl, 175) and outflows ofresources ($1,548) fiscal year due to the following from the Successor Agency to the City. During fiscal year 2017, the Citv has assumed die unfi.1nded pension obligabon from the Successor Agency Taxes increased $15,250 (5%) mainly due to the increase of $11,996 (9%) pursuant to the Cal1forn1a Department:of-Finance (DOF) denial in Mav 2017 in t:ransIent occupancy taxes (TOT). TOT increases are largely att:ributable of It:s request: to make payment towards its unfunded pension obligation. to the continued gro\i\,th of the rev1t:alized economv and die add1t:1on of four The Successor Agency has petitioned a lavvsuit against the DOF in its new hotels in 2016, adding 816 rooms to the City's hotel supply properly decision of denying the unfunded pension obligation and the case is taxes increased 52,263 (3%) and sales and use tax increased $757 (1%). currently under judicial revievv. Charges for services increased by $22,189 (29%) primarilv attributable to a $3,666 increase in police services due to expanded services in t:he Disneyland ResoIt and increased numbers of reimbursable Citvw1de events, $8,089 111 realized gain on the sale of vacant land in Communitv Services 19 CITY OF ANAHE 1\11 REVENUES BY SOURCE· BUSINESS-TYPE ACTIVITIES EXPENSES AND PROGRAM REVENUES · GOVERNMENTAL ACTIVITIES $160 ------ -'.:HJ -----4"'------e .... - ,,n;, '% $120 ,,$100 ---- ~$SO---- $60 ---- $40 ---- Cnrnges ,'or 1ror·lICro1 98% B usIness-t:vpe ac:t:ivitIes. BusIness--type activities increased the Citv's net posItmn bv $9,947. f....ey elements of Covemment:al activ1t1es expenses increased $34, l 36 (7%) as compared to the prior this change are as follows fiscal year due to the following Charges fm services of $610,358 increased by S 18,003 (3%) due to the following The increase in Public Safety expenses of 526,5 l 5 (14%) is main Iv due to a $16,225 increase in pension expense. In the prior fiscal year, public safety' The increase of $3,076 (1%) 111 Electric Utilities charges for services Is pension plans experienced favorable amortizations in actuarial assumptions primarily due to a $12,804 increase In retail and wholesale revenues and investment earnings between proJected and actual earnings, resultmg resulting from a generally \1varmer vear coupled with higher wholesale 1n lower pension expense recognit:lon. Public Safety expenses other than prices, this increase favorably reduced t:he amount to be recognized from pension expense increased by $10,291 primarily due t:o an increase in Rate Stabilization Account (RSA) revenues by 57,000 from prior fiscal year. salary and benefit costs; this amount includes costs for the service Additional information aboutthe RSA can be found in note l of the notes to enhancements in public safety and emergency response services, and the financial statement on pages 1-18-49 of this report $3,627 increase in reimbursable police services as previouslv discussed under revenue. The increase of $10,268 (17°/4) in Water Utilities charges for services is primarily due to a .Sll,479 (20%) increase from the sale of water resulting The increase in Public Works expenses of- $13,087 (27°/4) is primarilv due to from a 4.9% increase in retail customer demand of water during the fiscal one-time expense ($11,135) of costs accumulated for the Anaheim Rapid year. This increase in customer demand is due to the removal of the Connection (ARC) capit:,1.I project. Per the Cooperative Agreement with strenuous conservation efforts in response to the drought conditions Orange County Transprnta1lon Authority (OCTA), the City concluded and throughout t:he region. in add1tmn, t:he demand increase is compounded with discontinued all planning and work 011 the ARC project. rate increases in April 2017: these increases favorably reduced die amount to be recognized from Rate Stabrlizallon Account (RS!\) by $1,525 from The increase In Planning & Building of- $2,082 (10%) is primarily due to prior fiscal year. Additional information about the RSA can be found in note $798 paid t:o Countv of Orange for the City's year 1 payment: of- its pro--rat:ed l ofthe notes to the financial statement on pages 48-49ofthis report. percentage for the new Countvvvide Animal Shelter construction costs and $540 increase in contract costs for animal care services. The increase of $2,887 (5%) in Sanitation Utility charges for seIvIces Is attributable to a 2% rate increase in solid \1vast:e collection and disposal The decrease in Community & Economic Development: of $9,898 is mainly revenues and a 5% rate increase In \1vast:ewater revenues for the entire due to a $6,166 loss 011 sale of- capital asset during t:he current fiscal year fiscal year. versus a .Sl 7,'.)70 loss on sale of land held for resale in the prior fiscal year. 20 CITY OF ANAHE 1\11 The increase of $-1,652 (5%) in the Conventmn, Sports & Ente1ta1nme11t maI11t:enance, and administration costs was mainly due to cancellation of- a Venues Fund 1s due to an increase of $3,186 1n f:acil1bes rent:al resultmg construction work in progress for the t:erminabon of the Windv R 1dge WateI from more convention events and consumer shovvs partially offset bv a Storage Tank construction project; and interest expense increased $1,257 $1,685 decrease in concession fees due to lower food and beverage (24%) mainly due to issuance of the 2016 A revenue bonds during the fiscal revenues. vear. Capital grants and contribution of 54,381 decreased by 57,362 (63%) due to the The increase in Convention, Sports & E ntettainmentVenues of $3,036 (7°/4) follO\IVlllQ was pnmanly atlnbutable to $1,418 (8½) of increased labor and benefits costs; and a $298(20¾) increase in building maintenance. The decrease of $5,748 (66%) in Electric Utility is primanly due to more capital contributions for various electrical facilities in the prior fiscal vear. FINANCIAL ANALYSIS OF THE CITY'S FUNDS The decrease of $2,007 Cl OCJ.¾) in Coif Courses fund is due to one--time Governmental f-unds. The focus of- the City's governmental funds Is to provide capital contribution from the California Friendly Landscape Incentive for an information on near-term inflows, outflows, and balances of spendable resources. art:lficial turf project in the prior fiscal vear. Such information is useful In assessing die Citv's financing requIrement:s. In particular, unassigned fund balance mav serve as a usefiil measure of a Net Transfers out of $7,701 decreased by $3, ·1 ')'.) as discussed in t:he government- government's net resources available for spending at the end of the fiscal vear. \1v1de financial analysis ofgovernment:al activItIes. At the end of the current fiscal vear, the Citv's governmental funds reported total EXPENSES AND PROGRAM REVENUES - BUSINESS-TYPE ending fund balances of $445,850, an increase of $92,951 in comparison \1v1t:h the prior fiscal year. Of the total fund balance of s,145,850, restricted fund balance $~0 ------totaled $371,612 (83%) and indicates t:he use of resources are consbained by external parties, resource providers, constitutions or enabling legislations. Unassigned hmd balance totaled $30,134 (7%) and Is available fm spending at the City's discretion. The remaining fund balance is 54,1, W1 (lCl'/4), of which 59,532 is not In spendable form, and $34,572 that was assigned for particular purposes. Governmental revenues totaled $602,862 while expenditures were $518,387. The General Fund is the general operating fund of the City. At June 30, 2017, the Ceneral Fund reported a total ending fund balance of $')1,449 and consisted of the following $819 was non spendable for inventory, prepaid and other assets $6,035 was restricted for claims and judgments for t:he wateI transfe1 sett:lement $203 was restricted for grant purposes Electiic l'ti:ity Wale, Ulil:ly :,anitalion Uri!ir·,- G,,lf Cc,urses '~onvenlion, ,ports & APTIC c,lc;nrn_)srr·,enl $2,056 \Ivas assigned for encumbrances E~t,?rtainn,e,-,, $42,336 was unassigned Total expenses of $601,117 inueased $37,676 (i%) due lo the following General Fund total revenues increased $17,653 (5%) as compared to the prior fiscal The increase 111 die Electric Utility expenses of $2-1,692 (7°/4) Is mainly due year primarily attributable to the following to $23,866 (lcr/4) increase in power costs resulting from increased use of rene\1vable resources: interest expense increased $669 (3%) due to the Total taxes increased by $13,887 (4%) due to the growth in the overall issuance of the 2016 A & B revenue bonds during the fiscal year; partially economy. Taxes are the largest revenue sources of the General Fund and offset by a $2,843 decrease in operation, maintenance. and administration thev accounted for 5311,226 or 85% of the total General Fund revenues. due to lovver maintenance costs. During fiscal year 2017, transient occupancy taxes (TOT) increased Sl 1,996 (9%), propertv taxes increased by $2,972 (4%), sales and use taxes The increase In Water Utility expenses of $"11,09'.) ("18¼) is attributable deueased $1,364 (2%) due lo fmal d1su1buI1on of the sales tax triple f1ip mainly to $4,889 (16%) increases in purchased vvater and treatment and ($9,790) In the prior fiscal year, and olher laxes increased by $263 (3%), pumping costs due to t:he increase 111 customer demand related from the ending of drought restrictions; $5,389 (37'¾) increase in operation, Charges for services increased by 51-1,385 (29%) primarily due to increase in 21 CITY OF ANAHE 1\11 reimbursable police se1v1ces in the Disneyland Resort and C:itv\1v1de events. The Sanitation fund net posItIon increased $3,443 (3%) in t:he current fiscal year. The most: significant factors of the change in fund net posIt:1on are discussed In the General Fund expenditures increased bv $20,192 (7%) primarily due to planned govemment---\Nide financial analvsis of business-type activities. service enhancements in public safety, police services, and Planning & Building as The Coif Courses fund net position decreased 1 (6%) in the current fiscal vear. discussed 111 the government-wide financial analysis of the govemmental--activ1t:1es. 5-102 There \Ivere no s1gnif1Cant or unusual changes. The Housing Authority Fund revenues increased by S 16,369 (l gi/4) primarily due to an increase in Section 8 rental assisk1.nce of 54,116; an increase of $5,319 in The Convention, Sports & E ntertainmentVenues fund net position increased .$6,2 1-16 housing ground lease revenue from the Hermosa Village project, $8,6"1 ·1 realized (2%) in the nIIrent fiscal year. The most significant factors of the change in fund net gain on sale of land for housing development: partiallv offset bv a decrease in loan position are discussed in the govemment---\,vide analvsis of business-type activities. principal payment: received from the Successor Agency of $2,489 in t:he pnor fiscal The ARTIC Management fund decreased net position by Sl 57 (less than 1%). year. Housing Authoritv expenditures increased bv $2,876 (4%) mainly due to an There were no significant or unusual changes. increase of $3,732 in Section 8 rental assistance program, as more Anaheim residents were assisted at a higher cost per resident; 52,475 in properties acquired GENERAL FUND BUDGETARY HIGHLIGHTS fm multifamily affordable housing, partially offset by a loan of $2,'iCIO related lo lhe sale of a housing propertv and $839 of home buyer loans in the prior fiscal year. During the year, the original budget: was amended to increase appropriations by $7,404 (2%). The increase in appropriations was primarily the result of the canyover Total nonmaJor governmental funds revenues increased by .S l 1,4'.A (9%). License, of prior year appropriations and amendments amounting to 55,132 and the fees and permits increased by $5.,137(91%) mainly due to tl1e timing of the projects reallocation of appropriations from ot:her funds of $2,272. These amendments offset that receive developer 1mpact:tees: cont:ribut1ons from propeIty owners for the CFD-- revenues increase of $5,400 and die balance were to be funded from savings in 08-1, Platinum Triangle construction of public fucilities totaled 536,861; partially ot:her programs of-t:he General Fund during the year. offset by a decrease of- $32,400 In use of- monev due to one-time land held for resale transferred from the Successor Agencv in the prior fiscal year. The most significant General Fund revenues of .$366,513 vvere greater than budgeted revenues of factors of t:he changes are discussed 111 the government-\1v1de financial analvsis of 355,113 by $11,400 (3%), prrmarrly due lo stronger development activities and the governmental-activities. increases in reimbursable police services. Total nonmajor govemment:,1.I funds other financing sources increased bv .$7,512 General Fund expenditures were less than budgeted. Of the total appropriations of Cl 2%) pnmarilv due to a $6, 125 loan to provide funding for the acquisition of $321,721, approximately 4%, or .S"ll,527, went: unspent:. $6,683 of planned communication equipments expenditures in Community & E conomIc Development for pot:ential land purchases that did not materialize in fiscal year 2017. There were no other significant Total nonmaJor governmental fi.1nds expenditures decreased by .$13,"164 (HJ.Yo) vanances. primarilv due to a $17,570 one-time loss on sale of land held for resale in the Long Range Propertv Management Plan in the prior fiscal vear: partially offset by an increase of .$9,607 in capital outlay for various equipment acquisition and infrastructure co11strnctio11; and a decrease of $5,500 in debt service as t:he Arena portion of the 20H Lease Revenue Bonds vvas paid off in the prior fiscal year. Proprietary funds. The City's proprietary fi_mds provide the same type of information bund In the government-\1v1de financial statements, but In more detail. The Electric Utility' net position increased .Sl ,973 (6%) in the current fiscal year. The most signifKant factors of- the change 111 fund net position are discussed In the govemment---\Nide financial analysis of business-type activities. The Water Utility hmd net position decreased $697 (less tlian 1%) rn the current fiscal year. The most significant factors of the change in fund net position are discussed in the govemment-vvide financial analvsis of business-type activities. 22 CITY OF ANAHE 1\11 CAPITAL ASSETS AND DEBT ADMINISTRATION CAPITAL ASSETS (net of accumulated depreciation) JUNE 30, 2017 AND 2016 Governmental B usine ss-tvpe Total Activ1t:1es Activities CoveI·I1rnent 2017 2016 2017 2016 2017 2016 Land $ 646,359 s 647,289 s 89,505 $ 89,505 s 735,864 $ 736,794 Construction in Progress 'i9,098 50,033 299,828 207,644 358,926 2'.)7,677 Building, structures, and improvements 192,256 196,327 525,263 533,946 717,519 730,273 Utility plant 1,070,268 1,063,095 1,070,268 1,063,095 Mach1ne1v and equipment 39,015 37,018 12,738 12,465 51,753 ,19,483 Infrastructure 438,302 449,220 438,302 449,220 Total $ 1,375,030 $ 1,379,887 s 1,997,602 $ 1,906,655 $ 3,372,632 $ 3,286,542 Capital assets. The City's investment in capital assets for its governmental and improvements ($l,(J42), the Olive Park improvement ($1,486), tl1e bus1ness--type acbvities at: June 30, 2m 7 amounted to $3,372,632 (net: of !Vlanzanrla Park improvement (Sl ,213), the Lrltle People's Park accumulated depreciation). This investment in capital assets included land, Improvernent ($7"1 ·1) and the E ucl1d and Sunklst Branch Libraries renovation const:rucbon in progress, buildings, strnctures and 1mproveme11t:s, utllitv plant, ($1,b46). machinery and equipment, and infrastructure. The total increase over the prior fiscal year was 3% ($86,090), ofwh,ch governmenlal actrvrlles decreased 0.3% ($4,857) Sale of land and building at 295 West Centre Street Promanade, the and business-type activities increased 5% ($90,947). Anaheim Way site, and the excess right--of----\Nay on West f....atella with a net The decrease of capital assets in governmental activities was primarily due to book value total $10,950. removal of cost~ (.S 11, 13')) accumulated for the ARC project that: was d1scont1nued, capita.I asset additions totaled $56,110, capital assets transfer, net frorn business The increase in business--tvpe activities is primarily due to increases In t:he following type acbvities of $310, capital asset retirements of$ l"I ,745 and offset bv current year depreciation of $38,397. Major capital asset activities during the current fiscal The Electric Utility increase of $12,379 ("1%) Is comprised of capital asset year include the following additions of $69,176, and partially offset by current vear depreciation of $56,796. During t:he current fiscal year, the Electric Utility sta1ted Additions of $<-10,462 in construction work in progress including various construction work In progress of the 69---121<\/ Harbor subst:at:lon locat:ed at street: improvements and street: \1v1dening totaled .s·Is, 160 that: i1iclude t:he the Northeast corner of f....atella Avenue and Zyen Street, also included in the B rookurst Street widening ($3,974), West,\/Vestrnont Pioneer Neighborhood additions are the replacement of aging overhead, electrical lines with rehabilitation (S 1,062), Lincoln Avenue widenrng ($1,318), Santa Ana Street state--of---the----.:.1.rt, underground projects on the Underground District -#62 improvement ($661) and Cerritos Avenue sidewalk ($698): park Phase 2 at ~iliraloma Avenue, as well as t:he rehabilitation of the developments totaled $10,411 that include the Ponderosa Park ($7,488), underground distribution system in the ResoIt area in add1t:1on to the Pioneer Park (51,032); and various software and equipment upgrades ongoing replacement: of aging cIrcuIt breakers, poles, transformers and totaled $8,190 and that include the E nterprrse Permit Tracking and Land switches throughoutthe City. The Electric Utility completed 7.83 circuit miles Management system ($1,610) and t:he 800 rnHz radio cornrnunication of underground conversion on Miralorna Avenue as well as installation of equipment ($6,129). 14,987 feet of direct buried cable and the purchase of H9 new t:ransforrners, inst:allat:lon of-fiberopt:ic equipment, upgrading cornrnunicatIon Acquisitions of various vehicles and equiprnenttotaling $5,470. equipment: and Irnprovernent:s to general faci11t1es. This updated syst:ern will provide rnore efficient and function services t:oAnaheirn's customers. Completion of $19,653 of construction work in progress including the Lincoln Avenue,Brookurst: to Euclid improvements ($2,127), Ball Road The Water Utility decrease of $195 is comprised of capital asset additions of sidewalk ($1,074), La Palrna ;Potoma Circle t:o weir Canyon Road $15,088 and partially offset by current year depreciation of $10,63,1 and 23 CITY OF ANAHE 1\11 $4,650 \1vnte-off of const:rucbons work in progress pnrnarilv for the Euclid Street (5962) partially offset by the completion of the Orangewood te1m1nat1on of Windy Ridge Wat:er Storage Tank Construction proJect:. Avenue from Euclid Street: to J anett:e ($3,899), Cemtos--from Nutwood to During die current: fiscal year, t:he Water Ut:1l1ty completed the following Srookhurst ($1,'.)34), and Lincoln Avenue from Lemon Street t:o Claudina construction work in progress: $706 for the rehabilitation and replacement of Streel(628). various pressure regulating stations (PRS) throughoutthe City, the purpose of the PRS is to provide for the transfer of water from a high-elevation The Golf Courses decrease of $463 includes capital asset addition of $48 of service area to a lower one in order to maintain adequate svstem pressures land improvement in the Dad Miller Coif Course and offset by current year and fiows: $2,592 for the 8" main replacement proJect on County Clen Way, de precIation of $5 11. these improvements increase the service reliability and reduce maintenances expenses of t:he water system: and $1, 1'.)2 for the The Convention, Sports & EnteItaInment Venues increase of $79,150 is replacement of various transition and distribution water mains throughout comprised of capital asset additions of 592,311, and partally offset by the Citv, these various projects increase vvater svstem reliability by replacing current year depreciation of $13,054. Work in progress additions for the aging infrastructure to minimize the risk of svstem failures and also to fiscal year vvere $89,794 primarily for the Convention Center Expansion improve watertlow requirement. SetteImentVII bond funded project. The Sanitation Utility increase of $2,356 Is comprised of capital asset The /\RTIC Management: decrease of $2,280 Is comprised of capital asset additions of $5,460 and partially off:Set: by current: year depreciation of additions of $22 and offset by current:year deprec1abon of $2,302. $2,779. Construction vvork in progress decreased 52,389 mainly due to additions of S3,9fr-1 for bond funded sanitary system improvement projects Additional information on the Citv' Capita.I Assets can be found in notes l and 6 of including the sewer system improvements on Cerritos from Nutvvood to the notes to t:he financial st:at:ements, on page 49and page 61--62 of-t:his report Srookhurst ($-1,332), Svcamore from Alomar Avenue & Loara Street to LONG-TERM LIABILITIES J U NE 30, 2017 AND 2016 Covemment:,1.I Business-type Total ActivIt:1es ActivIt:1es Government 2017 2016 2017 2016 2017 2016 General obligabon bonds $ 700 s 700 Revenue bonds $ 627,'i89 631,621 s l ,23'i,400 s I, 124, Vi9 s 1,862,989 I ,75'i,780 Interest payable 2,635 2,207 2,635 2,207 Capital lease obligabons 1,738 2,088 1,738 2,088 Not:es and loans payable 29,577 20,820 20,523 36,200 50,100 57,020 Se lf--msurance 'i 1,865 '.)0,616 'i 1,865 '.)0,616 Compensated absences 20,941 20,538 20,941 20,538 Decommissioning provision 116,477 119,994 116,477 119,994 Net pension liabilities 518,494 426,422 1'19,319 134,169 667,813 560,591 Total s 1,250,204 s l, 152,805 s 1,524,354 s 1,416,729 s 2,774,558 s 2,569,534 24 CITY OF ANAHEIM Long-term liabil1t:ies. The City's outstanding long-term liabil1t:1es, 111cludi11g bonds, impacts to the Citv for these changes for future employees have vet to be capital leases, notes and loans pavable, self---111surance, compensat:ed absences, deterllllned. provision for decommissioning costs, and net pension liabilities tot:,1.led $2,774,558 atJ une 30, 2017. Of tl1is total, S1,250,204 (45%) was in governmental activities and Tourisrn plavs a significant: role in the economies of California, Orange $-1,524,354 (55%) \1vas In business-Wpe activIt1es. County and the City of Anaheim. While Anaheim has been able to compete for and capture a significant: portion of- tourism revenue, Anahe1rn has long The Citv's governmental activities outstanding long-term liabilities increased recognized its inability to robustly tap into the upscale convention and $97,399 (8%) during die current fiscal year. The increases are pnrnarilv due to the t:ourisrn business. At June 30, 2017, the C1tv has ent:ered into various accrued accretion interest payable of $19,285 on the 1997 Anaheim Resort economic assistance agreements for hotel developments. These Improvement Bonds, an increase in net pension liabil1t:1es of $92,072 as actuarially agreements provide tax abatements from t:he City's receipts of Transient determined for the measurement date ofJ une 30, 2016; and $12,148 of issuances Occupancy Tax (TOT). Provision of the economic assistance is contingent of- loans pavable for technology equipment: and software acqu1s1t:1ons, and pa1t1allv upon completion of construct:lon of the hotels, the commencement: of and offset by principal payments of $28,773 that decreased the long-term liabilities. continued operations as a four-diamond quality', and the generation of and payment: to t:he Citv of TOT. Add1t1onal information about: the City's Tax The City's bus111ess--type activities outstanding long-term liabilities increased Abatement can be found in note 5 of the notes to the financial sta.tements on $107,625 (8¾). The increases are primarily due to issuances of the 2016 Series A page 60 of this report and B E lee t:ric Revenues Bonds 111 the principal amount of $289,06'.) at: a pre mi urn of $35,183, the 2016 Water Revenue Bonds in the principal amount of $35,22'i at a On J ulv 7, 2015 t:he City Council approved an Agreement: concerning premiurn of $5,230; and current vear increase in t:he net pension obl1gat1on of Entertainment: Tax Reimbursement: with Walt D1snev Parks and Resorts, $15,150. Partially offsetting the increases are current year principal pavments of U.S., Inc (Disney). Under the agreement, the City would be obligated, in tl1e 555,001, payments for decommissioning costs of 51-1,270, and a reduction for the event anv enterk1.inment taxes are enacted bv the voters, to reimburse refunded bonds principal balance of $204,980. Disney an arnount: equal to ·1 OCJ.¾ of- the amounts rernitted to the City frorn t:his t:ax. In return, Disney is required to make a rn1nirnum of $-1 billion of Additional information on the Citv's long-term liabilities can be found in notes 7, 8 capital 1mproveme11t:s to receive the first: extended t:ax rebat:e period of- thirty and l O of- die notes to the financial state me nt:s, on pages 62---74, 76--80 of this re port. vears. Aftervvards, there is the option for an additional capital investment of at least $500 million for a second extended rebate period of fifteen years. ECONOMIC FACTORS Other performance obligations include specific timeta.bles for the capita.I 1rnprovements to be cornrnenced and completed; local hiring and There remains a focus on public pensions and their susta.inabilitv; manv nondiscrimination provisions; and continuous operation of improvements assumptions are used to estimate the ultimate liabilitv of pensions and the requirernents. contributions that will be required to meet those obligations. One of the most significant factors used 1n det:ermining the liabilitv and the funding For the 2018 fiscal year, the City appropriated $329,867 in estimated requirements is the rate of return that: investments will v1eld prior to mak111g available resources of $367,267 for Ceneral Fund spending. This leaves payments, knO\lvn as die discount: rate. The City's pension plans currently approximatelv 537,400 in estimated available reserves, which is 11% of utilize a discount rate of 7.SCP/o (net of pension plan investment and Ceneral Fund appropriations. The City's long--standing pol1cv 1s to ma1nta111 administrative expenses), which is used in determining the unfunded Ceneral Fund reserves of at least 7% to l CP/o of annual appropriations. pension liabilitv and funding requirements. in December 2016, the CalPERS California Senate Bill lX 2 signed into law in April 2011 mandated that all Board of/\drn1nist:rat:1on vot:ed to IO\lver t:his rate in its actuarial assumptions California utilities are required to reach 33% by 2020 and 50¼ by 2030. The from 7.50¼ to 7.0CJ.¾ over a t:hree -vear phase in beginning with the June 30, higher renevvable power costs will increase future power supplv costs. The 2016 actuarial valuation. The reduction of discount: rat:e will be a significant Electric Utility has a number of- strategies to mitigate the potenbal cost increase in the unfunded l1abll1ty and the contributions required to meet impacts. those obligations. Beginning in fiscal years 2018-2019, 2019-201 O and REQUESTS FOR INFORMATION 2020-2021, the discount rates will be 7.375%, 7.25% and 7.00% respective Iv. Additional information about the Cib/s retirement plans can be This financial report is designed to provide a general overvievv of the Citv's finances found 1n not:e l O of the notes to the financial statements on pages 76--80 of for all those with an interest in the governrnent's finances. Questions concerning anv t:his report. of the information provided in this report or requests for additional information should be addressed to the Office of the Finance Direct:or,£:itv Treasurer, Citv of Anaheim, The State of California enacted pension legislation that vvent into effect in 200 South Anaheim Boulevard, Suite 643, Anaheim, California, 92805. J anuarv 2013 and applies mainly to new public ernplovees. Some of- t:he major changes include mandatory cost sharing by emplovees, reducing the overall benefit level (e.g. percentage of pay), increasing the retirernent age, and placing a cap on the salarv used to determine retirement benefits. The 2') (This page left blank intentionally) 26 • • • I I I I 7 Basic Financial Statements f CITY OF ANAHEIM Statement of Net Position J u ne 30, 201 7 (In thousands) Governmental Business-type Activities Activities Tolal ASSETS Cash and cash equivalents $ 68.724 $ 41,992 $ 110.716 lnvest.rnf_'nlS 236.936 148,030 384.966 Accounts receivable, net 27.541 65,301 92.842 Accrued interest rece1va~e 905 1,593 2,498 Internal balances, net 16,102 (16,102) Due rrom other govemment.5 36,315 36,315 Inventories 1.134 16.533 17.667 Land held for resale. nel 28.862 28.862 Prepaid and other assels 12.01 7 97,533 109.550 Restncted cash and cash equivalents 78,411 290,230 368,641 Restricled invest1re11ts 106,106 179,899 286,005 U narrDrt1zecl prep:i.id bond insurance 1.226 68 1.294 Net other r=ost--empoyrrent benefits (OPE B) asset 11 .304 11.30-4 Notes receivable. net 78.290 78.290 Due from Successor Ai;;iency 11,610 11,610 Capital assets, net Nondepecia ble 705,457 389,333 1,094,790 DerxecialJle 669,573 1,608,269 2,277,842 Tora I assets 2,090,513 2,822,679 4,913,192 DEFERRED OUTFLOWS OF RESOURCES Deferred charges on refundini;:I l::onds 1.653 16,797 18.450 Deferred pensioI1 related items 126.317 38,247 164.564 Total def"erred outflovvs of resources 127.970 55,044 183.014 LIABILITIES Accounts rava ~le 29,123 90,643 119,766 Wages payable 8,545 1,461 10,(X)6 Due to other g:Jvernrrents 28.948 28.948 lnlerest piyat.Jle 4.922 12,321 17.243 Arbitrage rebate liablily 134 134 DepJSltS 9,892 8,774 18,666 U nea med revenue<; 3,360 4,246 7,606 Long-term liabilities Due within one vear 53.981 33,704 87.685 Due in mxe than one year 677.729 1,338,695 2,016.425 Interest payable 2,635 2,635 Net pension llabllties 518,494 149,319 667,813 Tora I liablities 1,334,994 1,641,933 2,976,927 DEF-ERRED INFLOVVS OF RESOURCES Deferred Regulatory credits 100,054 l 00.054 Deferred pension related iterns 45.201 15,104 60.305 Total deferred inflCMJs of resources 45,201 115,158 160,359 NET POSITION Net investment in carlt.al as<;ets 974,071 1,016,113 1,990,184 Restricted for Det:t service 20,244 20.244 Capital µ--of'.cts 101.346 52,693 154.039 Commurntv & Economic Developn--ent 114,627 114,627 Streets, roads and tra nsport.ation inproveme11t ptof'.cts 39,959 39,959 Other purp:1se5 18,898 10,874 29,772 U nrestncted (410,613) 20,708 (389,905) Total nel p::isition $ 838.288 $ 1,120,632 S 1,958.920 27 The accompanv111g notes are a11 111tegral part of these financial statements. (This page left blank intentionally) 28 CITY OF ANAHEIM Statement of Activities Year Ended J une 30, 201 7 (In thousands) Net (E ,pense) Revenue and Program Revenues Changes in Net Position lnd1recl Operating Capital Expenses Charges for C rants and Grants and Governmental Business-type Expenses /\I location Se1v1ces Contr1but1ons Conlribullons Acllvitles Activities Total Functions 1P roqrams Government::.7.I act1v1lles General gove1nmenl $ 26,476 $ ( 1°1,651) $ l,7tl2 $ 716 $ (9,367) $ (9,367) Police 148,017 l.542 15,441 6,537 $ l64 (129,217) (129,217) Fire & Rescue 69,·191 874 10,582 I, 193 1,485 (57, I05) (57,105) Community' & Economic Development 100,189 5ll 19,046 86,020 l.454 7,800 7,800 Planning & Building 20,819 I, 125 11,357 l,·121 2 (9,164) (9,164) Public Works 61.727 79 16,140 13,221 47,514 15,069 15,069 Communitv Services 34,144 655 ll,190 881 IO,l 59 (12,569) (12,569) Public Utilities 2,530 (2,530) (2,530) Convention, Sports & Entertainment 18,937 301 13,672 2,959 (2,607) (2,607) lnte1est on long-term debl 34,876 (34,876) (34,876) Total governmental activities 517,206 (7,544) 99,170 !09,989 65,937 (2l4,566) (234,566) Business-type activities Electric Utility 408,050 4,374 433,561 3,023 $ 24,160 24,160 Water Utilitv 71,622 1,093 70,777 247 247 (1,·144) (1,·144) Sanitation Utility 57,77l 445 63,893 178 5,853 5,853 Golf Courses ·1,338 127 4,062 (403) (403) Convention, Sports & Entertainment Venues 45,816 l.505 37,0l 5 l, lll (9,195) (9,195) ARTiC Management 6,l74 1,050 (5,l24) (5,l24) fot::.7.I business-type acllv1ties 593,973 7,544 610,358 ·125 4,381 l3,6tl7 l3,6tl7 Total government $ l,lll.179 $ $ 709,528 $ 110,414 $ 70,ll8 (234,566) 13,647 (220,919) General revenues Taxes P1opertv laxes 72,909 72,909 Sales and use taxes 77,732 77,732 T1ansient occupancv ta'\es 149,566 ]tl9,566 Motor vehicle license fees 161 161 Othe1 taxes 8,946 8,9tl6 Unrestricted investment earnings 2,116 4,001 6,117 Other 106 106 Transfers 7,701 (7,70 I) Total general revenues and transfers 319,237 (l.700) 315,537 Special 1lem (8,218) (8,218) Change in net position 76.453 9,947 86,400 Nel position al beginnir'K) of year 761,835 1,110,685 1,872,520 Net position at end of year $ 838,288 $ l, 120,632 $ 1,958,920 29 The accompanv111g notes are a11 111tegral part of these financial statements. (This page left blank intentionally) 30 CITY OF ANAHEIM Balance Sheet Governmental Funds J une 30, 20 l 7 (In thousands) Nonmajor Total Housing Governmental Gove1 nmental Ceneral i-\ulhonly Funds Funds ASSETS Cash and ca<,h equivalents $ 9,420 $ 17,570 $ 22,240 $ 49,230 lnve<,tments 30,772 61,081 77.315 169,168 Accounts receivable, net 16,494 22 5,140 21,656 Accrued 111terest receivable 165 232 288 685 Due from other funds 1,461 12,948 14,409 Due from other governments 15,020 114 21.18] 36.31 5 l11ventones 224 224 Land held for re<,ale, net 6,684 22.178 28.862 Prepaid and other a<,sets 595 8,747 9,342 Re<,tricted cash and ca<,h equivalents 835 75.563 76.398 Restncted investments 106,HXJ lOS,106 Note<, receivable, net 51,402 26.888 78.290 Due from Successor Agency 384 10,726 11,610 Total assets $ 75,035 $ 137,940 I 389.320 I 602,295 LIABILITIES Accounts payable $ 8,653 $ 665 I 12,463 I 21,781 Wages payable 3,573 88 230 3,891 Deposits 8,481 211 1,200 9,892 Due to otherfunds 31 13,158 13,193 Due to othergovemments 1,500 1,500 Unearned revenue 802 278 1,080 Total liabilities 21,544 1,242 28,551 51,337 DEFERRED INF-LOWS OF- RESOURCES Unavailable reve11ues I, 158 54 13,996 15,208 Unavailable resources --long--term 11ote<, receivable 51,402 26.888 78.290 Unavailable resources ---due from Successor Agency 384 10,726 11,610 Total deferred inflovvs of resources 2,0-1-2 51,456 51,610 105.108 FUND BALANCES Nonspendable Inventory 22,-1- 224 Prepaid and other assets 595 8,713 9,308 Land held for resale Restricted Anaheim Reso1t maintenance and impmvement 5,900 5,900 Capital projects 13.173 13.173 Claims and judgment<. 6,035 6,035 C ommunitv & Economic Development projects 2'-1-,490 24,490 Debt service 126,098 126,098 Development impact project<, 94,152 94,152 Grant purpo<,e<, 203 7.059 7,262 Homebuyer as<,istance program, 801 5,190 5,991 La.v and rn::iderate income housing 59,553 59.553 Rental assistance 1,984 1,984 Streets, roads and transportation improvement projects 26,974 26,974 As<,1gned Capital project<, 8.129 8,129 Debt service 1,483 1,483 Housing projects 22,904 22.904 Other purposes 2,056 2,056 Unassigned 42,336 (12,202) 30.13·-1- Total fund balances 51,449 85,242 309,159 445,850 Total liabilities, deferred 1nflm,vs of resource<,, and fund balance<, $ 75,035 $ 137,940 $ 389,320 $ 602,295 31 The accompanv111g notes are a11 111tegral part of these financial statements. CITY OF ANAHEIM Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position J u ne 30, 201 7 (In thousands) Tola! fund balances -government::.7.I funds $ ,)45,850 Amounts reported for governmental activities in the Statement of Net Position are different because Cap1t::.7.I assets used in the opeIation of governmental funds aIe nol current finarr::1al resources and, therefore, are not reported in the tiJnds. These assets consist of Land $ 646,359 Construction in pIogress 57,325 Build1rgs, st1uctuIes and improvemenls 336,808 tv1achinerv and equipment 59,919 Infrastructure 861,347 Accumulated depreciation (615,129) TOtal capital assets, nel 1,346,629 Other long--term assets are not available to pay for current period expenditures and. therefore, are reporled as defe1 red 1nftovvs of Iesources in the funds. 105,108 U namortlzed prepaid bond insurance ($1,226) and deferred charge on refunding bonds ($-1,653) are not current financial resources, and, lherefore, aIe nol repo1ted In the funds. 2,879 lnlernal seIvice funds are used by managemenl lo cha1ge lhe costs ofce1t::.7.in activIlles, such as insurance. employee benefits, and fleet services, to individual funds. The assets and liabilities of lhe inteI nal service funds are included In goveI nmenlal acllvities In the Statement of Nel Position. ,\1,296 Compensated absences, not othervvise included in the internal ser,/ice tiJnds. are not due and payable in the currenl penod and, the1efore, are not reported In the funds. (570) Certain liabilities are not due and payable in the current period. and tf-"nefore. are not reported in the funds. (27,448) Effects of nel pension obligation aI e not due and payable In the cunent period, and lherefo1e, are not I epo1ted In the funds. Deferred outftovvs of Iesources 120,099 Net pension obligation (496,073) Defened inflmvs of resources (42,180) ( 0118,l 54) Long-term liabilities of governmental fimds, including bonds ($627,589), notes and loans payable ($24,885), and accrued interest payable ($4,828) aIe nol due and payable in the current period and. therefore, are not reported in the fimds. (657,302) Nel position of goveI nmenlal activities $ 838 288 32 The accompanv111g notes are a11 111tegral part of these financial statements. CITY OF ANAHEIM Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Year Ended J une 30, 201 7 on thousands) NonmaJor Tolal Housing Governmental Governmenlal General Authority Funds Funds Revenues Propert/ taxf_•s $ 72,873 $ l6 $ 72,909 Sales and use taxes 80,500 80,500 Transient occupancy taxes 149,566 149,566 Other t::.wes 8,287 8,287 Licenses, fees and permits 25,053 $ il7 11,404 36,504 lnlergovernmental revenues 2,381 77,992 43,42tl 123,797 Charges for services 19,529 22,518 ·12,047 Fines, forfeits and penalties 2,756 2.756 Use of money and property 3,8ll 12,989 14,385 31.207 Contribution from property ovvners l6,864 36,864 Othe1 1,198 12,643 4,584 18,·125 Total revenues 365,976 103,671 133,215 602,862 E"f.)enditures Current Cit/ Council 673 67l City i-\dministlation 3,001 3,001 C1tyAtt01ney 7,062 120 7,182 City Clerk 1,226 1,226 Human Resources 1,615 l.615 Finance 5,728 22 5,750 Police 143,919 4,882 148,801 Fire & Rescue 69,357 807 70,164 Communily & Economic Development 2,099 80,583 9,·107 92,089 Plan111ng & Building 20,531 l,·166 21,997 P ubhc Vv' orks 18,546 12,340 30,886 Community Services 30,221 2,037 32,258 Public Utilities 2.496 2,496 Convention, Sports & E nte1t.1inment 708 13,315 14,023 Capital outlay l.012 2,480 39,040 44,532 Debt service Principal 1etirement 26,123 26,123 lnleresl cha1ges 15,571 15,571 TOtal e'\penditu1es 310,194 83,063 12s,·130 518,387 Excess of revenues over expenditures 55,782 20,608 8,085 84,475 Other financing sources (uses) Transfers in 31.644 1,029 71,124 103,797 Transfers out (91,957) (1,500) (7,989) (101,446) Issuance of loan payable 6,125 6,125 Total other financing sources (uses) (60,313) (471) 69,260 8.476 Net change 1n fund balances ( 01,531) 20,137 77,345 92,951 Fund balances at beginning ofyea1 55,980 65,105 231,814 352,899 Fund balances at end of yea1 $ 51,·149 $ 85,2tl2 $ 309,159 $ ·145,850 33 The accompanv111g notes are a11 111tegral part of these financial statements. CITY OF ANAHEIM Reconciliation of the Statement of Revenues, Expenditures and Changes 1n Fund Balances of Governmental Funds to the Statement of Activities Year EndedJ une 30, 2017onthousands) Net change 1n fund balances - lot::.7.I government::.7.I funds $ 92,951 Amounts reported for governmental activities in the Statement of Activities are different because Gove1 nmenlal funds 1epo1t capital outlay as expenditures. Hovvever, in the Statement of /\ctivitles the costs of those assets is allocated over their estimated usefiJI lives and reported as depreciation expense. This is the amount by which capital outlay ($44,532) exceeded depreciation ($33,076) in the current period. ll,456 Transfers of capital assets betvveen governmental 1i1nds and proprietarv funds do not require the use of financial resources and are not reporled as t1ansfe1s 1n the funds. 310 The net effect of other miscellaneous transactions involving capital assets (i.e., sales. trade-in, retirements and contributions) is to decrease r~t position. (19,199) Revenues 1n governmental funds provide cunent financial 1esources bul have been included in lhe S t::.Hemenl of Acllv1ties in p1101 fiscal year. (3,049) Collections of noles and long--te1 m receivables provide current financial resources to governmental funds but reduce rece1Vables in the Statement of Net Position. (ll.389) Proceeds from long--te1 m debt p1ovide currenl financial resources to government::.7.I funds, bul lhe issuance of debt increases long--term liabilities in the Statement of Net Position (6,125) Payments of principal on long--term debt use current financial resources in the governmental tiJnds. but the repayments reduce long--te1 m liabilities in lhe S t::.Hemenl of Nel Position. 26,123 Certain expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore. are not 1eported as expenditu1es 1n government::.7.I funds. (20,687) Net effect of acu ued nel pension llab1lit1es, the 1elated deferred outfows and deferred 1nfows of 1esources, and the special item are not reporled as e'\pendilures 1n the funds. 4,276 Internal service funds are used by management to charge the cosls of certain act1V1ties, such as insurance, employee benefits, and fleet services, to individual 1i1nds. The net expense of the internal service fr1nds is reported with governmental activities. 3,786 Change in nel position of gove1 nmenlal activities $ 76/153 34 The accompanv111g notes are a11 111tegral part of these financial statements. CITY OF ANAHEIM Statement of Revenues, Expenditures and Changes 1n Fund Balances Budget and Budgetary Basis Actual -General Fund Year Ended J une 30, 201 7 on thousands) Original Final Budgeted Budgeted /\ctual Va11ance \Vith Amounts Amounts Amounts Final Budget Revenues Property laxes $ 70,386 $ 74,886 $ 72,873 $ (2,013) Sales and use taxes 78,958 78.')58 80,500 1,542 T1ansient occupancy t::.wes 149,105 149,105 149,566 ·161 Other taxes 8, l l 'l 8,119 8,287 168 Licenses, fees and permits 21,')03 2l,90l 25,05l l,l 50 Intergovernmental revenues 2,188 2,188 2,381 193 Charges for ser1..dces 12,605 12,605 19,529 6,924 F 1nes, forfeits and penallles 2,950 2,950 2,756 (194) Use of 1mney and p1opertv 4,57tl 2,908 3,833 925 Other 5,')71 1,491 l ,7l5 244 TOtal revenues 356,759 355,113 366,513 11,·100 E"f.)enditures Citv Council 711 725 673 (52) City Administration 3,512 3,4')8 l,001 (497) C1ly Altornev 6,768 7,068 7,062 (6) C1lyCle1k 1,280 1,398 1,226 (172) Human Resources 1,806 1,806 1,615 (l'll) Finance 6,861 6,861 5,728 (1,133) Police ll6,723 144,027 144,027 Fire & Rescue 70,332 70,876 70,103 (773) Community & Economic Developmenl 11,118 8,782 2,099 (6,683) Planning & Building 19,850 20,531 20,5ll Public Works 18,776 19/167 19,·167 Community· Services 31,924 32,026 l0,241 (1,785) P ubllc Util1lles 2,712 2,712 2,496 (216) Convention, Sports & E. nterla1nment l,9tJil 1,944 1,925 (19) Total expenditures 314,317 321,721 310,194 (11,527) Excess of revenues over expenditures 42/M2 33,392 56,319 22,927 Other financing sources (uses) T1ansfe1s 1n 29,967 29,967 30,144 177 Transfers out (84,435) (85,435) ('ll ,957) (6,522) T0tal othe1 financing uses (',1,468) (55,·168) (61,813) (6,345) Net change in fimd balance (12,026) (22,076) (5,494) 16,582 Fund balance at beginning of year 55,980 55,980 55,980 Fund balance at end of year $ 43,954 $ 33,904 50,486 $ 16,582 AdJustment to reconcile to G/\AP Receipt of interfund receivable (537) Elimination of interfund payable 1,500 E.nd1ng fund balance -G/'v-\P basis $ 51,449 The accompanv111g notes are a11 111tegral part of these financial statements. CITY OF ANAHEIM Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Budgetary Basis Actual -Housing Authority Year Ended J une 30, 201 7 on thousands) Original Final Budgeted Budgeted Actual Variance vvith Amounts Amounts Amounts Final 6 udget Revenues Licenses, fees and perm1ls $ 35 $ 35 $ 47 $ 12 Intergovernmental revem1es 75.410 75,410 77,')')2 2,582 Use of money and property 10,374 10,374 12,989 2,615 Othe1 3,474 3,474 12,643 9,169 Total revenues 89,293 89,293 103,671 14,378 E"f.)enditures Currenl Community' & Economic Development 112,335 112,335 83,4')2 (28,843) Total expenditures 112,335 112,335 83,4')2 (28,843) Excess of revenues over expenditures (23,042) (23,042) 20,179 43,221 Other financing sources Transfers in 1,029 1,029 Transfers out Total olher financing sources 1,029 1,029 Net change in tiJnd balance (23,042) (23,042) 21,208 44,250 Fund balance at beginning of year 65.105 65,105 65,105 Fund balance al end of year $ 42,063 $ 42,063 86,313 $ 44,250 /\dJustments lo reconcile lo GA/\P Cost of improvements to land held for resale 570 Decline 1n value of land held for 1esale (141) E Ii mi nation of interfun::l receivable (l.500) Ending fund balance -G/'v-\P basis $ 85,2tl2 36 The accompanv111g notes are a11 111tegral part of these financial statements. CITY OF ANAHEIM Statement of Net Position Proprietary Funds J u ne 30, 201 7 (In thousands) B usiness--type Activities --Enterprise Funds Convention, Governmental Sports & Activities - Electric Water San1lat1on Golf Entertainmenl ARTIC lnlernal Ulility Utility Ulll1tv Cou1 ses Venues Management T0tal Service Funds ASSETS Current assets Cash and cash equivalents $ 16,908 $ 5,860 $ ll,108 $ 6 $ 8,004 $ 106 $ 41,992 $ l'l,494 Investments 58,780 20,l68 34,880 20 33,')82 148,030 67,70!3 Rest11cted cash and cash equivalents 11,866 2,879 3,209 87 18,0·11 Restricted investments 17,262 l.781 5,422 13,395 39,860 Accounls 1eceivable, net 48/159 6,05"1 7,816 l il3 2,611 218 65,301 2,253 Accrued interest receivable 1,110 104 175 204 l,59l 220 lnterfund receivable 345 345 833 Inventories 13,967 2,564 2 16,533 910 Prepaid and other assets 27,106 4 2,005 143 29,258 2,675 TOtal current assels 195,803 ·11,614 62,610 169 60,290 tJ67 360,953 94,153 Noncurrent assets Rest11cted cash and cash equivalents, less current porllon 20tl,229 62,~40 5,420 272,189 2,0·13 Restricted investments, less current portion 100,659 2,087 37,293 140,039 U namortlzed prepaid bond insurance 68 68 Accounts receivable, less current portion 3,632 lnterfund receivable. less current portion 2,407 2,407 27 Prepaid and olher assets 68,275 68,275 Net other post-employment benefits (OPE B) asset 11,304 Capilal assets Land 34,243 2,ll9 316 l,')4') 18,135 32,523 89,505 Buildings, structures and improvements 114,56') 18,874 499,')82 171.041 804,466 8,978 Utility plant 1,370,170 456,834 1,827,00°1 Machinery and equipment 8,315 834 28,518 2,482 40,149 72,712 Const! uctlon 1n progress 91,236 15,232 6,667 186,693 299,828 1,773 Total capital asset,;; l ,495,64') 474,405 129,867 21,657 733,328 206,046 l,060,952 83,46l Less accumulated depreciation (601,412) (l 55,l24) (21,702) (l2,l94) (266,70l) (5,815) (1,063,350) (55,062) Capital assels, nel 89tl,237 319,081 108,165 9,263 tJ66,625 200,231 1,997,602 28,·101 Total noncurrent assets 1,269,807 l8l.708 113,653 'l,263 503,918 200,231 2,480,580 45,377 Tola! assets 1,465,610 ·125,322 176,263 9/132 564,208 200,698 2,8°11,533 139,530 DEFERRED OUTFLOWS OF RESOURCES Defened cha1ge on refunding bonds 11,047 5,332 418 16,797 Deferred pension related items 19,117 6,652 3,989 238 8,251 l8.247 6,218 T0tal defened oulflows ofresou1ces 30, ]6tl 11,984 3,989 238 8,669 55,044 6,218 37 (continued; CITY OF ANAHEIM Statement of Net Position Proprietary Funds J u ne 30, 201 7 (In thousands) (continued) B usiness--type Activities -- Enterprise Funds Convention, Covernmental Sports & Activities - Electric Water Sanitation Coif Entertainment ARTIC Internal Ulility Utility Ulll1tv Cou1 ses Venues Management TOtal Service Funds LIABILITIES Current liabilities (payable from cu1 rent assets; Accounts payable $ 50,738 $ 12,651 $ 4,344 $ 327 $ 1,470 $ 284 $ 69,814 $ 7,342 \,\/ages payable 536 228 106 8 419 1,297 4,654 Interest payable 2,006 2,006 94 Compensated absences 12,069 Long--term liabilities 5,226 654 4,846 3,500 14,226 13,051 Unearned revenues 4,236 10 tl,246 2,280 Deposits 4,170 331 565 3 3,661 44 8,774 lnlerfund payable 345 1,251 1,596 825 T0tal current liabilities (payable from cu1 rent assets; 60,670 13,555 5,669 1,589 16,638 3,838 101,959 40,315 Current liabilities (payable from restricted assets) /\ccounts payable 5,744 1,310 385 13,390 20,829 \,\/ages payable 147 12 5 164 Interest payable 7,513 l.922 793 87 10,315 /\rbilrage rebate liability 76 58 ] 3tl Long--term liabilities 15,648 3,l70 460 19,478 TOtal current liabilities (payable from restricted assels) 29,128 6,660 1,650 13/182 50,920 fot::.7.I currenl liabil1lles 89,798 20,215 7,319 1,589 30,120 3,838 152,879 40,315 Noncurrent liabilities lnterfund payable, less currenl portion 2,407 2,407 interest payable 2,635 2,635 Long--term obligations, less current portion 749,966 l 75,4l0 40,387 239,936 16,500 l.222,219 53,546 Nel pension liabilities 77,861 25,862 14,035 1,035 30,526 ]tl9,319 22,421 Provision for decommissioning costs 116,477 116,477 Total noncu1 rent llab1lit1es 9tJil,304 203,699 Stl,422 1,035 270,462 19,135 1,493,057 75,967 Tola! liab1lilles 1,034,102 223,914 6l,7tl] 2,62tl 300,582 22,973 1,6°15,936 116,282 DEFERRED INFLOWS OF RESOURCES Regulatory c1 edits 98,218 1,836 100,05"1 Deferred pension related items 7,633 3,l6l 1,340 91 2,677 15,104 3,021 Total deferred inflows ofresources 105,851 5,199 1,340 91 2,677 115,158 3,021 NET POSITION Net investment in capital assets 294,820 207.536 66,664 9,263 257,599 180,231 l.016,113 23,984 Rest! 1cted for Debt service 16,748 3,0l6 460 20,244 Capilal projecls 16,060 3,038 12,357 21,238 52,693 Other purposes 10,874 l0,87tl Unrestricted 17,319 (5,417) 37,690 (2,l08) (9,219) (2,506) 35,559 2,461 TOtal net position $ 355,821 $ 208,193 $ 117,171 ) 6,955 ) 269,618 $ 177,725 I, 135,483 $ 26,445 Adjustment to reflect the consolidation of internal service tiJnd activities related to enterprise fimds. (14,851) Net pos1llon of business-type activities $ 1,120,632 38 The accompanv111g notes are a11 111tegral part of these financial statements. CITY OF ANAHEIM Statement of Revenues, Expenses and Changes 1n Net Position Proprietary Funds Year EndedJ une 30, 201 7 (In thousands) B usiness-tvpe Activities --Enterprise Funds Convention, Governmental Sports & Activities - E. lectric Water Sanitalion Golf Entertainment ARTIC Internal UtilitV Utility UtilitV Courses Venues Management Tolal Service Funds Operating revenues Sales of retail and wholesale electnuly, net $ 397,615 $ 397,615 Transmission revenues 31,457 31,457 Sales of water. net $ 69,569 69,569 Solid \Vaste collection fees $ 45,341 45,3tl l \,Vastewater fees 12,889 12,889 Street cleaning fees l,277 3,277 G1een fees and cart 1ent::.7.ls $ 3,607 3,607 Facilities rental $ 28,591 $ 1,007 29,598 Concession fees 232 6,446 6,678 Charges for services $ ]tl8,555 Other 4,489 1,208 2,l86 22.l l.978 43 10,327 80 Total operating revenues ·133,561 70,777 63,893 4,062 37,015 1,050 610,358 148,635 Operating e,penses Costofpu1ch:1sed power 263,729 263,729 Fuel and generation ofpmve1 19,337 19,337 Cost of purchased water 27,581 27,581 Trealmenl and pumping of water 8,367 8,367 Maintenance. operations and administration 50,128 19,645 54,255 3,944 32,662 3,644 164,278 47,150 insurance premiums and claims 15,767 Compensaled absences and othe1 benefits 82,738 Depreciation and amortization 56,796 10,634 2.779 511 13,054 2,302 86,076 5,321 T0tal operating expenses 389,990 66,227 57,034 tJ,455 tJS,716 5,9tl6 569,368 150,976 Operating income (loss) 4l,57l 4,550 6,859 (393) (8,701) (4,896) 40,990 (2,l4l) Nonoperallng income (expenses) Intergovernmental revenues 247 178 425 380 investment income 2.244 1,013 l76 (2) 370 4,001 235 lnleresl expense (22,192) (6,407) (l/127) (7) (1,417) (428) (31,878) (202) Gain (loss) from disposal of capital assets (15) (107) (122) 215 Total nonoperating expenses (19,948) (5,147) (888) (9) (1,154) (428) (27,574) 628 Income (loss) before contributions and transfers 23,623 (597) 5,971 (402) (9,855) (5,l24) 13,416 (l,7ll) Capilal conlributions 3,023 247 1,111 tl,381 Transfers in 53 600 16,807 5,167 22,627 5,QtlQ Transfers out (24,726) (947) (2,528) (1,817) (l0,018) Change in net position 1,973 (697) 3,·143 (402) 6,246 (157) 10/106 3,327 Net position at beginning of year l5l.848 208,890 113,728 7,357 263.372 177,882 23,118 Net position at end of year $ 355,821 $ 208,193 $ 117,171 $ 6,955 $ 269,618 $ 177,725 $ 26,445 Adjustment to reflect the consolidation of internal service fimd activities related to enterprise tiJnds. (459) Change in net position of business-type activ1lles $ 9,9"17 39 The accompanv111g notes are a11 111tegral part of these financial statements. CITY OF ANAHEIM Statement of Cash Flows Proprietary Funds Year Ended J une 30, 201 7 on thousands) Business---tvpe Activities -Enterprise Funds Convention. Covernmental Sports & Activities - Electric VVater Sanitation Coif Entertainment .t\RTIC Internal UtilitV Ulll1tv Ulll1tv Cou1 ses Venues rvlanagement Tolal Se1v1ce Funds Cash flows fiom operating act1V1ties Receipts from customers and users $ 437,980 $ 67,903 $ 61,032 $ 3,614 $ 37,055 $ 930 $ 608,514 Receipts from interfund services provided 2,709 313 31 3,053 $ ]tl8,555 Payments to suppliers (262,435) (29,936) (42,5l0) (3,252) (9,226) (l,689) (l5l.068) (31,254) Payments for salaries, wages and other benefits (45,293) (14,788) (8,195) (567) (19,958) (88,801) (94,286) Payments for 1nlerfund services used (12,762) (4,858) (3,·196) (195) (3,452) (36) (24,799) (4,326) Payments for insurance premiums and claims (14,782) Othe1 receipts 2,370 iJ 17 43 2,830 125 Nel cash p1ovided by (used fo1) ope1ating activilles 120,199 l8,63tl 9,212 17 ·1,419 (2,752) 149,729 tl,032 Cash flows from noncapital financing activities Receipt of 1nlerfund balances 700 700 832 Payment of interfund balances (l45) (112) (457) (845) Payment of decommiss10111ng costs ( 01,270) (4,270) Transfers in 600 2,167 2,767 5,040 Transfers out (24.726) (894) (2,528) (1,817) (29,965) Ope1ating giant receipts 2tl7 801 l,Qtl8 Net cash provided by (used for) noncapital financing activities (28;9%) (392) Tr;727) sss· (7 ,Bl7) ············2,T6T [30,777) ),017 Cash flows fiom capital and relaled financing activities Proceeds from sale ofcapit::.7.I assels 359 Capital contributions 2.234 5 2,239 Capilal purchases (61,208) (12,898) ( 01,891) (48) (78,781) (22) (157,848) (8,014) Proceeds from issuance of bonds 32tl,248 40/155 364,703 Transfer to refiJnded bond escrow agent (214,176) (214,176) Proceeds fiom issuance of loan 315 205 27 547 6,023 Debt Issuance costs (910) (44l) (l ,l5l) Principal payments on long-term debt (32,164) (3,380) (1,054) (15,403) (l,000) (55,001) (2,650) Interest payments (29,889) (6,853) (1,956) (14) (12,088) (50,800) (99) Payment of interfund balances for capital purposes l45 (537) (192) T1ansfers 1n fo1 cap1lal purposes 50 16,807 3,000 19,857 Transfers oul for capital purposes (50) (50) Net cash provided by (used for) capital and related financing (ll. l 55) 16,836 (7,696) (599) (89,438) (22) (92,074) (4,381) Cash nows from investing activ1lles Purchase of investment securities (53,969) (12,376) (l8,9ll) (9) (14,063) (99,348) (3l,8ll) Proceeds fiom sale and maluritv of investment secu11ties 118,055 tlQ,4 l 0 17,035 5 101,363 276,868 31,272 lnleresl received 3,675 1,190 663 643 6,171 747 Net cash provided bv (used for) investing activities 67,761 29,224 (1,233) (4) 87,943 183,691 188 Increase (decrease) 1n cash and cash equ1Valents 147,809 6tl,3Q2 (1,444) 2 1,107 (607) 211,169 4,866 Cash and cash e(Juivalents at beginning of the vear 85,194 6,977 21,181 4 6,984 713 121.053 16,641 Cash and cash e(Juivalents at end of the vear $ 233,003 $ 71,279 $ 19,737 $ 6 $ 8,091 $ 106 $ 332.222 $ 21,507 40 (continued; CITY OF ANAHEIM Statement of Cash Flows Proprietary Funds Year EndedJ une 30, 201 7 (In thousands) (continued) Bus1ness---tvpe /\ctiv1ties -Enterprise Funds Convention. Covernmental Sports & Activities - Electric VVater Sanitation Coif Entertainment .t\RTIC Internal Utility Ulll1tv Ulll1tv Cou1 ses Venues rvlanagement Tolal Se1v1ce Funds Reconciliation of ope1ating income (loss; to net cash provided by (used for) operating activities Operallng income (loss) $ 43,571 $ tl,550 $ 6,859 $ (393) $ (8,701) $ (4,896) $ tlQ,990 $ (2,341) Adjustment to reconcile operating income (loss) lo nel cash p1ovided by (used for) ope1ating activ1lles Depreciation and amortization 'JS,796 l0,63tl 2,779 511 13,054 2,302 86,076 5,321 Increase in provision for decommissioning costs 753 753 \\/11te--off of a constl uctlon work 1n progress tl,650 tl,650 Changes in assets. deferred outflows ofresources, liabilities, and deferred 1nfows of resources thal provided (used) cash Accounts receivable (931) (I, 135) (5tl2) (31) (547) (78) (3,264) 337 Inventories 3,767 (199) 3,568 (120) Prepaids and olher assets (1,387) 16 (9) (3) (1,383) 16tl Accounts payable ll.737 2,240 327 (27) 531 (78) l4,7l0 519 Vv'ages and benefits payable (2,166) (696) (293) (43) (496) (3,694) (1,133) Unearned revenues 85 85 77 Deposits 321 (l6l) 82 502 543 Compensated absences, OPEB and self-insurance liabil1ly 1,508 Regulatory credits 7,738 (l.063) 6,675 Total adjustments 76,628 l4,08tl 2,353 410 13,120 2, ]tJil 108,739 6,373 Net cash provided by (used for) operating activities $ 120,199 $ l8,63tl $ 9,2"12 $ 17 $ 4,419 ·s (2,752) $ 149,729 $ tl,032 Schedule of noncash investing, capital and noncapital financing Capital assets financed through capital leases $ 969 Cap1t::.7.I contnbullons $ 789 $ 2tl2 $ 1,111 $ 2, ]tl2 Transfers in (out) of capital assets 5l (53) $ (310) (310) VVrite-off of a construction work in progress 4,650 4,650 Deuease 1n fair value of investments (1,508) (192) (332) $ ( I) (235) (2,268) (SGS) Reconciliation of cash and cash equivalents Cash and cash equivalents $ 16,908 $ 5,860 $ ll .108 $ 6 $ 8,004 $ 106 $ 41,992 $ 19,494 Restricted cash and cash equivalents, current portion 11,866 2,879 3,209 87 18,041 Restricted cash and cash equivalenls, noncunent portion 204,229 62,540 5/120 272,189 2,013 Total cash and cash equivalents $ 2ll.003 $ 71,279 $ 19,737 $ 6 $ 8,091 $ 106 $ 332,222 $ 21,507 41 The accompanv111g notes are a11 111tegral part of these financial statements. CITY OF ANAHEIM Statement of Fiduciary Net Position (Deficit) Fiduciary Funds J u ne 30, 201 7 (In thousands) Successor Investment Agency Trust Private Purpose Agency Funds Trust Fund Funds ASSETS Restricted cash and cash equivalents $ 327 $ 33,383 $ 7,103 Reslncted inveslmenls l, 139 29 Accrued interest receivable 7 27 Accounls 1eceivable, net ·1 7 Notes receivable, net 794 Prepaid and olher assets 97 Unamortized prepaid bond insurance 1,725 TOtal assets 1,·173 36,030 7,139 DEFERRED OUTFLOWS OF RESOURCES Defened cha1ge on refunding bonds 195 Total deferred outflo'vvs of resources 195 LIABILITIES Accounts payable 63 Wages payable 4 Interest payable 5,766 Deposits 260 Due to bond holders 7,139 Long-te1 m liabilities Due v.ithin one year 9,983 Due in more than one yea1 221,339 Total liabilities 237,415 $ 7,139 NET POSITION Held in trust for pool participants 1,473 Held 1n ti ust fo1 olher purposes (defiul) (201,190) Total net position (deficit) $ l .473 $ (201.190) 42 The accompanv111g notes are a11 111tegral part of these financial statements. CITY OF ANAHEIM Statement of Changes in Fiduciary Net Position (Deficit) Fiduciary Funds Year Ended J une 30, 201 7 on thousands) Successor Investment Agency Trust Private Purpose Funds Trust Fund ADDITIONS Property t::.7.xes $ 24,966 Contributions to pooled investments $ 7,004 Interest and investment income 14 ·177 Renlal income ·107 Other 1.861 T1ansfer ofnel pension obligation to C1ly ofAnaheim 8,218 Total additions 7,018 35,929 DtDUCTIONS Distributions from pool investments 7,0ll Salaries and administration 441 Program expenses 4,477 interest expense 11,847 Tola! deductions 7,031 16,765 Change in nel position (13) 19,164 Net position (deficit) held 1n ti ust at beginning of yea1 1,486 (220,354) Net position (deficit) held in trust at end of year $ 1,473 $ (201,190) 43 The accompanv111g notes are a11 111tegral part of these financial statements. (This page left blank intentionally) 44 CITY OF ANAHEIM as a vehicle to reduce local borrowing costs and promote greater use of existing and Notes to Financial Statements ne\1\/ financial 111strnme11t:s and mechanisms. Members of the Citv Council of the City (Amounts in thousands) serves as the members of the Board and Directors of the AHPIA. Financial activitv of the AHPIA has been blended into the City's CAFR into various business--tvpe NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES activities and funds of the City as applicable. The financial report:ing ent:ity The Citv is a participant in four joint ventures and jointly--ovvned properties (see note 12), which are not considered part of the financial reportmg entity, as the City does As defined by U.S. generally accepted accounting principles (GAAP) that are not have significant equitv interests in the joint ventures and jointly-owned established by the Covernmental Accounting Standards Board (GAS 8), the financial properbes. reporting entity consists of the primarv government, as well as its component units, \1vhich are legallv separat:e organizations for which die elected officials of the primarv The City is a pa1t1c1pant 1n the California Municipal Finance AuthorilV (C:MFA), a non-- government are financially accountable. Financial account:,1.bilitv is defined as l) profit Joint Power Authoritv created to strengthen local communities by assisting appointment of a voting majority of the component unit:'s board, and either a) t:he with the financing of economic development and charitable activities t:hroughoutthe ability to impose will by the primary government, or b) the possibility that the State of California. The CMFA acts as conduit issuer by assisting local governments, component un1t:\1vlll provide a financial benefit to or impose a financial burden on the non--profit:s and businesses with the issuance of-taxable and t:ax--exempt financing primarv government: and 2) the component unit is fiscally dependent on and there is aimed at improving the qualitv of life in California. The Citv has no financial, a pot:ential for the component unit to provide specific financial benefit to or impose budgeting and operational obligations and responsibll1t1es of die CMFA. The CMFA financial burden on the primary government regardless of whether the component is a jointly governed organization. The Citv has recorded assets and liabilities from unit has a) a separately elected government board, b) a governing board appointed t:he City's debt issuances t:hrough the CMFA in the business--type activities and fi.1nds by a higher level of government or c) aJOintly appointed board. of the City as applicable (see note 8). The accompanying financial statements present the City of Anaheim (City), the Basic financial statements primary government, and its component units. The financial data of-the component units are included in the Citv's reporting entity because of the significance of their In accordance with GASB St:at:ement No. 34 - Basic Financial Statements and operational or financial relationships \1v1th the City. Management's Discussion and Analysis for State and Local Governments, the basic financial st:atement:s 111clude bot:h govemment:--wide and fund financial statement:s. The component unit:s described below are each legally separate from t:he CilV, but are so intertvvined with the Citv that they are, in substance, the same as the City. The govemment-vvide financial statements (Statement of Net Position and They are report:ed as part of and accountable to the C1tv and blended into t:he Statement: of Activities) report on the City and 1t:s component: units as a whole, govemment---\,vide and fund financial st:,1.tements. excluding fiduciarv activities. Governmental activities, which normally are supported bv taxes and intergovernmental revenues, are repo1ted separat:ely from business- Anaheim Housing Authority (Housing Authority) is a separate entitv primarily funded type activities, which rely to a significant extent on fees and charges for support All by the U.S. Depa1tment of Housing and Urban Development: to administer funds activ1t:1es, both governmental and business-Wpe, are reported in the govemment·-- received under the Federal Housing Assistance Payments program. City Council vvide financial statements using the economic resources measurement focus and members, m separate session, serve as the governing board of the Housing the accrual basis ofaccountmg, which includes long--te1m assets and receivables as Authority'. All budgeting, accounting and administrative functions of the Housing well as long-term debt and obligations. The government---\Nide financial statements Aud1oritv are pe1formed by the C1ly. The fina1icial act:ivilV of-the Housing Aut:hority focus more on t:he susta1nabil1tv of- t:he City as an entitv and the change in aggregate has been blended into the City's Comprehensive Annual Financial Reprnt (CAFR) in financial position resulting from the activities of the fiscal period. the government-\1v1de governmental activities and 111 the fi.1nd financial statement:s as the Housing Authority Special Revenue Fund. Generall\1, the effect of interfimd activitv has been removed from the govemment w1de financial st:at:ements, except for interfund services provided and used. Net Anaheim Public Financing Authority' (APFA), a joint powers authority, was interfund activity' and balances betvveen governmental activities and business-type established as a vehicle to reduce local borrowing costs and promote greater use of act:ivities are shown as internal balances, net, in the government-wide financial existing and nevv financial instruments and mechanisms. Citv Council members, in statements. The "doubling up" effect of internal service fund activitv has been separate session, serve as t:he governing board of-t:he APFA. Financial act1v1tv of-t:he eliminated from the government-wide financial statements with the expenses shown APFA has been blended into the Citv's CAFR into various governmental and in the various functions and programs on the St:a.tement of Activities. business--tvpe act1v1t:1es and funds of the C1tv as applicable. Anaheim Housinq and Public Improvement Authority (AHPIA). a Joint: power authoritv, was created by and between the Citv and the Anaheim Housing Authority CITY OF ANAHEIM Further, certa111 eliminations are also made to transfers of resources between funds The CItv reports the foll0\lv111g major governmental funds in the fund financial st:,1.tements so that onlv the net amount of the transfers are shown in the governmental activities and business--type act:ivities columns. The General Fund Is the C1tv's prirnaIv operating fund. It accounts for all financial resources of t:he general government, except d1ose required to be accounted fo1 The govemment:--\vide St:at:ement: of Net Position reports all financial and capital in another fund. resources oftl1e City (excluding fiduciary funds). It is displayed in a format of assets and deferred outf10\lvs of resources less liabilities and deferred infiows of resources The Housing Authoritv Special Revenue Fund accounts for the providing of equal net position, vvith the assets and liabilities shown in order of their relative housing assistance to IO\lv and moderate--11icorne f The Information and Commu11icat1on Services Fund 1s used to account for data Disbursements for the purchase of capital assets providing future benefits processing and telecommunication services provided to C:ilV departments. are considered expenditures. Bond proceeds are reported as other financing source. The Municipal Facilities Maintenance Fund is used to account for office maintenance services and equipment used by City departments. With this measurement: focus, operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) Fiducia1v Funds account: for assets held by the City 111 a trustee or agency capacilV in net current assets. This 1s the trad1bonal basis of accounting for governmental on behalf of others and, therefore, are not available to support City programs. The funds and also is the manner in which these fimds are normally budgeted. This F1duc1ary Funds are not included 1n t:he government-wide financial statements as presentation 1s deemed most: appropnat:e t:o: l) demonstrate legal and covenant they are not an asset of the City. The City reports the following fiduciary funds compliance, 2) demonstrate the sources and uses of liquid resources, and 3) demonstrate how t:he City's actual revenues and expenditures conform to the annual The investment Trust Fund is used to account for the external portion of the budget. Since the governmental funds financial statements are presented on a City's investment pool, which commingles resources of legally separate entities different basis t:han t:he governmental activities column of t:he government:--wide administered by the City in an investment po1tfolio for the benefit of- all financial statements, a reconciliation is provided immediately following each fund pa1t1c1pants. The ent1t1es 111clude three Joint Pmvers /\uthorities U PA) governed statement:. These reconciliations brieAy explain t:he adJustrnents necessa1v to by local boards. The CilV separately ma1nta111s these ent:lbes' money in three transform the fund financial statements into the governmental activities column of individual funds: these funds represent the assets, primarily cash and the government:--wide financial statements. investment, and the related net position held in trust by the City to disburse these monies on demand. The proprietary funds fmancial st:atement:s are prepared on t:he same basis (economic resources measurement focus and accrual basis of accounting) as the government:--wide fina1icial statement~. Therefore, most lines for the t:ot:al ent:erpnse The Private Purpose Trust Fund is used to account: for resources legally held 1n funds on the proprietary funds financial statements will directly reconcile to the t:rust: for use by the Successor Agency t:o the Former /\nahe1m Redevelopment business-Wpe act:ivities column on the government-\1v1de financial statements. Agency (Successor /\gency). The Former Anaheim Redevelopment /\gency, a Because the enterprise funds are combined into a single business-type activities former component unit of the City, dissolved on February l, 2012 under the State column 011 die government:--wide financial statements, certa111 int:erfund activ1t1es ofCaliforniaAssemblv Bill lX26. betvveen these funds are eliminated in the consolidation for the government---\,vide financial statements, but: are included 1n the fund columns in t:he proprietary fi.1nds The Agencv Fund is used to account for die monies collected and paid on behalf financial statements. The net costs of the internal service funds are also partially of the MelloRoos Districts located in the City. allocated to the bus1ness--type acbvities column on the government-wide financial statements. A reconciliation of the total enterprise funds on the fund financial statement:s to the business-type act1v1bes column on the government-wide financial Measurement focus and basis of accounting st:,1.tements is provided on the face of the fund financial statements. The governmental funds financial statements are prepared on a current financial Enterprise funds account for operations where the intent of the City is that the costs resources measurement focus and modified accrual basis of accounting. To conform of providing goods or services to the general public on a continuing basis be to the modified accrual basis of accounting, certa111 modifications must: be made to financed or recovered primarily through user charges and fees. Under GASB the accrual method. These modifications are outlined below Statement No. 34, enterprise funds are also required for any act1v1tv whose principal 47 CITY OF ANAHEIM revenue sources meet any of the foll0\lv1ng criteria 1) any activity that has issued Notes receivable debt backed solely by the fees and charges of the activity, 2) the cost of providing services bran act1vilV, including capital costs such as depreciation or debt: service, In the govemment-vvide financial statements, notes receivable of $78,290 includes must legally be recovered through fees and charges, or it is the policy of the City to accrued int:erest receivable of $20,483, ranging from 3% t:o ·1 OYo interest per annum, establish activity tees or charges t:o recover the cost of providing se1v1ces, including and is net of allowances of $23,258 for uncollectible accounts at June 30, 2017. capital costs. Allowances for uncollectible accounts \Ivere estimated based 011 certain assumptions; therefore, actual results could differ from the estimates. On the proprietarv funds financial statements, operating revenues are those that flow directly from die operations of the act:ivitv, I.e. charges to customers or users In the govemment:a.l funds financial statements, disbursements for providing notes who purchase or use the goods or services of that activity. Operating expenses are and loan receivables are recorded as expenditures \1vhlle the collections of- these those that are incurred to provide those goods or services. Non-<)peratrng revenues receivables are recorded as revenues. Due to the e-..tended period of time over and expenses are items such as investment income and interest expense that are which notes receivable are to be collected and die contingent nature of certain not:a result of the direct:operat1ons of t:he activity sources of repayment, the City has recorded deferred inflows ofresources equal to the outstanding principal and accrued interest: balance, net of- allowances of the The Electric and Water Utility fi.1nds bllow the uniform system of accounts notes receivable. prescribed by the Federal Energy Regulatory Commission (Electric Utility) and the California Public Utilities Commission (Water Utility). The utilities are not subject: t:o inventories the regulations of these commissions. Inventories are stated at average cost which consist of expendable supplies, The reporting focus for the inve strnent trust fund and the private-purpose trust fund electrical parts, and vehicle repair parts. The cost of such Inventories are recorded is upon net position and changes in net posIt:1on and employs accounting principles as expenditures}2xpenses when consumed rather than when purchased. similar to proprietary funds. The agencv fund has no measurement focus but utilizes the accrual basis of accounting for repoIti11g its assets and liabilities. Prepaid and other assets Cash and investments Certain payments t:o vendors such as insurance premiums, prepaid power, prepaid rents, prepaid softvvare maintenance and deposits for real property acquisitions The City pools available cash from all fimds for the purpose of increasing income refiect costs applicable to future periods and are recorded as prepaid and other through investment activities. Investments in U.S. Treasury obligations and agency assets in both govemment----\Nide and fund financial statements. The costs of these securities and medium t:erm corporate notes are carried at fair value based on prepaid items are recorded as expend1l1Jres}2xpenses in die period when consumed quoted market prices. Nonparticipating guaranteed investment contracts, flexible or when the City receives titie to the real property rather than when purchased. repurchase agreement~ are earned at cost--based measure. Money market mul1Jal funds and participating interest-earning investment contracts that have a remaining Land held for resale mal1Jrity at: t:he time of purchase of one vear or less are earned at amorbzed cost (which approximates fair value). The Citv's investment in the State of California The Housing Authoritv has recorded parcels of land held for resale in their financial Local /\gency Investment Fund (L/\IF) Is earned at: fair value based on the value of records. The properties held for resale are for the primarv purpose of developing IO\lv each participating dollar as provided by LAIF. LAIF is authorized by California and moderate income housing and are recorded at the lovver of cost or estimated Covernment Code (Covernment Code) Section H-A29 under die oversight: of- t:he net realizable value. /\tJ une 30, 20"! 7, land held for resale with an original cost of Treasurer of the State of California. Commercial paper, participating guaranteed $l 2,809was recorded net of the allowance for decline in value of $6,125 and totaled investment: contracts and negotiable ce1t1f1Cates of- deposit are carried at amorbzed $6,684, with this amount: offset bv a restriction of fund balance for IO\lv and moderate cost (vvhich approximates fair value). interest income, which includes changes in fair income housing in the Housing Authority' major governmental fund financial value, on investments Is allocat:ed to all funds 011 the basis of dailv cash and statement. inve strne nt balances. See note 3 for flirt.her discussion. The Long Range PropeIty Management Plan nonmaJor Special Revenue Fund For purposes of the basic financial statements, the City considers cash equivalents records parcels of land held for resale transferred from the Successor Agency to the to be highly liquid sho1t--term investments diat are readilv convertible to known fo1mer Anaheim Redevelopment Agency on JanuaIv l, 2016 under the amounts of cash and mature within three months of the date they are acquired. authorization of the approved Long Range Property' Management Plan of the State Cash and cash equivalent:s are included in the City's cash and investments pool and of California Health and Safetv Code Section 34191.5. The parcels are approved for in accounts held by fiscal agents. fi.1ture developments. The City has recorded the land held for resale equal to the net realizable value of- t:hese asset~ as recorded in the Successor Agencv's financial 48 CITY OF ANAHEIM records in the amount of 522,178 with a corresponding restriction in fund balance for Capital assets are depreciated using the straight-line method over the following future eco11om1c development. estimated useful lives Restricted assets Buildings, struct:ures and improvements 5 to 85 vears Utility plant 5 to 7'.') years Certain proceeds of the City's bonds, as well as certain resources set aside for their repayment, are classified as restricted on t:he Statement of Net Pos1t:1on or Balance Mach1ne1v and equipment 2 to 40 vears Sheet, because thev are maintained in separate bank accounts and their use is Infrastructure 25 to 75 years limited by applicable debt covenants. Add1t1onally, resources set aside by the Electric Utility for the TIJture decommissioning of its former ownership share of the The net book value of capital assets retired or disposed of~ related salvage value San Onofre Nuclear Generating St:abon, Units 2 and 3 (SONGS) and the SanJ uan proceeds and tl1e costs ofremoval are recorded in accumulated depreciation in the Generating Station, Unit 1-1, are classified as restricted on both the government-vvide Electric Utility and VVat:er Utllity Funds. In all other cases, t:hese amounts are Statement of Net Position and proprietarv funds Statement of Net: Pos1tmn. recorded as gains or losses on disposal ofcapit:,1.I assets. Capital assets Capital assets transferred betvveen funds are transferred at their net book value (cost less accumulated depreciation), as of the date of-t:he u·ansfer. Under CASB Statement No. 34, all capital assets, \Vhether owned by governmental activities or business-type activities are recorded and depreciated in the Debt: issuance costs govemment:--wide financial stat:ements. No long-term capital assets or depreciation are shovvn in the governmental funds financial statements. Debt issuance costs, with the exception of prepaid insurance costs, are recognized as outfio\1\/ of-resources (expense ,expe11d1t11re) in the period whe 11 the debt is issued. Capital assets, including public domain infrastructure (e.g., roads, bridges, Prepaid insurance costs are capitalized and amortized over the lives of the related sidewalks and ot:her assets that: are immovable and of value onlv to the City), are debt issues 011 a basis that approximates the effect1ve-~11t:erest method. defined as assets with an initial, individual cost of more than $5 ($50 for i11fiast:rucl1Jre) and an estimated useful life of greater than one year. Capital asset~ Bond refunding cost:s are recorded at cost or estimated historical cost if purchased or constructed. Donated capital assets, donated works of a1t and similar items, and capital assets Bond refunding costs are deferred and amort:ized ove1 t:he life oft:he new bond or received in a service concession arrangement are recorded at acquisition value over the life of the old bond, whichever is shorter, on a basis that approximates the rather than fair value at:the date ofdonatmn. eftE:cbve--interest method. These costs are shown as a deterred outfiow of- resources on the Statement of Net Position. The cost:s of normal maintenance and repairs that do not add to the value of t:he capital asset or materially extend capital assets lives are not capitalized. Major Accretion improvements are capitalized and depreciat:ed over the remaining useful lives of the related capital assets. Accretmn 1s an adjustment of the diftE:rence bet\i\ieen the price of a bond or certificate of participation (COP) issued at an original discount and the par value of Major outlavs for capital assets and improvements are capitalized as the projects are t:he bond or COP. The accret:ed value is recognized as 1t accrues by fiscal vear. const:ructed. Interest: incurred during the const:rucbon phase of projects is refiected in the capitalized value of the asset constructed for proprietary funds. For the year Deferred outf-lows of resources ended June 30, 2017, business-Wpe activities capitalized net interest cost~ of- 513,692 in the govemment-vvide and fund financial statements. Total interest In addition to assets, the statement of financial position will sometimes report a expense incurred by the bus111ess--type act:ivities (and the enterprise funds on the separate section for deferred outflows of resources. This separate financial propriek1.ry funds statements) before capitalization vvas S-45,570. Capitalized interest statement: element, deterred out:fows of resources, represents consumption of net in the Convention, Sports & E 11tertai11ment Venues Fund in t:he amount of- $8,640 position that applies to a future period(s) and so will not be recognized as an outflow was calculated by netting the actual interest expense on the bonds ($9,568) with the ofresou1ces (expense,expe11d1ture) until t:hen. In the government-wide statement of actual investment earnings on the unspent proceeds of- t:he bonds (5928) as the net position, the City reported tvvo items in this category 2014-A Lease Revenue Tax-Exempt Bonds was issued to finance the specific Convention Center Expansion. 49 CITY OF ANAHEIM l. Deferred charges on refunding bonds - A deferred charge on refunding 2. Regulatory credits -accumulated from collections of1he Electric and Water bonds results from the difference in the carrying value of debt and its Utility customers reported in business--type activities. These amounts reacquisition price. This amount is deferred and amortized over the shorter provide recovery in current period for costs to be incurred in future periods. of 1he life of 1he refunded or refunding debt The City reported $1,653 in (Reier to 1he discussion of Regulatory Credits). governmental activities and $16,797 in business--type activities in this category. B usiness--type activities 2. Deferred outflows of resources related to pension - these balances Enterprise Funds: represent current fiscal year contribution to the pension plans that will be Electric Utility $ 98,218 applied as a reduction in net pension liability in the next fiscal year; or other Water Utility 1,836 items arising from changes in actuarial assumptions, difference between Total $ 100,054 actual and projected experience, difference bet\Neen actual and projected investment gains 11osses or changes in a fund's proportionate share of the net pension liability; the amount will be amortized and reported as a 3. Deferred inflows of resources related to pension are certain changes in total component in pension expense in future fiscal years (refer to discussion of pension liability and fiduciary net position that are to be recognized as an Pension Plans). The City reported $126,317 in governmental activities and increase in pension expenses in future fiscal years. These are the balances $38,247 in business type activities in this category. arise from changes in actuarial assumptions; difference betvveen actual and projected experience; difference betvveen actual and projected investment Deferred inflows of resources gains1iosses or changes in the Fund's proportionate share of the Plan's net pension liability. Refer to discussion of Pension P !ans in note l 0 of the notes in addition to liabilities, the statement of financial position will sometimes report a to 1he financial statements on pages 76-1!0 of 1his report The City reported separate section for deferred inflows of resources. This separate financial statement $45,201 in governmental activities and $15, l 04 in business-type activities in element, deferred inflows of resources, represents acquisitions of fund balance or this category. net position that applies to a future period(s) and so will not be recognized as an inflow ofresources (revenue) until that time. The City reported the following in these Regulatory credits categories: The Electric Utility's Rates, Rules, and Regulations provide for the Rate Stabilization L Unavailable resources -- (which include revenues, notes and long term Account (RSA), which contains two components: 1he Power Cost Adjustment (PCA) receivables) measured under the modified accrual basis of accounting 1hatwas adopted by City Council on April 1, 2001, and the Environmental Mitigation reported in governmental funds. These amounts are deferred and will be Adjustment (EMA) 1hat was adopted by 1he City Council on January 13, 2009. The recognized as an inflow of resources in the period that the amounts become PCA has mitigated variations in the power supply or fuel costs. The EMA allows the available. recovery of environmental mitigation costs, such as greenhouse gas emissions costs, the marginal cost differential betvveen renewable power and traditional fossil- Non major fuel based power. The RSA provides the City with operauonal and billing flexibility 1o General Housing Covernment:al mitigate material fluctuations in the cost of energy, loss of revenues, or unplanned Fund Authority Funds Total costs including unexpected long-term loss of a generating facility, unplanned limits Governmental Funds on the ability 1D transmit energy to 1he City, or major disasters. The RSA funded by Taxes $ 948 $ 948 PCA and EMA collections is billed 1D cus1omers 1hrough standard rates. C rants s 54 s 13,937 13,991 Other revenues 2 lll 59 269 The Electric Utility restructured its rates effective September I, 2016 in order 1o Long-term notes receivable 51,402 26,888 78,290 more effectively align the recovery of the Electric Utility's costs with the nature of 1he Due from successor agency 884 lll,726 11,61() costs incurred. This was accomplished by reducing the Power Cost Adjustment Total $ 2,042 s 51,456 S 51,610 $ 105,108 (PCA) and the Environmental Mitigation Adjustment (EMA) with corresponding increases to base rates. The restructuring was designed to be revenue neutral to the customer. As of June 30, 2017, 1he Electric Utility recorded deferred inflows of resources for regula1ory credits related to PCA totaled $22,468. 50 CITY OF ANAHEIM As of September 8, 2017, the EMA rate was $0.0005 per kWh for all customers Utility has recorded a provision for decommissioning costs for SONG totaled regardless of t:he amount: of energy used. AtJ une 30, 2017, t:he deferred inflows of $110,757. resources recorded for regulatory credits related to EMA totaled 575,750. During fiscal year 2017, There was no RSA revenues recognized. 011 June 7, 2013, the Southern Cal1forn1a Edison (SCE) announced the permanent retirement of the SONGS plant The estimated completion of the decommissioning The Wat:er Utilitv's rates, rules and regulations provide for a water regulatory credit 1s expected to take approximate Iv 30 to 40 vears. The Electric Ublitv continues to account to reflect variations in the cost ofwaterto the Water Utility and provide more fund tl1e reserve until the end of the trust fund. On September 23, 2014, tl1e SCE stable retail \1vat:er rates to the customers of the City's Wat:er Utility. This rate submitted a decommissioning cost: analvsis st:udy to Nuclear Regulato1v stabilization account(RSA) provides increased flexibility by allowing the Water Utility Commission (NR C). According to this new study for the decommissioning costs of to maintain financial performance indicators and goals specified in bond covenant:s. SONGS, the Elect:ric Utility's share of decommissioning cost:s is $110,756 atJ une The account is funded through expense reimbursements such as water supplv cost 30, 2017. The Electric Utility currently has Sl l 0,384 in an irrevocable trust for the refunds received from the Metropolit:an Wat:er District and Orange County Water decommissioning cost:s. District and other miscellaneous credits and revenue. AtJ une 30, 2017the deferred inflows of resources recorded for regulato1v credits totaled $1,836 for the Water During fiscal year 2017, the Electric Utility has drawn $4,270 from the trust fm the Utility. During fiscal year 2017, the Water Utility recognized S1,375 of PCA revenues. disbursements of decommissioning related obligations. Compensated absences The Electric Utility' has a 10.01-1% ownership interest of the San Juan Generating S tat1on, Unit 4 (SJ). The Electric Utility 1s providing for the future demolition and Compensated absences, vacatmn and sick pav, for all Citv employees are generallv reclamation costs of its ownership share of SJ. As of June 30, 2017, the Electric paid by the General Benefits and Insurance Fund, an internal service fund. The Util1tv has recorded a provision for decommissioning costs for SJ of $5,720 ohvhich General Benefits and Insurance Fund is reimbursed through payroll charges to all $3,81-18 was in irrevocable trust and .$ 1,872 in the City's restricted cash account For other funds based on estimates of benefits to be earned and used during the fiscal the year ended June 30, 2017, the Elect:ric Utility has recorded decommissioning year. It is the policy of the C1tv to pav all accumulated vacation pay when an costs incurred for SJ of $440 in fiiel and generation of power of the operating employee retires or terminates. Accumulated sick pay in excess of 175 hours per expenses. employee 1s paid to emplovees at t:he1r then current: rate of-pay in January each year or upon t:ermination from die Cilv. Employees are paid for all accumulated sick pay Pension plan \1vhen t:hey rebre from the City. Vest:ed vacation and sick pay benefits are accrued when incurred in the General Benefits and insurance Fund and atJ une 30, 2017, Full-1Jme Cit; employees are members of the State of California Public Employees' totaled 520,371 and is included in long-term liabilities in the Statement of Net Retirement System (CalPERS). The City's policy is to fund all required actuarially Pos1t:ion. Also included 111 long-term liabilities in the Statement of Net Position at determined contribution, such costs to be funded are dete1mined annually as of-July June 30, 2017, is compensatory time l1abtlit; of $570. I by the C:alPE RS's actuary. The City maintains three Pension Plans with CalPERS -- Miscellaneous Plan, Police Safety Plan and Fire Safely Plan. See note 10 for Changes in the City's compensated absences liability in fiscal vear 2017 were as further discussion. follows For purposes of measuring the net pension liability and deferred outflows;lnflows of Compensated absences l1ab1litv at beginning of year s 20,538 resources related to pensions, and pension expense, information about the fiduc1arv Estimated compensated absence benefit:s earned 24,945 net position of the Citv's California Public Employee's Retirement System (CalPERS) plans (Plans) and additions to.deductions from the Plans' fiduciary net Compensated absences used (24,'i42) position have been determined on the same basis as they are reported by CalP E RS. Compensated absences liability end of year s 20,941 For this purpose, benefit payments (including re funds of employee contribubons) are recognized when due and payable in accordance with the benefit terms. Provision for decommissioning costs l11vestme11t:s are report:ed at fair value. Federal regulations require the Electric Utility' to provide for the future Net pos1t1on restrict:ed by enabling leg1slat:ion decommissioning costs of its former ownership share of San Onofre Nuclear Generating Station (SONGS). The Electric Utility has established a provision for The govemment-vvide Statement of Net Position repmts 5274,830 of governmental decommiss1on111g costs of-SONGS and restoration of-t:he beachfrontatSan Onofre, act:ivities restnct:ed net: position, ohvhich '.)8,088 1s rest:ricted by enabling legislation. California vvhere it is located. A separate irrevocable trust account has been established for amounts funded and these amounts are classified as restricted assets in the accompanying statement of net position. AtJ une 30, 2017, the Electric CITY OF ANAHEIM Fund balances The accumulat:ed deficit: fimd balances at June 30, 2017 of $73 in the VVorkforce Development Nonmajor Special Revenue Fund, $359 in the Grants Nonmajor In the fund financial statements, governmental funds report the follovving S pec1al Revenue Fund, $9,709 in the St:reet Const:rucbon nonmaJor Capital Project classifications Fund, and $2,061 in the Transportation Improvement Projects nonmajor Capital P roJect Fund, \1vlll be eliminated 111 fut:ure years by the receipt: of reimbursements fo1 Nonspendable fund balance includes amounts that: cannot be spent grant expenditures. because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. The "not in spendable form" Budgetary principles criterion includes items that are not expected to be converted to cash, for example, inventories, prepaid or long term loans and notes receivable. The C:ilV 1s required by its charter t:o adopt an annual budget 011 or before June 30 for the ensuing fiscal year. The General, special revenue, debt service, and capital projects governmental fund types and proprieta1v fund types have legally adopted Restricted fimd balance includes amounts when constraints placed on the budgets approved by City Council. The level of budgetary control (tl1at is, the level at use of t:he resources are either imposed by external resource providers, which expenditures cannot legally exceed the appropriat:ed amount) is established constitutional provisions or enabling legislation. at the department level. From the effective date of the budget, the amounts stated herein as proposed expenditures,expenses become appropriabons to die various Committed fund balance includes amounts that can be used only for the City departments. Throughout the fiscal year the budget was amended to add specific purposes pursuant: t:o co11strai11t:s imposed by formal actmn of the supplemental appropriations. All amendments t:o die budget which change the total Citv's highest: level of the decision--rnak1ng authorilv. The C1tv Council 1s the appropriation amount for any department require Citv Council approval and all highest: level of- dec1sio11-maklng aut:hority t:hat can, by adoption of an increases in appropriations 1n operatmg expenditures must be accompanied by an ordinance prior to the end of the fiscal year, commit fund balance. Once increase in revenue sources of a like amount to maintain a balanced budget. The City Manager has the authority to change individual budget line items within a adopted, the limitation imposed by the ordinance remains in place until a department as long as the total department's appropriation amount is not changed. similar action by the Citv Council to remove or revise the limitation. The CilV utilizes an encumbrance system as a management control technique to /\ss1gned fund balance includes amounts diat the City intends to use f-ix assist in controlling expenditures. All appropriations lapse at the end of the fiscal spec1f1C purposes but do not: meet:the criteria t:o be classified as rest:rict:ed or vear, except for capital projects which are carried fof\vard until such time as the committed. The City Council has by Resolution authorized the City Manager project is completed or terminated and for encumbered balances that are re or his designee to establish, modify' or rescind an assigned fund balance. appropriated in the next fiscal year. Unassigned fund balance accounts for the residual balance of- t:he City's C/\SB Statement No. 34 allows that budgeta1v comparison stat:ements for the general fund and includes all spendable amounts not contained in other General Fund and major special revenue funds be presented in the basic financial statements rather than as Required Supplementary lnfo1mat:1on. These statements c la ssificat1ons. In other governmental funds, the unassigned class1f1Catio11 must display original budget, amended budget and actual results. repo1ts a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed or assigned. Budgeted revenue amounts represent the original budget modified by Citv Council authorized adjustments during t:he year, which were contingent: upon new or Generally, the C itv vvould first apply restricted resources when expenditures incurred additional revenue sources. Budgeted expenditure amounts represent original for which both restricted and unrestricted resources are available. Furthe1; when t:he appropriations adjusted for supplemental appropriations during the year. Budget:s components of unrestricted fund balance can be used for the same purpose, are generally prepared in conformity vvith GAA.P using the modified accrual basis of committed fund balance 1s applied first, followed by assigned fund balance. accounbng, with the exception of capital leases, or ot:her similar instruments, and Unassigned fund balance is applied last land held for resale, which are budgeted on a cash basis. In all governmental funds, encumbered amounts have been restricted or assigned Property taxes for specific purposes for which resources have alreadv been allocated. AtJ une 30, 2017, encumbrances totaled 52,056, SO, and $19/142 in the General Fund, Housing Propertvtaxes attach as an enforceable lien on prope1ty as of-J a11ua1v I. Taxes are Authority Special Revenue Fund, and other nonmajor governmental funds, levied on July l and are payable in tvvo installments due on November l and respectively. Februa1v ·1 and become delinquent: after December ·1 O and April 10. The County of Orange, California (County) bills and collects the property taxes and remits them to t:he City 111 installments during the year. CilV prope1ty tax revenues are recognized 52 CITY OF ANAHEIM when levied in the governmental funds to the extent that they result in current Statement No. 82, Pension Issues -an amendmentofCASB Sk1.ternentNo. receivables collectible with111 60 days after year-end. See not:e 8 for discussion of 67, 68, and 73. The requirements of this Statement are effective for fiscal pledged property tax revenues. year beginning after June 15, 2016, except for the provision of paragraph 7 in a circumstance in which an employer's pension liabilitv Is measured as of The C:ountv 1s permitted by St:at:e la\1\/ (Propos1t1on 13) to levv taxes at ·1% of full market value (at time of purchase) and can increase the property' tax rate no more a date other than the employer's most: recent fiscal year-end. In diat than 2% per year from the full market value at: the t:lme of purchase. The CilV circumstance, the requirements of- paragraph 7 are effective for that receives a share of this basic levy proportionate to what it received in the 1976 and employer in the first reporting period in which the measurement date of the 1978 periods. pension liability is on or after June 15, 2017. E 11t1tlements, shared revenues and grant:s Implementation of diese S tat:ement:s had no mat:erial effect on amount~ report:ed In the City's financial statements for fiscal year ended J une 30, 2017. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible t:o accrual cr1t:eria are met:. Expenditure--driven grants are recognized In The Citv is currently reviewing its accounting practices to determine the potential the fond financial statements as revenue when the qualif\/ing expenditures have impacts on the fmancial statements for the following CASB Statements been incurred, all eligibility requirements have been met, and reimbursement Is received within the availability period. Statement No. 75, Accounting and F inanc1al R epoItIng for P ost:--employme nt Benefits Other Than Pension Plans. The requirements of this statement are Revenue recognition for Electric Utility, Water Utility, and Sanitation Utility effective for fiscal years beg11m1ng after June l S, 201 7. Funds Statement No. 81, Irrevocable Split-lnt:erest Agreement. The requIrement:s Revenue is recorded in the period in which services are provided. Most residential of this Statement are effective for fiscal year beginning after December 15, and smaller commercial customers are billed bimonthly and all odier customers 2016. monthly. At June 30, 2017 unbilled but earned service charges recorded in accounts receivable for the Elect:ric Ut:1l1ty, Water Utility, and Sanitation Utility Funds amounted S taternent No. 83, CeItaIn Asset Retirement Obligations. The requIrement:s to $25,730, $1,616, and $3,686, respectively. See note 8 for discussion of pledged of this Statement are effective for fiscal year beginning after June 15, 2018. revenues. Sk1.tement No. 84, Fiduciarv Activities. The requirements of this Statement Use of estimates are eftective for fiscal year beginning after December ·1 '), 2018. The preparation of financial statements in conformity with CAAP requires Statement: No. 86, Certain Debt Extingu1shment: issues. The requirements management to make estimat:es and assumptions that affect die repo1ted amounts of this Statement are effective for reporting periods beginning after June 15, of certain assets and liabilities and disclosures of contingent assets and liabilities at 2017. the date of die financial statements and t:he reported amounts of revenues and Sk1.ternentNo. 87, Leases. The requirements ofthis Statement are effective expenditures/expenses during the reporting period. As such, actual results could for reporting periods beginning after Decembe1 l 5, 2019. differ from those estimat:es. NOTE 3 ··DEPOSITS AND INVESTMENTS NOTE 2 ·· NEW ACCOUNTING PRONOUCE ME NTS The Citv maintains a cash and investment pool, which includes the cash balances of On July l, 2016, the city adopted the follovving nevv accounting pronouncements all funds, and is invested by the CIly Treasurer to enhance interest earnings. The issued by the GAS B pooled interest earned, net of administrative fees, is reallocated to each fund based on their respective average dally cash balances. Statement No. 77, Tax Abatement Disclosures. The requirement~ of this Statement are eftective for fiscal year beginning after December l '), 201 '). The Citv's pooled investment fund has been reviewed by Standard and Poor's Corporation (S&P) and received a credit rating ofAAf,S l in September 201'1. Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans. The requirements of this Statement are The Citv's investment policy frnther limits t:he permitted investments In Government effecbve for fiscal year beginning after December l '), 2016. Code Sections 53600 et al, 16129. l and 536&1 to the following obligations of the United States government, federal agencies, and government sponsored Statement No. 80, Blending Requirements for CeItain Component Units enterprises; medium-term corporate notes; certificates of deposit; bankers' An Amendment of CASB Statement No. H. The requirements of this acceptances, commercial paper: L/-\IF, repurchase agreements, reverse repurchase Sk1.tement are effective for fiscal year beginning after_] une 15, 2015. agreements: and monev market mutual fonds. CITY OF ANAHEIM Deposit~ and investments are comprised of-die following at:J une 30, 2017 submitt:ed to die California Debt: and Investment Advisorv Committee in accordance vvith Government Code. Re<,tricted Cash and Cash and The policy provides the basis for the management of a prudent, conservative Cash Cash Restricted investment program. Public fimds are invested for t:he maximum security of-principal Equivalents Investments Equivalent'i. Investments Total and to meet daily cash ftovv needs vvhile providing a return. All investments are made Governmental activities 1n accordance with t:he Government Code and, in general, the City Treasurer's policy General Fund $ 9A20 $ 30,772 $ 40,192 is more restrictive than Government Code. Hous111g Authority 17.570 61,081 $ 835 79,486 No11major governmental funds 22.240 77,315 75,563 $ 106,106 281,224 investments authorized by the Government Code and the City's investment Internal se1vice funds 19.494 67,768 2,013 89,275 policy Total governmental activities 68,724 236,936 78,411 106,106 490,177 Bus iness-tvpe activities The following table identifies tl1e investment types that are authorized for the City by Electric Ut1htv 16,908 58,780 216,095 117,921 409,704 its 1nvestmentpol1cvwhich 1s more 1·estrictive than Govemme11tCode. The table also VI/ ater Utilitv 5,860 20,368 65,419 5,868 97,515 identifies certain provisions of the City's investment policv that address interest rate Sanitation Utility 11,108 34,880 8,629 5,422 60,039 risk, credit risk, and concentration of credit risk. This table does not address Golf Courses 6 20 26 investments of debt proceeds held by bond trustees that are governed bv the provisions of-debt agreements of-the Citv, rat:her than the general provisions of-the Convention, Sports & Government Code or the City's investment policv. Entertainment\/ enues 8,004 33,982 87 50,688 92,761 AR TIC Management 106 106 Total bu<,ines<,--tvpe act1V1tie'> 41,992 148,030 290,230 179,899 660,15 I Maximum Government-wide totals 110,716 384,966 368,641 286,005 1,150,328 Maximum Investment Fiduciary funds 40,813 1,168 41,981 Maximum Percentage in One (S &P 1\1oody's Total cash and investments s 110,716 $ 384,966 I 409.454 I 287,173 s 1.192,309 Authorized l1westment T~iQe ___ Maturitv __ of Po11t0lio'i Issuer tf itch) U.S. T reasurv obligations 5 Years l 0IJ'/4 l 0IJ'/4 None lO(f/o Deposits and investments are comprised of the follovving at_J une 30, 2017 U.S. agencv securities SYears 4Cf/o None Banker's acceptances 180 days '-10% 5% None Comme1cial paper 270 days 25% 5% A-lP-l ;F-l Deposit~ $ 63,674 Negotiable certrficates ofder,osit 3Gll days 2'.)% 5% None Repurchase agreements l Yea1 30% None None Investments 1,128,635 Reverse repurchase agreements 90 davs 20% None None Total deposits and investments $1,192,309 Medium-te1rn corr,orate notes 5 Years 30% 5% A Monev market mutual funds 20% 10% Af\A At June 30, 2017, deposits of 563,674 with a corresponding bank balance of NA $71,6'.)0 were maintained in various federally regulated financial 111stitutio11s. The LAIF NA $50 million $50 million None per account per account difference of 57,976 represents deposits in transit, outstanding checks, and other C-0:)/ reconciling items. Deposit~ with bank balances of .$"I ,916 are insured bv the Federal Time Certrficate of Deposit (TCD) l vear 20% ),o None Depositorv Insurance Corporation. For deposits with bank balances tot:a.ling $69, 73 1-1 California state st:at:ut:es require federallv regulated financial institutions to secure a *E xclud1ng amount:s held bv bond t:rust:ees that are not subJectto Covernment: Code citv's deposits bv pledging collateral consisting of either government securities with rest:rict:ions a value of IICI¼ of a city's total deposits m by pledging f11st trust deed mmtgage notes having a value of l Serio of a citv's total deposits. The collateral is required by regulabon to be held by t:he counterpartv's agent 1n t:he name of the City. Investments The C1tv Treasurer prepares an investment: policy statement annually, \1vhich is presented to the Budget, investment and Technology Commission for review and the City Council for approval. The approved investment policy Statement 1s CITY OF ANAHEIM Custodial credit risk for investments held by bond trustees is the risk that the City will The City's pooled investments comply with the requirements of the investment not be able to recover the value of investment securities t:hat are in the possession policy. GAAP requires disclosure of certain investments in any one issuer that of an outside party. All securities held bv bond trustees are in the name of the bond exceeds five percent concentration of t:he total i11vestme11t:s. AtJ une 30, 2cr1 7, the issue in trust for satekeep111g \1v1t:h the bond trustee, \1vhich Is different from t:he City's following investments represent five percent or more of the Citv's total pooled primary bank. 1nvestrnents Interest rate risk Fair Interest rate risk Is the risk t:hat changes In interest: rates will adversely aftectthe f"21ir I nve stme nt Type Value % value of an investment The City Treasurer mitigates this risk by investing in longer U.S. Treasurv obligations T1easurv securities $ 89,520 17% t:erm securities only with funds that: are not needed for current: cash f10\lv purposes LAIF U\IF 79,986 15% and holding these securities to maturity. The City Treasurer uses the segmented Federa I National Mortgage Association U.S. agency securities 72.286 14% time distribubon method to identify and manage interest: rate risk. in accordance w1d1 Federal Home Loan Mortgage Corporation U.S. agency securities 63,008 12% the City investment policy, the Citv Treasurer monitors the segmented time Federal Farm Credit Bank U.S. agency securities 33,324 6% distribution of its investment portfolio and analysis of-cash flow demand. Investments authorized by debt agreements Investments held by bond trustees are typ1callv long--term securities which are not adverselv affected bv interest rate changes. Guaranteed investment contracts for Investment of debt proceeds held bv bond trnstees Is governed by provisions of t:he constructmn fi.1nds are usually limited to d1ree years or less. lnformatmn about the debt agreements, rather than the general provisions of the Government Code or the sensitivity' of the fair values of the City's investments (including investments held by City's investment pol1cv. The table below 1dent:1fies t:he investment types that are bond t:rustees) to market interest rate fluctuations is provided bv t:he following table authorized for investments held by bond trustees. The table also identifies certain that shows the distribution of the City's investments by maturity atJ une 30, 2017 provisions of d1ese debt agreements t:hat address interest: rat:e risk, credit risk, and concentration of credit risk. AtJ une 30, 2017, the following investments represent five percent or more of the City's total investments cont:rolled by bond trustees issuer lnvestmentT\;pe Fair Value % U.S. Bank Money market mutual fund $ 248.477 41% Morgan S tanlev FleXJble repurchase agIeemenl 90,294 15% Deutsche Bank C uaranteed investment agreement 61,037 lUX. Federated government obligation Money marh.et 59,427 lUX. Federal Nallonal MoItgage /\ssociatlon U.S. agency secunlles 30,511 5% DreyfiJs Treasury Money market mutual fiJnd 27.963 5% All guaranteed investment contracts have downgrade language that requires collateral should credit ratings drop below certaI11 levels. Custodial credit: risk Custodial credit risk for investments is the risk that the City will not be able to recover the value of invesb11ent securities that are In the possession of an outside paIty. /\II securities owned bv the City with the exception of LAIF and money market mutual funds are depos1t:ed in t:rust: for safekeeping \1v1t:h a custodial bank different from t:he Citv's primarv bank. Securities are not held in broker accounts. Funds held by LAIF and money market mutual funds are held in the City's name. CITY OF ANAHEIM Credit Rating Fair Value 12 months 13 to 24 25 to 36 37to 60 More than Investments (S &P ,Moody's) 6;30/2017 or less Months Mo11d1s Months 60 Months Investments cont:rolled by C1tv Treasure1 U.S. agency securities AA+//\aa $ 188,706 $ 75,089 $ 45,117 s 38,880 $ 29,620 U.S. Treasuries AA+/Aaa 89,520 29,86'i 59,6'i5 Medium term notes /\l--,!-\-+ 10,030 5,011 5,019 Medium term notes l\,A2 19,934 4,998 9,903 5,033 Medium term notes A,A3 3,997 3,997 Medium term notes A+,Al 20,162 3,003 5,023 12,136 Medium term notes A+,A2 6,041 6,0•11 Medium term notes A+,Aa3 4,972 4,972 Medium term notes AA,Al 20,103 10,142 9,961 Medium term notes AA,Aa2 13,0l 8 13,0l 8 Medium term notes AA,Aa3 9,990 4,991 4,999 Medium term notes AA+,l\al 6,996 6,996 Medium term notes A/\A,Aaa 29,132 10,138 4,992 4,941 9,061 Commerical paper Al,F' I 4,996 4,996 Commerical paper A l+,P l 5,993 '.),993 Negotiable ce1tif1Cate of deposit Al,F' I 5,001 '.),001 Money market mutual fonds AAA 806 806 LAIF Unrated 78,986 78,986 Tota.I investments controlled by City Treasurer 518,383 211,016 84,985 90,875 131,507 Investment controlled bv bond trustees U.S. agencv securities l\i\ +//\aa 51,701 26,276 25,178 247 U.S. Treasuries l\i\ +//\aa 2,973 250 744 743 1,236 C uaranteed investment: cont:ract~ Unrat:ed 74,586 'i 7,754 15,658 $ 1,-174 Flexible repurchase agreements Unrat:ed 103,940 I 03,940 Money market mut:ual funds AAA/Aaa 358,337 3'i8,33 7 LAIF Unrated 18,715 18,715 Total investments controlled by bond trustees 610,252 461,332 25,922 16,648 1,236 105,lH Total Investments $ l, 128,635 $ 672,348 $ 110,907 $ l 07,523 $ 132,7•13 $ 105, lH Fair Value Measurement The City groups its assets and liabilities measured at fair value in three levels, based on the markets in which t:he asset:s and l1abil1t:1es are traded and the rel1ab11itv of-the The City categorizes its fair value measurements within the fair value hierarchy assumptions used to determine fair value. The three levels of the fair value hierarchy established by generally accepted accounting principles. The fair value of- a are as follO\lvs financial instrument is the price that would be received to sell an asset or paid to transfer a liabilitv in an orderlv transaction between market participants at the Level l inputs are quot:ed prices (unadjusted) in act:ive market:s for 1de11t:ical measurement date. Fair value is best determined based upon quoted market prices. assets or liabilities that the City has the ability to access at the measurement Howeve1; in certain instances, there are no quoted market prices for the C:itv's date, various financial instruments. in cases where quoted market prices are not available, fair values are based 011 estimates using present value or other valuabon Level 2 input~ are inputs od1er than quoted prices included \1v1t:hin Level techniques. Those techniques are significantly affected by the assumptions used, t:hat are observable for the asset or liability, either directly or 1nd1rectly. including discount rates and estimat:es of future cash nows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. 56 CITY OF ANAHEIM Level 3 inputs are unobservable inputs for the asset or liabilitv. This Less valuation is accomplished using management's best estimate of fair value, Accounts Allovvance for vvith inputs into the determination of fair value that require significant Receivable U ncollectible s Total management judgment or estimatmn. The level in the fair value hierarchy Governmental activities with111 \1vhich a fair measurement in its entirety falls Is based on the lowest Ceneral Fund s 20,783 $ (4,289) $ 16,494 level input t:hat is significant to the fa1rvalue measurement In its entirety. Housing Authoritv 127 (105) 22 NonmaJor government:al funds '), 140 5,140 The City has the following recurring measurements as of_J une 30, 2017 internal service fonds 5,885 5,885 Total governmental activities 31,935 (•1,394) 27,541 Fair Value rv1ea5ureme11t. LJ5i11g Susiness--tvpe actIvIbes Quotec P nces in Electric UtJlit; •19,312 (853) 48,459 Act1Ve S 1grnficant Water Utility 6,081 (2;) 6,054 Marl,ets for other Not Identical ObservaUe Required to Sanitation Utility 7,945 (l 29) 7,816 Assels Inputs b.: leveled Coif Courses 143 143 Investment b,1 fair value level 6/30,Q0l 7 (Level 1) (Level 2) Convention, Sports & Del::t securities Entertainment Venues 2,667 (56) 2,611 U.S. Agency S ecuritie5 $ 240.407 $ 240,407 /\R TIC rv1anagement 218 218 U.S. Treasury Oblii;J1tions 92.493 $ 92,493 Total business-type activities 66,366 (1,065) 65,301 Comm.:rcial Par.er 10,989 10.989 Total accounts receivable s 98,301 $ (5,459) $ 92,842 Negotiable Certificate of Deposit 5,001 5.001 Mediurn Tenn C(xorporale Noles 144.375 144,375 Due from other governments LAIF 97,701 $ 97,701 Due from other governments for the Citv's governmental activities at_J une 30, 2017, Total investment rreasured at fair value 590,%6 I 92.493 $ 400.772 I 97,701 are as follows l11vestme11t5 nrasured at cost--tJa5ed Taxes Cr ants Othe1 Total Guaranteed investn-ent contracts 74,586 Governmental activities F lexi~Je repurchase agreertlf_'nls 103.940 Money Market Mutual F- unds 359.143 Ceneral Fund $14,751 s 48 $ 221 $ I 'i,020 Total invest.rnf_'nl nrast1red at cost--tJa5ed 537,669 Housing /\ut:honty 114 114 Nonmajor governmental fonds 21,160 21 21,181 Total i:xx1led and bond trustee inveslrnents $1,128.635 Total due from ot:her governments $14,751 $ 21,322 $ 242 $36,315 NOTE 4 ACCOUNTS RECEIVABLE, DUE FROM OTHER COVERNMENTS, Revenues are reported net: of estimated uncollectible amounts. Total estimated DUE FROM THE SUCCESSOR !\CE NCY, INTE RFU ND RECEIVABLE AND uncollectible amounts related to revenues of the current period are as follows PAYABLE BALANCES, AND CERTAIN INTER FUND TRANSACTIONS Ceneral fund $ l, 163 Accounts receivable Electric Utility 723 V'Vater Utility 217 Accounts receivable for the Citv's governmental and business-type activities, Sanitation 171 including the applicable allowance for uncollectible accounts at_J une 30, 2017, are as follovvs Convention, Sports & E nt:ertainment Venues 9 Total $ 2,283 CITY OF ANAHEIM Due from the Successor Agencv Inter-fund receivables and payables that are included In t:he fund financial statement:s atJ une 30, 2017, are as follows The amount: due from the Successor Agency atJ une 30, 2017 is $11,610. Due to the extended period of time overvvhich the receivables are to be collected, for the I nlerfund Receivable amount due to the Governmental Funds, the City has recorded expend1t:ures at the time the loans were provided and deferred inflovvs ofresources equal to the amount Nonmajor Internal due. General governmental service Electric Fund __ti_J_nd_s ___ ti_1_nd_s _____ Utilitv __ Total lnterfund Payable General Fund $ 884 Governmental Funds 10,726 NonmaJor govemme11t:al funds Gene1al Fund $ 35 $ 35 Total S 11,61 IJ Nonmajor government::.7.I funds $ 210 $ 12,9tl8 13,l 58 E nte1 prise Funds On April l, 2003 the City and the former Anaheim Redevelopment Agency Water Utility $ 2,752 2,752 entered into a Cooperation Agreement vvhereby the Citv assisted the Golf Courses l.251 1,251 Redeveloprnent:Agencywith the development ofVVestgate utilizing $10,000 Internal Service Funds 825 825 of funds from the HUD Section 108 loan program. The amount is due to t:he Tot::.7.I s;1,46r·----,i; 12,9"1s ·s s6o s;2,752 $18,021 City by annual installment through June 2024. At June 30, 2017, the amount ==== -_-_-_- -_-_-_- due Is $5,702. All 111terfund balances at: June 30, 2m 7 are generally sho1t--term loans to relieve On June l, 2010, the Citv and the former Anaheim RedevelopmentAgency temporary cash deficits in various funds, except the following interfund balances that entered into a Cooperation Agreement vvhereby the Citv assisted the are expected to be repaid in more than one year Redevelopment:Age1icvwith the rehabillt:at:lon of-the historic Packing House site utilizing $7,000 of funds from tl1e HUD Section 108 SI 'i,000 loan General Fund proceeds. The arnount: is due t:o the City by annual installmentthroughJ une 2031. AtJ une 30, 2017, tl1e amount due is 55,024. On S epternber 24, 2002, the City Council approved a loan up to $6,400 from the General Fund to the Coif Courses Fund for construction of the Anaheim Hills On February 5, 2013, the Citv and the Successor Agency entered into a Golf Clubhouse. The loan is payable in annual amounts of not less than S5•18 Cooperatmn Agreernent \\/hereby the CItv ass1st:ed the Successor Agency beginning in July 2005 until July 2023 and bears interest atthe City's investment with loaning t:he proceeds ofone--t1rne allocatmn of-the $-1,563 frornthe low- yield as ofJ une 30th of each year. The remaining loan balance will be repaid 111 and rnoderate income housing fund for various Successor Agency proJect:s. full during fiscal year 2018. AtJ une 30, 2017, the amount due to the City is $884. Electric Utility lnterfund receivable and payable balances In 2015, the Public Utilitv Customer Service Information System Project vvas Net: internal balances bet\,veen governmental actIvIbes and business-type act:ivities completed and placed In seIvIce. The Electric: Utilitv paid for the total cost of the of $16,102 are included 111 the government:--\,vide financial staternents at:J une 30, pmJect. The Water Utility portion of the total cost is $3,484, payable in annual 2017. amounts of not less than $345 beginning July 2016 unul J ulv 2024. The outstanding balance atJ une 30, 2017 is $2,752. 58 CITY OF ANAHEIM Certain interfund transactions The bllow111g interfi.1nd transfers are reflected in the fund financial st:at:ements atJ une 30, 2m 7 Transf-er In Enterprise Funes ConveI1tion, No11rnaJ0r Internal S po1ts & General Housing gove mme ntal Service Electric Water Entertainment ARTIC Fund Authority funds Funds Utility Utility Venues Management Total Transf-er Out General Fund $ 67,343 $ 5,()40 $ 600 $ 16,807 $ 2,167 $ 91,957 Housing Authoritv $ 1,500 1,500 Nonmajor governmental fonds 179 $ 1,029 3,781 3,000 7,989 Electric Utility 24,726 24,726 Water Utility' 89'-1 $ 53 947 Sanitation Utilitv 2,528 2,528 Convent:lon, Sport:s & EntertaInme11t\/enues 1,817 l,8"17 Total $ 31,644 $ 1,029 $ 71,124 $ 5,()40 $ 53 $ 600 $ 16,807 $ 5,167 $ 131,464 The net transfers betvveen governmental funds and proprietarv funds Is $2,351 Transfer of $5,01-10 from the General Fund to the internal Service Funds to which are primarily comprised of operational subsidies from enterprise funds to the cover defJCits for various t:echnology capital Improvement:s and facility improvements. General Fund and are offset by debt service subsidies to the ARTIC Management and Convention, Sports & E ntert:ainment Venues Funds. Transfer of $600 from die General Fund to the Water Utilitv E nt:erpnse Fund per the result of Measure Nin the November 2014 election. The City made the iollowing maJOr transfers during fiscal year ended June 30, 2017 Transfer of .S 1,500 from the Housing Authority major Special Revenue Fund Transfer of $57,174 represents Lease Payment Measurement Revenues to the General Fund to eliminate an interfimd balance provided for (lYMR) from t:he General Fund to the i\nahe1m ResoIt Improvements Homebuver loans at the Colony Park per the coorperatIve agreement nonmajor Debt Service Funds which is held by the Trustee, see discussion between CilV and the Housing Authoritv. on note 8 of the notes to the financial statements on page 6'.) ofth1s repoIt. Transfer of $3,000 from the Gas Tax non major Special Revenue Fund Transfer of $16,807 from the General Fund to tl1e Convention, Sports & ($2,000) and i\nahe1m Tourism Improvement District nonmajor Special E nt:ertainment Venues Enterprise Fund for debt service subsidy. Revenue Fund ($1,000) to the ARTIC Management Enterprise Fund for Transfer of $2,167 from the General Fund to i\RTIC Management debt: services on the ARTIC land acquIsItion loan as discussed on note 8 of Enterprise Fund for operational subsidies. the notes to the financial statements on page 70 of this report. Transfer of $4,739 from the General Fund to the Other Capital Transfers of $19,032 from the Electr,c Utility Enterprise Fund and $2,528 improvements nonmaJOr Capital ProJect Fund for the Public Safety 800 from the Sanitation Utility Enterprise Fund to the General Fund. As defined Megahertz (mHz) communicat:ion equipment ($3,888), die Community by City Chart:er, t:he t:ransfer is equal to t:he maximum of 4% of total Services librarv sofu,vare ($500); and various neighborhood capital operating revenues of the current fiscal vear. improvement proJects ($3'.) l). Transfer of $5,694 from the E lecurc Utility Enterprise Fund and $894 from Transfer of $1,792 from the General Fund to tl1e Other Capital t:he Water Utility Enterprise Fund t:o the General Fund. The amount Improvements Fund, per Council Resolut:ion, t:o set aside 25% of- annual represents the City' Council approved transfer of 1.5% retail electric revenue surplus fimds of the General Fund for community' and neighborhood and net water revenue of the prior fiscal year. improvements. Transfer of $2,500 from the General Fund and $2,363 from the Gas Tax Except: for t:he transfers detailed above, there were no othe1 significant transfers nonmaJor S pec1al Revenue Fund totaled $4,863 to the Transportation during the fiscal year that: were either non--routme In nature or inconsIst:ent with the Improvement Projects nonmajor Capital Project Fund for the close out of the activIt1es of the Fund making the transter. i\RTIC construction project. CITY OF ANAHEIM NOTE 5 ECONOMIC: ASSISTANCE AGREEMENTS ·· TAX ASATEME NTS 111 addition, the C1tv entered into several economic assistance agreements to (as defined by GASS Statement No. 1;) provide assistance to partially fill the feasibility gap of the four-diamond hotel developments w1diin t:he Cilv. Provision of-economic assistance is contingent: upon /\s of June 30, 2017, t:he C:itv Council approved two Economic Assistance completion of construction of the hotels, the commencement of and continued operations as a four- lnJ ulv 2002, the Citv entered into a Development and Economic Assistance In May 2013, the City entered into t\lvo economic assistance agreements for Agreement: (Agreement) with a developer to provide certain eco11om1c up to 866 hotel rooms, of a four-diamond quality, in two phases at the assistance to the developer in connection with the development of a seven Carden-\iValk. These agreements provide for Citv assistance in an amount sto1v all--suites hotel (DoubleTree Hotel) on certa111 real property O\IV11ed by equal to 7rJ¼ of the TOT for the development of a Convention Hotel (of not developer and located in the City. The feasibility gap of the economic less than 466 rooms) and a Resort Hotel (ofnot less than 350 rooms). The assistance is capped at 512,908 in total for a period over 15 years expiring C1tv's economic assistance obligation ends 011 the earlier of twentv years in fiscal year 2021 payable semi-annually calculated from the Transient from complebon of- constructmn or, provision of- assistance up to a not to Occupancv Tax (TOT), ranging from 5% to 40% 1n accordance to t:he exceed amount of approximate Iv Sl 58 million. Adjustment table of the Agreement During fiscal year 2017, the developer received 5728 in economic assistance. Fu1ther, 1n June 2015, t:he Citv established die Hotel Incentive Program to bring other four-diamond qualitv hotels to Anaheim. In accordance with the In /\pril 2006, t:he Citv entered into a Dispos1t1on and Development Hotel Incentive Program, the Citv entered into three additional economic Agreement with a developer to construct and operate retail space (Carden assistance agreements in July 2016 vvith similar terms for 580 rooms at Walk) in Anaheim. Upon completion of die construction, the developer 1700 South Harbor with an estimated economic assistance from the City in receives economic assistance equal to a portion of the sales tax that Carden-w·alk generated for a period of- 25 vears exp11mg at:the earlier of l) an amount of 5145 million, 634 rooms at l 030 West 1'atella Avenue vvith an December 2038 or 2) maximum amount of S15,600 in total which increases estimated economic assistance from the City in an amount of $148 million, 8% annually startmg 011 July l, 2013. During fiscal year 201 7, the developer and approximate Iv 700 rooms to the no1th of die Disneyland Hotel with an received 5201 in economic assistance. estimated economic assistance from the City in an amount of $267 million, thereby, creating the desired number of luxury rooms within the Citv. As such the program was rescinded for terminated for future developments in December 2016. The following Is a summary of economic: assistance agreements Total Economic Total Ta'\ Base for % of Ta'\ fo1 Ma'\imum i-\ssistance Total Maximum Calculation of Calculation Economic Paid in Economic Economic Years Economic of Economic Assistance Fiscal Year Assistance ,A.ssistance Project Expiration Date Remaining___ Assistance .Assistance Amount 2017 Paid to Date Remaining Double Tree Hotel 6/30/2021 4 TOT 5% 40% $ 12,908 $ 728 $ 9,467 $ 3,441 Garden\Valk Retail 12/l I (2038 21 Sales 40%-50% 15,600 201 915 14,685 CardenWalk Convention Hotel --466+ Rooms 20 Years from Completion 20 TOT 7Cf!6 81.100 81.100 Garden\i\ialk Reso1t Hotel -350+ Rooms 20 Years from Completion 20 TOT 7Cf!6 76,900 76,900 1700 South Harbar -- 580 Rooms 20 Years from Completion 20 TOT 7Cf!6 145,000 145,000 1030 West Kate Ila ,,"\venue --634 Rooms 20 Years from Completion 20 TOT 7Cf!6 148,000 148,000 Norlh of Disneyland Holel -700 Rooms 20 Years from Completion 20 TOT 70% 267,000 267,000 60 CITY OF ANAHEIM NOTE 6- CAPITAL ASSETS Capital asset activities for die vearendedJ une 30, 2017, \1vere as follO\lvs Beginning Tranter in Ending Balance /\dd1t:1ons (Out) Deletions Balance Covernment:al ac:tiv1t1es Nondepreciable assets Land $ 647,289 $ 2,773 $ 1,639 $ ('i,342) s 646,359 Construction in progress 50,033 40,462 (19,653) ( 11, 7•14) 59,098 Total 697,322 43,235 (18,014) (17,086) /0'i,457 Depreciable assets Buildings, structures and improvements 339,393 4,238 8,913 (6,758) 345,786 Mach1ne1v and equipment 125,611 8,582 1,641 (3,203) 132,631 lnfrastruct:ure 853,54'i ') '.) 7,770 (23) 861,347 Total 1,318,549 12,87'i 18,324 (9,984) 1,339,764 Total assets 2,01 'i,871 56,110 310 (27,070) 2,045,221 Less accumulated depreciation for Buildings, structures and improvements (143,066) (11,580) l, 116 (153,530) ~ilachinerv and equipment (88,593) (8,076) 3,053 (93,616) Infrastructure (404,325) (18,741) 21 (423,045) Total accumulat:ed depreciation (635,984) (38,397) 4,190 (670,191) Total governmental activities capital assets, net $ 1,379,887 $ 17,713 $ 310 $ (22,880) $ 1,375,030 Business---tvpe activities Nondepreciable assets Land 89,505 89,505 Construction in progress 207,64•1 174,33•1 (77,488) (4,662) 299,828 Total 297, H9 174,334 (77,488) (•1,662) 389,333 Depreciable assets Buildings, structures and improvements 796,571 1,658 6,295 (58) 801,,166 U1lli1y plant 1,761,443 3,729 70,87•1 (9,0•12) 1,827,004 Machinerv and equipment 38,890 2,384 9 (l, 134) 40,149 Total 2,596,90•1 7,771 77,178 (10,234) 2,671,619 Total assets 2,894,053 182, I Cl'i (31 0) (14,896) 3,060,9'i2 Less accumulated depreciation for Buildings, structures and improvements (262,625) (Hi,633) ')S (279,203) Uullty plant (698,348) (67,430) 9,042 (756,736) ~ilachinerv and equipment (26,425) (2,0l 3) l ,027 (27,411) Total accumulat:ed depreciation (987,398) (86,076) 10,124 (1,063,350) Total business-tvpe activities capital assets, net $ 1,906,655 $ 96,029 $ (310) $ (4,772) $ 1,997,602 61 CITY OF ANAHEIM Depreciation expense was charged to functions:tJrograms of the City during fiscal t:he leases range from 55 vears to 65 vears with lease expiration dat:es from 20'.A to year 2017 as follows 2080. The total base rentto be collected overthe terms of the leases are 570,570 with simple int:erest accruing on unpaid poItIons at a rate ranging from 1% to G¾. Covern111ental activities Minimum lease pavments are calculated annuall\1, based on residual receipts, as General government s 99 defmed in t:he lease agreements. At June 30, 2017, the Housing Authority has recorded lease receivables due from developers related to these transactions of Police 1,578 $7,794, net: of- allowances of $8, l 86 for uncollected accounts in the government- Fire & Rescue 1,498 wide financial statements. In the government:,1.I fund financial statements, this CommunilV & E conorrnc Development 1,850 amount is included in the $'.) ·1,402 notes receivable balance of die Housing Planning & Building 23 Authority. Public Works 19,566 ARTIC Management Communitv Services 3,271 Convention, S po1ts & E 11terta111rnent 5,191 The ARTIC has entered into numerous long--term operatmg leases with tenants Capital assets held by the City's int:ernal service funds are charged granting them certain uses of the ARTIC premises described in the respective lease to the various functions based on their usage of t:he assets 5,321 agreements. Terms of the leases range from '.) years to 1O years with lease Total depreciation expense -governmental activities S 38,397 expiration dates from 2020 to 2027. Extension options range from 5 years to l 5 years. Certain leases are subJect to percentage rent in an amount equal t:o a percentage of the amount by which tenant's gross sales exceed certain thresholds. Business---tvpe activities Elecu,c Utility $ 56,796 Future minimum lease pavments are as follows Water Utility 10,634 FiscalYearEndinq 6'30 Sanitation Utility 2,779 2018 $ '.)79 C olf Courses 511 2019 590 Convention, Sports & Entertainment Venues 13,054 2020 549 AR TIC Management 2,302 2021 4,18 Total depreciation expense -business-type activities S 86,076 2022 437 2023-2027 1,563 Total $ 4,166 C:apit:al leases AR TIC also entered into agreement:s to grant bus companies non--exclusive rights to Included in the capital assets amounts listed above are the follovving capitalized use certain spaces In ARTIC:. These agreements range from 5 years to perpetuity. leased asset:s Some of- the agreement:s can be terminated bv either parties with a 60 days termination notice, some of them have e".tension options, while others will automatically continue on a month-to-month basis upon expiration. Governmental Activities NOTE 7 SELF INSURANCE ~ilachinery and equipment 4,788 Less accumulated amortization (2,644) The Insurance Fund (a function of die General Benefits and Insurance Fund), an Capitalized leased assets, net s 2,144 internal service fund, is used to account for self-funded workers' compensation related benefits, self---funded general l1abll1ty claims, commercial insurance Operating leases purchases, and alternative risk financing vehicles. Revenues of the insurance Fund are derived from cost:--allocation charges to CilV department:s using estimates of Housing Authority anticipated risk-transfer costs, new losses, pavments on existing claims, and reserve development on knO\lvn claims. In addition, the Insurance Fund receives At June 30, 2m 7, t:he Housing Aut:hontv earned revenues as the lessor of land, interest income from reserves. carried at cost of $67,202 in the government-vvide financial statements, under ten operating ground leases. These leases to developers are noncancelable. Terms of 62 CITY OF ANAHEIM At June 30, 2017, the City was funded at an actuarially acceptable level for self officials errors and omissions liabilitv losses among twelve California cities, through f1111ded retention for \1vorkers' compensation and general liability claim exposures both risk--shanng and commercial insurance Joint:--purchase arrangement~. The CilV, (with retention levels of .Sl ,000 per occurrence for vvorkers' compensation claims therefore, continues to maintain some limited excess liabilitv risk sharing exposure, and .Sl ,000 per occurrence for general liability claims). /\bove these retained levels, above $1,000 per occurrence, directly with /\CCEL. This pooled coverage has the City's potential liabilitv is covered through various commercial insurance and exposure (i) from the run-out periods from prior vears in which commercial excess intergovernmental risk pooling programs (collect:ivelv, "Insurance"). Settled claims insurance \Ivas not obtained, and (i1) from an ACCE L retained laver for fiscal year have not exceeded total Insurance in any of the past three years, nor does 2017 of 5•1,000 in excess of Sl ,000. Each ACCE L member's share of pooled losses management: believe t:hat there are anv pending claims that: \1vlll exceed total is based on a retrospect:ively--rated risk--sharing formula which includes, but Is not Insurance coverage. limited to, exposure and loss experience factors. The unpaid claims liability' included in the Insurance Fund is based on the results of In order to provide fimds to pay claims, ACCE L collects an annual deposit from each actuarial st:udies and includes amounts for claims 11icurred--but--not--reported, known-- member. The deposits are cred1t:ed with investment income at: t:he rate earned on claim development, and allocated loss adjustment expenses. Claims liabilities are ACCEL's investments. At June 30, 2017, ACCEL's cash and investments totaled calculated using a discount: rate of l. 75% and consider the effect:s of- infiation, multi- $50,633, of \1vhich $6,286 consists of deposits and interest 011 depos1t:s provided by year loss development trends, and other economic and social factors. It is the Citv's the City. The City has no specific equity interest in ACCEL. Deposits provided to pract:ice to obtain full actuarial studies annually for It:s retained levels for general ACCEL by t:he CItv are expensed \1vhen paid by t:he General Benefits and Insurance liabilitv and workers' compensation exposures. "Premiums" are charged by the Fund. Insurance Fund using various allocation methods d1at include actual cost~, trends In claims experience and various exposure bases. ACCEL is responsible for deciding the risks it will undervvrite, the monitoring, and handling of large claims, and arranging excess risk--financ1ng programs. ACCEL Changes in claims liabilitv of the General Benefits and Insurance Fund and that does not have anv debt outstanding. For a copv of ACCE L's separate financial relates to the governmental funds and reported In the governmental activIt:1es in the statements, contact the F inane e Director of the C Ity. govemment---\,vide Statement of Net Position in fiscal years 2017 and 2016 were as follows 2017 2016 Claims liability at beginning of year $ '.)0,616 $ 46,035 Current year claims and changes in estimates 12,302 14,6'12 Claims payment:s (11,053) (10,061) Claims liability at end ofyear $ 51,865 $ 50,616 Above the retained limit of Sl ,000 per occurrence forvvorkers' compensation losses, the CItv purchases excess coverage, ut:illzing both commercial insurance and an intergovernmental risk pooling program (CSAC-E IA), to statutrny limits. Above the retained limit of Sl ,000 per occurrence for liabilitv losses, the Citv maIntaI11s excess coverage for all City operations to Sl '.)0,000 per occurrence, excluding helicopter operations for which the City purchases 550,000, per occurrence, of commercial aviation llabll1ty insurance (on a first- 63 CITY OF ANAHEIM NOTE 8 LONC TERM LIABILITIES The follovving is a summary of changes in long-term liabilities reported in the govemment-vvide financial statements for the vear ended.June 30, 2017 Beginning Additions/ Reductions/ Ending V\/ithin One ______Balance ______P roce eds __ _ Refi1nded ______p ayme nls ______Balance ______Year __ _ Covernmental activities General obligation $ 700 $ (700) Cit/ lease revenue 417,855 (23,363) $ 394,492 $ 12.168 Accretion 213,980 $ 19,285 233,265 13,673 Unamortized bond d1scountA1rem1um, net (214) 46 (168) Total 632,321 19,285 (24,017) 627,589 25,841 Cap1tal1zed lease obligations Internal Service Funds 2,088 969 (1,319) 1,738 1,095 Total 2,088 969 (1,319) 1,738 1,095 Notes and loans payable Crtv 20,820 6,125 (2,060) 24,885 2/150 Internal Service Funds 6,023 (1,331) tl,692 1,239 Tolal 20,820 12,148 --~(3,391) 29,577 3,689 Claims liabilities (note 7) 50,616 12,302 (ll ,05l) 51,865 10,717 Compensated absences (note l) --~20,538 --~24,945 (24,542) --~20,941 --,1~2,639 Net pension liabilities (note lO) Governmental Funds 407,133 132,751 (43,811) 496,073 Internal Service Funds 19,289 5,063 (1,931) 22,421 Total 426/122 l37,8ltl (45,7°12) 518,494 Cove rnme nta I a ctlvltle s tota I l, 152,805 207,463 (110,%4) 1,250,20°1 53,981 Business--tvr:..'2 activities Bonds pavable E lectnc Utilrtv 640,090 289,065 $ (204,980) (18,950) 705,225 20,845 \:Vater Utilitv 130,425 35,225 (3,380) 162,270 3,370 Sanitalion 41,535 (l ,0°15) tlQ,490 1,095 Convention, Sports & Entertainment Venues 244,262 (15,402) 228,860 4,844 Unamortized bond discount/premium, net 67,847 40,413 (9,705) 98,555 Total l, 12°1,l 59 36tl,703 (204,980) ( 018,482) 1,235/100 30, 15"1 Notes and loans payable Electric U lility 13,200 315 (13,21°1) 301 29 Sanitation Ulilitv 205 (9) 196 19 Convenlion, S r:..x:ins & Entertainment Venues 27 (l) 26 2 ARTIC Management 23,000 (3,000) --~20,000 3,500 Total 36,200 547 (16,224) 20,523 3,550 Interest payable ARTIC Management 2,207 428 2,635 Total 2,207 tl28 2,635 Decommissioning provision (note ·1) 119,994 753 (4,270) 116,477 Net pension liabilities (note 10) Eleclric Utilitv 71,235 13,333 (6,707) 77,861 \:Vater Utilitv 24,808 3,282 (2,228) 25,862 Sanitation Unlitv ll,510 3,734 (1,209) 14,035 Golf Courses 932 192 (89) 1,035 Convention, Sports & Entertainment Venues 25,684 7,472 (2,630) 30,526 Tolal 134,169 28,013 (12,863) 149,319 Business--t,,pe activities total 1,416,729 394,444 (204,980) (81,839) 1,524,354 33,704 Govemment-\,vide lotal S 2,569,53°1 $ 601,907 $ (20°1,980) ---,i; (191,903) ---,i; 2,77"1.558 $ 87,685 fr-1 CITY OF ANAHEIM Bond ratings for the Citv's revenue bonds are as follows required to pay any additional sums should tl1e LP!VIR fall short of the amount required to pay debt service on the bonds. The Walt Disney Companv provided a S landard & Fitch guarantee to the bond insurer to enable the issuer to obt:,1.in municipal bond P oor's Ratings Moody's insurance. General Fund Lease Revenue Bonds /\/\·· 1\1\ /\a3 2007 Senior Lease Revenue Bonds /\ I\+ /\ l LPMR began on J anua1v l, 2001, \1v1th the first pavment made t:o the trust:ee on July Electric Revenue Bonds !-V-\--- !\!\ /\a3 7, 2001, for the LP!VIR generated during the period January through June 2001. Water Revenue Bonds AA+ !\AA Unrated Subsequent to that date, LPrv'lR is collected and remitted to t:he t:rustee mont:hly. During the fiscal year ended June 30, 2017, $56,860 was remitted to the trustee. Sewer Revenue Bonds /\/\+ !-V-\ + /\3 GOVERN!VIE NT/\L /\CTIVITIES Debt service requirements to maturity for the 1997 Anaheim Lease Revenue Bonds and the 2007 Anaheim Lease Revenue Refunding Bonds to be paid by t:he Anaheim Resort Improvements Debt Service Fund from future LPMR are as follows BONDS PI\Y/\BLE l\tJ une 30, 2017, bonds payable consisted of the followings Fiscal Year Ending 6130 Principal Interest Total 2018 s 11,667 s 26,332 $ 37,999 2019 12,030 27,086 39,116 Out- Range of At1lhorized ,1Q,397 Date Final lnterestRates and standing 2020 12,616 27,781 Issued __ Maturily__ al Issue Date Issued _6/30(2017 _ 2021 13,279 28,4(i4 41,743 Citv 2022 13,782 29,197 42,979 1997 Anaheim Lease 2023 2027 77,762 l ',6,6I8 234,380 Revenue Bonds 2/1/1997 3/1/2037 4.5%-6.a¼ S510,427 $140,183 20282032 92,953 177,583 270,536 Accrellon 233,265 20332037 137,074 214,282 351,356 2007 Anaheim Lease Total 371,163 687,343 1,058,506 Revenue Refu11d111g Bonds 6/13/20J7 3/1(2037 3.25% --5.:i% 256,320 230,980 Unamortized bond discount (1,753) (1,753) 2C08 Anaheim Lease Total bonds $ 369,410 687,343 $ 1,056,753 Revenue Refunding Bonds 12/l0/20J8 8/1/2019 3.0%--:i.a¼ 5,084 1,575 s 2014Anaheim Lease Revenue Bonds 11/14/2014 5/112046 0.4%-5.0% 27,95tl 21,754 included in interest is 5233,265 related to accretion on capital appreciation bonds. Tot.al 627,757 Unanortized bond premium,tliscounts, net ( 168) Total governmental activities bonds $ 799,785 $627,589 Bonds Payable City Lease payment measurement revenues In February 1997, the /\naheim Public Financing Authority sold $510.,127 of lease revenue bonds to construct: public improvements 1n The Anaheim Resort. In June 2007, the Authority sold $256,320 of lease revenue bonds to defease $2,18,335 of the 1997 lease revenue bonds. The bonds are special obl1gat1ons of the Aut:honty payable solely from lease payments to be made by the City to the /\utl1ority for the use and occupancy of t:he leased premises. Debt service requirements to maturilV for these lease revenue bonds are paid from lease payment measurement revenues (LPMR) defined as amounts equal t:o "I) 3% ofd1e 15% transientoccupancv taxes (TOT) (i.e. 20% of the total transient occupancy taxes) for all hotel propeIties in the City, excluding Disney properties, and 2) 100¾ of the incremental TOT, sales, and propertv tax revenues from all Disney properties over the 1995 base, adjusted each year by the CPI change, with a minimum 2% increase annually. The Citv 1s not CITY OF ANAHEIM Lease revenue bonds -- City NOTES AND LOANS PAYAS LE AtJ une 30, 2017, notes and loans payable are as follovvs Debt: se1v1c:e requirement~ to rnat:uritv for t:he City's lease revenue bonds to be paid from unrestricted revenues of the Municipal Facilities Debt Service Fund are as Notes and Loans Payable - C:it:v follows HUD Section l 08 guaranteed loans payable Fiscal Year Endinq 6130 Principal Interest Total In May 2003, the C:itv entered into an agreement with HUD, making available 2018 $ 501 $ l, 154 $ 1,655 $10,000to provide fmancial assistance relat:ed to the development:ofVVestgate on a 2019 519 l, 129 l ,6'18 former landfill site located at the northeast comer of Beach Boulevard and Lincoln 2020 55'.) I, 102 l ,657 Avenue. The loan is payable from the receipts of the Successor Agencv receivable. 2021 1,088 1,088 The outstanding balance at June 30, 2017 was $5,653. The loan bears interest ranging from l.74% to 5.9?¼ and is payable over20years beginning on February ·1, 2022 40 1,088 I, 128 2005, until August l, 2023. Loan debt service requirements to maturity' are as 2023-2027 2,103 5,172 7,275 follows 20282032 3,277 4,427 7,704 2033-2037 4,182 3,476 7,658 Fiscal Year Ending 6,30 Principal Interest Total 2038-2012 5,338 2,263 7,601 2018 s 68'.) $ 305 $ 990 204321)46 6,814 714 7,'.)28 2019 730 266 996 23,329 21,613 4•1,942 Total 2020 785 223 1,008 1,585 1,585 U 11amort1zed bond premium 2021 841 177 1,018 $ 24,914 $ 21,613 $ 46,527 Total Bonds 2022 907 127 1,034 94 1,799 CAPITAL LEASE OBLIGATIONS 2023 2027 1,705 Total notes and loans s 5,653 $ I, 192 $ 6,845 The CilV has a long--term noncancelable agreement with HP Financial Services to finance the acquisition of the City's server, desktop, and portable computer in March 2010, the C:itv entered into an agreement with HUD, making available equipment The agreement qual1f1es as a capital lease for accounting purposes as $15,000 to fund the acquis1t:1ons of the Orange C:ountv Family J ustJCe Center and defined underthe Financial Accounting Standards Board (FAS B) Statement No. 13, Miraloma Park site, construction of the Thornton Brady storm drain and the Account:lng for Leases, and therefore has been recorded at: the present: value of rehabilitation of tl1e historic Packing House site. The loan 1s pavable from the future minimum lease payments at the date of inception of the lease. Future C:ommunitv Development Block C rant yearly entitlement and from the receipts of the minimum lease payments to be made from unrestricted revenues of the lnfo1mabon Successor Agency receivable. The outstanding balance of the loan at: June 30, Services Internal Service Fund under the capital lease are as follows 2017, was $10,910. The loan bears interest ranging from 1.74% to 3.97% and is payable over 20 years beginning 011 February I, 2011 through August I, 2030. Loan Fiscal Year Ending 6130 debt service requirements to maturity are as follows 2018 I, 158 Fiscal Year Endinq 6,(~0 Principal Interest Total 2019 496 2018 $ 670 $ 415 $ 1,085 2020 152 2019 690 l'l4 1,084 2021 27 2020 710 372 1,082 Total 1,833 2021 730 348 1,078 Less amount representing interest, variable (95) 2022 755 321 1,076 1,738 Present value of future minimum lease payments s 2023 -2027 4,185 I, 133 5,318 2028 2031 3,170 235 3,405 Total notes and loans $10,910 $ 3,218 $ 14,128 66 CITY OF ANAHEIM Helicopter loan payable governmental activities totaled $6,235. The outstanding balance at June 30, 2017 was $6,006. In J anuarv 2009, the City entered into an agreement vvith Government Capital Corporabon to finance t:he acqu1s1t:ion of a police helicopter. The amount of- die loan Loan debt service requirements to mat11rilV are as follO\lvs totaled $1,799 and bears interest at 5.391% per annum for a term of 12 years. On January 29, 2009, Government Capital Corporation assigned this agreement to Fiscal Year Ending 6,30 Principal lntere st Total Bank of America which subsequently assigned it to Western Alliance Equipment 2018 $ 687 $ 128 $ 815 Finance on March 21, 2012. Principal and interest payments of $206 are due 2019 700 1 ·1') 81 '.) annually beginning on December 16, 2009, until December 16, 2020. The 2020 7·14 102 816 outstanding balance atJ une 30, 20l 7was $724. Loan debt se1v1ce requirements to 2021 727 88 815 maturity' are as follows 2022 741 74 81 '.) 2023-2027 3,383 157 3,540 Fiscal Year Ending 6130 Principal Interest Total Total notes and loans s 6,952 $ 6(i4 s 7,616 2018 $ 167 $ 39 $ 206 2019 176 30 206 2020 186 20 206 ACCE LA Enterprise permit t:rackinq and land management sofl\vare system loan 2021 195 11 206 payable Total notes and loans $ 724 $ 100 $ 824 On September 13, 2016, the City entered into a Technologv Lease-Purchase Lincoln Avenue Const:ruction loan payable Agreement: with Covernment Capital Corporation t:o provide $5, ·190 fmancing for the procurement of the Accela, Inc. software, programming, maintenance, support, In rv'larch 2013, t:he City entered into a cooperative agreement with the Countv of licenses and proJect 1mplementat10n seIvIces for the replacement of the C1t\Nvide Orange (County) for the fonding and construction of Lincoln Avenue. The project enterprise permittracking and land management system. The loan bears interest at includes widening of Lincoln Avenue from Rio VIst:a Street: t:o R1verbend Parkway, 2.48% per annum for a term of 5 years. Principal and interest payment') of $1,090 and construction of the Lincoln Avenue Bridge over the Santa Ana River. are due annually beginning on September 22, 2016, until September 22, 2020. The Construction costs of the Lincoln Avenue with111 the City boundary is estimated to be outst:anding balance at:J une 30, 2017 was $4,-1 Ol. Loan debt service requirements $2,250 which will be payable to the County in seven installments starting on July l, to maturity are as follows 2013 and on J ulv 1 of each subsequent: year at no interest cost. The outst:anding balance at June 30, 2017 was $750. Fiscal Year Endinq 6/30 Princ1ral Interest Total 2018 $ 989 s 100 $ 1,089 800 Megahertz Communication E guipment 2019 l ,012 77 1,089 2020 1,037 52 1,089 On November 30, 2015, the City entered into a Master Equipment Lease.Purchase 2021 1,063 26 1,089 Agreement (Agreement) \1v1th Banc of- America Public Capital Corp., to finance the Total not:es and loans $ 4, I Ol 255 $ 4,356 acquisitions and replacement of tl1e City portion of the 800 Megahertz (MHz) s Countvwide Coordinated Communications System (CCCS). The CCCS project Network Core Equipment loan payable includes a plan for replacement of three main components: Backbone Equipment, Subscriber Equipment, and Dispatch Consoles. 011 J anuarv 10, 2017, the CItv entered into a lease purchase agreement: with On November 30, 2015, the Agreement provided $-1, H)0 fmancing for acquisition of Delage Landen Public Finance, LLC to provide $723 financing for the replacement a portion of the mobile radio equipment payable over l O years and bears interest of of the C1t\Nvide Network Core system. The loan is pavable over 3 years with an 1.98¾ per annum, Principal and int:erest payments of- $6·1 are due semi--annually annual payment of $25 l. AtJ une 30, 2017, the total debt service to maturity of the beginning on May 30, 2016, until November 30, 2025. The outstanding balance at the loan was $502. June 30, 2017 was $946. Fiscal Year E 11d111g 6d0 Principal lntere st Total On November 30, 2016, the Agreement provided $6,840 financing for acquIsItmn of 2018 $ 241 $ lO $ 251 the remaining radio equipment pavable over l O years and bears interest of 1.87% 2019 246 '.) 2'.) l per annum. P rinc1pal and interest: of $377 are due semi--annuallv beginning 011 May Total notes and loans j; 487 s I') s 502 30, 2017, until November 30, 2026. Amount of this financing allocated to the 67 CITY OF ANAHEIM 5 IJSINESS IYF'E !\CTIVITIES Bonds Payable Electric Utility BONDS P!\Y!\BLE The City's Electric Utility has pledged future electric revenues, net of certain costs, to repay a total of- .Sl ,090, '.) ·13 out:stand1ng long--te rm obl1gat1ons, principal and int:ere st. Proceeds from bonds provided financing for various capit:,1.I improvements, primarily Range of lnte1 -- distribubon asset:s. The E lectJ·ic U t:!lity's bonds are payable solely from electJ·ic Date est Rates at Authorized Outstandinq bsued !vlaluritv Issue Date and Issued 6/:)0/20lt customer net revenues and are payable through 20-17. AtJ une 30, 2017, the annual Electric Utility principal and interest payments on the bonds, excluding early bond retirements, 2009 Revenue Bonds 3/102009 10/1 ,,2039 3.C:% --5.25% $ 70,000 $ 3,020 vvere 46.7'¾ of net revenues. Principal and interest paid for the current fiscal year and total net revenues \1vere $47,898 and $102,611 respective Iv. 2011 Revenue Bonds 5/11/2011 10/112036 3.QVo -5. 375% 90,390 88,565 2012 Revenue Bonds 9/19/2012 10/1/2031 3.12S% --S% 92,130 02, no Bond debt service requirements to maturity br the E lecbK Ut:1l1ty t:o be paid from 2.0%-5.0% 2014 Revenue Bonds 10/8,2014 10/1 :2035 109,350 94,745 revenues are as follows 201 SA Revenue Bonds tl/211201':i 10/1 ?CMS Variable a 50,000 50,000 201 SB Revenue Bonds 7/21/2015 10/1/2035 3.0% --SJJ% 92,86:i 89,020 2016A Revenue Bonds 1011912016 10/1 :2041 3.0%-5.0% 219,285 219,285 Fiscal Year Ending 6.130 Principal Interest Total 20168 Revenue Bonds 10/19/2016 10/1/2028 0.80%--2.71% 69,780 68,460 2018 s 20,&Vi $ 31,441 s 52,286 Total 705,225 2019 21,660 30,616 52,276 U11a rm1t1zed bond µ1em1ums ,tl1scount.s, 11et 65,314 2020 25,585 29,601 '.)'), 186 Total Electric Utilitv 770,539 2021 26,755 28,'166 55,221 Water Utilitv 2022 29,445 27,227 56,672 2(X)8 Revenue Bonds 7/)/2008 10/1/2038 4.0% --'.).()% tlB,580 795 2023-2027 162,235 114,719 276,954 2010 Revenue Bonds 1012812010 10/1 ;2040 2.QVo -4.75% 34,525 33,475 20282032 180,740 77,236 2'i 7,976 2015 Revenue Bonds 4,121 /2015 10/1 Q045 2.0%-5.0% 95,885 93,535 20332037 163,685 35,477 199,162 20I6-A Revenue Bonds 10/19/2016 10/1 f,'()46 2.0% --'.).()% 3S,22S ___3_·1~/~16~5 2038-2042 52,145 9,056 61,201 Total 162,270 204321)47 22,130 1,454 23,'.)84 U11a rm1t1zed bond µIemiums ,tl1scount.s, I1et 16,S30 Total 705,225 385,293 1,090,518 Total Water Utilitv 178,800 U namorbzed bond Saniration Ulll1ly premiums/discounts, net 65,314 65,314 2007 Revenue Bonds 5,123 12007 2/1 ;2039 3.9%-5.0% 47,710 40,490 Total bonds $ 770,539 $ 385,293 Sl,155,832 U11arm1t1zed bond µIemium 815 Total Sa111t.at1011 41,305 Bonds Payable -Water Utility Convention, Sports & E nt.ertainn'K':nl Venues 2008 Lease Revenue The City's Water Utility has pledged fi1ture revenues from the sale of water, net of Refunding Bonds 12,-10/2008 8/1/2019 3.0% --'.).()% tJS,847 15,234 certain costs, to repay a total of $286,252 for outstanding long-term obligations, 2014 Lease Revenue principal and interest. Proceeds from bonds provided financing for various capital Bonds 11 /14:2014 5/1 ;2046 0.4%-5.0% 230,971 213,626 1mprovement:s, primarily distribution asset:s. The bonds are payable solelv from Toral 228,860 water net revenues and are pavable through 2047 At June 30, 2017, the annual principal and int:erest payments on the bonds were 62.~:11/4 of- net: revenues. Principal Unarrrntized bond premiums discounts, net 15,896 1 and interest paid for current fiscal vear and total net revenues were Sl 0, 195 and Total Convention, S p::;,Its & E ntertaInrne11t. Venues 244,756 $16, l 97 respectively. Tot:1I business-type activities bonds Sl ,332,543 $1,235,400 ,,. S S IFMA (Municipal Swap Index) rate up to the the period ending April 2, 2018. Durilg this period. The interest is Bond debt service requirement~ to maturilV for the Water Utility t:o be paid from calcula!J.>dweeklv tJ.ised on S IFMA index rdte ,md a bdse S IFMA spredd of 0.50%. On April 2, 2018, 1hese bonds are ~ubjec t 10 rnanddtorv tender for purchase or conversic(J to d fixed rdte. IFMA (Municipal S Wdp lnde~) rdte up to the revenues are as follows the period ending April 2, 2018. During thi~ peri(x:l. n-1e in1erest i~ calcula1edweeklv bdsed on S If MA ildex ra1e and a base S IFMA sixead of0.50%. On Apnl 2, 2018, these bonds are sub_1ect to mandatory tender for p..irchase or conversion to a fixed rate. 68 CITY OF ANAHEIM Fiscal Year Endinq 6130 Principal Interest Total Bonds Payable - Convention, Sports & Entertainment Venues 2018 $ 3,370 $ 7,638 $ 11,008 Bond debt service requirements to rnal1Jrity for t:he Convenbon, Sports & 2019 3,490 7,519 11,009 E ntertainment\/enues to be paid from revenues are as follovvs 2020 3,&10 7,369 11,009 2021 3,810 7,199 11,009 Fiscal Year Endinq 6,(~0 Principal lnt:erest Total 2022 3,985 7,025 11,010 2018 $ ,1,844 $ 11,317 $ 16,161 20232027 22,790 32,084 54,874 2019 '.),095 11,074 16,169 2028-2032 28,815 25,660 54,475 2020 6,355 10,814 17,169 2033--2037 3'.),78'.) 18,180 53,965 2021 2038-2042 38,145 9,143 47,288 2,400 l Cl,628 13,028 2022 20432047 18,440 2,165 20,605 3,890 10,508 14,398 Total 162,270 123,982 286,252 2023-2027 2'i,614 49,132 74,746 U 11amort1zed bond 2028-2032 32,689 42,056 74,74'i premiums;tliscount, 16,530 16,530 2033 2037 41,718 33,025 74,743 Total bonds $ 178,800 $ 123,982 $ 302,782 2038-2042 53,245 21,499 74,744 20432046 53,010 6,788 59,798 Total Bonds Payable - Sanitation Utility 228,860 206,841 435,701 Unamortized bond The City's Sanit:at:ion Utility has pledged fut:ure sanitation system net: revenues to premiurn1d1scounts, net 15,896 15,896 pay a total of $65,935 for revenue bonds issued in May 2007. Proceeds from the Total bonds $ 244,756 $ 206,841 s 4'i 1,597 bonds provided financing for capital improvements to t:he sanitation se\1ver collecbon system. The bonds are payable solelv from system net revenues and are pavable NOTES AND LOANS PAYAS LE through Februa1y 2039. At June 30, 2017, total p11nc:ipal and interest payments on the bonds were less than 38.7¾ of net revenues. Total principal and interest paid Note Payable - Electric Utility and total system net revenues for the curient fiscal year were $2,999 and $7,742 respectively. On March l, 2013, the Public Utility Department entered into a Revolving Credit Agreement: (Agreement) w1d1 Wells Fargo Bank, National Associatmn for a note Bond debt service requirements to maturitv for the Sanitation Utility' to be paid from amount notto exceed $100,000, of which 586,000 is made available forthe Electric revenues are as follows U lllity and $14,000 for the Water U t1lity. The note has a three year term at variable interest rate based on the LIBOR Daily Index Rate and a spread. The annual Fiscal Year E nd1ng 6/30 Principal Interest Total commitment f:ee is 0. 175% of the t:ot:al not:e amouI1t of .s·100,000. 2018 s 1,095 s 1,902 $ 2,997 2019 l, 145 1,853 2,998 On J anuaIv l, 2m 6, upon expiration of the Agreement, t:he Public Utilitv Department and Wells Fargo Bank National Association entered into a new revolving credit 2020 1,190 1,805 2,995 Agreement: for the same term with a maturity date ofJ anuary 28, 2021. 2021 1,245 1,750 2,995 2022 1,310 1,688 2,998 On J ulv 13, 2013, the Electric Utility used $44,000 from the proceeds of the 2023-2027 7,560 7,'124 H,984 Revolving Credit Agreement (Agreement) with Wells Fargo Bank, National 20282032 9,445 '.),'.A4 14,989 Association t:o retire the outstanding principal balance of- $60,205 of the 2002--B 2033-2037 11,910 3,078 14,988 Electric Revenue Bonds. 20382039 5,590 401 5,991 During fiscal year 2017, the Electric Utility repaid the entire remaining outstanding 40,'190 25,'145 65,935 Total principal balance of- $13,200 of the tax--exempt not:e. Unamo1t1zed bond premium 81 S 8"15 Total bonds $ ,11,305 $ 25,4,15 $ 66,750 69 CITY OF ANAHEIM Note Payable - ARTIC Management Sanitation U1lli1y Anaheim Regional Transportation lntermodal Center (ARTIC) Land Acquisition Loan Fiscal Year E 11d111g 6j30 Principal lnt:erest Total payable 2018 $ 19 $ 4 s 23 2019 19 3 22 In July 2012, the Ci1y entered into an agreement with the Orange Coun1y TranspoItatIon Authority (OCTA) for the Purchase and Sale of a 13.58 acres real 2020 20 3 23 property located at 1750 South Douglass Road in Anaheim. The purchase pnce for 2021 20 2 22 the site is $32,'.)00. The City paid $1,000 at the close of escrO\lv and the remaining 2022 21 2 23 531,500 will be payable to OCTA over 13 years and bears 2% simple interest per 2023-2027 97 '.) 102 annum. Annual principal payments are due on or before July Hlth each year Total notes and loans $ 196 $ 19 s 215 commencing 2012. The payment of accrued interest is deferred until equal payments of $1,883 are due and payable on or before July HJ, 2024 and July 10, 2025. The loan is payable vvith the Anaheim Tourism improvement Special District Convention, Sports & Entertainment Venues (AIID) special assessments and Measure M2 Local Fa11 Share funds. OCTA wtll Fiscal Year Ending 6130 Principal Interest Total rek1.in payments from Anaheim's "Local Fair Share" funds allocated by OCTA under rv'leasure M2 each year until the final pavment: is made on July ·10, 202'). AtJ une 30, 2018 $ 2 s 2 2017, accrued interest payable for the ARTIC loan was 52,635. The Ci1y may elect 2019 2 2 to provide alt:ernat1ve funding from ot:her City funds for t:ransportation relat:ed 2020 3 3 purposes, such as gas tax funds. AtJ une 30, 2017, the outstanding balance of the 2021 3 $ 4 ARTiC loan was 520,000. Loan debt service requirements to maturity' are as follows 2022 3 4 20232027 13 14 Fiscal Year Endinq 6130 Principal Interest Total Total not:es and loans $ 26 $ 3 $ 29 2018 $ 3,500 $ 3,500 2019 3,500 3,500 ARBITRAGE 2020 3,500 3,500 2021 3,500 3,500 The Tax Reform Act of 1986 (Act) substantially revtsed the tteatmentto be afforded 2022 4,000 4,000 to earnings on the proceeds of tax-exempt debt, and requires the City to calculate 2023-2026 2,000 $ 3,765 5,765 and remit rebatable arbitrage earnings to the lnt:emal Revenue Service. CeItaIn of Total notes and loans S 20,000 S 3,76'i S 23,76'i the City's debt and interest earned on the proceeds thereof are subject to the requirements of the Act. The CilV has accrued a liability for estimated rebat:able 800 Megahertz Comrnu11Icat:ion E quiprnent loan pavable arbitrage earnings and has set aside such earnings as restricted cash. AtJ une 30, 201 7, the arb1t:rage rebate l1ab11itv for governmental and business-Wpe activItIes was Portion ofthe 800 Megahertz Communication Equipment financing vvere allocated to zero and $134, respectively. The Elect:ric Ubllty, the Sanitation Utilitvand the Convention, Sport') & EnteItaInme11t Venues. Loan debt service requirements to maturitv are as follows COMPLIANCE WITH DEBT COVENANTS There are various limitations and restrictions contained in the City's bonds and Electric Utility certificat:es of participation indentures. The City' believes they are in compliance \1v1th Fiscal Year E 11d111g 6/30 Principal Interest Total all significant limitations and restrictions. 2018 s 29 s 6 $ 35 2019 30 5 35 DEBT ISSUANCES 2020 30 4 34 City ---Debt: Issuance 2021 31 4 35 2022 32 3 35 On September n, 2016, the City issued a loan pavable of $5,190 at an interest rat:e 2023-2027 149 7 156 of 2.48% w1d1 Government Capital Corporation to provide financing for the Total notes and loans s 301 s 29 $ 330 acquisIt:1on and 1rnplementat1on of the city'w1de enterprise permit tracking and land management system to replace the existing Tide mark system. Loan debt service to 70 CITY OF ANAHEIM maturity tl1rough fiscal year 2020 will be $5,448. The City has recorded tl1e loan Water Utility -Debt Issuances proceed 111 the Information and Communication Services Internal Service Fund. The loan vvill be repaid from unrestricted revenue sources of the Information and 011 October l 9, 2016, the Wat:er Utility issued /\naheim Housing and Public Communication Services lnt:ernal Service Fund. improvements Authority' Revenue Bonds Series 2016-A in the principal amount of $35,225 at: a premium of $5,230. The true interest: cost is 3.82%. The proceeds of On November 30, 2016, the City issued a loan payable of $6,840 at an interest rate .$,-10,000 vvill be used for capital improvements related to the transmission, of- 1.87% under the Master Equipment Lease,iPurchase Agreement: with Banc of distribution and storage system of- the Water Utilitv and $450 to pav for cost of America Public Capita.I Corp., The loan provides financing for the acquisition of the issuance. Total debt service to maturity through fiscal year 2047 will be $65,458. 800 Megahertz mobile radio equipment. Total debt service t:o maturity through fiscal year 2026 will be $7,531. The City has recorded the loan proceed in the Other DEBT RETIREMENTS Capital Prc)Ject nonmajor capital project fund ($6,125), the Internal Service Fund ($110), the Electric Utility ($315), the Sanitation Utility ($205) and the Convention, City Sports & E nte1ta1nment: Enterprise Funds ($2/). The Metro C1t:1es Fire Authority Uoint On September 28, 2016, the CilV repaid the total outstanding principal and accrued Venture) was allocated $58. The loan will be repaid from unrestricted revenue interest of the General Obligation bond from the collection of ad valorem taxes. Total sources from the respective Funds. principal and interest paid was $714. OnJ anuaIy 10, 2017, the City issued a loan payable of $723 with Delage Landen Electric Utility Public Finance LLC, payable over three years, to provide financing for the replacement of the Citvw1de Nel'work Core svstem. The City has recorded the loan On October 28, 2016, the Electric Utility repaid the total outstanding principal proceed in the information and Communication Services internal Service Fund. The balance of the Wells Fargo revolving Line of Credit. Total principal and interest: paid loan will be repaid from unrestricted revenue sources of the Information and during the fiscal year was .Sl 3, 1-148. Communication Services internal Service Fund. Debt De/eased Electric Utility ---Debt: Issuances The City defeased the following bonds priortoJ une 30, 2017 On October 19, 2016, the Electric Utility issued Anaheim Housing and Public Improvement Bonds Series 2016-A and 2016--B in the principal amount of 289,065 Outstanding ata premium of $3'), 183. The Bonds are being issued t:o provide .Sl 00,000 financing 6}30;2017 for the capit:,1.I improvements related to the Electric Utilitv distribution system, to Electric Utility refund the out~tand1ng principal balances of- the 2007 Electric Revenue Bonds 2009A Electric Revenue Bonds S 'i8,260 (SH6,720), partially refi_mded the 2009 Electric Revenue Bonds ($58,260), and to fund debt: service reserve funds and cost of issuance. The true interest: costs are Water Utility 3.71% and 2.38% for the 2016-A and 2016-ll respectively. The Electric Utility Series 2008 Water Svstem Revenue Bonds .S 46, '.)95 reduced its total debt: service payments over t:he lite of- the refunded bonds by In the refunding, the proceeds of the refunding issue were placed in irrevocable $39,948 and obtained an economic gain of $29,647. Total debt service to maturi1y escrow account:s and invested in government: securities that:, together with interest thmugh fiscal year 2047 will be $484,113. earnings thereon, will provide amounts suff1C1ent:for future payment~ of interest and principal on the issues refunded. Refunded debt is not included in the City's The bond proceeds, net of premium and along with .Sl '),288 of t:he previous debt accompanving basic financial st:,1.tements as the City has satisfied its obligation service reserve and bond funds totaled $339,536 were deposited as follows t:hrough the 111--subst:ance deteasance of these issues. 20I6A 20 I 68 Total CONDUIT FINANCINGS Project Fund $ 100,000 $ 100,000 Debt Service 18,399 s 5,8'.)5 24,254 City Cost of issuance fund &13 263 l, 106 The City has entered into tvvo conduit financings on behalf of a community care Deposited in escrovv for the refundings of: provider facility and one to facilitate the management agreement for t:he Honda 2007 Elect:ric Revenue Bonds 78,868 70,891 149,759 Center (formerly the Arrowhead Pond) of Anaheim. In accordance with applicable 2009 Electric Revenue Refi.1nd1ng Bonds 64,417 64,417 agreements, the Citv has no obligat:lon for debt service payments and therefore, the debt is not reflected in the accompanying basic financial statements. Bonds payable Total s 262,527 s 77,009 $ 339,536 and certificates of participation related to conduit financings outstanding at June 30, 2016, were as follows 71 CITY OF ANAHEIM FIDUCIARY FUNDS Date Final Amount Outstanding Issued Maturity Issued 6/l0/2017 Successor Agency l 993 Anaheim Memorial Hosp1lal Association 10/15/1993 5/15/2020 $ ,)6,690 $ 8,995 The following is a summary of changes in long-term liabilities for the vear ended 2003 Anaheim ,Arena J une 30, 2017 Financing Projecl 12/1 I;2003 6/1/2023 42,600 22,500 Within Total $ 89,290 $ 31,495 Beginning Additions/ Reduclions/ Ending One Balance P1oceeds Pavments Balance Year /\11ahe1m Housing /\uthority Bonds pavable $ 199,765 S (5,805) $ 193,960 S 8,205 prem1um {discount), net 2,275 (243) 2,032 The Anaheim Housing Authority has entered into conduit debt financings on behalf 1 of- various developers to assist with die acquisition, const:rucbon, equipping, Notes and loans pavable 6,189 (357) 5,832 396 rehabilitation and refinancing ofmultifamilv residential rental projects within the City Due to C:rtv of Anaheim 16,020 (4,410) 11,610 1,023 of Anaheim. In accordance \1v1t:h the bond document:s, neither the C1tv nor t:he Pollution remediation liability 18/162 (574) 17,888 359 Housing Authority has an obligation for debt service payments and therefore, the Net pension liabilitv 7,845 (7,845) debt 1s not: reAect:ed in t:he accornpanving basic financial statements. Housing $ 250,556 $ $ (19,234) $ 231,322 $ 9,983 Authoritv revenue bonds related to conduit financings outstanding at_J une 30, 2017, were as follows === Bonds Payable Date Final Amount OulSt.anding issued Maturity Issued 6/30/2017 2007 Tax Allocation Re funding Bonds Heritage Villaq~ Aparlm?nts 11/12/1992 7/15/2033 s 8,485 $ 5,485 Sai;;ie Park Project ll/1,-1998 11/1/2028 5.500 5,500 The Successor Agency \1vlll repay a total of $278,507, principal and int:erest, for the Park Vi5ta Apartrnf_'nls 7 ;24;2CIYJ 7/1/1933 27,180 27,180 outstanding 2007 tax allocation bonds issued in December 2007 from the semi Solara CourtAputrrents 11 /1,2004 12/1 /l 934 8,200 4,983 annual Redevelopment Property Tax Trust: Fund (RPTTF) revenue allocations. Proceeds from the bonds provided financing for public improvements related to the Bel Age Ma nor Apart_rnf_'nls 2/1/2008 2/1/19-:J-4 22,350 19,781 merged proJect: areas, for t:he supply of low--and moderate---income housing within P radera Aputments (Lincoln Anaheim) Phase B 5,n 5,'2009 4/15/1939 23.217 7,740 the Citv, to repay certain Redevelopment Agency loan obligations and to advance Anlon rv1onaco Apartment.<; 12;14;2012 1 /1 ;2046 35,460 34,532 refund the 1992, 1997 and 2000 bonds. The bonds bear interest at rates ranging Crossings at Chenv Orchard Apartrrents Tranche A 8/23/2012 12/1/2044 9,365 1,078 from 4.25% to 6.50¼ and are payable through Februarv 203·1. During t:he fiscal year Cros5ings al Cherry OrchardApartm.~nt.s Tranche B 8/23/2012 12/1/2029 2,985 2,624 ended.June 30, 201 7, total principal and interest paid was .s·1 s,9l 5. P aseo V1llai;;ie Aputn--ents 2;28,'2013 9/1/2045 19.750 12,615 Debt service requirements to maturitv for 2007 Tax Allocation bonds are as follovvs Village Center Apartm.~nt.s 8/7;2014 3/1;2047 15,000 15,000 Petble Cove Ap:1rtrrents S enes A 8/19/2015 9/1/2031 13,000 12,844 Fiscal Year Endinq_6,(10 Pett.lie Cove AputIreI1t5 Taxar.Jle SutXJrdinate P nncipal Interest Total Serb 2015A 8/1/2015 8/1/2055 3.550 3,550 2018 s 7,955 $ l0,053 s 18,008 Henmsa Village Apartnients Phase I Series A---i 12;28,Q0l 6 7/1/2049 34.169 34,169 2019 8,340 9,662 18,002 HernD5a Village Apartrnf_'nts Phase 1 Series A-2 12;28;2016 7/1;2049 6,859 6,859 2020 8,800 9,204 18,004 Miracle Terrace Apartments Series B--1 1 /I 0,201 7 2/1/2050 26,555 26,555 2021 9,290 8,720 18,01 IJ Miracle Terrace Apartments Series B-2 l /10/2017 2/1/2020 11.445 11,445 2022 9,800 8,208 18,008 2023-2027 63,195 32,671 9'.),866 Coljjestone Ap:1rtrrents S enes A--1 3,,14;2017 10/1/2054 6.185 6,185 20282031 81,390 11,219 92,609 Cot.t.Jlestone AputIrents Series A-2 3;14;2017 10/1 ;201 9 2,435 2,435 Total 188,770 89,737 278,507 Sea VV1ndAp:1rtrrents Senes B--1 3 /I 4/201 7 I 0/1 /2054 11,015 11,015 U namorbzed bond Sea \,'VindAput1n.'.nts Series B-2 3/14/2017 10/1/2019 4,340 4,340 premium/discounts, net 2,032 2,032 Total $ 297,045 $ 255,915 Total bonds $ 190,802 $ 89,737 $ 280,539 72 CITY OF ANAHEIM 201 0 Recovery Zone Economic Development Bonds CALSTRS assigned the agreement to the nevv owners, Pan Pacific Retail P mpeI1Ies, Inc. (PPR P). In Octobe, 2006, Kimco Realty Corpo,ation (~RC) acquired The Successor Agencv vvill repay a total of 58,090, principal and interest, PPRP including the assumption of the assigned plaza project agreement The KRC out:sta11d111g Recove1v Zone Econornics Development: Bonds issued in October 201 O paItIcipat:1on not:e bears 7% simple interest: rate, and has a maximum term of- 2'.) from the semi"1.nnual RPTTF revenue allocations. Proceeds from the bonds years. The Successor Agency's obligation to repay the note is entirely contingent on provided financing for public improvements related to the merged project: areas. The the revenues generated by the project. The note will be forgiven at the end of the bonds bear interest at rates ranging from 1.44% to 6.22% and are pavable through term whether or not the entire amount has been repaid. At June 30, 2017, the February 2031. During the fiscal year ended June 30, 2017, total principal and outstanding balance of the paIticIpatIon not:e was $3,06'.). interest paid vvas $577. Debt seIvIce requIreme11t:s to mat:uritv for t:he Successor/\gency not:es payable and Debt service requirements to maturity for 201 0 Recovery Zone Development bonds contractual commitments to be paid from future RPTTF revenues are as follows a re as fol lows Fiscal Year Ending 6130 Principal Interest Total Fiscal Year Ending 6130 Princit2al Interest Total 2018 $ 396 $ 614 $ 1,010 2018 $ 250 $ 326 $ 576 2019 •138 600 1,038 2019 265 314 579 2020 483 583 1,066 2020 280 30 I 581 2021 1,809 456 2,265 2021 290 286 576 2022 459 •159 2022 310 270 580 2023-2027 640 1,868 2,'.)08 20232027 1,840 1,049 2,889 20282032 2,066 579 2,&15 2028-203 l 1,95'.) 354 2,309 Total notes and loans $ 5,832 $ 5,159 $ 10,991 Total bonds s 5,190 $ 2,900 8,090 Due to the City of Anaheim Notes and Loans Payable The Successor Agency vvill repay a total of $6,&-15 outstanding long-term Savi Ranch /\ssocIates note payable obligations, principal and interest:, from t:he sem1-an11ual R PTTF revenue allocat:lons for the $10,000 Cooperation Agreement dated April l, 2003, between the former In July 1989, the former Redevelopment Agency executed a note with Savi Ranch RedevelopmentAgencv and t:he CilV, \/\/hereby the Citv ass1st:ed the brmer Agency Associates, a California general partnership. The amount of the note tota.led $2,707 with the development of the Anaheim Westgate Center (VVestgate project) utilizing and bears interest at 9.5% per annum. The note is payable from net property ta.x $10,000 of funds from the HUD Section H)8 loan. This Cooperatmn /\greement increment as defined in the Redevelopment /\gency note. If there is insufficient obligation (HUD Section 108 loan) bears interest ranging from 1.74% to 5.97% and R PTTF revenue to pay for principal and interest at the termination of the River Valley Is payable semi-annuallv through /\ugust 2023. At: June 30, 2017, outstanding project area plan In November 203·1, the note ceases t:o be an obl1gat1on of t:he principal due to the City for the Westgate proJect obligation was $5.702. Principal Successor Agency. For the fiscal year ended June 30, 2017, total interest paid was and interest: paid for the current fiscal year were $1,012. $396. The Successor AgeIicv will repay a total of- $6,490 outstanding long-term Contract:ual obl1qations obligations, principal and interest, from the semi-annual RPTTF revenue allocations for t:he $7,000 Cooperation Agreement dated June 201 0 bet\veen t:he forme1 /\s part of the Redevelopment /\gency's economic development program to att:ract Redevelopment Agency and the City, whereby the City assisted the former and retain businesses in the City, the former Redevelopment Agency has entered Redevelopment /\gency w1t:h the rehabilitation of t:he historic Packing House site into various contractual obl1gatmns to reimburse tenant: improvement costs to be utilizing proceeds from the HUD Section 108 loan. This Cooperation Agreement paid from property tax increment revenues (thereafter RPTTF). At June 30, 2017, obligation (HUD l08Section loan) bears interest ra11gI11g from l.68% to 3.989-6 and the out:sta11d1ng balance of-t:hese obl1gat1ons totaled $60. is payable over 20 years beginning on February l, 2011 through August l, 2030. As ofJ une 2017, the out:sta11d111g principal due to the City for the Packing House site In December 1992, the former Redevelopment Agency has entered into an project obligation was $5,024 Principal and interest paid for the current fiscal vear agreement with California Sta.te Teachers Retirement System (CALSTRS), to share were $553. in t:he development costs of the Plaza Redevelopment Project In March 2004, 73 CITY OF ANAHEIM In 20"13, the Successor /\gency entered into a C:ooperat:ive Agreements with the C1tv At June 30, 2017, the City has the following outstanding Mello Roos special tax whereby the Citv assisted the Successor Agencv by providing a loan of $1,563 to bonds fmance various Successor Agency proJect~. The Successor Agency will repay t:he City from future RPTTF revenue allocation. At June 30, 2017, tl1e outstanding Outstanding balance of these loan are $884. 6;30/2017 VVest:gate Pollut:ion Remediation Obligat:ion CFO 06-D2 s 7,540 CFD080I 60,000 lnJ une 2003, the former Redevelopment Agency acqu11ed p,opeI1y located at 2951 Total West Lincoln Avenue as part of a redevelopment project named the Westgate s 67,540 proJect. /\pprox.1rnately l l acres of the property \1vere formerly known as die Sparks and Rains Landfills. The County of Orange was the operator of these landfills until 111 February 2007, the City issued $9,060 In special tax bonds to finance a portion of 1960. In November 2008, the County paid the Redevelopment Agency $'i, 176 in the cost of acquisition and construction of facilities in the Platinum Triangle of settlement of claims related to the pollution remediation for the Westgate project site Anaheim, Communitv Facility District 06--2. Stadium Loft. On /\ugust 10, 2016, the prior t:o the development: of a shopping cent:er. The total cost~ of the pollution outstanding balance of 57,680 of the 2007 special tax bonds were refunded by remediation vvork amounted to $12,420 based on actual contract received for the Special Tax Refunding Bonds, Senes 2016, CFO 0602, in the principal amount of project. During t:he year ended June 30, 2m 5, management: 1de11bfied potenbal $7,5•10 and at a premium of $91. The Ci1y reduced the CFO 06-2 total debt seIvice additional pollution remediation costs including ongoing maintenance payments over the life of the refunded bonds by $1,989 with a present value savings responsibil1t:1es required for the Westgate proJectamounbng to $18,576.AtJ une 30, of $1,352. The true interest cost is 2.89¾ payable semi--annualy commencing from 2017, the pollution remediation liability is estimated to be S17,888. March l, 2017 through September I, 2037. Total debt service ,s SI 0, 181 to maturity. Unfunded net pension liability In August 2010, the City issued $28,630 in special tax bonds, Senes 2010 to fmance a portion of the cost of acquisition and construction of facilities in the Platinum In May 2017, the California Department ofFinance (DOF) has denied the Successor Triangle of Anaheim, Communitv Facility District 08-l and to fund a reserve fimd fo1 /\gency's request t:o make any payment: towards its unfunded pension l1abil1ty The the Series 2010 Bonds. On August 10, 2016 the Ci1y issued Special Tax Bonds, DOF has taken this position across successor agencies statewide. As a result, the Series 2016, CFO 08--1 in the principal amount of $60,000 and at a premium of Successor Agency can not pay any of- its unfimded pension obligat:ion and t:his $5,923. The bonds are being used to provide financing for acquisition and liability was assumed by the City. The Successor Agencv has petitioned a lawsuit construction of certain public faci11t1es necessarv for the contmued development of against the DOF In its decision of denying die unfimded pension obl1gat1on and this the District, and to refund $22,730 outstanding principal of the CFO 08-1, Special case is currently under judicial review. Tax Bonds, Series 2010. The City reduced the CHJ 081 total debt seIv,ce payments over the life of the refunded bonds by 513,325 with a present value savings of Mello-Roos Community Facilities Districts $8,649. The true int:erest cost: is 3.38¾ payable semiannuallv commencing from March l, 2017 through September l, 203 7. Total debt service is $110,392 to The City issued special tax bonds to finance construction in various Community mat:urity. Fac11it1es DIst:rict:s. These bonds were authorized pursuant to the Mello-Roos Communitv Facilities Act of 1982. The bonds are pavable from a special assessment:tax and are non-recourse bonds secured by the properbes. Neither the faith and credit nor the taxing povver of the Citv, the S t:,1.te ofCalifomia or any political subdivision of either of the foregoing is pledged to the payment of t:he bonds. The bonds are not general or special obligations of the City, nor do they contain anv credit enhancements that secondarilv pledge existing or firture re sources of the Citv, accordingly thev are not reflected in the accompanving basic financial statements. The City Is act:lng as agent: only for the property owners 111 collecting the special assessment:s and for\1vard111g the collect:lons t:o the fiscal agent. This act:ivity Is recorded in an agency fond in the basic financial statements. CITY OF ANAHEIM NOTE 9- SEGMENT INFORMATION Condensed S t:aternent of Revenues, Expenses and Changes in Net: Pos1t1011 The Sanit:abon Utilitv Fund issued revenue bonds to finance sewer system Waste water fees (pledged against bonds) s 12,889 expansion and improvements. The Sanitation Utility Fund accounts for three Other revenues 882 acbvities: solid waste collection, wastewater, and street cleaning. However, (2,216) investors in the revenue bonds rely solely on revenue generated through Depreciation and amortization \1vast:e\1vater activIt1es for repavment. Summary financial info1mat:1on for \1vast:e\1vat:er Other operating expenses (6,252) activIt:1es is presented belO\lv Total ope rating Income 5,303 No11operat111g income(expenses) Condensed S t:aternent of- Net Position Interest 111corne 223 (1,427) Assets lntere st expense (Vi) Cash and cash equivalents $ 7,368 Loss on disposal of capital assets (501) Investments 21,879 Transfer out (1,720) Other current assets 1,781 Total nonoperating expense 3,583 Rest:ricted cash and cash equivalent:s 8,629 Change in net position 97,458 Restricted investments 5,422 Net position at beginning ofvear Capital assets, net 10,1,324 Net pos1t1on at end of year s IOl,041 Total assets 149,403 Condensed Statement of Cash Flovvs Deferred outflows ofresources -deferred pension 1,855 Net cash provided by (used for) Liabilities Ope rating activ1t1e s $ 7,465 Current liabilities 1,289 Noncapital financing activities (501) Current liabilities pavable from restricted assets 1,650 Capital and related fmancing act:ivities (7,304) Noncurrent l1abil1t:1es 46,603 Investing activities (1,598) Total liabilities 49,542 Net decrease (1,938) Deferred inflows ofresources -deferred pension 675 Beginning cash and cash equivalents 17,935 Net Position Ending cash and cash equivalents 15,997 Net investment in capital assets 62,824 Reconciliation of cash and cash equivalents Rest:ricted for debt services 460 Cash and cash equivalent 7,368 Restricted for capit:,1.I projects 12,357 Restricted cash and cash equivalent 8,629 Unrestricted 25,'100 Total cash and cash equivalent s 15,997 Total net pos1t1on $ 101,041 CITY OF ANAHEIM NOTE 10 PENSIONS Police Safety Prior to On or a fie 1 General information about the Pension Plans Hire Date January l, 2013 J anua,y l, 2013 Plan Description Benefit:forrnula 3.0¾ @) 50 2.1% @) '.)7 Benefit vesting schedule 5 years service 5 years service The City provides pension benefits to eligible full-time employees in three separate Benefit payments monthlv for lite 1nmd1lv for lite pension plans Miscellaneous Plan, Police Safety Plan and Fire Satt'tv Plan. These plans are agent multiple-employer public employee defined benefit plans and are Retirem2ntage 50 52-'.)7 administered through the California Public Employees' Retirement System Monthly benefits, as a% of eligible compensabon 3.0CJ½ 2.7()½ (CalPERS), vvhich acts as a common investment and administrative agent for Requ1recl emplovee contJ·1but1on rates 9.0CP/4 I2.0(J½ participating public entities w1th1n the State of California. Benefit provisions and all 39.784% 39.7&1% other requirements are established by State statute and City ordinance. CalPERS Required employer contribution rates issues publicly available report:s t:hat include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be Fire Safety found on t:he CalPERS webs1t:e ~D\;V\i\,w.calpers.c:a.gov. Prior to On or after Hire Date January I, 2013 January I, 2013 Benefits Provided Benefit formula 3.0¼ r.fl' 50 2.7% r.fl' 57 CalPERS provides se1v1ce retirement and d1sabil1tv benefits, annual cost of living Benefit vesting schedule '.) vears service '.) vears se1v1ce adjustments and death benefits to plan members, who must be public emplovees Benefit: payments monthly for life monthly for life and beneficiaries. Benefits are based 011 years of credited service, equal to one 50 5057 year of full time employment. Members vvith five years of total service are eligible to Rebrernent:a9e rebre at: age ')0 with statutorily reduced benefit:s. All members are el1g1ble for non- Monthly benefits, as a% of eligible compensation 3.0CJ½ 2.0¾-2.7% duty disability benefits after l 0 years of service. The death benefit is one of the Required employee contribution rates 9.0(J½ 10.75% following the Basic Death Benefit:, the 19')7 Survivor Benefit, or the Optional Required employer contribution rates 4L87GYo 41.876% Settlement ZW Death Benefit. The cost of living adjustments for each plan are applied as specified bv the Public Employee's Retirement: Law. Employees Covered The Plans· provisions and benefits in effect: atJ une 30, 2()"17 are summarized as AtJ une 30, 2016, the following employees were covered by the benefit terms for follows each Plan M1scellan- Police Fire Miscellaneous eous Safetv Safety 1,972 Prior to On or afie1 Inactive emplovees or beneficiaries cunentlv receiving benefits 539 297 Hire Date J anuary I. 20 ll J anuary l. 2013 Inactive employees entitled to but not vet rece1v1ng benefils l/193 65 49 /\cllve employees 1,670 400 199 Benefit formula 2. ?% @) 5'.) 2.0¼ r.fl' 62 Tot::.7.I 5,135 l,OOtl 545 Benefltvesting schedule 5 years service 5 years service Benefit: paym2nts monthly fm life monthly fm life Contributions Retirement age 50-55 52-65 Section 208H(c) of the California Public Employees' Retirement Law (PERL) Monthlv benefits. as a% ofeli91ble compensatmn 2. 7CP/4 2.0CP/4 requires that the employer contribution rates for all public employers be determined Required ernployee contribution rates 8.0(J½ 6.7'.)% on an annual basis by the actuary and shall be effective on the July l following notice of a change 1n the rate. The total plan contributions are det:ermined through 28.415% 28.415% Required employer contribution rates Cal PE RS· annual actuarial valuation process. The actuarially determined rate is the estimated amount: necessary to finance t:he cost:s of benefits earned by emplovees during the year, vvith an additional amountto finance any unfunded accrued liabilitv, The City 1s required t:o contribute the diftt'rence bel\veen the act:uarially dete1m1ned rate and the contribution rate of employees. 76 CITY OF ANAHEIM The Citv pays a certain percentage of the Participant contribution. The following table summarizes the required contribution rates bv employee and emplover effective for fiscal year 2017. The contribution require men ts of plan members and the C 1tv are established and may be amended bv Ca IP E RS. E m12lovee Rate E rnployer Rate Cal PE RS 1 Ret:irement 2 Employee Group Membership Formula Employee Cit' Employee City Total Rate Miscellaneous Employees ~ilanagement Classic 2.7% (q) 5 5 8.000:¼ 0.000% 4.00()0/4 24.415% 36.415% Nevv 2.a¾ @ 62 6.750% 0.000% 0.000% 28.415% 35.165% AMEA General Classic 2.?% @ 55 8.000% 0.000% •1.000% 24.415% 36."115% AME A Clerical Nevv 2.a¾ @ 62 6.750% 0.000% 0.000% 28.415% 35.165% i.6.E.W. Classic 2.?% @ 55 8.000% 0.000% •1.000% 24.415% 36."115% C:onfide11t:1al New 2.0:¼ i[_i:- 62 6.75('/½ 0.00()0/4 O.OOCJ½ 28.415% 35.165% APA Trainees Classic 2.?% @ 55 8.000% 0.000% •1.000% 24.415% 36."115% New 2.0:¼ i[_i:- 62 6.75('/½ 0.00()0/4 O.OOCJ½ 28.415% 35.165% Safety Employees Fire & Rescue Management Classic 3% (q) so 9.000% 0.00()0/4 3.00CJ½ 38.876% 50.8/G¼ AFA Classic 2%@ so 9.00C1Yo 0.000% 3.000% 38.876% 50.876% New 2.7% (q) 57 I 0. 7'.)C1¼ O.OOCJ½ 0.00()0/4 41.8/G¼ '.)2.626% Police Management Classic 3%@ so 9.00C1Yo 0.000% 3.000% 36.784% •18.784% I\P!VI!\, APA New 2.7% (q) 57 12.000:¼ O.OOCJ½ 0.00()0/4 39.784% 'i 1.784% 1 Def1111t1011 of a 'New' PERS member A nevv hire who is brought in Ca IP ERS membership for the first time on or afterj anuarv 1, 2013, and who has no prior membership in anv California public retirement system. A nevv hire who is brrn1ght into Cal PE RS membership for the first time on or after J am1a1y 1, 2013, and who is not eligible for reciprocity with another California pt1blic retirement system. A member who first established Ca IP ERS membership prior toj anuarv 1, 2013, and who is rehired by a different CALP ERS employer after a break in service of greater than si'\ months. 2 PERS Cost Share Caps at ,-J-'16 for r>-iliscellaneous Classie Employees. The pension plans (pensions) are recognized in the governrnent-vvide financial Projected earnings on pension investments are recognized as a component of statements and proprieta1y funds financial st:at:ernent:s 011 an accrual basis of pension expense. Differences between proJected and actual investment earnings accounting, while the contributions to the pension plan are recognized as are reported as deferred inflows ofresources or deferred outflows ofresources and expenditures on modified accrual basis of accounting on the governmental fund amortized as a component of- pension expense on a closed basis ove1 a five-vea1 state rne nts. period beginning with the period in which the difference occurred. The net pension liabilitv in the Sk1.ternent of Net Position represents the Cib/s Net Pension Liability excess of t:he total pension liability over the fiduciary net position reflected 011 the Valuation Reports provided bv CalPERS. The net pension liabilities is measured as The Citv's net pension l1abll1ty for each Plan is measured as the total pension of t:he Citv's prior fiscal year. Changes 1n net pension liability are recorded as liability, less the pension plan's fiduciary net position. The net pension liability of pension expense or as deferred inflovvs of resources or deferred outflows of each of- the Plan is measured as of June 30, 20Hi Liabilities are based 011 the resources depending on t:he nature of the change. results of the actuarial calculations performed as of June 30, 2015 and were rolled for\ivard to det:errnine t:he June 30, 2016 total pension liability. F1duc1ary net pos1tmn The changes in net pension liability that are recorded as deferred inf10\lvs of is based on fair value ofinvestrnents as of_J une 30, 2016. resources or deferred outflows of resources that arise frorn changes in actuarial A surnrna1y of- principal assumptions and methods used to det:errnine the net assumptions or other 1nput:s and differences between expected or actual experience pension liability is shown below. are amortized over the weighted average remaining service life of all participants in the respective pension plan and are recorded as a component of pension expense beginning with the period in which the difference incurred. 77 CITY OF ANAHEIM Actuarial Assumptions years) and the longterm (1160 years) us111g a building block approach. Using the expected nominal returns for both short-term and long-term, the present value of Valuation Dale (VD) J LIile 30, 201 'i benefit~ was calculated for each fund. The expected rate of return \'Vas set by Measurement Date (MD) June 30, 2016 calculating the single equivalent expected return that arrived at the same present Measurement Period July l, 2015 toJ une 30, 20Hi value of benefits for cash f10\lvs as the one calculat:ed us111g both short-term and Reporting Date (RD) June 30, 2017 long-term returns. The expected rate of return was then set equivalent to the single Actuarial Cost Method E nt1y Age Normal equivalent rate calculated above and rounded down to t:he nearest one qua1ter of /\sset Valuation Method Market Value of Asset:s one percent The table below reflects long-term expected real rate ofretum by asset Actuarial Assumptions class. The rate of return was calculated using die capital market assumptmns Discount Rate 7.65% applied to determine the discount rate and asset allocation. The target allocation Inflation 2.75% shown was adopted by CalPE RS effective July I, 2Cll 5. Salary Increase Varies by Entry Age and Service P aymll c; rowth 3.0ll"/4 Current Target Real Return Real Return 7.50% Net of Pension Plan l11vestme11t:a11d 1 2 Investment Rate of Return Asset: Class Allocation Years 1---l 0 Years 11+ Administrative Expenses, includes inflation 5.71 % The probabilities of Retirement: are based on the Clobal Equity 47.00% '.).25 % c; lobal Fixed Income 19.00% 0.99% 2.43 % Retirement Age 2010 CalPERS Experience Study for the period from 1997 to 2007. In Aat:lon Sensitive 6.0CI¼ 0.4'.) % 3.36% Private Equitv 12.00% 6.83% 6.95 % The probabilities of mortality are based on the Real Estate I 1.00% 4.50% 5.13 % 2010 CalPERS Expenence Sl1Jdy for the penod 3.00% ,1.50% 5.09% from 1997 to 2007. Pre-retirement and Post Infrastructure and Forestland 2.0CI¼ (0.55)% Mortality retirement mrntalitv rates include 5 years of Liquidity (l.05)% projected mortality' improvement using Scale AP, IOIJ.OCI¼ publ1sed by the Society ofl\ctua1y. 7 An expec1ed r111a1ion of2.5% u~ed forttlb period Contract COLA up t:o 2.75% until Purchasing 2 An expected i'1flat~m of 1.C% used for 1hb period Post Retirement Benefit Protection Allowance Floor on Purchasing Power 111 December 2016, the C:alPERS Board of Administration voted to lower the Increase applies, 2.75% thereafter discount rate used in its actuarial assumptions from 7.65% to 7.15% (including Discount Rate administrative expenses) effecbve J ulv l, 2017 over three vear period. As shO\lvn on page 80, a similar reduction to the discount rate in accordance with GAS B The discount rate used to measure the total pension liability' was 7.65 percent To Statement: No 68 will increase the net pension liability. This increase \1vlll be determine whedier the municipal bond rate should be used in the calculation of a amortized over the expected remaining service lives of all employees provided by discount rate for each plan, CalPERS stress tested plans that would most likely benefit:s through the pension plans. result 1n a discount rate that: \1vould be different: from the act:uanally assumed discount rate. Based on the testing of the plans, the tests revealed the assets would Recognition of Cains and Losses not run out. Therefore, die current 7.6'.) percent discount rate is appropriate and t:he Under CASB 68, gains and losses related to changes in tot:,1.I pension liabilitv and use of the municipal bond rate calculation is not deemed necessary. The long-term fiduciary net pos1bon are recognized in pension expense systemat1callv over t:lme. expected discount rate of 7.65 percent is applied t:o all plans 111 t:he Public Emplovees Retirement Fund. The first amortized amounts are recognized in pension expense for the vearthe gain or loss occurs. The remaining amounts are categorized as deferred outflows and The long--term expected rate of return on pension plan investment:s was determined deferred inflows ofresources related to pensions and are to be recognized in TIJture using a building-block method in which best-estimate ranges of expected TIJture real pension expense. rates of return (expected ret:urns, net of pension plan investment: expense and inflation) are developed for each major asset class. Difference bet\veen projected and actual 5 vear straight-line amortization earnings on investments In det:ermining the long-term expected rate of return, C:alPE RS took into account All other amounts Straight-line amortization over the both short-term and long-term market return expectations as well as the expected average expected remaining service lives pension fund cash flows. Such cash f10\lvs were developed assuming t:hat both of- all members that are provided with members and emplovers vvill make their required contributions on time and as beneflt:s (active, 1nact1ve, and retired) as scheduled in all future vears. Using historical ret:ums of- all die funds' asset: classes, of-die beg11m111g of-t:he measurement expected compound (geometric) returns were calculated over the short-term (first l 0 period 78 CITY OF ANAHEIM Change in the Net Pension Liability Net Pension Net pension liability 1s the plan's total pension liability based on t:he entry age normal Total Pension Plan Fiduciary Liability/ actuarial cost method less the plan's flduciarv net position. Liability Net Position (Asset) (a) (b) (c) (a) The following table shows the changes 111 net pe11s1011 liabilitv fo1 each Plan Fire Safety Plan (b) recognized over the measurement period Balance at_l une 30, 2015 (VD) $ 383,379 $ 289,566 $ 93,813 Net Pension Changes recognized for tl12 Total Pension Plan Fiduciary Liability/ Liability Nel Position (Asset) Measurement Period Miscellaneous Plan (a) (b) (c) ~(a) -(b) Service Cost 5,572 5,572 Balance at_l une 30, 2015 (VD) $1,224,619 $ 898,392 $ 326,227 Interest on the Total Pension Liability 28,550 28,550 Changes 1ecognized forthe Changes of Assumptions Measurement Period Difference bet>vveen Expected and 19,841 19,841 S er\dce Cost Actual Experience (2,504) (2,504) Interest on the Total Pension L1abil1tv 89,941 89,941 Plan to Plan Resource Movement Changes of Assumptions (9,483) Difference bel\f\.ieen E'..pected and Contribution from the Employer 9,483 Actual Experience (28,822) (28,822) Contributions from Employees 2,328 (2,328) P Ian to P Ian Resource Movement (34) 34 Nel inveslmenl Income 1.449 (l/M9) 31,595 (31,595) Conti 1bution from the E. mployer Benefit Payments, 1nclud1ng Contributions from Employees 9,812 (9,812) R efimds of Employee Contributions (20,907) (20,907) Net Investment Income 4,556 (4,556) (177) 177 Benefit Payments, includim Administrative E,penses Refimds of Employee Contributions (60,039) (60,039) Net Changes during 20·15-2016 10,711 (7,824) 18,535 (548) Administrative E'..penses 548 Balance at 6/30/2016 (MD) $ 394,090 $ 281,742 $ 112,348 Net Changes during 2015-2016 20,921 (1°1,658) 35,579 Balance at 6/30/2016 (MD) $ 1,245,540 $ 88l,734 $ l6l.806 Total Pension Plan F1duuarv Net Pension Liabilitv Net Position Liability,{Asset) Net Pension Comb1ned_Tot::.7.I: (a) ...... (bJ ... (c) ~(a) -(b) Tolal Pension Liability/ Plan Fiduciary Balance at_J une 30, 201 S (VD) $ 2,255.406 $ l.686,970 $ 568,436 Liability Net Position (Asset) Changes 1ecognized for th2 Police_ S afetv_ P Ian: (a) (b) (C) ~(a)-(IJ) MeasuI emenl Pei 10d Balance at_J une 30, 20"! 5 (VD) $ 647.408 $ 499,0l 2 $ l48,l96 Service Cost l8,964 38,964 Changes recognized fo1 lhe 167,840 167,840 Measurement Period Interest on the Total Pension Liability Service Cost 13.551 13,551 Changes of Assumptions lnteI est on the Total Pension Liab1lily 49,3tl9 49,349 D1ffe1ence between E '..pected and Changes of Assumptions Aclual Experience (2°1,407) (24/107) Difference bet\veen Expected and Plan lo Plan Resource Movement (3°1) 34 Actual E "f-)erience 6,919 6,919 Contnbullon fiom the E mplover 58,605 (58,605) P Ian to P Ian Resource Movement 16,866 (16,866) Contribution from the E mploye1 17,527 (17,527) Contributions from Employees Contributions from Employees 4,726 (4,726) Net investment income 8,612 (8,612) Net lnveslmenl Income 2,607 (2,607) Benefit Payments, 1nclud1ng Benefit Payments. includit)J Refunds ofE mployee Contributions (112,985) (112,985) RefiJnds of Employee Contributions (32,039) (32,039) Admirnstlative Expenses (1,029) 1,029 Adm1nislrat1ve Expenses (30°1) 304 Net Changes during 2015-201 G 37,780 (7/183) 45,263 Net Changes during 2015--2016 69,412 (29,965) 99,377 Balance at 6/30(2016 (MD) $ 685.188 $ 491,529 $ 193,659 Balance at 6/30;2016 (MD) $ 2,l24.818 $ l.657,005 $ 667,813 79 CITY OF ANAHEIM Sensitivity of the Net Pension L iabilit;y to Chanqes in the Discount Rate Measurement Date The following presents the net pension liabili1Y of the Ci)y's three Plans of the Ended June 30 measurement date, calculated using the discount rate of 7.65 percent, as well as \1vhat the net pension liability would be if 1t: were calculated using a discount rate t:hat 2017 S (18,891) is l percentage-point lower (6.65 percent) or l percentage-point higher (8.65 2018 (6,376) percent) than the current rate 2019 42,'.AS 2020 23,709 Discount Discount Discount Total S 40,987 Plans' Net Pension Liability Rate -- ·1% Rate Rate -·- 1% (6.6'i%) (7.65%) (8.65%) Pavable to the Pension Plans Miscellaneous 522,6(}1 $ 361,806 $ 228,641 s AtJ une 30, 2017, the Ci)y reported a payable of $2,25•1 for the outstanding amount Police Safety 285,989 I 93,6'i9 117,694 ofco11t:ribut1ons to the pension plan required for die fiscal year endedJ une 30, 2m 7. Fire Safety 162,529 112,3•18 70,818 Combine total s 971,122 $ 667,813 $ 41 7, Vi3 NOTE n ---Other Post--employment Benefits Pension P Ian Fiduciary Net Position In addition to the pension benefits described above, the Citv provides other post employment benefits (OPE B) as a single employer defined benefit healthcare plan. Detailed information about each pension plan's fiduciary net position is available in The OPEB provides medical, dental and life insurance benefits to eligible retirees the separately issued CalPE RS financial reports. (hired priortoJ anuary l, 1996, Anaheim Police /\ssocIabon emplovees hired prior to July 6, 2001, and Anaheim Fire Association employees hired prior to November 9, Pension Expenses and Deferred Outfi0\IVS11nflows of Resources Related to 2001) in accordance with City Personnel Resolutions and various Memoranda of Pensions Understanding. Eligible emplovees hired after t:he dates above have access to the City's medical and dental plans but do not receive a defined benefit There are no Pension expense is the change in net pension liability from the previous fiscal year separatelv issued financial st:at:ements for t:he OPEB. to the current fiscal year less adjustments. For the fiscal yearendedJ une 30, 2017, the Ci1Y recognized pension expense of $44,920. At June 30, 2017, the City F u11d111q Policy reported deterred outflows of resources and deferred inf10\lvs of- resources related t:o pension from the following sources The contribution requirements of plan members and the CItv are established in accordance with City Personnel Resolutions and various Memoranda of Understanding. The retired plan members receiving benefit~ make varving Deferred Deferred contributions tovvard the cost of these benefits depending on the retiree's Medicare Outflows of Inflows of Resources Resources el1g1bilitv, year of hire, age and emplovee group. Retiree contributions for the fiscal year ended June 30, 2017were 2.9Cl'/4 of total payroll. Pension co11t:ribut10ns subsequent: to measurement date $ 63,272 Changes of Assumptions s 16,227 In June 2008, the City JQined the California Employer's Retiree Benefit Trust Difference betvveen Expected and Actual Experiences 5,231 38,583 Program (CERBT) to prefund OPEB liabilities. The CERBT Is an agent multiple Net: difference between projected and act1Jal earnings employer plan consisting of an aggregation of single-employer plans, with pooled administrative and II1Vestrne11t: fimctions that: are administered bv PE RS. /\ copv of 011 plan investments 90,566 the aggregated CERBT annual financial report mav be obtained Change in proport:ions 5,495 5,49'.) @) \1wvw.calpe rs.ca.gov. Total $ 1&1,564 s 60,305 The Citv contributes an amount not less than the annual required contribution (ARC) $63,272 repo1ted as deferred out:fows of resources related to contribut:ions of the employer. The ARC is an amount actuarially determined in accordance with subsequent to the measurement date will be recognized as a reduction of the net t:he paramet:ers ofCASB Statement: No. 4'.). The ARC represents a level offi.1nd1ng pension liabilitv in the measurernent:year ended June 30, 2m 7. Amount reported In that, if paid on an ongoing basis, is projected to cover normal costs each year and Deferred inflovvs ofresources related to pensions will be recognized as a component amortize any unfunded actuarial l1ab11it1es over a period not to exceed thirty years. in pension expense as follows The ARC rate forthe fiscal year ended June 30, 2017, was 8.&6 of covered payroll. 80 CITY OF ANAHEIM Annual OPEB Cost and NetOPEB Asset Actuarial Methods and Assumptions The Citv's annual OPE B cost, amount actually contributed to the plan, and changes Projections of benefits for financial reporting purposes are based on the substa.ntive in the City's net: OPE B asset for the fiscal year ended June 30, 201 7, are as follows plan (the plan as understood by the employer and plan members) and include the types of benefits provided atthe time of each valuation and the historical pattern of ARC $ 15,937 sharing of benefits costs bet\1veen the Citv and plan members to that: point The lnte1est on net OPE Basset (819) actuarial methods and assumptions used include techniques that are designed to AdJustment to /\RC 838 reduce short--termvolatllitv m die actuarial accrued liability and the actuarial value of /\nnual OPE B cosl $ 15,956 assets, consistentvvith the long-term perspective of the calculations. Contributions made $ 16,016 In the July l, 2015, actuarial valuation, the entry age normal actuarial cost method Annual OPE. B cost (15,956) was used. The acl1Jarial assumption included a 7.28% investment rate of ret:um, an Change inOPEB asset 60 annual healthcare costtrend rate ranging from 7.5CP/o initially and declining to 5.00¾ Net OP EB asset --beginning ofvear 11,244 bv 2022, payroll grmvth rate of 3.00% per year, and an infiation fi::ict:or of2.75%. The Net OPE B asset -- end of vear $ 11,304 OPE B unfimded actuarial accrued liability' is being amortized as a level percenta.ge of payroll over a closed 30--year period. The remaining amort:ization period as of-July The City's annual OPE B cost, the percentage of annual OPE B cost cont:ributed to l, 2017, is 21 years. the plan, and the net OPEB asset for the fiscal year ended June 30, 2017 are as follows NOTE 12 ···JOINT VENTURES AND JOINTLY-OWNED PROPERTIES Authonl\i for Orange County ---Cll\i Hazardous Materials Emergency Response Fiscal Year Annual OPEB Percentage of Annual OPEB Ending Cost OPES Cost Contributed Asset The CilV participates in Joint powers authority U PA), the Authority for Orange 6/30;20"1 ') $ 13,192 I 00.4()¼ $ 11,209 County-City' Hazardous Materials Emergency Response (Hazmat'.), for the purposes 6;3012016 13,686 l 00.26% 11,244 of respondmg to, assessing the nature of, and stabilizing anv emergency created by 6/30/2017 15,956 100.3&6 11,304 the release orthreatened release of hazardous materials. Funded St:at:us and Fu11d111g Proqress The follovving entities are members of Hazmat: Citv of Anaheim and Citv of Huntington Beach (provider agencies). rv'lembers of-the Board of Directors (Hazrnat /\ctuarial valuation of an ongoing plan involves estimates of the value of reported Board) consist of one voting Board member and an alternate appointed bv the amounts and assumptions about the probabilitv of occurrence of events far into the governing body from the provider agencies. Under the Fifth Amendment to die JP/\ future. Amounts det:ermined regarding t:he funded st:at:us of t:he plan and the annual agreement, three representatives from the subscribing agencies are also voting required contributions of the employer are subject to continual revision as actual Board Members. The following cities \1vere subscribing agencies Brea, Costa Mesa, results are compared with the past expectations and new esbmates are made about Fountain Vallev, Fullerton, Garden Grove, Newport Beach and Orange. the future. The schedule offimding progress, presented as required supplementary mformat:lon followmg the notes to the financial statement:s, will present rnulti--year Public entities in Orange Countv may receive hazardous materials response trend information in subsequent years, that will show whether the actuarial value of services from the Hazmat by execubng an agreement and paying a fair share plan assets 1s increasing or decreasing over time relabve to the actuarial accrued contribution. Audited financial information for the joint powers authoritv as of and for liability for benefits. the year ended June 30, 2017, was as follows The table below displays the funding progress of the plan and is based upon the Total assets $ 250 most recent act:uarial valuation data Total l1ab1l1ty 15 Members' equity 235 (A) (B) ( C:) (D) (E) (F) Total revenues 85 Funded UL as a Tota.I expenses 56 /\ctuanal Actuanal Unfi1nded Ratio Annual % of Change in net position 29 Valuation Value of Acc1ued Liability (UL) AVA Covered Pavroll Date Assets (AVA) Liability (B) (A) (A) /(B) Pavroll (C) / (E) Hazmat does not have any debt outstanding atJ une 30, 2017. 7;11,)015 $ 79,787 $ 271,243 $ 191,456 29.4% $ 166,522 115.0% 81 CITY OF ANAHEIM The C1tv has no signifKant equity interest: 111 Hazrnat:, and accordingly neither assets Audited financial 1nformat1on for the AuthorilV as of and f:ix the vear ended J une 30, nor liabilities of Hazmat have been recorded in the City's basic financial statements. 2016, was as follows For a copy ofHazrnat:'s separate financial statements, contact the Finance Director ofthe City. Total assets $ 1,546 Metro Cities Fire Authority Total liabilities 56 Members' equity 1,490 The C1ly participates in a jrnnt powers authority, Metro CIt:1es Fire Authority (Fire Total revenues 781 Authority), for the purpose of providing a central communication net\vork and record Total expenses 896 keeping svst:em t:o support fire suppression, emergency medical assistance, rescue Change in net position (11 'i) service, and related services provided by the members of the Fire Authority. J 01nt:ly-ow11ed utllitv plants The following entities are members of the Fire Authority City of Anaheim, City of Brea, CilV of- Fountain Valley, C1ly of Fulle1ton, City of Carden Crove, C:ilV of The Citv's E lectnc Utilitv owns a l 0.04% ownership interest: in the coal--fire San_] uan Huntington Beach, City of Newport Beach, and tl1e City of Orange. Members of the Generating Station, Unit 4 (SJ), located near Water-flow, New Mexico. The other Board of Directors (t:he "Board") consist of one voting Board member and an paItIcipants in SJ and their respective ownership include Public Service of New alternate appointed by their governing body. Mexico, 45.48'%, Citv of Farmington, New Mexico, 8.'-l8%, County' of Los Alamos, Ne\1\/ ~ilexIco, 7.2CJ>/4. and ~il--S-R Public Power Agencv, 28.S(J.¾. There are no Public entities in Orange County may receive services from the Fire Authoritv bv separate financial statements for this venture, as each participant's interest in the executing an agreement and paving a fair share contribution. Audited financial util1tv plant Is included in their respecbve financial statements. The City's cumulative information for the Fire Authority as of and for the year ended_] une 30, 2017, was as share of construction costs included in the utility plant at June 30, 2017, amounted follows to $84,616. Total assets $ 1,749 011 July 31, 201'>, the Electric Utility and the other Parties involved with the San Total liabilities 233 Juan Generating Plants agreed to a plan for the closure of2 of the 4 units in New rv'lernbers' equity 1,516 Mexico. As co- Entitlement Expiration Fiscal Na.lural IPA STS MAP MPP Hoover Magnolia Canyon Tot::.7.I Transmission Year Cas SoutherTra11smiss1on System (STS) ------17.6% 2027 2017 $41,090 $4,968 $680 $349 $l ,Q3tl $22,931 $637 $8,823 $80,512 Mead-Adelanto Project (MAP) 13.5 2030 Mead Phoenix Project (MPP) 24.2 2030 Cap--and---Trade Proqram Generation California Assembly Bill (AB) 32 requires that Utilities in California reduce their Hoover Dam Uprating (Hoover) 42.6% 2018 greenhouse gas (GHG) emissions to 1990 levels by the year 2020. It directed the Magnolia Generating Station (~ilagnolia) 38 2037 California Air Resources Board (CARS) to develop regulations of G HG that became Canyon Power Project (Canyon) 100 2(}10 effecbve J anuarv 2012. Emission compliance obligations under the Cap-and--Trade regulation began 111 January 2crI3. Natural Gas Reserve Projects (Natural Gas) 2033 SC PAA Natural Gas ProJect-Pinedale, Wyoming 35.7% The Cap-and-Trade program (Program) was implemented beginning J anua,y l, SCPPA Natural Gas Project--Barnett, Texas 45.5 2033 2013. This Program requires Electric Utilities to have CHG allowances on an annual 83 CITY OF ANAHEIM basis to offset C HC emissions associated with generating electricity. CARS will sufficient to pay the City's rent payment:s for t:he t:erm of the sublease and to exercise provide a free allocation of CHG allowance to each electric utility to mitigate rek1.il the City's purchase option at the end of the sublease. The excess of the amount of rate 1rnpacts. This free allocabon of CHG allowance 1s expected t:o be sufficient to the advance rent payment rnade by the trustee to the CItv over t:he deposit to the meet Electric Utility's CHG compliance obligations for retail sales. During this fiscal trust funds, after the payment of transaction expenses and payment to the Manager year, an unused portion of retail allowance was sold for S 16,208 t:o reduce future for agreeing to pledge its interest as Manager under die management agreement renewable energy costs for retail customers. The compliance obligation for the then in effect and agreeing to undertake certain additional obligations to the wholesale sales requires allO\lvance to be obtained through t:he auctmn or 111 the transaction, was approximately $4,000. This arnount:was recognized by die CilV as secondary market quarterly. AtJ une 30, 2017, the value of prepaid Cap and Trade unearned revenue and is being amortized over the sublease term. The City has allowance is $18,903, and the value of the Cap and Trade obligauon Is S 13,324. secured its obligat:lons to die other parties to diese lease transactions by a pledge of its respective interest in revenues from the facility, subordinate (with certain Operatinq Leases exceptions) to any int:erests of t:he debt holders of t:he facility. The Citv's obligations under these lease transactions are considered to be defeased in substance, and lnJ anua1y 200'.), the C:itv entered into a long--term noncancelable ground lease with t:herefore the relat:ed l1abillt1es as well as the trust assets have been excluded frorn City of Fullerton, for an approximately 1.56 acre site at the Fullerton Municipal the City's financial statements. The City's and AI\M's respective rights under the Airport: for t:he operation of- t:he Ana he Irn Police Department Heliport. The term of t:he F ~ill\ are subject in certain respects to the effect: of-t:he 1999 lease transaction. lease is 40 years with t\No l 0--vear extensions commencing from January 2005 and e11d111g Decernber 2044. The base rent Is adjusted eveIv five years bv t:en percent E ffect1ve December l 6, 2003, the CItv and AnaheirnArena Managernent L LC (/-V-\M) (10'/4). The City constructed a building of approximately 30,000 square feet that entered into a Facility Management Agreement (FMA) whereby A/\M has the includes offices, aircraft: rnai11t:ena11ce and storage facilities and other infrastructure exclusive right and license to manage, maintain and operate all aspect:s of the supporting such facilities on the leased premise. Future minimum lease payments to Honda Center in accordance with the FMA through June 30, 2023, vvith an option to be rnade frorn unrestricted revenues of-die General Fund are as follows extend t:he term for an add1t1onal period not to exceed ·1 0 vears. Annual distribut:ions to the Citv, A.AM and the County' of Orange are required for their respective share of adJust:ed net revenues, as defined in the FMA. 111 the event that cash on hand Is F 1scal Year E 11d1ng I une __ 30 insufficient to pay operating expenses, debt service, distributions to the City, the 2018 $ 59 County of-Orange, or ot:her arnounts payable, AA,rv'l shall make or cause an affiliate 2019 59 or third-party lending institution to make loans for such purposes, as defined in the 2020 62 FM/\. Such funds will be repaid from gross revenues or adjusted net revenues, if 2021 65 any, as defined in and in accordance vvith disbursement priorities established in the FMA. l\tJ une 30, 2017, the outstanding conduit debt on the Honda Center totaled 2022 65 $22,500. The debt is non-cecourse, payable from revenues generated by the facility. 2023--2027 342 Neither the faith and c1ed1t nor the taxing power of the City Is pledged to the 20282032 376 payment of the debt. The debt is not a general or special obligation of the City, nor 20332037 •114 does It contaI11 any credit enhancernents that secondarily pledge exIstI11g or future 2038-2042 455 resources of the City (other than revenues generated bv the facilitv), and accordingly it Is not reflected in die accompanying basic financial statements. 2013-2045 239 Total minimum future rentals s 2,136 Angel Stadium of Anaheirn The Honda CenteI On May 14, 1996, the City and the California Angels, LP (Team), wh,ch was then managed by Disney Sports Enterprises, Inc. (subsequentlv known as Anaheim On J anuarv 26, 1999, the City entered into a series of lease transactions for the Sports, Inc.), ent:ered I11to an agreement to provide for the operation and Honda Center. Under these transactions, the CItv leased the Honda Center to a third refurbishment of the Stadium. Pursuant to the agreement, the Team assumed party' trustee acting for the benefit of an equity investor for a term of approximate Iv respons1bilitv for the operation of-the Stadium 011 October l, 1996. The agreement 39.2 years. The trustee sublet the facility back to the City fm 20 years, which was runs for 33 years (subject to a limited Team option to cancel at 20 years and the shorter than the then remaining term of the management agreement bet,veen the Team's right to extend the term). In September 2013, the agreement:was modified th1rd--partv manager at that time (~ilanager) and the City 111 consideration of- an extending the Team's right to terminate the agreement by three vears to October 16, advance rental payment for the entire lease term. At the end of the sublease, the 2019. CItv has a purchase option to purchase the trustee's right:s under die lease for a fixed amount The advance rent pavments to the City were deposited into a trust Under the terrns of t:he agreement, the Team assumed fiJII respons1bilitv for all fund and invested. The cash scheduled to be available from this trust: fund is Stadium operations and maintenance, including capital maintenance. The Team CITY OF ANAHEIM books all Stadium and parking lot events (except for ten annual City events), pays all maturitv date to the June 30, 2019 and increased the line of credit amount from $200 expenses, and retains all revenue (subJectto the C:itv's rights to share 111 certa111 net to $250 annuallv. AtJ une 30, 2017, there \1vas no amount due to the Cilv. revenues) except that the Citv credits the Team up to $500 per vear adjusted annually for CPI as a capital reserve contribut:lon, calculated on the basis of properly PartIc Ipation Agreement -- Construct:ion of Regional Animal Care S helte1 taxes. The Citv's participation in net revenues includes amounts received by the Team above ce1tain thresholds including paid adm1ss1ons ($2.00 per paid admission 011 April ·12, 20·15 t:he CItv Council approved a PaItIcipat:1on Agreement bet\1veen the in excess of 2.6 million admissions per year), net income from nongame events (in Countv of Orange and City of Anaheim for the construction of a new regional animal excess of $2,000 per vear adjusted annuallv for CPI), and parking lot net income shelter at: the former Tustrn Air Base. P articIpa11t:s of this P aItIc ipa t:lon Agreement is (25% in excess of 54,000 per year adJusted annually for CPI). Additionally, as among the County of Orange and fourteen Orange County Cities. The Shelter will indicated above, the City retained the right: to book and retain all revenue from t:en be a County public \1vorks proJectw1d1 a maximum construction amount of- $35 million parking lot events per year. Major League Baseball consented to the transfer of the of which tl1e County will fund 57.2 million and contribute the land at no cost The Team in fiscal year 2003 t:o interests controlled by Arte Moreno. No changes In the remaining $27.3 million of the maximum construction amount will be divided terms of the agreement with the Team were made in connection with that transfer. proportionately among the contract cities based on the percentage of actual shelter usage over the last: five years. The City's propoItIonat:e share is 28.28% or $7.7 The Agreement also provided thatthe City had the rightto develop approximately 42 million for an estimate annual payment of $798 pavable quarterly over 10 years acres of the parking lot development site. In 1998 a land sale of- $1,000 for a l.2'.) starting with fiscal year 2017. acre site vvas approved for the construction of a 1, l 00--seat theatre called "Tinseltown St:ud1os" (now known as "City National Crove of /\nahe1m"). In During fiscal year 2017, the City has paid 5798 with an estimated unpaid balance of November 2002, the City purchased tl1e facility and the land for 56,700 from its then $6,949. owner, SMC. Concurrent \1v1t:h t:he purchase, the CItv granted t:o Nederlander--Crove LLC (Nederlander) a license to operate the facility for three years with the right to LItIgatio11 extend another five years. In rv'lay 2009, t:he management agreement was amended e-..tending the term to December 31, 2015 vvith the right to extend another five vear A number of claims and suits are pending against the Citv for alleged damages to period. lnJ une 201 '.), t:he option to extend was exercised, \1vhich extends the term t:o persons and,br property and for other alleged liabilities arising out: of- matt:ers usually December 31, 2020. Additionally, under the amended management agreement, incidentto the operation ofa citv such as Anaheim. Although the aggregate amount effective January l, 2009, Nederlander no longer receives a management: tee of asserted for such la\1vsuits and claims is significant, in the opinion of- City Sl 50 and the Citv's share in the annual net profits and losses from operations management, the Citv has strong defenses against such claims, and thus the increased from SOYo t:o 6(J.¾. Nederlander Is responsible for 10(% of losses in ultimate loss, if any, relating t:o these claims and suits not: covered by insurance 01 excess of $400, therebv limiting the Citv's share of net losses to a maximum of $240 reflected in the financial statements, will not materially affectthe financial position of in anv given year. The CilV may elect to terminat:e t:he agreement prior to expiration the City. of the term under certain conditions, and pay the unamortized balance of capital asset:s purchased during the term to Nederlander. Concurrent with the amendment C rants to the management agreement, the parking license fee agreement was amended, wherein the parking license fees from Nederlander \Ivere reduced to .Sl 76 and is Amounts received or receivable from grant agencies are subject to audit and subject to adjustment annually based on CPI increases. Nederlander paid the Citv adjustment: by grant.or agencies. Any disallO\lved claims, including amount:s already .s·I93 for the year endedJ une 30, 2017, for parking and common area maI11t:enance. collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by t:he grant:or cannot: be determined at this Muzeo time, although the Citv expects such amounts, if any, to be immaterial. In October 2007, the Cit.v and the former Redevelopment Agency ent:ered into a property operating agreement (Agreement) with the Muzeo Foundation to operate and provide programming for the Muzeo, the dow11t0\lvn museum. The /\greement Is for a term of 30 years and provides for a line of credit for the first 3 vears from the City to the Muzeo Foundabon In an amount: not: to exceed $1,000 or 95% of pledges at an annual interest rate of 5%. The Agreement was amended on August 1, 2010, to extend the maturity date to June 30, 201 S. It: also amended the aggregate amount of the line of credit to 5500 during fiscal year 2011 and 5200 during each fiscal year thereafter with amounts being converted to grant:s upon achieving fund raising thresholds. On June 30, 2014, the agreement was amended to extend the CITY OF ANAHEIM Construct:ion and ot:her significant commitments NOTE 14-SUBSEQUENTEVENTS AtJ une 30, 2017, the City had the following commitments with respectto unfinished On December 6, 2017, Standard and Poor's (S&P) raised the City's Treasurer capital projects, disposition and development agreement:s, reimbursement Investment Pool Fund credit quality rating to 'Al\+f from 'I\Af and reaffirmed its 'S l' agreements and cooperation agreements fi_,nd volatility rating. Remaining Expected On December 18, 2017, the Electric Utility rernarketed t:he variable rate 2015-l\ Construction Completion California Municipal Finance Authoritv Revenue Bonds in the principal amount of Capital PrQ1ect:s Cornrn1trne nt Date $50,000. The rernarketing provides a three year extension of the call protection date as well as a reduction in the interest rate of 15 basis point or 0.15%. Alderdale Avenue Water Transmission Main Replacement s 1,917 2018 Anaheim Hills Road Water Main Replacement Project 678 2017 011 December l 2, 2017, the Electric Utllitv entered into a bond purchase /\greernent Anaheirn Resort Electric Line Extension 5,321 2018 vvith Underwriters for the negotiated sale of Anaheim Housing and Public Brookhurst Street Improvement 3,893 2017 improvements Authority Revenue (AHPIA) Refunding Bonds Series 2017 A & B Cable l ,'.)28 2017 (Electric Utility Distribution System Refunding), $42,995 and $194,790 principal, Citywide Sanitary Sewer Improvement-Cerritos Avenue 2,121 2017 respective Iv, to refund a po1t1on of certain outstanding Qualified Obl1gat:1ons of the C:ity\1v1de Sanitary Sewer Improvement --Crescent Avenue 1,914 2017 Electric System. The proceeds of these issues vvill be used, together with certain other available moneys, to refund a portion of the outstanding AHPIA Revenue Convention Center Expansion Betterment VII 6,124 2017 Refunding Bonds Series 2016 A & B (Electric Utility Distribution System Refunding Direct Buried Cable Replacement Phase XII 2,967 2018 and lmpmvements), Anaheim Public Financing Authonty (APFA) Senes 2011 A Equipping of Well No. 59 1,950 2018 (City of Anaheim Electric System Distribution Facilities) bonds,APFASeries 2012-A Fire St:at:lon No.'.) Design Build Project 4,737 2018 (E lectric Distribution System Refi.1nd1ng) bonds and are scheduled to close on Harbor 69 l2Kv Substation DesignJi3uild 25,189 2019 December 21, 2017. Kate Ila Substation to Central Anaheirnl 2kv Line Extension 2,130 2017 Kate Ila Water Ma111 Replacement ProJect:--Disneyland Drive 6,149 2018 La Palma Complex Reservoir and Purnp S t:,1.tion 7,276 2018 Parks play equipment,,estioom facility and LED lighting 1,092 2017 Permit Tracking and Land ManagernentSofu,vare svstern 2,013 2018 Ponderosa Park Family Resource Center & Park Upgrade 6,863 2018 Switch Gear 1,309 2017 Tra11sforrne1 1,007 2017 Underground District#62 Phase 2, MiralornaAvenue 2,514 2017 Underground D1st:rict: #63 -- Li1icol11 and Rio Vista 7,393 2018 Underground District #64 Orangewood 9,428 2018 Vehicle acqu1s1tmns 2,204 2017 Yorba Substation l2~v Upgrade 3,194 2018 Total $ 110,911 86 The accompanv1ng notes are a11 111tegral part of these financial statements. I I Required Supplementary Information j CITY OF ANAHEIM Schedule of Changes in the Net Pension Liability and Related Ratios Last Ten Fis cal Years I (In thousands) Miscella- Police neous Safety Fire Safety Total Miscellaneous Police Safety Fire Safety Total Measurement Pei 10d 201 S-2016 2015-2016 2015-2016 2015-2016 2014-201 S 2014-2015 2014-2015 2014-2015 TOTAL PE NS ION LIABILITY Service cost $ 19,841 $ 13,551 $ 5,572 $ 38,964 $ 20,33tl $ 12,193 $ 5,419 $ 37,9'16 Interest on the Total Pension Liability 89,941 49,349 28,550 167,840 88,334 46,658 27,760 162,752 Changes of Assumptions (21,249) (11,546) (6,582) (39,377) Difference Betvveen Expected and Actual Experience (28,822) 6,919 (2,504) (24,407) (16,296) (19,370) (4,549) (40,215) Benefit Payments, 1nclud1ng Refunds of Employee Cont11butions (60,039) (32,039) (20,907) (112,985) (57,158) (30,517) (19,944) (107,619) Net Change in Total Pension Liability 20,921 37,780 10,711 69,412 l.l,965 (2,'xl2) 2,104 l.l,487 Total Pension Liability -Beginning 1,224,619 647,·108 383,379 2,255/106 1,210,654 6tl9,990 381,275 2,2°11,919 Total Pension Liability -Ending (a) 1,245,540 685,188 39tl,Q90 2,324,818 l,22°1,619 6tl7,408 383,379 2,255,406 PLAN FIDUCIARY NET POSITION Contributions -E mplover 31,595 17,527 9,483 58,605 25,375 14,663 7,622 "17,660 Contributions -- Employees 9,812 4,726 2,328 16,866 8,877 4,192 2,075 15,144 Net Investment Income 2 4,556 2,607 1,449 8,612 20,081 10,967 6,515 37,563 Benefit Payments, 1nclud1ng Refunds of Employee Cont11butions (60,039) (32,039) (20,907) (112,985) (57,158) (30,517) (19,944) (107,619) Plan to Plan Resource Movement (34) (34) (5) 5 Adminislratlve Expense (',18) (30°1) (177) (1,029) (1,011) (562) (326) (1,899) Net Change in Fiduciary Net Position (14,658) (7,483) (7,824) (29,965) (l,841) ( l.252) (4,058) (9.151) Plan F1duc1ary Net Position -Beginning 898,393 499,0l I 289,566 1,686,970 902,23tl 500,263 293,62tl 1,696,121 Plan Fiduciary Net Position --Ending (b) 883,7l5 491,528 281,742 1,657,005 898,3')3 499,011 289,566 l ,686,')70 Plan Nel Pension Liability (Asset) -Ending (a) -(bJ $361,805 $ 193,660 $ ll2,3tl8 $ 667,813 $ 326,226 $ 148,397 $ 93,813 $ 568,436 Plan Fiduciary Net Position as a percentage of the Total Pension Liabilitv 70.95% 71.74% 71.49% 71.27% 73.36% 77.08% 75.5l% 74.80% Covered Payroll $ 111,398 $ 46,·179 $ 21,600 $ l 79/177 $ 112,039 $ iJ 1,800 $ 20,935 $ 174,774 Plan Net Pension Liability' (Asset) as a Percentage of Covered Payroll 324.7')% 416.66% 520.13% 372.09% 291.17% 355.02% 448.12% 325.24% 87 See accompanied Independent auditors' reporl CITY OF ANAHEIM Schedule of Changes in the Net Pens ion Liability and Related Ratios Last Ten Fiscal Years I (In thousands) (continued) Miscellaneous Police Safety Fire Safety Total Measurement Period 20132014 20ll 2014 20132014 2013--2014 TOTAL PE NS ION LIABILITY Service cost $ 21,254 $ l.l,088 $ ,961 $ 40,303 Interest on the Total Pension Liability 85,5')1 45,898 27,044 158,533 Changes of Assumptions Difference Betvveen Expected am Actual Experience Benefit Payments, 1nclud1ng Refunds of Employee Cont11butions (53,552) (28,845) (18,657) (IOl,054) Net Change in Total Pension Liability 53,2')3 30,141 14,348 97,782 Total Pension Liability -Beginning l, 157,361 619,849 366,927 2,]tJil,137 Total Pension Liabilitv --Ending (a) $ 1,210,654 $ 649,990 $ 381.275 $2,241,919 PLAN FIDUCIARY NET POSITION Cont11butions -Employer $23,8tl l $13,505 $7,723 $45,069 Contributions --Employees 8,8')3 4,064 2,337 15,2')4 Net Investment Income 2 l 35/168 75,115 44,305 254,888 Benefit Payments. including RefiJnds of Employee Contributions (53,552) (28,845) (18,657) (101,054) Plan to Plan Resource Movement Administrative Expense Net Change in F1duc1arv Net Position 114,650 63,839 35,708 214,197 Plan Fiduciary Net Position --Beginning 787,584 436,424 257,916 l ,481,')24 Plan Fiducia1v Net Position -Ending (b) 902,234 500,263 293,624 1,696,121 Plan Net Pension L1abil1lv (Assel) -Ending (aJ -(b) $ 308,420 $ l tJ9,727 $ 87,651 $ 545,798 Plan Fiduciary Net Position as a percenlage of lhe Tolal Pension Liability 74.529'0 76.96% 77.0"!% 75.65% Covered Payroll $ 110,815 $ 43,204 $ 22.107 $ 176,126 Plan Nel Pension Liability (/\sset) as a Percentage of Covered Payroll 278.32% 346.56% 396.49% 309.89% 1 H1<,toncal information I'> required 0111v for mea<,ureme11t penod<, for which GAS B 68 I'> applicable, Additional years will be presented as they become available 2 Net of adm1111strat1ve expenses Notes Benefit Changes The figures above do not include any liabilitv impact that may have resulted fmm plan changes which occurred after theJ une 30, 2014 valuation date/ This applies forvoluntarv benefit changes as well as arrv offers of Two Years Additional Service Cred (a.la. Golden Handshakes). Changes of Assumptions: In 2016, there were no changes. In 2015. the discount rate was changed fmm 7.59b (net of administrative expense) to 7.65% (without a reduction for pension plan administrative expense.) In 2014, arn::iunt<. reported were based on the 7.5 percent discount rate. 88 See accompanied Independent auditors' reporl CITY OF ANAHEIM Schedule of Pension Plan Contributions Last Ten Fis cal Years I (In thousands) Miscellaneous Police Safetv Fire Safetv Total Miscellaneous Police Safety Fire Safety Total 20162017 2016--2017 2016--2017 20162017 20152016 20152016 2015--2016 20152016 /\Cluar1ally Delermined Contnbullon $ 33,277 $ 19,595 $ 10,356 $ 63,228 $ 31,141 $ 17,527 $ 9/183 $ 58,151 Conti 1butions 1n Relation to the Actuarially Determined Contribution (33,277) (19,595) (10,356) (63,228) (31,595) (17,527) (9,·183) (58,605) Contribution Deficiency (E v:ess; (454) ("l 5"1) Covered Payroll $ 117, l1l $ 49,255 $ 24,732 $ 191,098 $ 111,398 $ 46,47') $ 21,600 $ 179,477 Contributions as a Percentage of Covered Payroll 28.41% 39.78% 41.87% 33.09% 28.l6% l7.71% 43.90% 32.65% Miscellaneous Police Safety Fire Safety Total Miscellaneous Police Safety Fire Safety Total 2014-2015 2014-2015 2014-2015 2014-201 S 2013-201°1 2013-2014 2013-2014 2013°2014 /\Cluar1ally Delermined Contnbullon $ 25,375 $ ]tl,663 $ 7,622 $ 47,660 $ 23,841 $ 13,505 $ 7,723 $ 45,069 Contributions in Relation to the Actuariallv Determined Contribution (25,375) (14,663) (7,622) (47,660) (2l.84l) (13,505) (7,72l) (45,069) Contribution Deficiency (E v:ess; Covered Payroll $ 112,039 $ 41,800 $ 20,935 $ 174,774 $ 110,815 $ 43,204 $ 22,107 $ 176,126 Contributions as a Percentage of Covered Payroll 22.65% 35.08% 36.41% 27.27% 21.51% 31.26% 34.')3% 25.59% 1 Histo11cal info1 mallon is required on~1 fo1 measurement periods for which Gi\S B 68 1s applicable. /\dditlonal years will be p1 esented as they become available. Notes to Schedule The actua11al methods and assumptions used to setthe aeluarially delerm1ned conn 1butions for Fiscal Year 2013-20 l "l, 20 l "l-20"! 5, and 2015-16 vve1e from the J une 30, 20 l l, J une 30, 2012, and J une 30, 2013 fund1ny valuallon reports respectively. valuations. /\Cluanal Cost Method Entry Aye Normal Amortization Method,,?eriod Level Percent of Payroll Asset Valuallon Method Market Value of /\ssets Inflation 2.75% Salary I nu eases Va11es by Entry Aye and Service Payroll G rovvth 3.00% Investment Rate of Return, for Measurement Date June 30. 2014. jand June 30,2016 7.509'0 Net of Pension Plan Investment and i-\dministlative E. xpenses; includes In nation Investment Rate of Return, for Measurement DateJ une 30. 2015 7.65% Net of Pension Plan Investment Expenses; includes Inflation Retirement/\ge The probabilities of Retirement are based on the 201 O CalP ER S Experience Study for the period from 1997 to 2007 The probabilities of mo1t::.7.lity are based on lhe 20·1 O CalP E. RS E'..penence Study for the period from ·1997 to 2007. P 1e Mo1t::.7.lity retirement and Post--rel11emenl morlal1ly rates include 5 years of projected morlal1ly 1mprovemenl us1ny Scale i-\/\ published by the Society of,A.ctuaries. 89 See accompanied Independent auditors' reporl CITY OF ANAHEIM Schedule of Funding Progress for Other Post -Employment Benefits (Amounts in Thousands) Unfunded Funded Annual Actuarial Value of Accrued Liability Ratios Covered UL as a% Actuarial Valuation Date Assets (AVA) Liability AVA AVA Payroll of Payroll July I, 2015 s 79,787 $ 21·1,243 s I 91,4'i6 29.4% 166,522 115.0% July l, 2013 74,013 237,202 163,189 31.2% 155,317 I Cl'i.1% J ulv I, 2011 67,747 201,108 133,361 33.7% 169,331 78.8% July l, 2010 63,920 211,91'1 H7,994 30.2% 177,229 83.5% 90 See accompanied Independent auditors' reporl I Nonmajor Governmental Funds J • n J r rn nt I Fun s SIPECAl REVENUE FUNDS are used to account for revern.1es derlved from spedfic taxes or other earmarked revenue sources (other than for major capita:! projects) that are restricted by law or admini1tr;,tive actlon to lf'Xf)€'nrliture,; for specified purposes. GAS TAX FUNO Established to account for the construction and malntenance of the road ne'.Work system of the City. Financing is provtded primarily by the City'• share of Federal, State, and locaf gasoline taxes, Federal, State, and local regulatfons require th.at these gasoline taxes be used to improve-and maintain streets, and indudes programs intended to improve the air quality of the region, WORKFORC:£ D£VHOPMENT fUND tsLabfished to account fo1 the CU•,/s invoh1ement in federal, State, and kn::.il programs to create JObs .and provide the unemployed CAPITAL Pf:t'OJECTS fUNDS are used to account for resources used for the acquisition and construction of capital assets by the Clty1 except for those financed by proprietary funds S rn£E r CONSTRUCrlON !-UNO: Established to .account for transport;i1.ion improvem1;.,nt constfw::tion itt the City's right,of-way. Financing l$ provided primarily by f1:.•dt.•ral, State and 1(){;61 grants, and Measure M2 alfocatfons by the County of Orange. TRANSPO~TATfON IMPROVEMENT PROJECT FUND~ EstahlJShed to account for transportation improvementprojects tn the-City, primarily in support of the Anahelm Regional Transportation !nterrnodaf Cmtar {ARTtC}, which is a transportation gateway and mixe:d.,use activity <.enter funded by a:rants from OCTA, financing is provided by hd•ri1I; State and local agencies. DEVHOPMCNI IMPACT PROJECrS FLJh D - Established to account for infrJstn.1cture !mproverncnts, primarily i11 the Platinum 1riangle ari?.1, which pr'ov1de dcveloprneot oppottunities for high dL'•nsity, mixed use, office, restaurant. and residentiaf projects. Financing fs provtded primarily by de11elopment fmpact fee;i,, COMMUNITY SFRVICFS FACltmFS FUNO- Established to account for the development of new park s[tes., play1roonds and ltbraryfadlities. Fi?deral and :St;;;te gr.ant programs, in conjund:km with ti;,es: charged to residentiJI omd <:ommer-ci 91 See accompanied Independent auditors' reporl CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes 1n Fund Balances Nonmajor Governmental Funds by Fund Type Year Ended J une 30, 201 7 on thousands) Non major Nonmajor Nonmajor Total S pec1al Debl Capital NonmaJor Revenue Seri.dee Projects Covernmental Funds Funds Funds Funds Revenues Property· t=1....es $ 36 $ 36 Licenses, fees and permits $ 30 11,374 11,404 lntergovernment-11 revem1es 27.539 15,885 43,424 Charges for services 22,470 48 22,518 Use of money and property 2,790 210 II ,l85 14,385 Contnbullon from properly ovvners 36,864 36,864 Other 3,442 1.142 4,584 TOtal revenues 56,271 76,698 133,215 Expenditures Currenl City Attorney 120 120 Finance 22 22 Police tJ,040 842 4,882 Fire & Rescue 471 ll6 807 Community & Economic Development 9,389 18 9,407 Planning & Building 1,421 45 1,466 Public Works I l,2CO 1,140 l 2,3tl0 Communitv Services 335 1,702 2,037 Convention, S porls & E nte1t::.7.inment 13,315 13,31 S Capital outlay 6,955 32,085 39,040 Debl service Principal retirement 1,064 24,063 996 26,123 Interest charges 481 14,670 420 15,571 Total expenditures 48,791 38,755 37,584 125,130 Excess (deficiency; ofrevenues over (unde1) expenditures 7,480 (38,509) 39,114 8,085 Other financing sources (uses; Transfers in 310 57,797 13,017 71,124 T1ansfers out (7,300) (189) (500) (7,989) Issuance of loan payable 6,125 6,125 TOtal other financing sources (6,990) 57,608 18,642 69,260 Net change in fund balances 490 19,099 57,756 77,345 Fund balances at beginning of year 68,691 108,482 54,641 231,814 Fund balances at end of year $ 69,181 $ 127,581 $ 112,397 $ 309,159 92 See accompanied Independent auditors' reporl CITY OF ANAHEIM Combining Balance Sheet Non major Special Revenue Funds J une 30, 20 l 7 (In thousands) Anaheim Anaheim Long Range Community Resort Tourism Narcotic Property Gas Workforce Development Maintenance Improvement Asset Management Tax Development Block Grant Grants Dist1 ICt District Forfeiture Plan Total ASSETS Cash and cash equivalents $ 3,563 $ 2 $ 241 $ 960 $ l/118 $ 2,440 $ 707 $ 967 $ 10,298 Investments 12,386 6 838 3,336 4,931 8,481 2,457 l,361 35,796 Accounls 1eceivable, net 2 l 1,618 91 1,712 Accrued interest receivable 49 12 19 30 11 15 136 Notes receivable, net 4,798 22,090 26,888 Due from othe1 gove1 nmenls 1,751 614 195 3,953 6,513 Land for resale 22.178 22,178 Prepaid and other assets 33 3tl Restricted cash and cash equivalents 2,297 2,297 Due from Successor Agen0,,' 5,024 5,024 Total assets $ l 7,7tl9 $ 622 $ 11,098 $ 30,352 $ 6,369 $ 12,569 $ 5/172 $ 26,645 $ 110,876 LIABILITIES Accounts payable $ 1,173 $ 384 $ 276 $ 944 $ 457 $ 2,113 64 $ 588 $ 5,999 Wages payable 57 20 31 36 12 I 30 2 189 Deposits 6 6 Due to other fimds 210 210 Due to other governments 1,500 1,500 Total liabilities 1,230 614 307 980 469 2,114 94 2,096 7,904 DEFERRED INFLOWS OF RESOURCES Unavailable revenues 81 2 1,737 59 1,879 U nava1lable 1esources -long--te1 m notes receivable 4,798 22,090 26,888 Unavailable resources --due from Successor Agency 5,024 5,024 Total deferred 1nfows of resources 81 9,824 23,827 59 33,791 FUND BALANCES Restricted Anaheim Resort rrnintenance and improvement 5,900 5,900 Community & Economic Development proJects 24,,190 2tl,490 Grant purposes 967 714 5,378 7,059 Homebuver assistance program 5,190 5,190 Streets, roads and transpo1 tatlon improvemenl proJects 16,519 10.455 26,974 Unassigned (73) (359) (432) Total tiJnd balances (deficit) 16,519 (73) 967 5,545 5,900 10,455 5,378 24.490 69,181 Total liabilities, deferred inflows of resources, and fund balance $ l 7,7tl9 $ 622 $ 11,098 $ 30,352 $ 6,369 $ 12,569 $ 5/172 $ 26,645 $ 110,876 93 See accompanied Independent auditors' reporl CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes 1n Fund Balances (De fie it) Non major Special Revenue Funds J une 30, 20 l 7 (In thousands) ,,~naheim ,,~naheim Long Range Communitv Reso1 l Tourism Na1collc P1 operty Cas \,Vorkforce Development Maintenance improvement Asset Management Tax Development BlockCrant C rants District District Forfeiture Plan Total Revenues Licenses, fees and permits $ 29 $ $ 30 lnlergovernmental revenues $ 13,210 $ 3,192 $ 3,998 5,403 $ 1,736 27,539 Charges for services 173 4,335 $ 17,962 22,470 Use of rroney and property 58 319 464 17 98 42 $ l.792 2,790 Othe1 II 14 879 2/172 3 36 27 3,tM2 Total revenues ll,452 3,206 5,196 8,368 4,356 18,060 1,814 1,819 56,271 E"f.)enditures Current C 1ty Atto1 nev 120 120 Police 2,607 1,433 4,040 F11e & Rescue 471 471 Community & Economic Development 3,271 1,377 2,319 2,·122 9,389 Planning & Building 1,421 1,421 Public Works 5,785 ·1,828 587 11,200 Communitv Services 308 27 335 Convention, S porls & E nte1 tainment 13,315 13,315 Cap1t::.7.I outlay ·1,578 19 1,206 120 167 271 594 6,955 Debt service Principal retirement 250 655 159 l,Q6tl Interest charges 433 48 481 Total expenditures 10,613 3,271 4,333 6,630 4,948 14,069 1,911 3,016 ·18,791 Excess (deficiency) ofrevenues over (under) expenditures 2,839 (65) 863 1,738 (592) 3,991 (97) (l, 197) 7,480 Other financing sources (uses) Transfers in 110 200 310 Transfers out (5,091) (638) (391) (1,180) (7,l00) Total olher financing sources (uses) ( 01,981) (638) (391) 200 (1,180) (6,990) Net change in 1i1nd balances (2,142) (65) 225 1,347 (l92) 2.811 (97) (1,197) 490 Fund balances at beginning ofyea1 18,661 (8) 742 4,198 6,292 7,644 5/175 25,687 68,691 Fund balances at end of year $ 16,519 $ (73) $ 967 $ 5,545 $ 5,900 $ 10.455 $ 5,378 $ 24,490 $ 69,181 94 See accompanied Independent auditors' reporl CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes 1n Fund Balances (Deficits) Budget and Actual -All Non major Special Revenue Funds Year EndedJ une 30, 201 7 (In thousands) Cas Ta, \,Vorkforce Development Final Variance Final Variance Budgeted ,A.ctual 'vVith Final Budgeted ,A.ctual with Final /\mounts /\mounts B udgel /\mounts /\mounts Budget Revenues Licenses, fees and permits lnlergovernmental revenues $ 13,486 $ 13,2!0 $ (276) $ 3,780 $ 3,192 $ (588) Charges for services 215 173 (42) Use of rroney and property 58 58 Other 9 II 2 l iJ l iJ Total revenues 13,710 13,452 (258) 3,780 3,206 (574) E. xpend1tures City ,Attorney Police Fire & Rescue Communilv & Economic Development 3,813 3,271 (542) Planning & Building Public Works 23,294 10,613 (l 2,6/ll) Communily S erv1ces Convention, Sports & Entertainment TOtal expenditu1es 23,29tl 10,6B (12,681) 3,813 3,271 (542) Excess (deficiency) of revenues over (under) expenditures (9,584) 2,8l9 12,423 (33) (65) (32) Other financing sources (uses; Transfers in 66 110 44 T1ansfers out (2,000) (5,091) (3,091) Total other financing sources (uses) (l.934) (4,981) (3,047) Net change 1n fund balances (11,518) (2,142) 9,376 (33) (65) (32) Fund balances at beginning of year 18,661 18,661 (8) (8) Fund balance al end of year $ 7,143 $ 16,519 $ 9,376 $ (41) $ (73) $ (32) (continued; CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes 1n Fund Balances (Deficits) Budget and Actual -All Non major Special Revenue Funds Year Ended J une 30, 201 7 (In thousands) (continued) Community Development Block_ Crant Crants Final Variance Final Variance Budgeted Actual 'vVith Final Budgeted Actual with Final /\mounts /\mounts B udgel Amounts /\mounts Budget Revenues Licenses, fees and perm1ls $ 30 $ 29 $ (I) lntergovernment-11 revem1es $ 4,559 $ 3,998 $ (561) 16,966 5,403 (ll ,56l) Charges for ser\dces Use of m:mev and properly 219 319 100 86 464 378 Other 474 879 405 480 2,472 1,992 TOtal revenues S,252 5,196 (56) 17,562 8,368 (9,194) Expenditures C ily /\ltorney 120 120 Police 7,018 2,607 (4.411) Fire & Rescue 16 (16) 2,026 1,556 (470) Communitv & Economic Development 7,094 2.484 (4,610) 7,597 2,319 (5,278) Planning & Building l/189 1,·121 (68) Public \\/01ks 229 121 (108) Community S er,,.'ices 643 308 (ll5) 234 27 (207) Convention, Sports & E ntert::.7.inment Total e'1-)enditures 9,362 4,333 (5,029) 17,104 6,630 (10.474) Excess (deficiency; ofrevenues over (unde1) expenditures (4,110) 863 4,973 tJ58 1,738 1,280 Other financing sources (uses) Transfers in Transfers out (638) (638) (l9l) (l9l) Total olher financing sources (uses) (638) (638) (391) (391) Net change in fund balances (4,110) 225 4,335 458 1,347 889 Fund balances at beginning ofyea1 7tl2 742 4,198 tl,198 Fund balance at end of year $ (3,368) $ 967 $ 4,335 $ 4,656 $ 5,545 $ 889 96 (continued; CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes 1n Fund Balances (Deficits) Budget and Actual -All Non major Special Revenue Funds Year Ended J une 30, 201 7 on thousands) (continued) Anaheim Resort rv1aintenance District Anaheim Tourism Improvement District Final Variance Final Variance Budgeted Actual 'vVith Final Budgeted Actual with Final /\mounts /\mounts B udgel Amounts /\mounts Budget Revenues Licenses, fees and perm1ls $ $ lntergovernment-11 revem1es Charges for ser1..dces $ 4,472 4,335 (137) $ 17,848 $ 17,962 $ 114 Use of m:mev and properly 50 17 (33) 57 98 41 Other 4 3 ( l) Total revenues 4,526 4,356 (170) l 7,905 18,060 l 55 Expenditures C ily /\ltorney Police Fire & Rescue Communitv & Economic Development Planning & Building Public \\/01ks 7,035 ·1,948 (2,087) 3,390 (2,636) Community S er,/ices Convention, Sports & E ntert::.7.inment 13/191 13,31 S (176) Total e,penditures 7,035 4,948 (2,087) 16,881 14,06') (2,812) Excess (defic1en::y; ofrevenues ove1 (unde1) expenditures (2,509) (592) 1,917 1,024 3,991 2,967 Other financing sources (uses) T1ansfers 1n 200 200 Transfers out (1,178) (l.180) (2) Total other financing sources (uses; 200 200 (1,178) (1,180) (2) Net change in fimd balances (2,l09) (392) l ,')17 (l 54) 2,811 2,965 Fund balances at beginning ofyea1 6,292 6,292 7,6tJil 7,644 Fund balance at end of year $ 3,')83 $ 5,900 $ l ,')l 7 $ 7,4')0 $ 10,455 $ 2,965 97 (continued; CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes 1n Fund Balances (Deficits) Budget and Actual -All Non major Special Revenue Funds Year Ended J une 30, 201 7 (In thousands) (continued) Narcotic Asset Forfeiture Long Range Property rv1anagement Plan Final Variance Final Variance Budgeted Actual with Final Budgeted Actual with Final /\mounts /\mounts B udgel Amounts /\mounts Budget Revenues Licenses, fees and perm1ls Intergovernmental revem1es $ 2,478 $ 1,736 $ (742) Charges for ser\dces Use of m:mey and properly 22 ·12 20 $ 1,936 $ 1,792 $ (144) Other 36 36 63 27 (36) Total revenues 2,500 1,814 (686) 1,999 1,819 (180) Expenditures C ily /\ltorney Police 3,539 l.911 (l.628) Fire & Rescue Communitv & Economic Development 3,016 3,016 Planning & Building Public \\/01ks Community S er,/ices Convention, Sports & E ntert::.7.inment Total expenditures 3,539 1,911 (1,628) 3,016 3,016 Excess (deficiency; ofrevenues ove1 (unde1) expenditures (1,039) (97) 942 (1,017) (I, 197) (180) Other financing sources (uses) T1ansfe1s 1n Transfers out Total olher financing sou1ces (uses) Net change in tiJnd balance (deficits) (l.039) (97) 942 (l.017) (1,197) (180) Fund balances (defiuls) at beginning of year 5,475 5,475 25,687 25,687 Fund balances at end of year $ 4,436 $ 5,l78 942 $ 24,670 $ 24,490 $ (180) 98 See accompanied Independent auditors' reporl CITY OF ANAHEIM Combining Balance Sheet Non major Debt Service Funds J une 30, 20 l 7 (In thousands) Ceneral Anaheim Obligation Municipal Resort Bonds Facilities Improvements Total ASSETS Cash and cash equivalents $ $ 331 $ 331 Investments l, 152 1,152 Accrued interest receivable 14 14 Restricled cash and cash equivalents 9 $ 27,788 27,797 Reslricled investments l, 160 97,131 98,291 Total assets $ 2,666 $ 124,919 $ 127,'xlS LIABILITIES AND FUND BALANCES Liabilities Accounts payable $ ,1 $ ,] Total liabilities 4 4 Fund balances Rest! 1cted for debt service $ $ l, 183 $ 124,915 126,098 Assigned for debt service 1,483 l.483 TOtal fund balances 2,666 ]2tl,9l S 127,581 Total liabilities and 1i1nd balances $ 2,666 $ 124,919 $ 127,585 99 See accompanied Independent auditors' reporl CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Debt Service Funds Year Ended J une 30, 201 7 on thousands) Ceneral ,,~naheim Obl1gat1on Municipal Resort Bonds Facilities Improvements Total Revenues Propert/ taxf_•s $ 36 $ 36 Use of m:mev and properly 3 $ 156 $ 51 210 TOtal revenues 39 156 51 246 Expenditu1es Current Finance 22 22 Debt service P11nc1pal retirement 700 463 22,900 24,063 Interest charges l4 1,177 ll,47') 14,670 TOtal expenditu1es 714 l ,6tlQ 36,401 38,755 E'\cess (deficiency) of 1evenues over (under; e'\penditu1es (675) (1,·184) (36,350) (38,509) Other financing sources Transfers in 623 57,174 57,797 Transfers out (189) (189) Total olher financing sources (189) 623 57,] 7tl 57,608 Net change in fund balances (864) (861) 20,824 19,099 Fund balances at beginning of year 864 3,527 104,091 108,482 Fund balances at end of yea1 $ $ 2,666 $ 124,915 $ 127,581 100 See accompanied Independent auditors' reporl CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes 1n Fund Balances Budget and Actual -All Debt Service Funds Year Ended J une 30, 201 7 (In thousands) Ceneral Obl1gat1on Bonds Municipal Fac:llit1es Final Variance Final Variance 8 udgeted /\c:t:ual \1vith Final 8 udgeted /\c:t:ual with Final i\rnoL1nt:s /\mounts 5 udget i\rnount:s /\mounts Budget Revenues Property laxes $ 36 $ 36 Intergovernmental revenues $ 8 (8) Use of Imney and pIopertv 6 3 (3) $ 156 $ 156 Total revenues 14 39 25 156 156 E. xpend1tures Finance $ 1,088 1,088 Public \\/01ks 71 S 7]tl (I) 552 552 Total expenditures 715 714 (l) l.640 1,640 Excess (deficiency) of revenues over (under) expenditures (701) (675) 26 (l.640) (1,484) 156 Other financing sources Transfers in 628 623 (5) Transfers out (189) (189) Total other financing sources (189) (189) 628 623 (5) Nel change in fund balances (701) (864) (163) (1,012) (861) 151 Fund balances at beginning of year 864 864 3,527 3,527 Fund balances at end of yea1 $ 163 $ $ (163) $ 2,515 $ 2,666 $ 151 I Ol (continued; CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual -All Debt Service Funds Year Ended J une 30, 201 7 on thousands) (continued) !-\naheirn Resort: Improvements Final Variance B udgelecl Actual with Final !-\mounts /\mounts B uclget Revenues Propert/ taxf_•s Intergovernmental revenues Use of money and property $ 51 50 Total revenues 51 50 E. xpend1tures Finance 36,460 36,401 (59) Public \\/01ks Total expenditures 36,460 36.401 (59) E.xcess (deficiency; ofrevenues over (unde1) expenditures (36,·159) (36,350) 109 Olher financing sources Transfers in 60,853 57,174 (3,679) Transfers oul Total other financing sources 60,85l 57,174 (3,679) Net change in fund balances 2tl,394 20,824 (3,570) Fund balances at beginning of year 104,091 104,091 Fund balances at end of year $ 128,485 $ 124,915 (3,570) 102 See accompanied Independent auditors' reporl CITY OF ANAHEIM Combining Balance Sheet Nonmajor Capital Projects Funds J une 30, 20 l 7 (In thousands) Transportation Development Community Storm Street Improvement Impact Services Drain Olher Capital Mello--Roos Construe lion P1ojects P roJects Facilities Construction lmprovemenls P1 ojects Total ASSETS Cash and cash equivalents $ 72 $ 18 $ 7,417 $ 1,263 $ 1,069 $ 1,203 $ 569 $ 11,611 investments 250 61 25.786 4,390 l.717 4,184 1,979 40,367 Accounts receivable, net 3,l90 38 3,428 /\ccrued 1nleresl receivable 74 16 14 21 13 138 Due from other 1i1nds 26 7,910 5,012 12,948 Due from other governments 10,666 3,·107 212 381 I l ]tl,668 Prepaid and olher assets 7,3"14 l 1,368 8,713 Restricted cash and cash equivalents 228 45,241 45,469 Restricted investment 7,815 7,815 Due from the Successor Agenc:v 5,702 5,702 TOtal assets $ 18,332 $ 3,·186 $ 36,905 $ 6,089 $ tJ,800 $ 27,06tl $ 5"1. 183 $ 150,859 LIABILITIES ,Accounts payable $ 1,615 $ 120 $ l.470 $ 569 $ 1,963 $ 336 $ 387 $ 6,460 Wages pa.vable 18 7 2 I ,1 9 41 Deposits 1,194 1,194 Due lo olher funds 10,025 2,923 l2,9tl8 Total liabilities 11,658 3,04l 1,477 571 3,158 340 396 20,643 DEFERRED INFLOWS OF RESOURCES Unavailable revenues 9,039 2,504 193 381 12,117 Unavailable resources --due from Successor Agency 5,702 5,702 T0tal defened inflmvs of resources 9,039 2,504 193 381 S,702 17,819 FUND B.~LANCES Nonspendable Prepaid and other assets 7,344 1,368 8,713 Restricted Capital projects 13,173 13,173 Development impact projects 35,235 4,856 1,642 52,419 94,152 i-\ssigned Capital projects 280 7,849 8,129 Unassigned (9,709) (2,061) (ll ,770) Tolal fund balances (deficits) (2,365) (2,061) 35,235 5,137 l,6"12 21,022 53,787 112,397 Total liabilities, deferred inflo'vvs of resources. and 1i1nd balances (deficits) $ l8,:B2 $ 3.486 $ 36,905 $ 6,089 $ 4,800 $ 27,064 $ 54,183 $ 150,859 103 See accompanied Independent auditors' reporl CITY OF ANAHEIM Combining Statement of Revenues, Expenditures and Changes In Fund Balances (De fie its) Nonmajor Capital Projects Funds J une 30, 20 l 7 (In thousands) Transportation Development Communitv Storm Slreel 1mp1ovement Impact Services D1a1n Olher Capital Mello-Roos Construction Projects P roJects Facilities Consll uclion improvement ProJecls Total Revenues Licenses, fees and permits $ 8,869 $ 2,·170 $ 35 $ 11,374 Intergovernmental revem1es $ 9,595 $ 1.192 1.988 $ 3,110 15,885 Charges for services $ 48 tJ8 Use of m:mey and properly 368 (16) 10,435 71 ,14 362 121 11,385 Contribution from prupeerty ovvners 36,864 36,864 Other 5 69 398 670 1,142 Total revenues 9,963 1.181 19,373 4,927 79 4,142 37,033 76,698 Expenditures Current Police 67 775 842 Fire & Rescue ll6 336 Community & Economic Developmenl 18 18 Planning & Building 45 45 Public \,Vorks 701 l8l l1 3 42 1,140 Community S e1vices 233 509 960 1,702 Capital outlay 7,574 64 8,831 2,737 164 ll ,l60 1,355 32,085 Debl service Principal retirement 996 996 Interest charges 420 420 Total expenditures 8,275 ,147 9,142 3,246 164 14,913 1,397 37,584 E'\cess (deficiency) of 1evenues over (under; e'\penditu1es 1,688 734 10,231 1,681 (85) (10,771) 35,636 39, 1 ]tl Olher financing sources (uses) Transfers in 1,136 4,863 48 6,970 13,017 Transfers out (9l) (407) (500) Issuance of loan payable 6,125 6,125 Total other financing sources (uses) 1,043 4,86l (359) ll.095 18,642 Net change in 1i1nd balances 2,731 5,597 9,872 1.681 (85) 2,324 35,636 57,756 Fund balances (deficits) al beginning of year (5,096) (7,658) 25,363 3,456 1,727 18,698 18,151 54,6tl l Fund balances (deficits) at end of year $ (2,365) $ (2,061) $ 35,235 $ 5,ll7 $ 1.642 $ 21.022 $ 53,787 $ 112,397 104 See accompanied Independent auditors' reporl CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits) Budget and Budgetary Bas is Actual -All Capital Projects Funds Year Ended J une 30, 201 7 on thousands) Street Construction Transportation improvement Projects Final Variance Final Va1 iance Budgeted Actual with Final Budgeted Actual with Final Amounts /\mounls B udgel /\mounts Amounls Budget Revenues Licenses, fees and permits lnlergovernmental revenues $ 68,393 $ 9,595 $ (58,798) $ 956 $ I, 192 $ 236 Charges for services Use of rroney and property 368 l68 (16) (16) Conlribution from prope1tv owners Other 5 5 Total revenues 68,393 9,963 (58,430) 956 1,181 225 E. xpend1tures Police Fire & Rescue Community' & Economic Development Planning & Building Public \Vorks 62,142 8,275 (53,867) 447 ,147 Community S er,,.'ices Total expenditures 62, ]tl2 8,275 (53,867) iJil7 447 Excess (deficiency') of revenues over (under) expenditures 6,251 1,688 (4,56l) 509 7l4 225 Other financing sources (uses) T1ansfe1s 1n l, 136 l, 136 ,),863 4,863 Transfers out (93) (9l) Total other financing sources 1,043 1,043 4,86l 4,863 Net change 1n fund balances 6,251 2,731 (3,520) 509 5,597 5,088 Fund balances at beginning of year (5,096) (5,096) (7,658) (7,658) Fund balances at end of year $ 1,155 $ (2,365) $ (3,520) $ (7,149) $ (2,061) $ 5,088 I 0'.) (continued; CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes 1n Fund Balances (Deficits) Budget and Budgetary Bas is Actual -All Capital Projects Funds Year Ended J une 30, 201 7 on thousands) (continued) Development Impact ProJecls Communitv Services Facil1lles Final Variance Final Variance Budgeted Aelual vv1th Final B udgeled Actual w1lhFinal Amounts Amounts Budget Amounts Amounts Budget Revenues Licenses, fees and perm1ls $ 1,363 $ 8,869 $ 7,506 2,·170 $ 2,470 intergovernmental revenues 902 (902) $ 2,361 l.988 (373) Charges for services Use of 1mney and p1opertv 10,209 226 32 71 39 Contribution from property ov,ners Othe1 69 69 283 398 115 Total revenues 12,474 l'l,373 6,899 2,676 4,927 2,251 E"f.)enditures Police 1,159 808 (351) Fire & Rescue Community & Economic Development Planning & Building Public Works 1,740 262 (1,478) Communily Services 17,478 8,072 (9,·106) tl,005 3,246 (759) Total e"l-)enditures 20,377 'l, 142 (ll ,235) 4,005 l,246 (759) Excess (deficiency) of revenues over (under) expenditures (7,903) 10,231 18,134 (l,l29) 1,681 l,010 Other financing sources (uses; Transfers in 48 48 T1ansfers out (407) (407) Total other financing sources (l59) (l59) Net change in fund balances (7,903) 'l,872 17,775 (l.329) l.681 3,010 Fund balances at beginning of year 25,363 25,363 3/156 3,456 Fund balances at end of year $ 17,460 $ 35,235 $ 17,775 $ 2,127 $ 5,ll7 $ l,010 106 (continued; CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits) Budget and Budgetary Bas is Actual -All Capital Projects Funds Year Ended J une 30, 201 7 on thousands) (continued) Storm D1a1n Construction Olher Capital Improvements Final Final Variance Budgeted Actual Va11ance with Budgeted /\ctual vvith Final Amounts Amounts Final Budget Amounts Amounts Budget Revenues Licenses, fees and permits $ 50 $ 35 $ (15) lnlergovernmental revenues $ 2,] 7tl $ 3,110 $ 936 Charges for services Use of m:mey and properly 44 44 342 362 20 Conlribution from prope1tv owners Other 670 670 Total revenues 50 79 29 3,186 ·1, 142 956 E. xpend1tures Police 1,314 1,094 (220) Fire & Rescue 6,959 I, 150 (5,809) Community' & Economic Development 3,912 1,455 (2,457) Planning & Building 397 230 (167) Public \Vorks 164 164 10,894 3,992 (6,902) Community S er,_,'ices 2,004 967 (1,037) Total expenditures ]6tl ]6tl 25/180 8,888 (16,592) E.xcess (deficiency; ofrevenues over (unde1) expenditures ( 114) (85) 29 (22,294) (4,7'16) 17,548 Other financing sources (uses) T1ansfe1s 1n 4,235 6,970 2,735 Transfers out T0tal other financing sources tl,235 6,970 2,735 Net change 1n fund balances (114) (85) 29 (18,059) 2,224 20,283 Fund balances at beginning of year 1,727 1,727 18,698 18,698 Fund balances at end of year $ 1,613 $ 1,642 $ 29 $ 639 20,922 $ 20,283 AdJustment to reconcile to G/\AP Equipment acquisition from loan proceeds 6,125 Ending 1i1nd balance --CAAP basis (6,025) $ 21,022 107 (continued; CITY OF ANAHEIM Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits) Budget and Budgetary Bas is Actual -All Capital Projects Funds Year Ended J une 30, 201 7 on thousands) (continued) Mello-Roos Projects Final Budgeted Actual Variance'vvith Amounts /\mounls Final Budgel Revenues Licenses, fees and permIls Intergovernmental revenues Charges for services $ 48 $ ·18 Use of Imney and pIopertv 121 121 Contribution from property ov,ners $ 36,772 36,864 92 Othe1 Total revenues 36,772 l7,033 261 E"f.)enditures Police Fire & Rescue Community & Economic Development Planning & Building Public Works 19,463 l,l97 (18,066) Communily S ervIces Total e"l-)enditures l'l,46.l l.397 (18,066) Excess of revenues over expenditures 17,309 35,6l6 18,327 Other financing sources (uses; Transfers in T1ansfers out Total other financing sources Net change in fund balances 17,309 lS.636 18,327 Fund balances at beginning of year 18,151 18,151 Fund balances at end of year $ 35,460 $ 53,787 $ 18,327 108 See accompanied Independent auditors' reporl I I \ Internal Service Funds f • Int rn IS I Fun s INTERNAL SERVICE FUNDS are used to account for the financing of centralized services to City departments on a cost-reimbursement basis (including depreciation) GENERAL BENEFITS AND INSURANCE FUND - Established to account for employee compensated 11tmmc11s, retirement and health benefits, and self-insurance programs, MOTORIZED EQUIPMENT FUND - Established to account for molori,ed equipment used by City di!!partmt!nls, INFORMATION AND COMMUNICATION SERVICES FUND - Established to account for data processing and wmmunicati General Information Bene fl ls and Municipal and Motorized Communication Facilities insurance Equipment Ser1..dces Maintenance Total Operating revenues Charges for ser1..dces $ 105,831 $ 11,904 $ 20,545 $ 10,275 $ 148,555 Othe1 30 41 9 80 Total operating revenues 105,861 11,945 20,545 10,284 l48,6l5 Operating expenses Salaries and wages l.467 4,068 2.497 l,227 13,259 Maintenance and operations 2,676 5,069 16,612 9,53tl 33,891 Insurance premiums and claims 15,767 15,767 Compensated absences and other benefits 82,738 82,738 Depreciation 2 2.286 2.705 328 5,321 Total operating expenses 104,650 ll /123 21,814 13,089 150,976 Operating income (loss) l.211 522 (1,269) (2,805) (2,341) Nonoperating income (expenses) Intergovernmental revenues 380 380 Investment 1n::ome 235 16 (16) 235 interest e,pense (l) (201) (202) Gain from disposal of cap1lal assets 215 215 Total nonoperating income (loss) 235 610 (201) (16) 628 Income (Loss) before transfer 1,446 1,132 (1,470) (2,821) (1,713) Transfer 1n 2,740 2,300 5,040 Change in net position 1,446 1,132 l.270 (521) 3,327 Net position at beginning of year 4,850 13,618 5,551 (901) 23,118 Net pos1llon at end of year $ 6,296 $ ]tl,750 $ 6,821 $ (1,422) $ 26,445 110 See accompanied Independent auditors' reporl CITY OF ANAHEIM Combining Statement of Cash Flows Internal Service Funds Year Ended J une 30, 201 7 (In thousands) Ceneral Information Benefits and Municipal and Motorized Communication Facilities Insurance Equipment Services Maintenance Total Cash nows from ope1ating act1v1lles Receipts from interiiJnd services provided $ 105,831 $ 11,904 $ 20,545 $ 10,275 $ 148,555 Payments to suppliers (879) (3,735) (17,777) (8,863) (31,254) Payments for salaries and wages to employees (3,753) (4,l08) (2,984) (3,694) (l4,7l'l) Payments for 1nlerfund services used (1,682) (606) (1,099) (939) (4,326) Payments for insurance premiums and claims (14,782) (14,782) Payments for compensated absences and other benefits (79,547) (79,547) Other receipts 70 tJ6 9 125 Net cash provided by (used for) operating activities 5,258 3,301 (l.315) (3,212) 4,032 Cash flows from noncapital financing activities Receipt of 1nlerfund balances 9 IOI 722 832 Payment of interfund balances (20) (825) (845) Transfer in 2,740 2,lOO 5,040 Net cash provided by (used for; noncapital financing acllv1ties (II) (825) 2,8"1 l 3,022 5,027 Cash flows from cap1t::.7.I and related financing acllv1ties Proceeds from sale of capital assets 359 359 Proceeds from issuances of loan payable 110 5,9B 6,023 Capital purchases (4,245) (3,586) (183) (8,014) Capilal granl receipts Principal paymenls on long-term debt (5) (2,6°15) (2,650) interest payments (l) (98) (99) Net cash used for capital and relaled financing activities (3,782) (416) (183) (4,381) Cash flows from investing activities Purchase of investment securities (28,473) (1,511) (1,006) (841) (31,831) Proceeds from sale and matunly of investment securities 25,669 2,616 1,799 1,188 31,272 Interest received 679 56 12 747 Net cash provided by (used for) investing activities (2,125) 1,161 793 359 188 Increase (decrease) in cash and cash equivalents 3,122 (145) 1,903 (14) 4,866 Cash and cash equivalents at beginning of the year 14,314 1,070 727 530 l6,6tl l Cash and cash equivalents at end of the year $ 17.436 925 $ 2,6l0 $ 516 $ 21,507 111 (continued; CITY OF ANAHEIM Combining Statement of Cash Flows Internal Service Funds Year Ended J une 30, 201 7 (In thousands) (continued) Ceneral Information Benefits and Municipal and Motorized Communication Facilities lnsu1ance Equipment Services Maintenance Tolal Reconciliation of ope1 ating income to net cash provided by operating activities Ope1ating income $ 1,211 $ 522 $ (1,269) $ (2,805) $ (2,341) ,Adjustment to recorrile operating income lo nel cash p1ovided by operallng activities Depreciation 2 2,286 2,705 328 5,321 Changes in assets, deferred outfows of resources, liabilities and deferred inflmvs ofresou1ces ,Accounts receivable 332 5 337 lnvento11es (120) (120) Prepaid and other assets 1,590 (l.426) 164 Other post rel11emenl emplovmenl benefits (OPE BJ assets (60) (60) ,Accounts payable 777 848 (838) (268) 519 Wages and benefit payable (239) (240) (487) (467) (1,433) Unearned 1evenues 77 77 Compensated absences 319 319 Self-insurance liab1hly 1,249 1,249 Total adjustments 4,047 2,779 (46) (407) 6,373 Net cash provided by (used for) operating activities $ 5,258 $ 3,301 $ Cl,315) $ (3,212) $ ,1,032 Schedule ofnoncash financing and investing activ1lles Capital assets financed through capital leases $ 969 $ 969 I nu ease (decrease) in fair value of investments $ (tl87) $ (36) (25) $ (20) (568) Reconciliation of cash and cash equivalents Cash and cash equivalenls $ 17,,136 $ 925 $ 617 $ 516 $ 19,494 Restricted cash and cash equivalents, noncLirrent portion 2.013 2,013 Total cash and cash equivalents $ 17,436 $ 925 $ 2,630 $ 516 $ 21,507 112 See accompanied Independent auditors' reporl •I Fiduciary Funds j CITY OF ANAHEIM Statement of Changes in Fiduciary Assets and Liabilities Agency Fund -Mello-Roos Year Ended J une 30, 201 7 (In thousands) Beginning Ending Balance /\dd1tio11s Deductions Balance ASSETS Restricted cash and cash equivalents $ 4,573 $ 76,3')6 $ (73,866) $ 7,lOl Restricted investments 31 (2) 29 Due from other qovernments 94 2,739 (2,826) 7 Total assets $ ·1,698 $ 79,135 $ (76,694) s 7,139 LIABILITIES Due to bond holders $ 4,698 $ 76,307 $ (73,866) $ 7,139 113 See accompanied Independent auditors' reporl (This page left blank intentionally) 114 I Statistical Section J St tisti IS ti n The Statistical Section is included to prov1de detailed data on the physical, economic, social and political characteristics of the reporting government. It is intended to provide the user with a broader and more compl"t" understanding of the goYl!!rnment and its financial affairs than is possibl" from the basrc financial statements and supplementary information included in the Financial Section. CITY OF ANAHEIM STATISTICAL INFORMATION (Unaudited) The S t::.7.tistlcal Section is included to p1 ovide financial st::.Herrent use1 s vv1lh addition_al hislorical p_erspect!Ve, context, and delall for them to use in evaluatir'K) lhe _information contained \Mthin the financial statements, notes to the financial statements, and required supplementarv information with the goal of prov1d1ng the user a better understanding of the C11:v 1s economic condition. Contents Financial trends These schedules contain information to help the reader understand how the City's financial performance and vvell-being have changed over time. Net Position by Component-Last Ten Fiscal Years 116 Changes in Net Position --Last Ten Fiscal Years 117 Government::.7.I AcllvIties Tax Revenues by SouIce -Last Ten Fiscal Years 119 Fund Balances of Governmental Funds ---Last Ten Fiscal Years 120 Changes in Fund Balances of Governmental Funds -Lasl Ten Fiscal Years 121 Revenue capacity These schedules cont::.7.in information to help the reader assess lhe Cily's most significant local Ievenue sources. General Government Tax Revenues by Source --Last Ten Fiscal Years 122 Assessed Value and E stimaled Actual Value ofTa'\able Property -Last Ten Fiscal Years 123 Property Ta, Rates --Direct and Overlapping Governments ---Last Ten Fiscal Years 124 Principal P ropertv Tax Payers --Cum:nt Year and Nine Years Ago 125 Properly Ta'\ Levies and Collections -Last Ten Fiscal YeaIs 126 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 1i1ture. Ratio of Outst::.7.nding Debt by Type -Last Ten Fiscal Years 127 Ratio of General Bonded Debt Outstanding ---Last Ten Fiscal Years 128 Direcl and Overlapping Government Activities Debl -As of June 30, 2017 129 Legal Debt rv1argin information --Last Ten Fiscal Years Bl Pledgeci--Revenue Coverage --Last Ten Fiscal Years 132 Demog1aphic and economic informallon These schedules offe1 demographic and economic indicators to help lhe reade1 underst::.7.nd the environment \Mthin which the Citv's financial acllvIties t::.7.k.e place. Demographic and Economic S tatlstics -Last Ten Fiscal Years l 3tl Pnnupal E mplovers -CuIrent and Nine Years Ago 135 Operallng 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 lhe activities it perfo1 ms. F ull~nme E qu1valent CItv government Employees by Function /Program -Lasl Ten F 1scal YeaI s 136 Operating Indicators by Function -- Last Ten Fiscal Years ll7 CapitaLAssets Statistics by Function ---Last Ten Fiscal Years 139 Sources_ Unless othervv1se noled, the information In these schedules is derived from the comprehensive annual financial I epoIts fo1 lhe relevant year. 11 '.) CITY OF ANAHEIM Net Position by Component Last Ten Fiscal Years (In thousands) (Accrual basis of accounting) Fiscal Year 2017 2016 2015 2014 2013 2012 2011 2010 200') 2008 Governmental Activities Net investment in capital assets $ 974,071 $ 968,473 $ 894,651 $1,016.259 $ 894,625 $ 831,430 $ 832,')51 $ 794,164 $ 751.910 $ 731,726 Restricted 274,830 211,338 210,934 205,998 l96,85l l'J0,868 182,0ll 150,750 154,306 87,566 U nrestncted 1 (410,613) (417,976) (447,817) (455,863) 30,341 16,760 (124,422) (121,283) (92,773) (70,621) Total Governmental Activities 838,288 $761,835 $657,768 $766,394 l.121,819 1,039,058 890,540 823,631 8ll.443 748,671 B usiness---tvpe Activities Net investment in capital assets 1,016,113 997,292 ')')3,075 823,505 787,459 780,093 779,224 756,020 747,379 746,450 Restricted 83,811 76,74') 83,448 77,311 71,lll 61,235 54,626 49,325 45.493 47,406 Unrestricted 20.708 36,644 (l.725) (37,696) 121,083 112,159 115,445 130,812 145,269 165,196 TOtal Business-type /\ctivities I, 120,632 1,110,685 1,074,798 863,120 979,673 953/187 9tl9,295 936,-157 938,141 959,052 Total Government Net 1nveslmenl in cap1t::.7.I assets 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,·199,289 1,478,176 Reslncted 358,641 288,087 294,382 283,309 267,984 252,103 236,637 200,075 199,799 ] 3tl,972 Unrestricted (389,')05) (38l ,ll2) (449,542) (493,559) 151,424 128,919 (8,977) 9,529 52.496 94,575 Total Gove1 nmenl $ 1,958,920 $ 1,872,520 $ 1,732,566 $ 1,629,514 $2,101,492 $ 1,992,545 $ 1,839,835 $ 1,759,788 $1,751,584 $ 1,707,723 Note 1 The City implemented Governmental Accounting Standards Board (GAS B) Statement No. 68 Accot1nting and Financial Re_porting for Pension. and S tate_ment No. 71_ Pension Transition for Contributions Made Subsequent to the Measurement Date, for the tis cal vear ended June 30, 201 S. Implementation of these Statements require the C Itv to restate pnor penod net posItIon and are reflected In the fiscal year 2014 Unrestncted I1et po'>it1on. lnformatio11 prior to the 1mp!ementation of the<,e Statements Is not available. Certain reclassifications have been made to prior year data to conform to the current presentation. S ouIr:e- Finance Department. C itv of Anaheim 116 See accompanied Independent auditors' reporl CITY OF ANAHEIM Changes 1n Net Position Last Ten Fiscal Years (In thousands) (Accrual basis ofaccounting) Fiscal Year 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Program Revenues Gove1nmenlal activities Charges for services General government $ 1,742 $ 1,892 $ 2,253 $ 1,779 $ 1,670 $1.872 $ 1,872 $ 1,708 $ 1,890 $ 2,088 Police 15,441 11,775 10,001 9,927 9,859 10,122 10/135 10,127 10,089 10,235 Fire & Rescue 10,582 9,814 9,024 10,166 9,912 9,4ll 9,518 9,369 9,122 9,850 Community & E.conomic Development l9,Qtl6 10,210 14,023 17,305 9,151 7,281 8,143 7,306 5/159 6,212 Planning & Building 11,357 11,515 9,800 7,746 6,404 5,327 6,263 6,45l 7,724 9,084 Public Works 16,140 15,817 l3,l09 13,037 14,012 11.401 9,837 7,619 7,421 8,619 Community S erv1ces 11,190 3,·130 3,·108 3/179 3,556 3,386 4,Q2tl 4,561 tl,833 tl,855 Convention, Sports & Entertainment 13,672 12.528 11.124 10,236 9,574 9,142 4,356 202 200 218 Total charges for services 99,170 76,981 72,942 73,675 64,138 57,962 Stl,448 ·17,345 46,738 51,161 Operating grants and contributions 109,989 108,lll 109,968 114,584 112,507 108,620 124,358 l2l,7ll 110,200 100,393 Capital grants and contributions 65,937 85,782 67,014 110,295 71,472 44,184 70,080 31,828 66,347 30,361 Governmental activities program revenues 275,096 270,894 249,924 298,554 248,117 210,766 248,886 200,904 223,285 181,915 Business-type activities Charges for services E lectl IC UtilllV tJ33,56l 430,·185 453,697 426,051 tl 51,958 397,931 381 /196 377,387 365,526 351,160 Water Utility 70,777 60,509 6l.495 65,946 60,785 57,748 55,598 56,368 50,807 49,125 Sanilation Utility 63,893 61,006 60,076 57,843 57,230 56,630 56,359 56,023 55/12"1 54,017 Golf Courses 4,062 4,114 4,4l5 4,667 4,759 4,802 4,711 5,168 5,634 5,947 Convention, S po1ts & E. nterla1nment Venues 37,015 35,363 34,742 32,Q8tl 29,656 29,389 27,981 30,797 26,987 31,197 /\R TIC rvlanagement 1,050 878 ·148 Total charges for services 610,358 592,355 616,893 586,591 604,388 546,500 526,145 525,743 504,378 491,446 Ope1ating giants and contnbullons tl25 776 287 452 952 1,101 746 1,990 965 l, ]9tl Capital grants and contributions 4,381 ll ,74l 8,7l4 8,441 6,698 8,954 12,667 5,622 6,620 12,332 B L1siness--type activities program revenues 615,164 604,874 625,914 595,484 612,038 556,555 539,558 5ll.355 511,963 504,972 Total government program revenues 890,260 875,768 875,8l8 894,038 860,155 767,321 788,444 734,259 735,248 686,887 E.xpenses Covernmental activities General gove1nmenl 11,825 10,331 12,370 15,790 13,275 11,617 10,911 10,917 12, ]tJil 12,610 Police 151,559 132,889 135,161 127,037 124,556 117,840 119,504 125,121 121,162 122,883 Fire & Rescue 70,365 62,520 61,794 59,510 58,508 58,027 56,393 58,229 57,768 56,434 Community & Economic Developmenl 100,720 110,618 80,976 8Q,Qtl3 82,769 95,683 105,937 117,621 109,523 105,651 Planning & Building 21,944 19,862 18,303 17,030 16,917 15,648 15,627 16,822 17,057 17,199 Public Works 61,806 '-18,719 66,023 60,262 44,ltlQ 41,228 tJil, 109 39,017 47,226 ·13,680 Community' Services 34,799 34,212 31,587 34, BO 28,925 28.282 30,958 35,372 37,704 39,033 P ubllc Util1lles 2,530 2,687 2,599 2,51"1 2.405 2,315 2,218 1,952 1,515 2,128 Convention, S po1ts & E. nterla1nment Venues 19,238 18,503 17,026 l S,586 13,935 13,584 13,633 9,931 10,069 10,781 Interest on long--term debt 34,876 l5.l85 l5.340 35,514 35,880 42,824 47,985 47,610 47,779 45,502 Governmental Activities Expenses 509,662 475,526 461,179 447,416 421,910 427,048 447,275 462,592 461,947 455,901 117 (continued; CITY OF ANAHEIM Changes 1n Net Position Last Ten Fiscal Years (In thousands) (Accrual basis ofaccounting) (continued) Fiscal Year 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Expenses B usiness-tvpe Activ1lles E leclric Utility 412/12"1 390,732 ,101,243 411,246 417,008 386,358 372,129 375,173 359,320 353,2Qtl Wale1 Util1ly 72,71 S 61,620 68,011 62,996 57,056 58,319 56,608 55,,178 tJ9,309 49,219 Sanitation 58,218 56,564 55,979 53,508 52,813 55,939 49,845 50,521 52,702 49,693 Golf Courses 4.465 4,405 4,418 4,399 4,473 4,114 4,256 4,4l6 4,495 4,810 Convention, Sports & Entertainment Venues 47,321 44,285 56,715 46,385 45,001 45,278 44,662 45,954 45,487 4/l,292 ARTIC Management 6,374 6,235 5,075 B usiness-tvpe activities e'\pense 601,517 563,841 591.441 578,534 576,351 550,008 527,500 531.562 511,313 505,218 Total government expenses 1,111,179 1,039,367 1,052,620 1,025,950 998,261 977,056 974,775 994,154 973,260 961,119 Net (E ,pense)/Revenue Government::.7.I act1v1lles (234,566) (20°1,632) (211,255) (148,862) (173,793) (216,282) (198,389) (261,688) (238,662) (273,986) B us1ness--type act1v1lles 13,647 41,033 34,47l 16,950 35,687 6,547 12,058 l,79l 650 (246) Total government, net (e,pense) revenue (220,919) (163,599) (176,782) (131,912) (ll8, l06) (209,735) (186,lll) (259,895) (2l8,0l 2) (274,232) Gene1 al Revenues and Other Changes in Net Pos1llon Governmental activities Ta'\es Propertv taxes 72,909 70,646 68.405 66,282 64,311 58,896 59,053 59,689 60,806 59,592 Property' tax increments 28,678 47,040 47,7ll 47,115 45,719 Sales tax and use tax 77,732 76,975 72.356 67,505 65,445 59,654 54,711 51.214 56,035 62,510 Transient occupancy taxes 149,566 137,570 119,744 110,134 102,936 90,376 82,605 77, ll9 80,055 87,183 Motor vehicle license fees 161 142 145 331 1,783 l.026 1,180 1,532 Othe1 laxes 8,946 8,731 8,318 7,780 7,756 7,272 7,288 7,288 8,Qtl l 9,529 U nrestncted investment earnings 2,116 3,692 2,725 2,930 1,094 3,598 3,667 7,012 8,667 15,337 Other 106 87 55 49 1,857 873 614 I, 175 39tl 2,670 Transfers 7,701 10,856 (169,119) 7,288 12,824 12,571 8,537 19,602 iJ l, l 4 l 15,573 Special Item (8,218) Extraordinary gain 102,882 Covernmental activities 311,019 308,699 102,629 261,968 256,554 364,800 265,298 271,876 303,434 299,645 B usiness-tvpe activities U nreslricled investment ea1 rnngs 4,001 5,710 8,086 6,986 3,323 10,216 9,617 15,825 19,580 3l,2tJil Transfers (7,701) (10,856) 169,119 (7,288) (12,824) (12,571) (8,537) (19,602) (41,141) (l S,573) Business-type activities (3,700) (5,146) 177,205 (302) (9,501) (2,355) 1,080 (3,777) (21,561) IS,671 Total government 307,319 303,553 279,834 261,666 2"17,053 362,445 266,378 268,099 281,873 315,316 Change in Net Position Governmental activities 76/153 104,067 (108,626) 113,106 82,761 148,518 66,909 10,188 64,772 25,659 B us1ness--tvpe act1v1lles 9,947 35,887 211,678 16,648 26,186 4,192 13,138 (1,984) (20,911) l 5,425 Tolal government change 1n net pos1llon $ 86,400 $ ll9,954 $ lOl,052 $ 129,754 $ 108,947 $ 152,710 $ 80,047 $ 8,204 $ 43,861 $ 41,084 Note· Certain reclassifications have been rnade to prior fiscal years' data to conform to the curwnt presentation. Source. F- inance Department, City of Anaheim 118 See accompanied Independent auditors' reporl CITY OF ANAHEIM Governmental Activities Tax Revenues By Source Last Ten Fis cal Years on thousands) (Accrual basis of accounting) Amounts Motor Property Sales and Transient Vehicle Fiscal Property Tax Use Occupancv License Other Year Taxes Increments Taxes Taxes Fees 1 Taxes Total 2017 $ 72,909 $ 77,732 s 149,566 S 161 s 8,946 $ 309,314 2016 70,646 76,975 137,570 H2 8,731 294,0&1 2015 68,405 72,356 119,744 HS 8,318 268,968 2014 66,282 67,S0'i l lll, 134 7,780 251,701 2013 (i4,l I l 65,44'i I 02,936 331 7,7'.)6 240,779 2012 58,896 $ 28,678 2 59,65•1 90,376 7,272 244,876 201 l 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 56,03', 80,055 I, 180 8,IJ4 l 2'i3,232 2008 59,592 •15,719 62,510 87,183 1,532 9,529 266,065 1 The decrease 111 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 wa<, part of the State of California 2004 Budget Act. 2 The decrease 111 P ropertv ta, increments from fi<,cal year 2012 wa<, due to the d1s<,olutio11 of Redevelopment Agency 011 Februarv 1, 2012. 3 Motor Vehicle License Fee<, allocation wa<, eliminated per the fiscal year 2012 State Budget. Note: Certain reclas<,1f1catio11s have been made to prior fiscal years' data to conform to the current presentation. S oun:e: Finance Department, Citv of Anaheim 119 See accompanied Independent auditors' reporl CITY OF ANAHEIM Fund Balances of Governmental Funds Last Ten Fiscal Years (In thousands) (Modified accrual basis of accounting) Fiscal Year 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 General Fund Nonspendable $ 819 $ 958 $ 1,538 $ 2,099 $ 2,531 $ 3,082 $ 3,626 Reslricled 6,238 7,730 6,124 6.449 l.766 982 582 Committed 788 /\ss1gned 2,056 7,442 5ll 4,073 6,879 320 141 Unassigned 42,336 39,850 39,615 30,394 26,920 22,636 22,·139 Reserved $ 4,092 $ 4,530 $ 5,001 U nrese1ved -undesignated 29.490 47,729 37,347 Total General 1i1nd 51,449 55,980 47,790 43,015 l8,884 27.020 26.488 33,582 52,259 42,348 Housing Authority' Fund Nonspendable 2 4 7 38 42 Restricted 62,338 48,974 4l.703 41.134 32.234 29,935 7,778 /\ss1gned 22,9Qtl 16,129 14,283 11,664 11,823 11,237 9,922 Reserved 1,373 1,830 830 Unreserved -- undesignated 11,603 5,669 6/17"1 Total Housing Authoritv Fund 85,242 65,105 57,990 52,805 44,095 41,172 17,742 12,976 7/199 7,3Qtl NonmajoI Governmental Funds Nonspendable 8,713 6,000 6,270 3,542 4,619 l 6ll Reslricled 303,036 237,930 197,360 170,950 164,870 158,933 241,674 Assigned 9,612 5,875 l.040 l.291 8,055 7.400 7,761 Unassigned (12,202) (17,991) (20,071) (19,005) (11,231) (32,448) (3°1,293) Reserved 130,313 142,760 138,402 Unreserved --designated. reported in S peual revenue funds 7,349 7,211 6,809 Debt service funds 156 4,433 1,656 Capital projects funds 31,899 iJ 1,544 32,809 U111eserved -undesignated, repo1ted In Special revenue funds l4,l50 5,342 4,199 Capit::.7.I pI0Jects funds (3,376) (7,037) (15,551) Total nonmaJor governmental funds 309, l 59 231,814 186,599 158,778 166,313 133,886 215,773 180,691 194,253 l68,32tl Total governmental fimds1 $ 445,850 $ 352,899 $ 292,l79 $ 254,598 $ 249,292 $ 202,078 $ 260,003 $ 227,249 $ 254,011 $ 217,976 1 The C itv implemented Governmental Accounting Standards Board Statement No 5·-1-(GAS B 54) for the Fiscal Year E ndedj une 30, 2011. Fund Balance Classifications prior to the implementation of GAS B 54 is not available. Source. F- inance Department, City of Anaheim 120 See accompanied Independent auditors' reporl CITY OF ANAHEIM Changes 1n Fund Balances of Governmental Funds Last Ten Fiscal Years (In thousands) (Modified accrual basis of accounting) Fiscal Year 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Revenues Property taxes $ 72,909 $ 70,646 $ 68.405 $ 66,282 $ 64,311 $ 58,896 $ 59,053 $ 59,689 $ 60,806 $ 59,592 Property tax increments 28,678 47,040 47,731 47. ll 5 45,719 Sales and use t::.wes 80,SOO 81,844 71,977 68,581 62,793 58,589 55,034 "18,210 56,493 64,296 Transient occupancy laxes ]tl9,566 137,570 119,744 110,134 102,936 90,376 82,605 77,139 80,055 87,183 Olher ta'\es 8,287 8,024 7,·178 7,012 7,078 6,401 6,486 6,303 6,451 6,753 Licenses, fees, and permits 36,504 30,65l 28,57l 21,353 22,305 17,067 18,772 21,580 21.062 24,705 Intergovernmental revenues 123,797 121,055 2 155,314 215,755 186,018 143,348 150,394 141,418 158,729 135,072 Charges for services 42,047 36,147 33,295 32,569 30,883 29,672 24,408 18,351 17,874 17,730 Fines. forfeits, and penalties 2,756 2,875 2,823 2,656 2,907 l.515 3,304 3,255 l.409 3,767 Use of money and property 31,207 55,052 13,233 16,681 8,058 7,657 10,159 10,236 9,293 16,923 Conti 1bution from property own,~rs 36,86tl 4 41,007 I Other 18/125 13,520 16,573 6,555 8,926 6,617 2,638 4,009 10,137 3,755 Total revenues 602,862 557,386 517.415 547,578 496,215 450,816 500,900 437,921 471,424 465,495 E,penditures General government 19,447 18,679 19,052 21,070 18,270 16,502 16,055 15,822 16,953 16,325 Police ]tl8,80l 139,775 127,226 120,962 117,702 112,656 l ]tl,678 115,379 112,057 115,195 Fire & Rescue 70,164 66,399 61,·183 57,529 56,127 55,886 55,802 55,713 55,966 54,685 Community & Economic Development 92,089 107,544 3 89,446 83,658 86,282 95,352 110,138 126,590 112.406 104,991 Planning & Building 21,997 19,935 17,667 16,086 15,785 14.408 14,560 15,173 15.489 15,949 Public VVorks 30,886 30,388 29,814 29,737 25,387 22.861 27,087 19,957 29.321 25,810 Community Services 32,258 31,980 28,l94 30,602 25,268 24.618 27,813 31,311 33,572 35,203 Public Utilities 2/196 2,727 2,622 2,510 2,398 2,313 2,220 1,939 1,507 2,120 Convenllon, S porls & E ntertainmenl 14,023 13,089 11,608 l0,7]tl 10,002 9,725 9,917 6,369 6,699 7,390 Capit::.7.I outlay 44,532 32,589 79,710 136,597 98,601 55,505 70,918 62/122 52,229 60,906 Debt ser1..dce Principal 26,123 28.448 25.289 24,220 18,948 16,294 12,219 12,777 16,085 27,472 interest charges 15,571 16,930 18,085 18,797 19,808 26,927 33,032 33,509 34,8l0 28,324 Debt issuance costs 127 227 70 5,182 Total expenditures 518,387 508,483 510,523 552/182 494,578 453,047 494,666 ·196,961 487,184 tl99,552 Revem.11;_•s over (under) expenditures 84,475 48,903 6,892 (4,904) 1,637 (2,231) 6,234 (59,040) (15,760) (34,057) Other Financing Sources (Uses) Transfers in 103,797 95,920 85,818 84,813 73,470 131,093 99,571 83,498 121,987 299,410 Transfers out (101.446) (85,403) (79,373) (75,953) (59,393) (119,552) (86,621) (59,970) (76,304) (288,985) Issuance of refunding bonds 6,200 5,084 201,680 Payments to refunded bond escrow agent (6,200) (5,683) (171,222) P rem1um on long lerm debt 1,790 94 4,6"1 l Discount on long term debt (199) Issuance of long-term debt 6,125 1,100 22,654 1,350 31,500 13,570 8,000 2.769 175 Claims settlement proceeds 750 3,848 E xtraordinarv loss (67,235) Total olher financing sources 8/176 11,617 30,889 10,210 45,577 (55,69°1) 26,520 32,278 51,795 "15,500 Net change 1n fund balances $ 92,951 $ 60,520 $ 37,781 $ 5,306 $ 47,2]tl $ (57,925) $ 32,75tl $ (26,762) $ 36,035 $ 11,443 Debt service as a percentage of non--capital expenditures 8.80% 9.54% 10.07% 10.34% 9.7CJ% 10.87% 10.68% 10.65% 0 ll.71% 12.77¼ I Conrnbuuon from pmpe,tv owner•, pursuartt m rne issuance of•: omrr11x11t; Fac.1:ity [),stnctC'f-7 f'lannum J::'70 :-; pec:al Tax 8 ond. 2 :nue,,c-e :n lJs,, -Jfmoney and pcop,,rof :s due DJ on,,-'Jme 3 1ncce,,,.e :n Comm,_11•:r{ .,rod Economic Development ,,.,pend,tures rc- due to a one time loSc- on s,,le of:a,•d ·I Co1•t11but101• fom pmp,, ,,~mounts in Dollars Prope1 lV Taxes Properly Tax lncremenls Secured Unsecu1ed Supplemental Secured Unsecu1ed Supplemental Properly Sales Transient Fiscal Proper\"\,,' Property' Proper\"\,,' Property Propertv Property' Taxes and Use Occupancy Other Year Tav_•s Taxes Tav_•s Residual Taxes Taxes Taxes in-~ieu ofVLF 1 Tav_•s Taxes Taxes Total 2017 $ 37,771 $ 1,214 $ I, I08 $ 2,484 $ 30,332 $ 80,500 $ 149,566 $ 8,287 $ 311,262 2016 37,000 1,256 991 2,203 29,196 8l ,8tJil 3 137,570 8,024 298,084 2015 35,624 1,358 1,001 2,262 28,160 71,977 l 19,744 7,·178 267,604 2014 33,976 l ,2"13 832 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 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 36,82tl 8,859 1,357 25,532 55,034 82,605 6,·186 250,218 2010 32,267 l ,3"1 l 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,tll9 26,247 56,493 80,055 6,·151 250,920 2008 31,073 l ,3"13 1,326 3tl,772 9,105 1,842 25,850 64,296 87,183 6,753 263,543 1 Collection of property taxes m--lieu of VLF starting 111 fiscal year 2005 is due to the shift111g of revenue from motorveh1cle license fees category to the property tax category. Thi'> was part of the Sta.le of California 2004 Budget Act. 2 Decrease in property tax increments revenues in fiscal year 2012 was due to dissolution of the Redevelopment Agencv on Febrnary 1, 2012. Property tax increments were received up toJ anuarv 31, 2012. 3 Increase in sales and use ta'\es in fiscal year 2016 was due to the sales taxt1iple flip final distribution. Note: Certain reclassifications have been made to prior fiscal years' data to conform to the current presentation. Source. F- inance Department, City of Anaheim 122 See accompanied Independent auditors' reporl CITY OF ANAHEIM Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fis cal Years on thousands) (Modified Accrual Basis of Accounting) Fiscal Year 2017 2016 2015 2014 2013 City of Anaheim Secured property $ 34,732,460 $ 33,338,748 $ 32,023,757 $30,548,214 $ 29,608,967 Unsecured propertv l, 172,650 1,243,307 1,515,905 1,266,403 1,265,519 Total City of Anaheim 35,905,110 34,582,055 33,539,662 31,814,617 30,874,486 Dissolved Anaheim Redevelopment Agency1 Secured properly tl,773,715 4/179,386 4,102,931 3,916,169 4,338,935 Unsecured property 684,544 753,736 759,729 654,982 683,237 Total Anaheim RedevelopmenlAgency 5/158,259 5,233,122 ·1,862,660 4,571,151 5,022,172 Total Ta,able Assessed Value $ 41,363,369 $39,815,177 'f, 38.402,322 $ 36,385,768 $35,896,658 Total Di1ect Tax Rate 0.10851% 0.11024% O. l 10"19% 0.11062% 0.11078% Fiscal Year 2012 2011 2010 2009 2008 City of Anaheim Secured properly $ 28,808,8tl9 $ 28,600, l 52 $ 28,775,989 $ 29,329,062 $ 28/173,221 Unsecured properly 1,232,825 1,278,062 1,283,263 1,226,209 l, 198,812 Total Cily of Anaheim 30,0°11,674 29,878,21 °1 30,059,252 30,555,271 29,672,033 Dissolved Anaheim Redevelopmenl Agency 1 Secured property 3,977,843 3,751,227 3,762.168 3,644,931 3,360,645 Unsecured properly 656,505 7tl3,403 762,903 789,618 818,255 Total Anaheim Redevelopment Agency 4,634,348 4,494,630 4,525,071 4,434,549 4,178,900 Total Taxable Assessed Value $ 3tl,676,022 $ 34,372,844 $ 34,584,323 $ 3tl,989,820 $ 33,850,933 Tolal Direct Tax Rate 0.11075% 0.11075% 0.11031% 0.1102°1% 0.11041% Note: In 1978 the voterc, of the State of California pa<,sed_ P roposit1on 13 which limited property ta.xe<, to a total maximum rate of 1'.lt based upon the as_ses<,ed value of the property be111g taxed. Each vear, the assessed value of property may be increased bv an "1nflat1on facto!" (limited to a maximum increase of R ). \'\/1th tew e'\cept1ons. properly 1s on~, reassessed atthe time that 1t 1s sold to a new owner. At that PJlllt, the new assessed value 1s reasses<,ed at the purchase pnce of the property sold. The as<,e<,sed valuation data sho1N11 above represents the onlv data. current~, available with respect to the actual market value of taxable property and is '>UbJect to the limitations described above. 1 The Anaheim Redevelopment Aqencv was resolved on Februarv 1, 2012 Source· Auditor-( ontmller, California r>-ilunicipal Sta tis tics, Inc, C aunt'), of Orange 123 See accompanied Independent auditors' reporl CITY OF ANAHEIM Property Tax Rates Direct and Overlapping Governments Last Ten Fiscal Years (Rate per $100 assessed value) Fiscal Year 2017 2016 2015 2Q]tl 2013 2012 2011 2010 2009 2008 City D11ect Rale (1) Citv Basic Rate (Zl 0.10851 0.10851 0.10851 0.10851 0.10851 0.10851 0.10851 0.10816 0.10816 0.10816 Anaheim General Obligation Bond Fund 0.00000 0.00173 0.00198 0.1Xl2l I 0.00227 0.00224 0.00224 0.00215 0.00208 0.00225 0.10851 0.11024 0.11049 0.11062 0.11078 0.11075 0.11075 0.11031 0.11024 0.11041 Overlapping Rates Anaheim E lerrentary General Fund 0.29873 0.29873 0.29873 0.29873 0.29873 0.29873 0.29873 0.29778 0.29778 0.29778 Anaheim High General Fund 0. ]9Qtl3 0.19043 0. ]9Qtl3 0.19043 0. ]9Qtl3 0.19043 0. ]9Qtl3 0.18982 0.18982 0.18982 E ducallonal Revenue /\ugment::.H1on Fund 0.15592 0.15592 0.15592 0.15592 0.15592 0.15592 0.15592 0.155"13 0.15543 0.155"13 North Orange Co. Community College General Fund 0.07755 0.07755 0.07755 0.07755 0.07755 0.07755 0.07755 0.07730 0.077l0 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 0.01579 0.01579 0.01579 0.01579 0.01579 0.01579 0.01579 0.01574 0.01574 0.01574 Orange County Flood Contlol Dislrict General 0.02197 0.02197 0.02197 0.02197 0.02197 0.02197 0.02197 0.02190 0.02190 0.02190 Orange County General Fund 0.06849 0.06849 0.06849 0.06849 0.06849 0.06849 0.06849 0.06827 0.06827 0.06827 Orange County' Harbors Beaches & Parks CSA 0.01698 0.01698 0.01698 0.01698 0.01698 0.01698 0.01698 0.01693 0.01693 0.01693 Orange Countv Sanitation District #2 Operating 0.03227 0.03227 0.03227 0.03227 0.03227 0.03227 0.03227 0.03469 0.03469 0.03469 Orange Countv Transportation Authority· 0.00312 0.00312 0.00312 0.00312 0.00312 0.00312 0.00312 O.OOlll 0.00311 O.OOlll Orange County Vecto1 Conlrol 0.00] 2tl 0.00124 0.00 l 2tl 0.00124 0.00 l 2tl 0.00124 0.00 l 2tl 0.00 l 2tl 0.00124 0.00 l 2tl Orange County Waler District 0.00831 0.00831 0.00831 0.00831 0.00831 0.00831 0.00831 0.00893 0.00893 0.00893 Orange County Water District Water Reserve 0.00012 0.00012 0.00012 0.00012 0.00012 0.00012 0.00012 O.OOOll O.OOOll O.OOOll Anaheim Elementarv School Districts 0.04461 0.04227 0.02867 0.05848 0.05382 0.05371 0.03363 0.03193 0.02248 0.03544 Anaheim High School Districts 0.04259 0.04948 0.02412 0.02620 0.02858 0.02678 0.02745 0.02617 0.02363 0.02516 No1th 01ange Counly Community College 0.02885 0.03043 0.01704 0.01704 0.01902 0.01742 0.01758 0.01662 0.01493 0.01502 \\/ aler D1stnct Rate 0.00350 0.00350 0.00350 0.00350 0.00350 0.00370 0.00370 0.00430 0.00430 0.00450 Total Direct and Overlapping Rate l.l l 955 l.12741 l.0753 l l. l07ll l.10719 l.10385 l.08460 l.08117 l.06742 l.08237 (l) Excludes rates associated with mello-mos districts. (2) In 1978, California voters passed Proposition 1:lwhich sets the propertv ta'\ rate at a 100 fixed amount. This 19t is shared bv all taxing agencies forwhich the subject property resides. In 1986, the State Constitution was amended to allo,,v rates over the ]'jf_, ba.se rate for voter approved general oblig_at1on debt. Valuations of real propertv are frozen at the value of the property i_n 1975, with an allowable adjustment up to 2% per year for 111flat1on. Hovvever, property IS assessed to its current value when a change of CM1nersh1p occur'>. New construction, 1nclt1d1t1g tenant 1mprovernents, IS assessed at its nment value. Source: Auditor Controller, Orange County 124 See accompanied Independent auditors' reporl CITY OF ANAHEIM Principal Property Tax Payers Current Year and Nine Years Ago On thousands) Fiscal Year 2017 2008 Percentage Percentaqe ofTotal Taxable of Total Taxable Assessed /\ssessed Assessed Assessed Tax Payer Rank Value Value Rank Value Value Walt Disney World Company l 11.30% S ·1,'164,753 10.5&6 S 3,469,918 HHC HA Investment II Inc. 2 0.52% 203,517 US REIF MG Madison ParkCALLC 3 0.31% 123,861 lrv111e Company LLC: 4 0.29% 114,281 Teachers Insurance & Annuitv /\ssoc1ation 5 0.26% 104,666 Prologis California I LLC 6 0.24% 96,782 Angeli LLC 7 0.23% 92, 1(}1 OTR 8 0.23% 91,033 ~ila1v Susan Sarnia Trust 9 0.23% 90,365 Essex Anavia LP 10 0.22% 86,793 f....aiser Foundation Health 2 O.'.)C1¼ 159,638 l Total 13.84% S 5,468,155 13.36% $ •1,251,841 S rn1n:e: Finance Depa1tment, City of Anaheim, California r>-ilunicipal Statistics, Inc. 12'.) See accompanied Independent auditors' reporl CITY OF ANAHEIM Property Tax Levies and Collections Last Ten Fiscal Years Onthousands) Collecled within the Tolal Collected \Vithin the Total Fiscal Yea1 of lhe Levv Col lee lions to Date Fiscal Year of the Levy Col lee lions to Date Collections Collections Total In Tolal Tax In Fiscal Taxes Percentage S ubse(Juent Percentage Increments Percentage S ubse(Juent Percentage Year Levy Amount 1 ofLevv Years Amount of Levy Levy 2 Amount 2 ofLevv Years Amount of Levy 2017 $ 40,787 $ l9,7l0 97.36% $ 152 $ 39,862 97.73% 2016 40,026 38,832 97.02¾ 382 l9.214 97.97% 2015 38,365 l7.456 97.63% 414 37,870 98.71% 2014 36,293 35,558 97.97% 460 l6,0l8 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% ·19,294 ·15,906 93.-13% $ 282 ·16,188 93.70% 2010 33,627 32,·190 96.62% 796 33,286 98.99% ·19, 119 46,584 94.84% 524 47,108 95.91% 2009 34,579 33,068 95.63% 1,231 34,299 99.19% ·18,432 46,057 95.W% 622 ·16,679 96.38% 2008 34,283 32,798 95.67% 1,237 34,035 99.28% 46,785 44,793 95.74% 552 45,345 96.92% 1 Excludes properly taxes in-lieu of vehicle license fees 2 Decrease in property ta, collect1on is due to tl1e di<,solution of the Redevelopment Agency 011 F ebruarv 1, 2012. Property tax increme11ts were received up to J a11uarv 31, 2012. Note. Certain reclass1ficat1ons have been made to prior fiscal vears' data to conform to the current presentation. Source: Auditor--Controller, County of Orange 126 See accompanied Independent auditors' reporl CITY OF ANAHEIM Ratios of Outstanding Debt by Type Last Ten Fiscal Years onthousands,exceptpercapitaarnount) Fiscal Year 2017 2016 2015 201:1 2013 Covernment:al Ac:t1v1ties Bonds $ 627,589 s 632,32 l $ 640,891 $ 614,7'i7 s 616,086 Cerbticate s of- pa1t1cipat:1on 8,880 10,020 Notes and loans 29,'.)77 20,820 2·1,372 50,757 54,877 Capital leases 1,738 2,088 2,346 1,325 1,369 Tok1.I governmental activities 658,904 655,229 661,609 675,719 682,352 13 usiness-Type Activities Bonds l ,235,'100 l, 124,159 l, 116,443 780,553 863,987 Certificates of participation 38,000 38,000 Notes and loans 20,'i23 36,200 'i7,399 48,271 62,722 Tot:al busine ss-Wpe activ1t:1e s 1,255,923 1,160,359 l, 173,842 866,824 964,709 Total Government $1,914,827 S 1,81'>,588 $1,838,451 $ 1,542,'i43 $1,647,061 Percentage of Personal Income 20.84% 20.19½ 21.26% 18.88% 19.74% Per Capita $5,341 S'i,070 $5,231 $4,429 $4,758 Fiscal Year 2012 201 l 2010 2009 2008 Covernment:al Ac:t1v1ties Bonds $ 616,444 s 821,587 $ 810,504 $ 805,068 s 793,343 Certificates of participation 11,085 12,070 12,990 13,840 23,333 Notes and loans 25,546 34,566 29,09'1 2•1,621 27,538 Capital leases 1,694 2,341 2,605 1,235 2,353 Tok1.I governmental activities 654,769 870,561 855,193 &14,764 816,567 13 usiness-Type Activities Bonds 889,581 908,683 805,925 829,707 689,791 Cerbticate s of- pa1t1cipat:1on 38,000 38,000 38,000 38,000 88,185 Notes and loans 24,652 30,519 I ·1,379 12,299 13,189 Tot:al busine ss-Wpe activ1t:1e s 9'i2,233 977,202 855,31)4 880,006 791, 16'i Total Government $1,607,002 S 1,847,766 $ 1,710,497 $ 1,724,770 $1,637,732 Percentage of Personal income 20.95% 24.5/% 23.32% 23.96% 21.93% Per C:apit:a $ 4,674 s 5,418 $ 5,088 $ 5,193 s 4,953 Note Per capita amount'i. are estimates Certa111 reclassifications have bee11 made to prior year data to co11form to the current presentatio11. Sources California State Department of Finance and Finance Department, Citv of Anaheim US Census Yearlv American Community Survey 127 See accompanied Independent auditors' reporl CITY OF ANAHEIM Ratios of Net General Bonded Debt Outstanding Last Ten Fiscal Years (In thousands, except per capita amount) Fiscal Year 2()"17 2016 201'> 2014 2013 Bonds General Obligation $ 700 $ 1,360 $ 1,995 $ 2,605 Lease Revenue s 627,589 631,621 639,531 612,762 613,481 Tax /\llocation 627,589 632,321 640,891 614,7'i7 616,086 Less amounts available in debt service fimd 127,581 108,482 88,174 73,500 61,625 Total net obligation bonds outstanding s 51)(), 008 s 523,839 s 552,717 s 541,257 $ 554,461 Percentage of Assessed Value of Propertv 1.21% 1.32% l.4•1% 1.49% L5•1% Per capita $ 1,395 $ 1,463 $ 1,573 $ 1,554 $ 1,602 Fiscal Year 2012 2011 2010 2009 2008 Bonds General Obligation $ 3,185 $ 3,735 $ •1,255 $ •1,750 $ 5,220 Lease Revenue 616,444 609,683 60'i,252 600,0f,4 588,692 TaxAllocabon 208,169 200,997 200,2'i4 199,431 619,629 821,'.)87 81 O,'iCl4 80'i,068 793,343 Less amounts available in debt service fund 53,398 67,363 69,043 63,560 57,995 Total net obligation bonds outstanding s 566,231 s 754,224 s 741,46"1 s 741,508 $ 735,348 Percent:age of-/\ssessed Value of-Propertv 1.63% 2.19% 2.14% 2.12% 2.1 i% Per capita $ l,&17 $ 2,212 $ 2,205 $ 2,233 $ 2,224 Note Details regarding the C itv's outstanding debt can be found in the notes to the basic financial statements Certa111 reclassifications have been ma.de to prior year data to conform to current presentation. S oun:e Finance Department, Citv of Anaheim 128 See accompanied Independent auditors' reporl CITY OF ANAHEIM Direct and Overlapping Governmental Activities Debt As of J une 30, 201 7 on thousands) 2016-17 Assessed Valuation $41,363,369 DIRECT TAX AND ASSESSMENT DEBT Outs landing City of Anaheim $ 0 DIRECTGENERAL FUND DEBT C1ly of Anaheim General Fund Obligations 658,904 TOML GROSS DIRECT DEBT 658,904 Less: City of Anaheim Public Financing Autho11ty ( l 00% self-supporting; 627,589 City of Anaheim various revenue fimcis ( l 00% self--supp.xting) 31,315 TOTAL NET DIRECT DEBT 0 City's Share Total Debt of Debt 6:30/2017 % Applicable O) 6/30/2017 OVERLAPPING Ti\'( AND,\SSESSMENTDEBT Metropolitan \,\later District $ 74,905 l.599 % $ l.198 Norlh Orange _Joint Communitv College District 2"10,284 27.539 66,172 Ranch:J Sanllago Community College D1stnct 258,097 12.646 32,6l9 Rancho Santiago Community' College District School Facilities Improvement District No l 57,025 0.391 223 /\nahc~im Union High School D1stnct 130,664 67.629 88,367 FullertonJ oint Union High School District 126,838 0.242 307 Garden Grove Unified School Dislrict 329,640 0.584 1,925 Placentia-Yo1ba Linda Unified SdDol Districl 242,284 18.988 46,005 Anal12im School District l 75,7tl2 99.127 174,208 Magnolia School Dislricl 22,288 67.155 14,968 Other School Districts 130,782 Various 21.578 Citv of Anaheim Commurnly F ac1lit1es Dislricls 67,540 100.000 67,540 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 1,856,089 5·15, 130 OVERLAPPING GENER,\L FUND DEBT Orange Countv Ceneral Fund Obligations 227,516 7.878 17,924 Orange County Pension Obligation Bonds 386,763 7.878 l0.469 Orange County Board of Education Certificates of Participation 14,440 7 .. 878 l.138 Norlh Orange Countv Regional Occupation Program Ce1tificates of P articipatlon 9,910 28.353 2,810 Orange U rnfied School Districl Certificates of Participation 24,848 26.285 6,5ll Orange Unified School District Benefit Obligations 80,865 26.285 21,255 P lacentla--i/orba Linda Unified School D1stnct Certificates of P a1tic1pallon 95,540 18.988 18,141 Anah.~im Union High School District Certificates of Participation 39,595 67.629 26.778 Fullerton_] 01nt Union High School District Ce1tificates of Pai ticipatlon 19,920 0.242 48 Fullerton School D1stnct Certificates of Pa1ticipallon 5,165 0.170 9 TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT 904,562 125, lOl OVERLAPPING TAX INCREMENT DE BT (Successor Aqenc,,') Citv of Anaheim Ta'\ Allocallon Bonds 203,855 0.093100% 193,969 TOTAL OVERLAPPING TAX INCREMENT DEBT 193,969 TOTAL GROSS OVERLAPPING DEBT 834,202 TOTAL NET OVERLAPPING DEBT 834,202 12) GROSS COMBINEDTOT,\L DEBT $ l,·193, 106 $ 834,202 NET COMBINED TOTAL DEBT 129 (continued; CITY OF ANAHEIM Direct and Overlapping Governmental Activities Debt As ofJ une 30, 2017onthousands)(continued) rn Percenlage ofovellapp1ng agency's assessed valuation located within boundaries of the citv. (21 Excludes tax and revenue antiupallon notes, ente1p11se 1evenue, mo1 tgage revenue, and t::.,x allocation bonds and non-bonded capit::.7.l lease obligations. Ratios to 2016--17 Assessed Valuation Direct Debt ($0) 0.000% Tola! Direcl and Overlapping Ta'\ and Assessment Debt 1.25% Ratios to Adjusted Assessed Valuation Gross Combined Direct Debt($) 1.59% Net Combined Direct Debt($; 0.000% Gross Combined Tola! Debt 3.61% Net Combined Total Debt 2.02% Ratios to Redevelopment lncrementValuallon ($5,461 ,774/ Total Overlapping Tax Increment Debt 3.55% Source· California Municipal Statistics, Inc. Note. Overlapping govemroent<, a_re tho<,e that coinc1de,_at least 111 part, with the geographic boundaries of the City. This schedule estimates the portion of the outsta11ding debt of those overlapping governments that is borne bv the residents and businesses of the C 1ty. This process recognizes that, when cons1denng the qovemment's ability to issue and repay long---tenn debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not 1mplv that everv taxpayer is a resident, and therefore re<,pons1ble for repay111g the debt, of each overlapping government. 130 See accompanied Independent auditors' reporl CITY OF ANAHEIM Legal Debt Margin Last Ten Fis cal Years on thousands) Fiscal Year 2017 2016 2015 2014 2013 Debt limit $ 1,551,126 $ 1,493,069 $ l,4•10,087 $ 1,364,466 $ 1,346,125 Total net debt applicable to limit (700) (1,360) (1,99'i) (2,60'i) Legal debt margin $ l,'i51, 126 $ 1,492,369 $ 1,438,727 5 1,362,471 5 1,343,'i20 Total net debt applicable to the limit as a percentage of debt l11llit O.OC% 0.05% 0.09% 0.15% 0. ·1gYo Legal Debt Margin Assessed value $ 41,363,369 $ 39,815,177 $ 38,402,322 $ 36,385,768 $ 35,896,658 Debt limit (3.75% of t:ot:al assessed value) 1,551,126 1,493,069 1,440,087 1,361,466 1,346,125 Fiscal Year 2012 201 l 2010 2009 2008 Debt limit $ 1,300,351 $ 1,288,982 $ 1,296,912 s 1,312,118 s 1,269,410 Total net debt applicable to ltmit (3, 185) (3,735) (4,255) (4,750) (5,220) Legal debt margin 5 1,297, Hi6 5 1,28'i,247 $ 1,292,657 $ 1,307,368 $ 1,264,190 Total net debt appltcable to the limit as a percentage of debt limit 0.24% 0.29% 0.33% 0.36% 0.41% Leqal Debt: ~ilarqi_0 __ Assessed value $ 34,676,022 $ 34,372,844 $ 34,584,323 s 34,989,820 s 33,850,933 Debt limit (3.75% of total assessed value) 1,300,351 1,288,982 1,296,912 1,312,118 l ,269,,110 Note 1 California Government Code sets the debt limit at 1 5%. The Code section was enacted when assessed valuation were based on 25% of full market value. This has since changed to 1OCYX of full market value. Tht1s the limit shown is 3. 75'16 (one--fou1th the limit of 15% ). Note. Certain reclass1ficat1ons have been made to prior fiscal vears' data to conform to the current prese11tat1on S rnm:e: Finance Depa1tment, City of Anaheim 131 See accompanied Independent auditors' reporl CITY OF ANAHEIM Pledged-Revenue Coverage Last Ten Fis cal Years on thousands) Electric Utility' Revenue Bonds Less Net Fiscal Electric Operating Available Debt: Service . 3 Year Revenue Expenses Revenue Principal Interest Total Cove rag_~-- 2017 $ •135,805 $ 338,888 $ 96,917 $ 18,950 $ 28,CJ,18 $ •17,898 2.023•1 2016 433,74•1 319,169 114,575 14,040 27,995 42,035 2.7257 2015 458,211 341,206 117,005 12,950 27,878 •10,828 2.8658 2014 430,782 347,290 83,492 11,590 30,039 41,629 2.0056 2013 453,949 349,835 104,114 18,99'i 33,335 'i2,330 1.9896 2012 •107,787 314,23 l 93,556 18,175 34,104 52,279 l.7896 201 l 391,218 309,27•1 81,944 17,825 30,825 48,650 l.6844 2010 390,364 309,112 81,252 15,995 31,788 •17,783 l.70O1 2009 378,916 300,269 78,647 15,370 28,798 44,168 1.7806 2008 373,842 299,534 74,308 14,690 29,450 44,140 I .683'i 3 Operating expenses includes transfer for right of way and excludes amortization and depreciation. Water Utility Revenue Bonds Less Net Fiscal Water Operating Available Debt Service 4 Yea1 Revenue Expenses Revenue Principal Interest Total Cove rag_~-- 2017 s 71,790 $ 'i6,487 $ 15,303 s 3,380 $ 6,81 '.) $ 10,195 1.501 Cl 2016 61,721 46,383 15,338 5,88'.) 1,775 7,660 2.0023 201 '.) 65,518 'i2,883 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 •14,838 17,01 l 950 4,255 5,205 3.2682 2012 59,330 44,61'> 14,715 91 '.) 4,292 5,207 2.8260 2001 '.)6,93'.) 45,293 11,642 880 3,27'.) 4,155 2.8019 2010 57,787 45,231 12,556 1,490 2,544 4,034 3. I I 2'i 2009 'i3,039 40,123 12,9Hi 1,435 1,967 3,402 3.7966 2008 ., 1,052 41,190 9,862 1,3 7'.) 325 1,700 5.8012 4 Operating expenses includes tran<,fer for nght of way and excludes amort1zat1on and depreciation. Note: Detail'> regarding the Cit'/'> out<,ta.nd1ng debt can be found in the note<, to the ba.<,1c fina11C1al <,ta.tements. Source: F 111ance Department, C1tv of Anaheim 132 (continued; CITY OF ANAHEIM Pledged-Revenue Coverage Last Ten Fis cal Years on thousands) (continued) Sanit:atI011 Revenue Bonds Less Net Fiscal VVastewater Operating 1\vallable Debt Service .. 6 Yea1 Revenue E. xpenses Revenue Principal Interest Total Coverage 2017 $ 13,771 $ 6,252 $ 7,519 $ 1,045 $ l ,95•1 $ 2,999 2.5072 2016 13,291 5,733 7,558 1,00'.) 1,994 2,999 2.5202 201 '.) 13,373 6,103 7,270 955 2,1)42 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 2.2lll 2012 11,933 4,832 7,101 835 2,161 2,996 2,3 702 201 l 11,813 4,030 7,783 805 2,193 2,998 2.5961 77,- 2010 11,773 5,452 6,321 ') 2,224 2,999 2.1077 2009 10,913 5,176 5,737 2,224 2,224 2.5796 2008 10,299 5,167 5,132 1,532 1,532 3,3499 5 Amounts based on the note<, to the basic financial statement, segment reporting 6 Operating expenses excludes amo1tization and depreciation. Note. Details regard111g the City's outsta11ding debt can be found 111 the notes to the basic financial statement... S oun:e: Finance Depa1tment, City of Anaheim 133 See accompanied Independent auditors' reporl CITY OF ANAHEIM Demographic and Economic Statistics Last Ten Fiscal Years Personal Per Educat:ion Orange Income Capita Level in County Fiscal (thousands Personal Med ran Years of- School Unemployment Yea1 Populat:ion \I) of dollars) Income J-\qe O) School1nq Enrollment Rate 2017 358,546 $ 9,189,369 s 25,630 1,1 33.6 12.2 64,870 3.8()¼ 2016 358,136 8,998,883 25,127 33.6 12.2 65,692 4.,1()¼ 2015 351,433 8,649,469 24,612 33.6 12.2 66,439 4.1 C?/o 2014 348,30'i 8,955,966 25,7"13 33.8 12.2 66,982 6.2()¼ 2013 346,161 8,344,211 24, I O'i 32.8 12.2 67,0"l4 6.lC% 2012 343,793 7,669,678 22,309 32.4 12.2 67,760 7.9C?lo 201 l 341,03•1 7,519,459 22,049 32. l 12.2 67,881 9.2C?/o 201 Cl 336,208 7,333,705 21,813 32.1 12.2 68,331 9.5()¼ 2009 332,120 7,198,701 21,675 3 l.5 12.2 68,890 9.3CJ¼ 2008 330,6'i9 7,467,272 22,583 32.4 12.2 68,663 5.3C% ( I) Population ,rnd Median Age were upditted to reflect 2011--2015 Amenrnn Comnurnty 5 urvev F1ve-Y ear btimate. (2) Per rnrMa inrnme kt rY 2017 is estimated Data not readly available. s oun:es California State Department of F- inance Anaheim City Superintendent of Schools State of California, Employment Development Department State Department of Commerce and Labor Sta.le Department of Education US Census Yearlv American Community Survey 134 See accompanied Independent auditors' reporl CITY OF ANAHEIM Principal Employers Current Year and Nine Years Ago Fiscal Year 2017 2008 Percentage Percent:age ofTotal ofTotal City City E rnployer Rank EmQlovees E m12lo:r1 ment Rank E mr2lovees EmQloyment Disneyland Resort 31,000 18.3% 20,0'iO 11.4% Kaiser Foundation Hospital 2 6,000 3.6% 2 3,660 2.1% Northgate Conzalez Supermarkets 3 2,000 1.2% 4 2,000 1.1% Hilton Anaheim •1 1,5 7'.) 0.9% 7 920 O.'.)% Angels Baseball 5 1,4&1 0.9¾ Anaheim Regional Medical Center 6 1,262 0.7°/4 5 I, 185 0.7% Anaheirn ~ilariott Hotel 7 1,030 0.6% L-3 Communications 8 1,000 0.6% St.Joseph Heritage Healthcare 9 900 0.5% Time Warner Cable Business Class 10 900 O.')% Carrington Mortgage Serv,ces LLC (CMS) O.a¾ West Anaheim Medical Center llJ 774 0.4% Honda Center 6 1,000 0.6% AT&T 3 2,6'.)9 ].')% Long Beach Mortgage 8 800 O.')% Alstyle Apparel 9 750 0 ..1% Total 47, 15 l 27,g1/4 33,798 19.2% Source: Inside Prospects Database See accompanied Independent auditors' reporl CITY OF ANAHEIM Full-time Equivalent City Government Employees by Function;Program Last Ten Fiscal Years Fiscal Year 2017 2016 2015 20H 2013 2012 201 l 2010 2009 2008 Function P roqram Ci1y Council 9 6 7 7 7 7 7 7 7 7 C:itv /\dministration 19 19 20 20 20 21 21 24 24 24 C:i1Y Attorney 33 33 33 31 30 30 30 3') 3'.) 3') Cit; Clerk 8 8 7 7 7 6 6 7 7 7 Human Resources 40 39 37 37 38 36 36 40 40 40 l Finance 55 54 44 44 44 46 47 52 53 5,1 Police 5 76 '.)69 561 '.A9 536 '.)30 554 61 Cl 610 61)4 Fire & Rescue 276 274 267 262 262 275 277 289 289 290 Community & Economic Development 73 73 71 68 78 102 105 106 109 108 Planning & Building 76 76 75 7·1 69 73 75 93 ()4 97 Public Works 236 235 237 236 234 235 252 252 252 252 Community Services 92 92 91 87 87 115 123 180 183 184 Public Utillt1es 3'.)2 352 3'.A 353 352 355 377 377 377 367 Convention, Spotts & Entertainment 85 85 85 84 83 91 91 91 91 88 Total 1,930 l ,91 S 1,889 1,856 1,847 1,922 2,001 2,163 ---1J1l 2,157 1 l11Crease 1s due to reorganization of tl1e C1tyw1de Geograpl1ic Information Svstem (G IS) and Police Information S vs tern into F 111ance. Source· City of Anaheim 136 (continued; CITY OF ANAHEIM Operating Indicators by Function Last Ten Fiscal Years Fiscal Year 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Funct1on,,P I omam Police Department Number of calls fo1 se1vice 200,6')5 208,710 195,305 186,042 186.461 189,751 195,587 185,934 191.037 196,241 Number of9l l calls received l S0,555 l 55,371 158,·147 145,813 182,856 179,313 165,698 140,529 129,998 125,174 Number of Part I Crimes per l 00,000 population 2,917 3,279 2,950 2,883 3,326 3,057 2,886 2,857 2,764 2,899 Number of /\rrest 11,010 11,604 11,405 11,846 11,617 11.494 13,345 17,650 15,951 16,212 Number ofF ield Reports processed by Records Bureau 41,208 41,655 39,191 38,362 39,066 33,050 35,807 35,256 37,999 40,232 Number of ti affic collisions 4,817 5,179 4,8ll 4,686 4,414 4,044 4,046 4,027 4,251 4,626 Number of Hou1 s ofVoluntee1 se1vice 21,132 21,647 22,885 24,124 23,470 25,309 20,335 18,038 16,201 16,820 Fire & Rescue Deparlmenl Fire responses 1,035 1,082 952 885 902 923 983 1,275 1,016 1,082 False alarm responses l,')03 1,848 l,910 l ,7l5 l.424 1,390 l.487 l.467 l.503 l.398 Mutual aid responses 5/150 5,506 4,322 3,001 2,860 2,7tJil 2,707 2,560 2,532 2,662 Medical responses 28.437 28,858 27,158 24,912 24,735 23,061 22,202 24,045 21,553 2"1,301 Haza1dous condition 1esponses 222 211 213 211 207 201 19') 207 224 203 Public VVorks Cenlerllne miles of arte11al highvvav pavement improved l.22 4.7 l.55 7.ll 5.9 8.7 5.8 9.0 8.1 9.1 Square feet of deteriorated pavement replaced 01,0l 7,828 2,487,188 2,101,231 4,345,480 4,029,806 2,977/182 01,274,·163 820,000 780,500 890,500 Square feet of deteriorated pavement slurry sealed 5,519,982 l,')41,187 7,253,633 4,422.148 2,850,9l9 4,208,194 4,167,569 l.975,000 2,532,000 l.483,000 Number of traffic intersections ma1nla1ned 335 333 321 327 318 318 31 ') 318 318 316 Number of traffic control hubs maintained 18 18 18 19 18 18 18 18 17 16 Square feel of deleriorated sidewalk replaced 102,305 232,922 l 53,5ll 96,399 77,590 74,780 62,940 60,000 50,500 50,200 Linear feet of damaged cu1 b/gutter replaced 6,797 33,373 30,152 29,996 25,187 27,661 2tl,755 11,500 12,500 11,500 Square feet of medians;parkwavs maintained 6,063,299 6,063,299 5,721,764 5,644,799 5,6°14,818 5,511,065 5,460,655 5,400,000 5,350,000 5,350,000 Square feel of landscape maintained in the /\naheim Reso1t 1,554,886 1,554,886 l.542,442 1,542.442 1,430,486 1,430,486 1,430,486 l .430,486 l .419,286 l .419,286 Square feet of hard scape maintained in the Anaheim Resort 991,360 991,360 991,370 991,360 858,828 858,828 1,001,743 858,828 858,828 858,828 Number of vehicles maintained 1,036 1,025 l.097 1,144 l.106 1,152 1,162 l.331 l.331 l.351 Number of vehicles per mechanic 49 49 57 58 58 50 47 50 55 59 Square feet of interior space maintained 2,379,100 2,379,100 2,379,100 2,700,000 2,362,992 2,176,265 2,176,265 2,176,265 2,176,265 2,176,265 Squa1e feetofexte1101 space ma1nt::.7.ined 37,662,184 37,662,184 37,662.184 l7,655,278 37,645,278 3'), 138,187 3'l,l.l8,l87 39, ll8. l87 39, ll8. l87 39, ll8. l87 Number of facllily square feet (inte1101) pe1 vwrker 125,215 1,459,000 1,459,000 150,000 139,000 120,904 114,540 103,631 103,631 103,631 Number of construction projects 80 120 100 165 120 100 136 130 130 132 Number of pe1 mit inspecllons 650 510 429 486 380 404 355 800 800 802 Parks Number of pa1 k acres maintained per full-time equivalent employee 77 77 76 75 75 75 75.00 12.00 12.00 10.52 Number of sports fields prepared 66 66 66 66 66 66 66 66 66 66 Cost per acre of parks ma1nla1ned. $9,221 $8,952 $8,691 $8,438 $8,192 $8,031 $8,333 $9,651 $9,950 $10,699 Cost per sports field maintained. $01,791 $01,655 $4,519 $4,387 $4,260 $01, 133 $4,261 $5,134 $5,134 $4,937 Golf Courses Cost per acre of golf course maintained $10,434 $10,076 $9.455 $9,9ll $9,595 $9,010 $9,56') $11,327 $10,674 $10,617 Number of I ounds played l02,5tl2 102,23tl 110,855 117,652 118,879 120,675 116,287 124,·104 137,948 153,661 Number of acres maintained 200 200 200 200 200 200 200 200 200 200 137 (continued; CITY OF ANAHEIM Operating Indicators by Function Last Ten Fiscal Years (continued) Fiscal Year 2017 2016 2015 2Q]tl 2013 2012 2011 2010 2009 2008 Function1P roqram City Libraries Hours open 16,023 15,461 16,929 16,820 16,243 15,530 l5,l64 18,944 19,290 20,292 fot::.7.I circulation of male rials, including eBooks 1,117,096 l, 169,829 1,257,127 1,397,239 1,520,841 1,635,627 1,700,104 1,655,922 1,721,779 1,658,731 Patron assistance (reference, inform.1tion, computer) 226,429 185,436 207,305 240,287 291.960 347,085 397,287 5l0.364 5l7,807 461.819 Patron visits 981,637 1,098,1'16 1,221,982 1,264,972 1,317,689 1,321,309 1,403,995 1,572,138 1,752,838 1,615,640 L1b1 a1y cardholders 230,951 217,661 201,194 186,891 158,396 157,278 I 'JS,444 149,501 138,826 147,638 Programs offered 4,507 3,900 l,800 3,l97 3,097 3,235 l.927 l,991 4,777 4,410 P1ogram attendance 142,098 125,609 117,226 111,380 102,728 101,696 124,·IO I 146,357 158,669 152,532 Hours of public internet usage 144,364 150,712 184,851 209,953 237,l40 220,930 209,673 246,676 277,097 242,7l4 Community Services Programs Number ofyoulh prog1am pa1tic1panls 181,697 183,967 177,746 126,·129 136,345 129,21 S 110,013 134,611 146,381 ·155,725 Number of youth program parllcipants in recreation classes 8,500 13,026 10,B6 13,897 10,906 9,213 10,231 10,125 16,332 16,006 Number of adult program sports teams 679 725 750 791 841 845 908 885 875 840 Number of park ranger conlacts 382,310 278,599 327,893 263,765 233,308 275,014 232,132 187,000 208,176 161,038 Public Utilities Department Elect11c Utility Number of meters 118,248 117,593 115,682 115,474 115.418 115,113 114,662 ll l.434 112,548 ll l.784 Megavvatt-liours -- sales 3,298,340 3,229,569 l.725,l86 4,065,552 l,312,018 2,966,119 2,976,0l 4 l.344, 188 3,208,123 2.979,l96 Megawalt-hou1 s -purchased povve1 2,990,931 3,050,657 3,·117,459 3,751,220 3,029,766 2,707,466 2,737,174 3,085,358 2,836,962 2,978,800 Megavvatt-hours ---ov,ned generation 398,068 318,921 lll.657 467,l48 410,601 430,323 431,027 410,784 4l5,835 lOl.021 \!\later Utilitv Number of meters 63,489 63,775 6l.l45 63,002 62,917 62,793 62,717 62,607 62.456 62.436 Millions of gallons sold 17/122 16,607 19,804 20,743 20,·164 19,672 19,526 20,·192 22,238 23,154 Millions of gallons pu1chased from Met1opol1tan Water 4,170 4,373 4,717 5,286 6,878 7,023 7,l98 8,054 6,614 4,978 Millions of gallons pumped from water system i,,vells 14,217 13,213 15,180 16,749 14,659 14,100 l.l.399 14,669 17,034 18,961 ,,~naheim Convention Center Number of evenls serviced 179 181 197 221 263 222 200 232 310 339 Number of attendees 925,000 954,000 986,000 1,020,000 1,070,000 1,059,000 935,000 944,000 917,000 1,008,000 Percentage of occupancy 72.0% 59.0% 63.a¼ 63.0% 58.0% 62.0% 56.0% 68.0% 56.0% 61.0% Sources_ Various Citv deparlmenls 138 See accompanied Independent auditors' reporl CITY OF ANAHEIM Capital Assets Statistics by Function Last Ten Fiscal Years Fiscal Year 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Function ,Program Police Department Police Facililies lO lO lO lO lO lO lO lO lO 9 Motorized Equipment 260 260 250 247 2,17 242 242 250 266 255 Police Helicopters 3 2 2 2 3 3 3 4 ,1 3 Shooting Range Communication,Radio Trn,ver Fi'.ed V\/ing Fire & Rescue Department Fire stations 11 II II II 11 11 II 11 11 II Training center 7,- Fire trucks, engines, and other vehicles ') 75 74 74 79 74 69 74 74 79 Public Works Streets (cent:er lane miles) '.)85 584 '.)84 578 578 '.)78 578 588 633 633 Traffic signals 335 321 321 321 318 318 318 306 318 314 Sewers (miles) 'i78, l 7 578.13 'i/7,60 57'.).52 57552 'i73,63 5,1lA4 569,60 'i68,30 56'.). 70 Storm Drains (miles) l 5L82 l5L30 l5L30 151.30 l5L30 l5L24 l5L2,1 l5L24 148,00 H8,00 Parks C:ommunitv parks 11 II II II 11 11 II 11 11 II Mini parks I') 15 9 7 7 7 7 7 7 6 Neighborhood parks 23 23 21 21 21 21 21 21 21 20 S pec1al use parks 8 8 7 7 7 7 7 6 6 6 Coif Courses 2 2 2 2 2 2 2 2 2 2 Cily Libraries Branch libraries 8 8 8 7 7 7 7 7 7 7 Book mobiles 2 2 2 rv1useurns 1H1storic: prope1t1es '.) 5 5 5 5 '.) 5 5 3 3 139 See accompanied Independent auditors' reporl CITY OF ANAHEIM Capital Assets Statistics by Function Last Ten Fiscal Years (continued) Fiscal Year 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Function ,P roqram Public Utilities Department Electric Utility Transmission, 69 kV, circuit miles 90 88 87 86 87 86 90 80 80 80 Distribution, 12 kV and IO\lver, circuit miles Overhead 402 408 414 ,120 426 428 440 4,15 446 453 Underground 708 693 680 666 662 656 658 5·17 625 61 '.) Water Uullty Active Wells 18 17 18 17 18 18 18 18 18 21 Reservoirs 14 H 14 H 14 14 H 13 13 l3 V\/at:er Mains (llllles) 753 753 753 753 753 753 752 753 750 750 Fire Hvdrant:s 7,842 7,832 7,840 7,832 7,816 7,812 7,8()2 7,805 7,751 7,749 Anaheim Convention Center Square footage available I, 130,000 l, ·130,0CX) I, 130,CXlO 1,110,mo l, 130,000 I, 130,000 l, ·130,0CX) I, 130,000 I, 130,000 l, ·130,0CX) Number of exhrbrt halls 5 5 5 5 5 5 5 5 5 5 Soun:e: Various Citv Depa1trnents 140 See accompanied Independent auditors' reporl I \ Other Information f CITY OF ANAHEIM Summary of Pension Obligation Funding Progress (in thousands) June 30, 2016 Market Value of Accrued Unfunded Funded Annual UL as a% /\ctuarial Valuat:ion Date Assets (MVA) Lrabrlrty Lrabrlrty Ratio Covered Pavroll of Payroll Miscellaneous $ 881,703 $ 1,295,862 $ 414,159 68.CI¼ $ 117,138 353.G¼ Police Safety 490,402 708,804 218,402 69.2% 46,888 •165.&6 Fire Safety 281,087 403,743 122,6'i6 69.6% 22,027 556.&6 Total $ 1,6'i3, 192 $ 2,408,409 $ 755,217 68.6% $ 186,053 405.9% June 30, 2015 MarketValue of Accrued Unfunded Funded Annual UL as a% Actuarial Valuation Date Assets (MVA) Liability Liability Ratio Covered Payroll of Payroll Miscellaneous $ 896,992 $ l,217, 106 $ 320,114 73.7% $ 108, Vi4 296.CI¼ Police Safety 498,226 666,459 168,233 74.8% 45,125 372.&6 Fire Safety 289,122 387,567 98,"145 74.6% 20,971 469.4% Total $ l,68•1,340 $ 2,271,132 $ 586,792 74.2% $ 174,250 336.&6 June 30, 2014 MarketValue of Accrued Unfunded Funded Annual UL as a% Actuarial Valuation Date Assets (!VIVA) Liability Liability Ratio Covered Payroll of Payroll Miscellaneous $ 900,l'iO $ 1,194,359 $ 293,609 75."1% $ 108,776 269.9% Police Safety 499,432 630,621 131,189 79.2% 40,583 323.3% Fire Safety 293,153 376,725 83,572 77.8% 20,326 441.2% Total $ 1,693,335 $ 2,201,705 $ 508,370 76.9% $ 169,685 299.6% 141 See accompanied Independent auditors' reporl I I (33 '- :391,_ Legend * CITY HALL 2.00 S ANAHf:'IM Bl VD A FIRE STATIONS * POLICE STATIONS • LIBRARIES • CITY FACILITIES + HELIPORT PARKS 1. HANSEN PARK 13. SAGE PARK 25. LINCOLN PARK 37. OAK 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. REID PARK 14. STODDARD PARK 26. EDISON PARK 38. YORBA REGIONAL PARK 50. MAGNOLIA PARK 3100 W. Orange Ave 901 S Ninth St 1145 B 3. SCHWEITZER PARK 15. MANZANITA PARK 27. BOYSEN PARK 39. OAK CANYON NATURE CENTER 51. FRIENDSHIP PLAZA PARK 951 State College Blvd 200 S. Anaheim Blvd 238 S. Bel Air St 1260 Riviera St 6700 Walnut Canyon Rd 52. ANAHEIM COVES 4. MAXWELL PARK 16. LA PALMA PARK & STADIUM 28. JUAREZ PARK 40. SYCAMORE PARK 841 S. Sunkist S1 962 S. Rio Vista St 2660 W. Orange Ave 1151 La Palma Park Way 8268 Monte Vis1a Rd 29. PIONEER PARK 53. PAUL REVERE PARK 5. PETER MARSHALL PARK 17. PEARSON 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. LITTLE PEOPLES PARK 30. RIO VISTA PARK 42. RONALD REAGAN PARK 2600 E. Miraloma Way 2271 W Cresent Ave 220 W. Elm St 201 N. Park Vis1a S1 945 S.Weir Canyon Rd 55. CIRCLE PARK 7. JOHN MARSHALL PARK 19. JULIANNA PARK 31. OLIVE HILLS PARK 924 S.Park Cir 309 E. Juliana St 4200 Nohl Ranch Rd 43. ROOSEVELT PARK 2066 Falmouth Ave 8160 E.Bauer Rd 56. CORAL TREE PARK 8. MODJESKA PARK 20. GEORGE WASHINGTON PARK 32. RIVERDALE PARK 44. ROSS PARK 1711 S. Be1mor Ln 1331 S. Nutwood St 250 E. Cypress St -15-15 E. Riverdale Ave 1280 W San1a An 142 APPENDIX B THE CITY OF ANAHEIM The Bonds are not secured b,t the faith and credit or the taxing po.ver of the City. The econonic and financial data regarding the City of Anaheim and Orange County set forth in this section are included for inforrration purposes only, to give a more corrplete description of the service area of the System General The City of Anaheim (the "City") was founded and incorporated in 1857. I nJ une 1964, the local voters apprc,,1ed a City Charter. As a result, the City operates underthe Charter and with a Counci I-Manager form of government. The six City Council merrbers are electedtofour-yearterms in alternate slates every two years. In February 2016, the City Council unanimously adopted the city's first districting map and election seq.Jenee, changing the election of counci I members from an at -I arge system to a b{-di strict system as of the November 2016 election; the mayor continues to be elected at-large. The Mayor presides OJer meetings of the City Council and has one vote. The City Council appoints the City Manager, who heads the executive branch of government, irrplements City Council directives and policies, and rranages the adninistrative and operational functions through the various depc1.rtmental heads, who are appointed b,t the City Manager. City full-time errplO{ees numbered 1,930 in 2017, of whom 576 were assigned to the Police Department and 276 to the Fire & Rescue. The latter has eleven stations; the City enjO{s a Class One fire insurance rating, the highest rating possible. The City cOJers 50 square niles and is located in northwestern Orange County, about 28 miles southeast of doNntcwn Los Angeles and about 90 niles north of San Diego. The City lies on a coastal plain which is bordered b,t 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 nil lion people which is comprised of Orange, San Diego, Los Angeles, Riverside and San Bernardino counties. Major freeways in and through the City prc,,1ide convenient access for industries and consumers to labor markets, recreation, and commerce. The Santa Ana Free.vay (Interstate 5) connecting Los Angeles and San Diego, is the rrain artery traversing the City and connects, in or near the City, with the Artesia;Riverside free.vay (State Route 91), the Garden GrOJe freeway (State Route 22), the Orange freeway (State Route 57), and the Costa Mesa freeway (State Route 55). The City has OJer 25,500 active business licenses, of which approxirrately 23,000 are businesses operatingwithinthe City's boundaries, and it is home to more than 8,500 rranufacturing plants. The City's population is nearly 359,000 residents. The Anaheim Regional Transportation I ntermodal Center, located inAnaheim's PlatinumTriangle and near the Anaheim Resort, provides access to AMTRAK rail P3-Ssenger service, Metrolink commuter rail, as well as bus service operated b,t the Orange County Transportation Authority, Anaheim Resort Transportations, and Greyhound Lines. The major airports in the area includeJ ohn Wayne (14 nil es southwest), LA;Ontario International ( 20 ni I es northeast), Los Angel es I nternati anal ( 30 mi I es northwest) and Long Beach ( 14 ni Ies west) . B-1 City Council The City Council is made up of a rrayor, elected at large, and six City Council rrembers, who appoint a city rranager to oversee day-to-day operations. As of the NOJember 2016 election, council rrembers are elected to staggered four yearterms in a b{--di strict system Biographies of the rrembers of the City Council are set forth belcw: Tom Tait, Mayor, was elected rrayor of Anaheim in NOJember 201 O and re-elected to his second four-year term in November 2014. As mayor, he represents the City at large. Tait ran on a platform of bringing the values of freedom and kindness to the culture of the City, while upholding fiscal responsibility, public safety and civic upkeep. He previously served on the City Council from 1995 to 2004and also served on the Anaheim Planning Comnission and Metropolitan Water District of Southern California board of directors. He is a current rrember of the board of directors of the Orange County Transportation Authority. As part of his kindness initiative, Tait created the "Hi Neighbor" program which encourages neighbors to get to knew one anotherthrough acts of kindness and to bui Id social infrastructure for stronger, more resi I i ent cornmuni ti es. He al so Iaunched the Coni ng Horre A nahei m program, which coordi nates the work and resources of local community and religious groups to prOJide horres and help for the homeless. In addition, Tait forrred a Regulatory Relief Task Force to review and elininate regulatory burdens on existing and prospective business in the City. Tait received his Bachelor of Science degree from the University ofWyomi ng and earned a Masters degree in Business Administration from Vanderbilt University with a concentration in Finance. Mayor Tait received aJ uris Doctorate degree from Vanderbilt in 1985 and is a rrember of the California State Bar. Tait is also chief executive officer of Tait & Associates, Inc. and Tait Environrrental Services, an engineering and envi ronrrental consulting firm with offices throughout the western United States. Dr.Jose F. Moreno, Mayor Pro Tern and Council Member, District 3, was elected to the City Council in NOJember 2016, representing District 3 in central-north Anaheim Before joining the City Council, Moreno served two terms on the Anaheim City School District Board of Education from 2006 to 2014. He is an associate professor and forrrer chair of the Departrrent of Chicano & Latino Studies at California State University, Long Beach, where he focuses on Latino education and policy studies. He is a nationally,ecognized scholar and teacher and sits on the National Action Council for Minorities in Engineering and the Puente Prqject. Moreno is also president of Los Amigos of Orange County, a community group serving people and communities in need, and is a rrember of the Anaheim Police Departrrent Chief's Advisory Board. He has served on the boards of the Orange County Community Housing Corporation and the Orange County Communities for Responsible Developrrent. Kris Murray, Council Member, was re-elected to the City Council in November 2014, after first being elected in November 2010. She represents the City at large. She has represented Anaheim on the regional boards of the Association of California Cities-Orange County, League of California Cities, Metropolitan Water District of Southern California, Southern California Water Comninee, Southern California Association of Governrrents, Orange County Council of Governrrents and the Transportation Corridor Agencies. She is a co-chair of the Anaheim Chamber of Comrrerce Econonic Consortium and a rrember of the Gift of Hi story board of di rectors. As counci I rrember, she has authored various budget i ni ti atives to restore Anahei m's pol ice departrrentto pre,ecessi on I eve Is, addi ng 15 new fi refi ghters to the fire departrrent, and restori ng a fire truck to service. She has charrpi oned an ordi nance to el i ni nate B-2 marijuana dispensaries in neighborhoods and various econonic developrrent initiatives in the City and region. She co-chairs the Anaheim Econonic Consortium and chairs the annual Anaheim;OCJ obs Fair. James Vanderbilt, Council Member, was elected to the City Council in NOJember 2014 and represents the City at large. He has previously served as a rrember of the Anaheim Community Service Board, as rrember and chair of the Anaheim Planning Commission, and as board rrember and president of the Anaheim City School Board for 1O years. He has also previously taught as a rrember of the acjjunct faculty for the North Orange County Community College District, School of Continuing Education. Denise Barnes, Council Member, District 1, was elected to the City Council in November 2016, representing District 1 in west Anaheim She is an executive rrember of the West Anaheim Neighborhood Developrrent Council, a nonprofit group of residents working to imprOJe west Anaheim She volunteers with the Maxwell Elerrentary Parent Teacher Association, Boy Scouts of Arrerica, First Baptist Church of Anaheim Homeless Outreach, theArrerican Legion, LOJeAnaheimandAltrusa. Barnes also serves on the boards of the Orange County Sanitation District and Orange County-City HAZ MAT Errergency Response Authority. Barnes is retired accounting supervisor and, together with her husband, founded an Anaheim- based property managerrent company. Lucille Kring, Council Member, District 4, was re-elected to the City Council in NOJember 2016, representing District 4 in south Anaheim From December 2015 to December 2016, she served as mayor protem of the City Council forthe second consecutive year. She has previously served as a rrember of the City Council from 1998 to 2002 and 2006 to 2010. Kring is a graduate from Western State University College of Law. She practices in the fields of lalbor, employrrent contract and real estate law. Kring was an Anaheim Chamber of Comrrerce Ambassador and was Ambassador of the Year, after amassing 500 hours of volunteer service to the community. In 1996, she was elected to the Anaheim Chamber of Comrrerce' s Board of Di rectors and served in that cap3.city unti I 2011. Kring is active in nurrerous I ocal charitable organizations, including as a rrember of the North Orange Unit fortheArrerican Cancer Society as she is a cancer survivor. Stephen F aessel, Council Member, District 5, was elected to the City Council in NOJember 2016, representing District 5, in east-central Anaheim Faessel serves as Anaheim's representative on the board of directcrs of the Metropolitan Water District of Southern California. He has previously served on the Anaheim Public Utility Board, Anaheim Planning Comnission, Budget, lnvestrrent and Technology Comnission, and on the City's General Plan Acwisory Comninee. He has served on the board of trustees of the Anaheim Museum Inc. since 1990andtheAnaheim Historical Society Inc. He is a founding rrember of the Anaheim MUZEO and has been a continuing education instructor for the North Orange County Community College District. City Management Biographies of the rrembers of the City Managerrent are set forth belcw: Linda N. Andal, Interim City Manager, was appointed b,t the City Council inJ uly 2017. She forrrerlyserved as City Clerk since 2007. She originallyjoinedthe City in April 2001 and was subsequently appointed Deputy City Clerk. Andal left the City in December 2005 for a position with the County of Orange as a Human Resources Manager, and returned to the City in February 2007 as City Clerk. She has a bachelor's degree in political science and a master's degree in public adninistration fromCaliforniaState University, Fullerton. Andal has been active in the International Institute of Municipal Clerks, the City Clerk'sAssociation of California, the Southern California City ClerkAssociation and the Society of Human Resources Managerrent. As Interim City Manager, Andal OJersees a full-5ervice city supporting nearly 359,000 residents, 23,000 businesses and 25 nillion annual visitors. The City prOJides public safety B-3 through the Anaheim Police Department and Anaheim Fire & Rescue, water and pcwer service through Anaheim Public Utilities, i:arks, community centers, family services and libraries through Anaheim Community Services, neighborhood and transportation i rrprOJements through Anaheim Public W arks and community re.1italization through Community & Econonic Developrrent. Greg Garcia, Deputy City Manager, was appointed Deputy City Manager in NOJember 2012. He has served the City since 2005. As Deputy City Manager, Garcia OJersees the communications office as well as the GOJernmentAffairs Division for the City. In addition to prOJiding policy support for the Mayor and City Council, he also prOJides high level support to the City Manager and the executive management team for policy execution and City-wide special prqjects. Prior to his current position, Garcia held the positions of Deputy City Manager for Adninistration, GOJernment Affairs Manager, and Budget Analyst. Prior to joining the City, Garcia worked in the public sector at both the national and state le.1els. Greg earned his bachelor's degree in political science from the University of California, San Diego, and hisjuris doctorate from the University of Notre Dame Law School. Deborah A. Moreno, Finance Director;CityTreasurer, was appointed Finance Director in July 2012 and then also as City Treasurer in December 2015. Moreno OJersees the City department that is responsible for the City's $1. 7 bi 11 ion budget, accounting, cash and investment management, procurement, and technology services. Moreno initiallyjoinedthe City in February 2001, and was appointedtoFinancial Accounting Manager. lnJ anuary 2006, Moreno briefly left the City to be the City of La Palma Director of Finance, but returned to Anaheim in August 2007 as Deputy Finance Director. Prior to her work in local 9'.)Vernment, Moreno was in public practice at Ernst andY oung LLP and is a Certified Public Accountant (inactive). She earned a bachelor's degree in adninistration from California State University, San Bernardino. Moreno also lectures for the California State University, Fullerton Extended Education. Kristin A. Pelletier, Acting City Attorney, has been Acting City Attorney since December 2016. Pelletier has served as Senior Assistant City Attorney, Civil Division, specializing in labor and employment law, constitutional law, and civil rights litigation. She served as the acwisor to the human resources and police departments and also supervises litigation matters. As Acting City Attorney, Pelletier leads the department that prOJides legal acwice and services to the City Council, City officials, staff, dei:artments, boards, comnissions and related City entities and enterprises. Further, she works to protect the interests of the City and its taxi:ayers, and assures that actions b{, or on behalf of, the City and its related entities are in accordance with all applicable legal requirements. She holds ajuris doctorate from the University of Southern California and a bachelor of arts degree from the University of California, Los Angeles. Theresa Bass, Acting City Clerk, originally joined the City in December 2007 and served as Assistant City Clerk until her appointment as Acting City Clerk of the City inJ uly 2017. In her role as A cti ng City CI erk, Ms. B ass Ieads a dei:artmentthat is responsible for adni ni strati ng the democratic process b,t conducting local elections, developing and maintaining the City's records management program, prOJiding 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 M unicii:al Clerk designation from the International Institute of Municii:al Clerks in 2009. Her professional memberships include the International Institute of Municii:al Clerks, the City Clerk's Association of California and the Southern California City Clerk's Association. B-4 Pensions All full-tirre and certain pc1.rt-tirre City personnel belong to the California Public ErrplO{ees' Retirerrent System ("CalPERS"). The City's policy is to fund all required actuarially deternined contribution; such costs to be funded are determined annually as of July 1 b,t the CalPERS's actuary. The City maintains three Pension Plans with Cal PERS: the Miscellaneous Plan, the Police Safety Plan and the Fire Safety Plan. As ofJune 30, 2017, Cal PERS had sepc1.rate contracts with the State of California plus 1,579 local publ i c agencies. The 57 contracts with county offices of education i ncl uded i n that total prOJi de benefits for 1,366 school districts and charter schools, bringing the total number of public agency errplO{ers to 2,945. Membership includes the State of California, cities, counties, county offices of education, school districts and other public agencies. Each agency has sorrewhat differing benefit programs and amounts of actuarial liabilities. For the Public EmplO(ees' Retirerrent Fund as a whole, the CalPERS investrrent portfolio rrarket value as of June 30, 2017, was approximately $326.4 billion, cDrnP3-red to $302.0 billion as ofJune 30, 2016. As ofJune 30, 2016, the Cal PERS unfunded actuarial accrued liability was $138.58 bi 11 ion. Such i nforrrati on is the most recent i nforrrati on avai Iable and no assurances can be given that there has not been a reduction in the rrarket value of the assets held b,t Cal PERS. A COP{ of Cal PERS' annual financial report may be obtained from its website at www.calpers.ca.QOJ. The Cal PERS website also contains CalPERS' most recent actuarial valuation reports and other inforrration concerning benefits and other matters. Such inforrration is not incorporated b,t reference herein. Neitherthe City nor the Authority can guarantee the accuracy of such information. Actuarial assessrrents are " forward-I ooki ng'' staterrents that reflectthejudgrrent of the fiduciaries of the pension plans, and are based upon a variety of assurrptions, one or more of which rray not rraterialize or be changed in the future. Actuarial assessrrents will change with the future experience of the pension pl ans. With respect to the City's portion of the Public ErrplO{ees' Retirerrent Fund, the net actuarial value of assets available for benefits, as of the most recent actuarial valuation date, June 30, 2016 was approximately $1.65 billion with an unfunded liability of approxirrately $755.2 million. [Remainder of pc1.ge intentionally left blank.] B-5 The table belew shews the funding progress of the three plans and is based on aJ une 30, 2014 market val uati on date ( $s in thousands) . (A) (B) (C) (D) (E) (F) Market Unfunded Value of Liability Funded Annual UL as a% Assets Accrued (UL) Ratio CCNered of Payroll Plan (MVA) Liability (BHA) (A),(B) Payroll (C) /(E) M i scel laneous $ 900,750 $1,194,359 $293,609 75.4% $108,776 269.9% Pol ice Safety 499,432 630,621 131,189 79.2 40,583 323.3 Fire Safety 293,153 376,725 83,572 77.8 20,326 411.2 Total $1,693,335 $2,201,705 $508,370 76.9 $169,685 299.6 Source Comprehensive Annual Financial Rep:irt of the City of Anaheim, dated as of J Lile 30, 2017. The table belew shews the funding progress of the three plans and is based on aJ une 30, 2015 market val uati on date ( $s in thousands) . (A) (B) (C) (D) (E) (F) Market Unfunded Value of Liability Funded Annual UL as a% Assets Accrued (UL) Ratio CCNered of Payroll Plan (MVA) Liability (BHA) (A),(B) Payroll (C) /(E) M i scel laneous $896,992 $1,217,106 $320,114 73.736 $108,154 296.036 Pol ice 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 $174,250 336.8 Source: Comprehensive Annual Finan::::ial Rep::111 of the City of Anaheim, dated as of June 30, 2017. The table belew shews the funding progress of the three plans and is based on the rrost recent market valuation data as ofJune 30, 2016 ($sin thousands). (A) (B) (C) (D) (E) (F) Market Unfunded Value of Liability Funded Annual UL as a% Assets Accrued (UL) Ratio CCNered of Payroll Plan (MVA) Liability (BHA) (A),(B) Payroll (C) /(E) M i scel laneous $881,703 $1,295,862 $414,159 68.036 $117,138 353.636 Pol ice Safety 490,402 708,804 218,402 69.2 46,888 465.8 Fire Safety 281,007 403,743 122,656 69.6 22,027 556.8 Total $1,653,192 $2,408,409 $755,217 68.6 $186,053 405.9 Source: Comprehensive Annual Finan::::ial Rep::111 of the City of Anaheim, dated as of June 30, 2017. 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 rrost significant factors used in deternining the liability and the funding requirements is the rate of return that investments will yield prior to making i:avments, knewn as the discount rate. The City's pension plans currently utilize a discount rate of 7.'JYo, which is used in determining the unfunded pension liability and funding requirements. If it is deternined in the future that an even lesser rate of return is more appropriate, there will be a significant increase in the B-6 unfunded liability and the contributions required to rreetthose obiigations. The City has adopted the new prc,,1isions of the GOJemrrental Accounting Standards Board relating to the accounting and reporting for pensions. The City's contribution rate is determined b,t annual actuarial valuations based on the benefit forrnul a and the nurnber of errployees and their respective salary schedules. As ofJ une 30, 2017, the City's contribution rate, for errployees hired on or after January 1, 2013, was 28.415% for niscellaneous employees and 41.876% for fire safety employees, and 39.784% for police safety errployees. Participc1.nts' contributions totaled $16.866 million for the fiscal year endedJune 30, 2016. On January 1, 2013, the Public Errployees' Pension Reform Act of 2013 (PEPRA) took effect and applies rrainly to new public employees. Sorre of the rnaj or changes incl ude rrandatory cost sharing b,t employees, reducing the OJeral I benefit level (e.g. percentage of pc1.y), increasing the retirerrent age, and placing a cap on the salary used to deterni ne reti rerrent benefits. Errployees hi red on or after January 1, 2013 who were not already a rrernber of a pension system are sul::iject to PEPRA. The City's actuarially determined contribution, the City's actual contribution, and the City's net pension Ii abi I ity as a percentage of cOJered i:avrol I for the fiscal years endedJ une 30, 2016 andJ une 30, 2017 are as fol lCM/5 ($s in thousands): Police Fire Police Fire Safe:y Safety Total Safety Safety Total Miscellaneous 2016- 2016- 2016- Miscellaneous 2015- 2015- 2015- 2016-2017 2017 2017 2017 2015-2016 2016 2016 2016 Actuarially Determined $33.277 $19.595 $10.356 $63.228 $31.141 $17.527 $9.483 $58.151 Contribution (ADC) Contribution in Relation to the ADC (33.277) (19.'BS) (10.356) (63.228) (31.'BS) (17.527) (9.483) (58.605) Covered-fmployee Payroll 117.lll 49.255 24.732 191.()98 lll.398 46.479 21.EiOO 179.477 Plan Net Pension Liability as a Percentage of Covered 28.41% 39.78% 41.87% 33.09,?6 28.36% 37.71% 43.'XJ,?6 32.65% Employee Payroll Source: Comprehensive Annual Finan::::ial Rep::111 of the City of Anaheim, dated as of June 30, 2017. Post-Retirerrent Medical Benefits. In addition to the contributions to Cal PERS, the City provides posHetirerrent rredical benefits for certain of its retired employees (the" Post-Reti rerrent Medical Benefits Program''). Active employees (hired prior to January 1, 1996, July 6, 2001 for the Anaheim Police Association errployees and NOJernber 9, 2001 for Anaheim Fire Association employees) are eligible to received posHetirerrent rredical benefits from the City. The City's contribution to posHetirerrent health benefits for the fiscal year endedJ une 30, 2016 andJ une 30, 2017 was approxirrately $13.72 million and $16.02 nillion, respectively. See "APPENDIX A-COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF ANAHEIM FOR THE FISCAL YEAR ENDED JUNE 30, 2017-Notesto Financial Staterrents-Note 11-Other Post-€mployrrent Benefits" for additional inforrration on the post retirerrent benefits offered b,t the City to its errployees. OnJ une 30, 2008. the City transferred $63,223,656 to an irrevocable trust with Cal PERS to pre fund the City's Post-Retirerrent Medical Benefits Program obligation. As of the actuarial valuation date of July 1, 2015, the unfunded liability for the City's Post-Retirerrent Medical Benefits Program was $191.46 ni 11 ion or 29.4% funded. B-7 The City's annual OPE B cost, the percentage of annual OPE B cost contributed to the pl an, and the net OPEB asset for the fiscal years endedJ une 30, 2015,J une 30, 2016, andJ une 30, 2017 are as folio.vs ( $s i n thousands) : Percentage of Fiscal Year Annual OPEB Cost Ending Annual OPEB Cost Contributed OPEB Asset June 30, 2015 13,192 100.40 11,209 June 30, 2016 13,686 100.26 11,244 J une 30, 201 7 15,956 100.38 11,304 Source: Comprehensive Annual Finan::::ial Rep::111 of the City of Anaheim, dated as of June 30, 2017. Labor Relations A majority of City ernpl oyees are represented b,t various unions, including the Anaheim Muni ci pl! Employees Association, the Anaheim Police Association, Anaheim Police Management Association, the Anaheim Firefighters Association, the International Brotherhood of Electrical Workers, Local 47 (I BEW), the Service Errployees International Union, Local 1877; and the Teamsters Local 952 (Teamsters). The preceding are designated representatives under the Meyer Milias Brcwn Act (Section 3500 et seq. of the GOJernment Code of California). The expiration dates of current memoranda of understanding are: I BEW (full-time errployees), June 30, 2020; I BEW (part-time errployees), June 30, 2020; Anaheim Municipll Employees Association General Ernployees,J anuary 4, 2018; Anaheim Municipc1.I Employees Association Clerical Errployees,J anuary 4, 2018; Anaheim M unicipc1.I ErrployeesAssociation Part Time Unit,J anuary 3, 2018, Anaheim Police Association,J une 27, 2019; Anaheim Police Management Association,J anuary 14, 2018; Anaheim Firefighters Association ("AFA"),J une 29, 2017 (the City and the AFA are currently negotiating a mw memorandum of understanding); Service Employees I nternati anal Uni on, Local 1877 ("SEI U"),J uly 6, 2017(theCity and SEIU are currently negotiating a new memorandum of understanding); and the Teamsters,J anuary 1, 2019. Area and Population The City land area remained at 3.7 square miles from 1900through 1940. From 1940to 2016, that area increased to 50.8 square niles. The City's population gre.v from 14,556 in 1950 to an estimated 358,546 in 2017. Anaheim is the oldest and most populous city in Orange County and California's tenth most populous city. The follONing chart includes the grONth in the City's population since 1950as well as the grONth in the population of Orange County and the City's population as a percentage of the population of Orange County. [Remainder of pc1.ge intentionally left blank.] B-8 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 354,532 0.68 3,152,376 11.25 2016 355,692 0.33 3,172,152 11.21 2017 358,546 0.80 3,194,024 11.22 Sources: California Department of Finan:::e ard U.S. Census Bureau. Building Activity In 2016, the City issued 3,286 building permits with a total valuation of approximately $698.59 nil lion. The table belcw provides information on City building pernits forthe five calendar years ending 2016. City of Anaheim Building Activities Calendar Year 2012 2013 2014 2015 2016 Total Valuation (thousands) $179,941 $338,946 $609,443 $568,394 $696,585 Total Perrrits Issued 2,560 2,885 3,609 4,107 3,286 New Construction: Residential (thousands) $37,906 $54,034 $213,731 $147,479 $204,052 Perrrits 102 55 80 66 147 Non-Residential (thousands) $17,443 $92,175 $182,135 $183,930 $282,771 Perrrits 24 29 30 36 44 Additions and Alterations: Residential (thousands) $24,195 $28,547 $37,648 $50,323 $33,389 Perrrits 1,440 1,638 2,129 2,909 2,027 Other (thousands) $100,397 $164,190 $175,930 $186,662 $176,373 Perrrits 994 1,163 1,370 1,096 1,068 New Dwelling Units: Total Residential Units 170 420 1,301 1,019 1,295 Source: City of Anaheim Planning Department, Building Division. B-9 E mplO(ment No annual i nformati on is regularly compi Ied on empl O{ment and unempl O{ment for the City al one, though monthly estimates are made b,t the State of California EmplO{ment Development Department. EmplO{ment in the Anaheim-Santa Ana-Irvine Metropolitan Division, a census-designated region, increased from about 1,406,400 in 2011 to about 1,538,000 in 2016. The unemplO(ment rate was I ewer than that in the State in each of the plSt six years. The rrobile resident labor force of Orange County is emplO{ed not only in the County but also in acjjacent counties, such as Los Angeles, San Bernardino and Riverside. The unemplO(ment rate in Anaheim for September 2017 was estimated to be 4.6%, while the national unemplO{ment rate was 4.2% and the California unemplO{ment rate was 5.1%. ORANGE COUNTY (Anaheim-Santa Ana-Irvine Metropolitan Division) EMPLOYMENT, UNEMPLOYMENT AND LABOR FORCEl 11 Calendar Year Averages: 2011-2016 2011 2012 2013 2014 2015 2016 C ivi I ian Labor Force 1,546,400 1,562,100 1,565,300 1,572,000 1,588,700 1,602,400 E rrployment 1,406,400 1,439,300 1,462,400 1,485,700 1,518,000 1,538,000 U nerrployment 140,000 122,900 102,900 86,200 70,700 64,300 U nerrployment Rate 9.1% 7.9% 6.636 5.5% 4.4% 4.036 State U nerrpl oyment 11.7% 10.4% 8.9% 7.5% 6.2% 5.4% Rate (iJ By place of residence, irr::ILding workers involved in labor disputes. Sources: California Employment Development Department, Lalxir Market Information Division. The table bel cw Ii sts the major manufacturi ng and non-manufacturing empl O{ers within the City. CITY OF ANAHEIM PRINCIPAL EMPLOYERS 2017 Number of Corrpany Errployees Products/l'urpose Disneyland Resort 31,000 Theme Park Kaiser Foundation Hospital 6,000 Medical Facilities Northgate Gonzalez Superrrarkets 2,000 G rocery Stores Hilton Anaheim 1,575 Hotel Angels Basebal I 1,484 Entertainment and Sports Anaheim Regional Medical Center 1,262 Medical Facilities Anaheim Mariott Hotel 1,030 Hotel L-3 Communications 1,000 Aerospace and Defense Systems St.Joseph Heritage Healthcare 900 Medical Facilities Ti me Warner Cable Business Class 900 Telecommunications PrCNider Sources Inside Prospects Database, as published in City of Anaheim CAFR, year erdedJ une 30, 2017. B-10 Income The fol I cwi ng table sumnari zes per capita personal income for Orange County, California and the United States for the years 201 0 through 2016: PER CAPITA PERSONAL INCOME Calendar Years 2010through 2016 Year City of Anaheim Orange County California United Stat es 2010 $21,813 $49,534 $43,315 $40,277 2011 22,049 51,383 45,820 42,453 2012 22,309 54,893 48,312 44,267 2013 24,105 53,321 48,471 44,462 2014 25,713 55,470 50,988 46,414 2015 24,612 57,749 53,741 48,112 2016 25,127 62,071 56,374 49,246 ------Source: U.S. Department of Commerce, Bureau of EccnomicAnalysis ard City of Anaheim CAFR, year erdedJ une 30, 2017. Tourism and Community and Recreational Facilities Tourism is a major i ndustry i n A nahei m M uch of that industry is centered around the Anaheim Resort Area, an area of 1,100 acres that includes the Disneyland Park, Disney's CaliforniaAcwenture, the Anaheim Convention Center, the Anaheim GardenWalk, and a majority of the City's 22,000 hotel and motel rooms. overall, the City has over 150 lodging establishments and 600 restaurants in a broad range of sty I es, ethni cities and price ranges, Tourism continues to thrive with expansions and development activity in the Anaheim Resort and Platinum Triangle areas, as well as innovative capital prqjects to link visitors to the entertainment centers. Recent imprOJements include the follcwing: in 2012, Disney's California Acwenture 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. lnnOJative prqjects in development include: the development of the Anaheim Regional Transportation lntermodal Center, which will serve as a transportation gateway and nixed-use activity center where vi sitars wi 11 seam essly move between transit services to reach Southern California activity centers and businesses; the Anaheim Rapid Connection, an approximate 3.2 mile fixed guideway system that prOJides residents, businesses and visitors with a safe, convenient and efficient connection between the A nahei m Resort and the Pl ati num Triangle; the Anaheim Convention Center Solar Prqject, expected to be the second largest solar photOJoltaic array placed on a convention center in the nation, is designed to produce enough energy to create 3 nillion kilcwatt hours of electricity on an annual basis which is equival entto producing electricity for 500 residential homes. Anaheim Convention Center In Septerrber 2017, the Anaheim Convention Center completed a 200,000 square foot expansion of leasable space resulting in 1,013,000 square feet of exhibit space, 352,000 square feet of meeting space, 238,000 square feet of bal I room space and continues to be a sought -after meeting, event and entertai nment destination. The Anaheim Convention Center hosts Iarge annual events that have incl uded NAM M , Natural Products, Medical DesignWondercon, D23 and Bli=on, as well as a multitude of trade shews, educational B-11 e.,,ents, consurrer shews and conventions. In 2012, the Anaheim Convention Center was the recipient of the 2012 Venue Excellence award for convention centers, presented 0y the International Association of Venue Managers, an organization recognized as the world-wide I eader i n the venue managerrent i ndustry. 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 monurrent, more than 80,000 square feet of colored concrete and pave rs, 153 pal m trees, 60 citrus trees, and three signature water features with a river of lights connecting the Mountain Fountain and flewing through the Anaheim fountain and continuing to the Ocean fountain. In its first six months of operation, the Grand Plaza hosted nurrerous recepti ans and concerts and drawi ng visitors to the fountain areas. Angel Stadium In 1964, the City comrrenced 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 35year agreerrentwith Golden West Baseball Company (the CaliforniaAngels) for the purpose of exhibiting Arrerican League Baseball at the Stadium. In 1996, Anaheim Angels L .P. acquired 10036 of what is new knewn as the Los Angel es Angels of AnaheimArrerican League Baseball franchise and reached agreerrentwith the City on a plan to keep the Angels in Anaheim for the next 33 years. The agreerrent centered around a $118 nil lion renOJation of the Stadium, with Anaheim Angels L.P. obligated to pay $80 million of the total costs and for any costs OJerruns in excess of $100 million. The renOJation made the Stadium a smaller and more intimate park with approximately 45,000 seats and upgraded concessions, suites, seating and other arrenities. Also as part of the agreerrent, Anaheim Angels L.P. took over operation of the Stadium effective October 1, 1996. In 2003, Arturo Moreno (Angels Baseball LP) purchased the team for $185 nil lion. The current lease between the City and Angels Baseball LP expires in 2029; hewever, Angels Baseball LP has the option toterninate the current lease at any tirre, without cause, between October 17, 2016 and October 16, 2019. Honda Center In June 1993, the City completed construction on the $103 million 19,400-seat Honda Center (forrrerly knewn as the Arrewhead Pond of Anaheim) (the "Honda Center") with approximately 3,900 parking spaces. The Honda Center is new horre to the National Hockey League's Anaheim Ducks and is equi pped to accommodate Nati anal Basketbal I Association garres, nati anal touri ng shews as wel I as major concerts. In 2013, Honda Center held more than 120 e.,,ents, and OJer 40 concerts and shews, with an attendance of 1.5 nil lion, including concerts 0y the Rolling Stones, Fleetwood Mac, Andrea Bocelli, and sporting events such as the Big West tournament, NCAA Tournarrent and the Los Angeles Lakers. As it celebrated its 20th anniversary, the Honda Center opened its doors to the Grand Terrace, the most extensive upgrade to Honda Center since its opening in 1993. Encompassing 12,000 square feet, the privately financed Grand Terrace boasts 80 feet of bar space, unique dining options, upscale decor and high quality service. Honda Center has also partnered with Wolfgang Puck to open a mw 220-Seat, full-service restaurant, offering Wolfgang's iconic service and signature fare. The restaurant will be open to serve all fans prior to events at the Honda Center. B-12 City Nati anal GrOJe of Anaheim In 2013, the City National GrOJeof Anaheim held more than 200eventswith 72 live performances, welconing OJer 150,000 guests. Performances included favorites such as Kenny Loggins, Mike Tyson, Chris Isaak and The B-52s along with newcomers such asJ esse Cook and The Fresh Beat Band. The venue also hosted four live performances of Prince, grossing more than $940,000, easily the venue's top-grossing event ever. City National GrOJe of Anaheim was ranked 35th in the World's Top 100 Club Venues forticket sales b,t Pd Istar Magazine. Further, the GrOJe was ranked #3 in the world for venues with a cap3.city of Iess than 2,000 guests b,t Venues Today. Recreational Facilities Orange County is a major tourist center of Southern California, attracting OJer 47 nil lion annual visitors. Forty-two miles niles of shorelines with more than twenty publicly maintained beach areas prOJide year-rnund 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 AdJenture, Dcwntcwn Disney, Anaheim GardenW al k, House of BI ues-Anahei m, the Anaheim Convention Center, the Stadium and the Honda Center. Within one hour's drive from the City are Knott's Berry Farm in the aqjacent City of Buena Park, the Los Alamitos Race Course, the rencwned 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 fe.v miles south of the City, prOJides 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 SanJ acinto mountains. Other Anaheim facilities include a main public library, six branch libraries, a self-service branch at the A nahei m Regi anal Transportation I ntermodal Center, the A nahei m Heritage Center and a bookmobi I e. The M UZEO 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. The follcwing table sets forth the Transient Occupancy Taxes (TOT) revenue of the City from the fiscal year endedJ une 30, 2005 through fiscal year endedJ une 30, 2017: [Remainder of page intentionally left blank.] B-13 City of Anaheim Transient Occupancy Tax Ra,enue (in millions) $160.0 $149.6 $140.0 $120.0 $100.0 $80.0 $60.0 $40.0 $20.0 $- 07/08 08,00 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Source: City of Anaheim. Retail Sales Total taxable sales during calendar year 2015 in the City were reported to be $6,652,443, a 7.94% increase from the total taxable sales of $6,163,023 reported during calendar year 2014. A summary of historic taxable sales within the City during the past five years for which data is available is shewn in the fol I cwi ng table. City of Anaheim Taxable Retai I Sal es Number of Permits and Valuation of Taxable Transactions (Dollars in Thousand) Retail Stores Total All Outlets Nurrlier of Taxable Nurrlier of Taxable Year Permits Transactions Perrrits Transactions 2011 4,549 $2,968,543 7,969 $5,144,214 2012 4,941 3,162,872 8,427 5,548,091 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 Source: California State Board of Equalization. B-14 Total taxable sales during calendar year 2015 in the County were reported to be $61,358.0 billion, a 2.1% increase from the total taxable sales of $60,097.1 billion reported during calendar year 2014. A sumnary of historic taxable sales within the County during the plSt five years for which data is available is shewn i n the fol IONi ng table. County of Orange Taxable Retai I Sal es Number of Permits and Valuation of Taxable Transactions (Dollars in Thousand) Retail Stores Total All Outlets Nurrlier of Taxable Nurrlier of Taxable Year Perrrits Transactions Perrrits Transactions 2011 58,795 $35,587,795 92,207 $51,731,139 2012 60,273 38,372,456 93,183 55,230,612 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 Source: California State Board of Equalization. Education The City is served 0ythree non-traditional public schools, eleven public high schools, seven public junior high schools and forty-six public elementary schools. Almost all of the City I ieswithin eight districts: the Anaheim, Centralia, Magnolia, and Savanna Elementary School Districts, the Anaheim Union High School District, the Orange Unified and Placentia-¥ orba 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, Chaprran University, Cypress College, Fullerton College, and a number of public community colleges. [Remainder of page intentionally left blank.] B-15 City Financial Information The follcwing unaudited summaries of certain funds of the City have been prepc1.red b,t the City Finance Department from audited financial statements. CITY OF ANAHEIM ALL GOVERNMENTAL FUNDTYPESl11 SUMMARY OF REVENUES,TRANSFERSANDOTHER FINANCING SOURCESl'i Fiscal Years E ndedJ une 30, 2013 through 2017 ($000) 2013 2014 2015 2016 2017 Property taxes $ 64,311 $ 66,282 $ 68,405 $ 70,646 $ 72,909 Sal es and use taxes 62,793 68,581 71,977 81,844 80,500 Transient occupancy taxes 102,936 110,134 119,744 137,570 149,566 Other taxes 7,078 7,012 7,478 8,024 8,287 Licenses, fees and perrrits 22,305 21,353 28,573 30,653 36,504 I ntergcwernmental ra-enue 186,018 215,755 155,314 121,055 (3) 123,797 Charges for services 30,883 32,569 33,295 36,147 42,047 Fines, forfeits and penalties 2,907 2,656 2,823 2,875 2,756 Use of rrone,, and property 8,058 16,681 13,233 55,052 31,207 Contribution from property cwners 36,864141 Other ra-enues 8,926 6,555 16,573 13,520 18,425 Ra-enues before transfers and other financing sources 496,215 547,578 517,415 557,386 602,862 Other financing sources 45,577 10,210 30,889 11,617 8,476 Total ra-enue and other financing sources $ 541,792 $ 557,788 $ 548,304 $ 569,003 $ 611,338 rn Incl Ldes the General Furd, special re.;enue furds, debt service furds ard capital projects funds and excl Ldes the enterprise furds ard internal service funds. AITTJunts have been restated from audited financial statements to conform with current presentati en. Additionally, prior peri cxl adjustments for cha.Jl'Jes in accountitl'J prirr::iples ard corrections of errors have generally been treated as adjustments to beginnitl'J furd balan::::es. Therefore, m adjustments have been made to revenues or other fi nan:::i tl'J sources. See aLdited fi nan:::ial statements for further detai Is. (,) Increase in use of m:mey ard property is due to one-time lard held for resale transferred from the Su:::cessor Agency. (<) Contribution from property avvners pursuant to the issuance of Community Facility District 08-1 Platinum Tria.Jl'Jle Series 2016 Special Tax Bond. [Remainder of P3-Qe intentionally left blank.] B-16 CITY OF ANAHEIM 1 ALL GOVERNMENTAL FUNDTYPESl ,~ SUMMARY OF EXPENDITURES Fiscal Years E ndedJ une 30, 2013 through 2017 ($000) 2013 2014 2015 2016 2017 City Council $ 456 $ 548 $ 606 $ 268 $ 673 City Adrrinistration 3,507 3,377 3,535 3,322 3,001 City Attorney 6,462 8,155 6,038 6,368 7,182 City Clerk 891 1,073 1,057 897 1,226 Human Resources 1,296 1,432 1,250 1,449 1,615 Finance 5,658 6,485 6,566 6,375 5,750 Police 117,702 120,962 127,226 139,775 148,801 Fire 56,127 57,529 61,483 66,399 70,164 Comnunity and Econorri c Development 86,282 83,658 89,446 107,544131 92,089 Planning 15,785 16,086 17,667 19,935 21,997 Public Works 25,387 29,737 29,814 30,388 30,886 Comnunity Services 25,268 30,602 28,394 31,980 32,258 Public Utilities 2,398 2,510 2,622 2,727 2,496 Convention, Sports and Entertainment 10,002 10,714 11,608 13,089 14,023 Total operating expenditures $ 357,221 $ 372,868 $ 387,312 $ 430,516 $ 432,161 Rederrption of serial bonds, general obi i gati ons 18,948 24,220 25,289 28,448 26,123 Interest expenditures 19,808 18,797 18,085 16,930 15,571 Bond issuance costs 127 Capital outlay 98,601 136,597 79,710 32,589 44,532 Total expenditures $ 494,578 $ 552,482 $ 510,523 $ 508,483 $ 518,387 (1) Incl Ldes the General Furd, special re.;enue furds, debt service furds ard capital projects funds and excl Ldes the enterprise furds ard internal service funds. m AITTJunts have been restated from audited financial statements to conform with current presentati en. Additionally, prior peri cxl adjustments for cha.Jl'Jes in accountitl'J prirr::iples ard corrections of errors have generally been treated as adjustments to beginnitl'J furd balan::::es. Therefore, m adjustments have been made to expen:litures. See aLdited finan:::ial statements for further detai Is. (,) Increase in Community and Ecommic Development expen:litures is due to a one-ti me loss on sale of lard held for resale. Budgetary Processes The fi seal year of the City begins on the first day ofJ uly of each year and ends on the thirtieth day ofJune of the fol lCM!i ng year. At such date as the City Manager determines, each department head must furnish to the City Manager an estimate of revenues and expenditures for such depc1rtment, for the ensuing fiscal year, detai I ed in such manner as may be prescribed 0y the City Manager. In preparing the proposed budget, the City Man ager reviews the estimates, holds conferences thereon with the respective depc1rtment heads, and revises the estimates as he may deem ad.ii sable. At leastthirty days prior to the beginning of each fiscal year, the City Manager subnits to the City Council the proposed budget as prei:ared 0y the City Manager. After reviewing 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 B-17 proposed budget are available for inspection b,t the public in the office of the City Clerk at least ten days prior to the heari ng. A tthe concl usi on of the public hearing, the City Counci I further considers the proposed budget and rrakes any revisions thereof that it deems acwisable. On or beforeJ une 30, the City Council adopts the budget with revisions, if any, b,t the affirrrative vote of at least a majority of the total rrerrbers of the City Council. From the effective date of the budget, the amounts stated as proposed expenditures are appropriated to the departrrents, for the ol::ij ects and purposes narred. The City Manager is empcwered to transfer funds from one ol::iject or purpose to another within the sarre departrrent, as necessary. All appropriations lapse at the end of the fiscal yeartothe extentthatthey have not been expended or lawfully encurrbered. At any public rreeting afterthe adoption of the budget, the City Council rray amend or supplerrentthe budget b,t the affirrrativevote of at least a majority of the total rrerrbers of the City Council. U nderthe City Charter, the City may not incur indebtedness evidenced b,t general obi igation bonds which would in the aggregate exceed 15% of the total assessed valuation, for purposes 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 rray be created unless authorized b,t the affirrrative votes of two-thirds of the electors. The City Council emplO{s, at the beginning of each fiscal year, an independent certified public accountant who, at such tirre or tirres as specified b,t the City Council, at least annually, and at such other ti rres as they shal I deterni ne, exani nes the books, records, i nventori es and reports of al I officers and departrrents as the City Counci I rray direct. As soon as practicable afterthe end of the fiscal year, a report is submitted b,t such accountant to the City Council and a cop{ of the financial staterrents as of the close of the fi seal year is publ i shed. The follcwing table sets forth the General Fund actual revenues and expenses for fiscal year ended June 30, 2015 through fiscal year endedJ une 30, 2017, and the General Fund adopted budget for fiscal year endedJ une 30, 2018: [Remainder of page intentionally left blank.] B-18 General Fund Revenue and Expenditures($ in millions) Fiscal Year 2014/15 2015/16 2016/17 2017/18 Actual Actual Actual Adopted G eneral Fund Revenues Transient Occupancy Taxes $119.7 $137.6 $149.6 $154.5 Sales and Use Taxes 72.0 81.8 80.5 82.3 Property Taxes 67.6 69.9 72.9 73.1 Busi ness License Taxes 6.2 6.6 6.6 6.8 Property Transfer Taxes 1.3 1.4 1.7 1.6 Other Revenues 46.0 51.0 54.7 54.7 Transfers from(to) Other Funds (40.3) (50.1) (60.3) (53.4) Total Revenuesl 11 $272.5 $298.2 $305.7 $319.6 G eneral Fund Expenditures Keeping us Safe $183.4 $198.6 $214.1 $219.2 PrCNidingthe Necessities 19.3 22.4 22.0 21.1 Ensuring Quality of Life 46.1 50.4 54.8 56.6 Administering EfficientGCN't 12.4 10.8 12.0 13.4 Supporting Activities 6.5 7.8 7.3 9.4 Total Expensesl 11 $267.7 $290.0 $310.2 $319.7 Net Contribution (Draw) $4.8 $8.2 ($4.5) ($0.1) Source: City of Anaheim CAFR, fiscal year erdedJ une 30, 2015 throUJh fi seal year erdedJ une 30, 2017 ard acbpted fiscal year 2017-18 Operati tl'J B Ldget & Capital Improvement Pr(XJram. (7l Figures may mt sum due to rourding. Assessed Valuation and Tax Collections Taxes are le.1ied each fiscal year on taxable real and personal property which is situated in the City as of the precedi ng J anuary 1. For assessrrent and col I ecti on purposes, property is classified either as "secured' or" unsecured' and is listed accordingly on separate parts of the assessrrent roll. The "secured roll" is that part of the assessrrent roll containing State-assessed public uti Ii ties property and real property, the taxes on which are a lien, sufficient, in the opinion of the County Assessor, to secure i:avrrent of the taxes. Other property is assessed on the "unsecured rol I." Property taxes on the secured roll are due in two installrrents, on NOJerrber 1 and February 1 of each fiscal year. If unpc1.id, such taxes become delinquent after Decerrber 10 and April 10, respectively, and a 1036 penalty attaches to any del i nquent pc1.yrrent. Del i nquent taxes must be pc1.i d b,t J une 30 to avoid additional penalties, which are equal to 1.5% per month on the unpc1.id base tax amount for eachJ une 3 Property taxes on the unsecured roll are mailed between March andJ uly of each fiscal year and are due upon receipt. If unpaid, such taxes becorre delinquent after August 31 and a 1036 penalty plus a $75 col Iecti on fee attaches to any deli nquent pc1.yrrent. Del i nquent taxes must be pc1.i d b,t Octolber 31 to avoid the filing of 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. B-19 Assessed valuation for revenue purposes increased 0y 3.1% in fiscal year 2016 overthe prior fiscal year. Such assessed valuations include secured and unsecured properties assessed 0y the Orange County Assessor, and secured utility properties assessed 0y the State Board of Equalization. Such assessed valuations exclude business inventory exemptions and exclude veterans, religious, charitable, and other such nonrecOJerabl e exempti ans. The table belcw shews the assessed valuations, total City tax levies, total current tax levy col Iecti ans, col Iecti on percentage, and per capita assessed valuation for the Iast ten corrpl eted fi seal years. The assessed valuation for fiscal year 2017 is $35,905,110. CITY OF ANAHEIM ASSESSEDVALUATIONANDTAX COLLECTION RECORD ($000) Percent of Fiscal Year Total Current Current Tax Per Capita Ended Assessed Total City Tax Levy La,y Population Assessed June 30 Valuation Tax Levy Collections 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 92 2015 33,539,662 38,365 37,456 97.6 351 96 2016 34,582,055 40,026 38,832 97.0 358 97 2017 35,905,110 40,787 39,710 97.4 359 100 Source: City of Anaheim Comprehensive Annual Finan:::ial Reports. Summarized belcw is a four-year history of property tax rates levied 0y the City and OJerlapping taxing agencies in a typical tax code area i n A nahei m [Remainder of page intentionally left blank.] B-20 Largest Property Taxpayers The ten Iargest property taxpayers i n A nahei m and thei r fi seal year 201 7-18 assessed valuations as of NOJerrber 2017 are as fol lo.vs: CITY OF ANAHEIM LARGEST PROPERTY TAXPAYERS 201 7-18 Assessed Property Owner Pri rrary Land Use ValLBtion % ofT01aII 1I 1. Walt Disney World Co. Theme Park $4,310,880,738 10.42% 2. H HC HA I rwestments 11 Inc. Commercial 207,586,783 0.50 3. AnaheimConcourselLP LLC Commercial 188, 150,828 0.45 4. US RE IF MG Madison Park CA LLC Apartments 126,337, 71 0 0.31 5. Irvine Company LLC Apartments 116,566,481 0.28 6. Teachers Insurance & Annuity Association Industrial 106,758,871 0.26 7. PrologisCalifornia I LLC Industrial 98,749,682 0.24 8. Gateway Apartments II LLC Apartments 94,448,772 0.23 9. Angeli LLC Commercial 93,946,440 0.23 10. OTR Commercial 92,868,097 0.22 11. PlatinumGateway Da-elopmentCompany LP Apartments 92,637,397 0.22 12. Mary Susan Samia Trust Commercial 92,171,970 0.22 13. Essex Anavia LP Residential Properties 89,108,486 0.22 14. Rreef America REIT II Corp. Industrial 79,484,691 0.19 15. AvalonAnaheimStadium LP Apartments 77,977,920 0.19 16. UDR 1818PlatinumLLC Apartments 77,792,309 0.19 17. Anaheim Angels LP Commercial 76,934,363 0.19 18. BEX Portfolio Inc. Apartments 74,782,275 0.18 19. GS Promenade LLC Apartments 74,087,744 0.18 20. W orl drrark, the CI ub Commercial 73,263,695 0.18 $6,244,535,252 15.09% (iJ 2017-18 Local Secured Assessed Valuation: $41,381,378,521 Source: California Municipal Statistics, Inc. Direct and Overlapping Debt For details of the long-term liabilities of the City, see "APPENDIX A-COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF ANAHEIM FOR THE FISCAL YEAR ENDED JUNE 30, 2017-Notes to Financial Statements-Note 8-Long-Term Liabilities." The direct and OJerlapping bonded de!:( of the City as of NOJerrber 1, 2017 is shewn belcw. The City is not obligated to pay any Orange County obligations otherthan those identified as applicable to the City. [Remainder of page intentionally left blank.] B-21 City of Anaheim Statement of Direct and Overlapping Debt 20l 7-l8Assessed Valuation: $43,277,778,283 OVERLAPPING TAX AND ASSESSMENT DEBT: % A[l!Jlicable Debt ll /l /17 Metropolitan Water Di strict l.577% $ l, 181,093 North OrangeJointCormunity College District 27.453 56,567,841 Rancho Santiago Cormunity College District 12.451 30,720,881 Rancho Santiago Cormunity College District School Facilities lrrproverrent District No. l 0.384 195,053 Anaheim Union High School District 67.590 79,437,821 Fullertonjoint Union High School District 0.249 303,213 Garden Grove Unified School District 0.576 1,892,391 Placentia-¥ orba Linda Unified School District 19.244 45,670,082 Anaheim School District 99.138 166,786,218 MagnoliaSchool District 67.359 14,679,752 Other School Districts Various 23,979,878 City of AnaheimCormunity Facilities Districts 100.000 66,960,000 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $ 488,374,223 DIRECT AND OVERLAPPING GENERAL FUND DEBT: Orange County General Fund Obligations 7.761% $ 17,223,677 Orange County Pen~on Obligation Bonds 7.761 21,634,516 Orange County Board of Education Certificates of Participation 7.761 l, 120,688 North Orange County Regional Occupation Program Certificates of Participation 28.265 2,716,267 Orange Unified School District Certificates of Participation 25.958 6,450,081 Orange Unified School District Benefit Obligations 25.958 20,990,937 Placentia-¥ orba Linda Unified School District Certificates of Participation 19.244 18,123,105 Anaheim Union High School District Certificates of Participation 67.590 26,093,120 Fullertonjoint Union High School District Certificates of Participation 0.249 48,087 Fullerton School District Certificates of Participation 0.166 8,574 City of Anaheim General Fund Obligations 100.000 606,340, 522"' TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT $ 720,749,574 Less: City of Anaheim Public Financing Authority (supported by various revenue funds) (606,340,522) TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT $ l 14,409,052 OVERLAPPING TAX INCREMENT DEBT (Successor Agency): Q 09 l-l 00.000% $ 193,967,398 GROSS COMBINED TOTAL DEBT $1,403,091, 195m NET COMBINED TOTAL DEBT $796,750,673 (7l ExclLdes the Bards. (21 Excl Ldes tax and revenue anti ci pa.ti on mtes, enterprise re.;enue, ITTJrtgage revenue bards ard mn--borded capital lease obi i gations. Qual ifi eel Zone Academy Bards are irr::ILded based on prirr::ipal due at maturity. Ratios to 20l 7-l8Assessed Valuation: Total Overlapping Tax and Assessrrent Debt l.13% Total Gross Direct Debt ($606,340,522) 1.40% Total NetDirectDebt ($0) 0.00% Gross Cambi ned Total Debt 3.24% NetCorruined Total Debt l.84% Ratios to Redevelg:,rrentSuccessor Agency Incremental Valuation ($5,906,607,701): Total Overlapping Tax I ncrerrent Debt 3.28% Source: California Municipal Statistics, Inc. B-22 APPENDIX C SUMMARY OF CERT Al N PROVISIONS OF THE INDENTURE AND THE AGREEMENT The follONing sumrary discussion of selected prOJisions of the Indenture and the Installment Purchase Agreement are rrade suqject to all the prc,,1isions of such documents. This sumrary discussion does not purportto be a corrpl ete statement of said provisions and prospective purchasers of the Bonds are referred to the corrplete texts of said documents, copies ofwiich are available upon request sent to the Trustee. DEFINITIONS "Additional I mprc,,1ements" means the imprOJements to the System described in the Installment Purchase Agreement. "Additional Obligations" means Obligations otherthan the Installment Purchase Agreement. "Adjusted System Net Revenues" means, for any period, the System Net Revenues for such period, less amounts, if any, transferred during such period from the Rate Stabilization Account to the System Revenue Fund. "Administrative Costs" means the ordinary and necessary adninistrative costs and incidental expenses related to the Obi i gati ons or payable pursuant to the Obi i gati ons or the debt i nstruments or other obligations payable from Obligation Payments, including, but not linited to, Obligation Trustee fees and expenses (incl udi ng any fees and expenses of Obi i gati on Trustee counsel), i ndernni fi cation payable pursuantto the Obi igati ons or the debt instruments or other obi i gati ons payabi e from Obi i gati on Payments and fees incurred in connection with the calculation of arbitrage rebate due to the federal government with respect to the Obi i gati ons. "Affiliate" of another Person means any Person directly or indirectly controlling, controlled 0y, or under common control with, such other Person; for purposes of the Installment Purchase Agreement, control means the paver to exercise a control Ii ng influence over the management or policies of a Person, unless such paver is solely the result of an official position with such Person. "Annual Debt Service'' means, for any Fiscal Year, with respect any Obligation, the Debt Service on such Obligation in such Fiscal Year. "Assumed Debt Service" means, for any period, for any Obligation, that portion of the Obligation Payments for such Obligation required to be rrade in such period. For purposes of calculating Assumed Debt Service, the follcwing assumptions shall be used: (a) in deterniningthe principal amount due in each period, payment shall be assumed to be rrade in accordance with any amortization schedule established for such Obligations, including any scheduled payment at maturity or rrandatory rederrption or prepayment of Obi i gati ons on the basis of accreted value and, for such purpose, the scheduled payment at rraturity or redemption payment or prepayment shal I be deemed a principal payment; (b) in determining the interest due in each period, interest payable at a fixed rate shall be assumed to be made at such fixed rate and on the required payment dates; C-1 (c) if any outstanding Obligations constitute Variable Rate Indebtedness, the interest rate on such Obi i gati ons shal I be assurred to be 11 036 of the rate of i nterest on such Obi i gati ans on the date of calculation; (cl) if Additional Obligations proposed to be incurred will be Variable Rate I ndebtedness, then such A dditi anal Obi i gati ans shal I be assurred to bear interest atthe rate quoted in the" 25 Revenue Bond Index" for the last week of the month preceding the date of sale of such Additional Obligations, as published in The Bond Buyer, or if that index is no longer published, another sinilar index selected b,t the City, or if the City fails to select a replacerrent index, an interest rate equal to 8036 of the yield for outstanding United States Treasury bonds having an equivalent rraturity as the Additional Obligations proposed to be issued, or if there are no such Treasury Bonds having equivalent rraturities, 8036 of the lcwest prevailing prirre rate of any of the five largest comrrercial banks in the United States, ranked b,t assets; ( e) if any outstanding Obi i gati ans constitute Bal I oon I ndebtedness ( and such Obligations do not constitute Short-Term Obligations excluded from the calculation of Assumed Debt Service pursuant to clause (h), belcw) or if Additional Obligations proposed to be incurred would constitute Balloon Indebtedness (and such Additional Obligations would not constitute 5 hort-T erm Obi i gati ans excl uded from the cal cul ati on of Assumed Debt Service pursuantto clause ( h) , bel cw), then such amounts as caisti tute Bal I oon I ndebtedness shal I be treated as if the pri nci pal amount of such Obi i gati ans were amortized from the date ori gi nal ly i ncurred in substantially equal i nstal I rrents of pri nci pal and i nterest over a term of 30 years; the interest rate used for such computation shall be the rate quoted in the" 25 Revenue Bond Index" for the lastweekofthe month preceding the date of calculation, as published in The Bond Buyer, or if that index is no longer published, another sinilar index selected b,t the City, or if the City fails to select a replacerrent index, an interest rate equal to 8036 of the yield for outstanding United States Treasury bonds having an equivalent rraturity as the Obligations on the date incurred, or if there are no such United States Treasury bonds having equivalent maturities, 8036 of the I cwest prevai Ii ng pri rre rate of any of the five largest comrrercial banks in the United States, ranked b,t assets; (f) if any outstanding Obligations constitute Credit Enhanced Obligations or if Additional Obligations proposed to be incurredwouldconstitute Credit Enhanced Obligations, then (x) Assurred Debt Service on such Obligations shall be deemed to include any periodic payrrent payable to the Credit Enhancer as a condition of the Credit Enhancer's standing ready to provide moneys necessary for payrrent to the holders of such Credit Enhanced Obligations, and (y) Assurred Debt Service on such Obi igati ans shal I not be based upon the terms of any rei mburserrent obi i gati ans to the Credit Enhancer except to the extent and for periods duri ng which payrrents have been required to be made pursuantto such rei mburserrent obi i gations due to the Credit Enhancer's acwanci ng funds and not being reimbursed; (g) if any outstanding Obligations constitute Option Obligations or if Additional Obi i gati ans proposed to be i ncurred would constitute Option Obi i gati ans, then (x) Assurred Debt Service on such Obligations shall not include amounts payable upon exercise b,t the holderthereof of the option to tender such Obligations for payrrent to the extent and for so long as a Liquidity Backer is required to prc,,1ide the moneys necessary for such payrrent, (y) Assurred Debt Service on such Obligations shall be deerred to include any periodic fees payable to the Liquidity Backer as a condition of the Liquidity Backer's standing ready to provide the moneys necessary for such payrrent, and (z) Assurred Debt Service on such Obligations shall not be based upon the terms of any rei mburserrent obi igation to the Liquidity Backer except to the extent and for periods during which payrrents have been requi red to be rrade pursuant to such rei mburserrent obi i gati on due to the Liquidity Backer acwancingfunds and being reimbursed; C-2 (h) if any outstanding Obligations constitute Short-Term Obligations or if Additional Obligations proposed to be incurred would constitute Short-Term Obligations, and such Short Term Obligations are or will be payalble only out of System Ra,enues of the Fiscal Year in which such Short-Term Obligations are incurred, then Debt Service on such Short-Term Obligations shall be disregarded and nct included in cal cul ati ng Assurred Debt Service; (i) if any outstanding Obligation constitutes a Financial Contract, then amounts i:avable b,t the City under such Financial Contract shall be included in calculatingAssurred Debt Service only if and to the extent that such amounts exceed amounts receivable b,t the City under such Financial Contract; if the interest rate applicable to i:ayrrents receivable b,t the City under such Financial Contract is a variable rate, such variable rate shall be calculated in accordance with clause ( c) , albo.!e; U) if any Additional Obligation proposed to be incurred will be a Financial Contract, then amounts payable b,t the City under such Financial Contract shall be included in calculating Assurred Debt Service only if and to the extent that such amounts exceed amounts receivable b,t the City under such Financial Contract; if the interest rate applicable to payrrents receivable b,t the City under such Financial Contract will be a variable rate, such variable rate shall be calculated in accordance with clause (cl), albo.!e; ( k) if amounts consti tuti ng accrued interest or capitalized interest have been deposited with an Obligation Trustee for Obligations, then the interest i:avable with respect to such Obi i gati ans from such amounts shal I be disregarded and not included in cal cul ati ng Assurred Debt Service; (I) if moneys or Defeasance Securities have been deposited b,t the City into a separate fund or account or are otherwise held b,t the City or b,t a fiduciary to be used to l'.0-Y Debt Service on specified Obi i gati ons, and such Obi i gati ans are discharged, or no I anger outstandi ng, pursuant to the terms of the i nstrurrent under which they are issued or arise, then the Debt Service to be paid from such moneys or Defeasance Securities, or from the earnings thereon, shal I be disregarded and not included in calculatingAssurred Debt Service; ( rn) the amount on deposit i n an Obi i gati on Reserve Fund on any date of cal cul ati on of Assurred Debt Service shall be deducted from the amount of principai due at the final maturity of the Obligations for which such Obligation Reserve Fund was established and in each preceding year until such amount is exhausted; and (n) with respect to Obi igati on Payrrents that are not comprised of separate i:ayrrents of interest and pri nci pai but which, rather, are requi red pursuant to the i nstrurrent under which they arise to be paid in amounts sufficient to pay pri nci pai and i nterest on bonds, notes or other obligations of an entity other than the City, for purposes of calculating Assumed Debt Service, interest payrrents and pri nci i:al i:ayrrents (whether at maturity or b,t rederrpti on or prei:ayrrent) with respect to such bonds, notes or other obi i gati ans shal I be deerred to be interest i:ayrrents and pri nci i:al i:ayrrents with respect to such Obi i gati on Payrrents. "Assumed Maximum Annual Debt Service" rreans, at any point in tirre, with respect to Obligations to be outstanding immediately after the incurring of the Obligations in connection with the incurrence of which Assurred Maximum Annual Debt Service is being calculated, the rrnxirnum amount of Assumed Debt Service on such Obligations in the then current or any future Fiscal Year. C-3 "Authority" rreans the Anaheim Housing and Public I rrprOJerrentsAuthority, ajoint exercise of pcwers authority organized and existing under and 0y virtue of the laws of the State, and any successor thereto. "Authority Bonds" rreans the Anaheim Housing and Public lmproverrents Authority Sewer Revenue Bands, Series 2018 issued under and pursuantto the Indenture. "Authority Revenues" means all lnstallrrent Payrrents. "Authorized Denominations" rreans $5,000 and any integral multiple of $5,000. "Authorized Representative'' means (a) with respect to the Authority, the Chairperson, the Vice Chairman, the Executive Di rector, the Treasurer, the Auditor and the Secretary of the Authority, and any other Person designated as an Authorized Representative of the Authority in a Written Certificate of the Authority filed with the Trustee, and (b) with respect to the City, the City Manager of the City, the Finance Director of the City, the Assistant Finance Director of the City and the Treasurer of the City, and any other Person designated as an Authorized Representative of the City in a Written Certificate of the City filed with the Trustee. "Balloon Indebtedness" means an Obligation 5036 or more of the principai of which matures or is payable on the sarre date and which is not required 0y the instrurrent pursuanttowhich such Obligation was incurred to be amortized 0y payrrent or redemption prior to such date. "Bond Counsel" means a firm of nationally recognized bond counsel selected 0y the Authority. " Bond Year" means the period from the Closing Date through February 1, 2018 and, thereafter, the twelve-month period comrrenci ng on February 2 of each year through and including February 1 of the fol I cwi ng year. "Bonds" means the Anaheim Housing and Public I mproverrentsAuthority Sewer Revenue Bands, Series 2018, issued underthe Indenture. "Book-£ ntry Bonds" rreans the Bonds registered in the narre of the noninee of DTC, or any successor securities depository for the Bonds, as the registered cwner thereof pursuant to the terms and prOJi si ons of the I ndenture. "Business Day" means a day which is not (a) a Saturday, Sunday or legal holiday in the State, (b) a day on which banking institutions in the State, or in any state in which the Office of the Trustee is located, are required or authorized 0y law (including executive order) to close, or (c) a day on which the NewY ork Stock Exchange is closed. "Cede & Co." rreans Cede& Co., the noninee of DTC, and any successor noninee of DTC with respect to the Bands. "Certified Financial Statements" rreans financial staterrents for the System Revenue Fund certified 0y the Director of Finance of the City or an Assistant Director of Finance of the City as being prepared in accordance with Generally Accepted Accounting Principles that are, except as noted, applied on a consistent basis with prior financial staterrents for the System "City" means the City of Anaheim, a municipal corporation and chartered city organized and existing under and 0yvirtue of its charter and the laws of the State, and any successorthereto. C-4 "Closing Date" rreans the date upon which the Bonds are delivered to the Original Purchaser. "Code" rreans the Internal Revenue Code of 1986. "Construction Costs" rreans all costs of acquiring, constructing and installing the Additional I rrprOJerrents, incl udi ng but not Ii ni ted to: (a) all costs which the City shall be required to l'.0-Y to a seller or any other Person under the terms of any contract or contracts for the purchase of any portion of the Addi ti anal I rnprOJerrents; (b) al I ca;ts which the City shal I be required to i:av a contractor or any other Person for the acquisition, construction and i nstal I ati on of any portion of the Addi ti anal I rnproverrents; (c) obligations of the City incurred for services (including obligations i:avable to the City for actual out -of-pocket expenses of the City) i n connection with the acquisition, construction and i nstal I ati on of the Additional lrnproverrents, including reirnburserrenttothe City for all acwances and i:ayrrents rrade in connection with the Addi ti anal I rnproverrents prior to or after issuance of the Bands; (cl) the actual out-of-pocket costs of the City for test borings, surveys, estirrates and prelininary investigations therefor, as well as for the perforrrance of all other duties required b,t or consequentto the proper acquisition, construction and i nstal Iati on of the Addi ti anal I rrproverrents; (e) Costs of Issuance, to the extent amounts for the i:ayrrent thereof are not available in the Costs of I ssuance Fund; and (f) any sums required to reimburse the Authority or the City for acwances rrade b,t the Authority or the City for any of the above items or for any other costs incurred and for work done b,t the Authority orthe City which are properly chargeable to the Addi ti anal I rnproverrents. "Construction Fund" rreans the fund b,tthat narre established pursuanttothe Indenture. "Continuing DisclosureAgreernent" rreans the Continuing DisclosureAgreerrent, dated as of January 1, 2018, b,t and between the City and U.S. Bank National Association, as Trustee, as originally executed and as it rray frorn ti rre to ti rre be arrended or supplerrented in accordance with the terms thereof. "Costs of Issuance" rreans all items of expense directly or indirectly i:ayable b,t or rei rnbursable to the Authority or the City relatingtothe authorization, issuance, sale and delivery of the Bonds, including but not limited to printing expenses, rating agency fees, filing and recording fees, initial fees, expenses and charges of the Trustee and its counsel, including the Trustee's first annual adni ni strative fee, fees, charges and disburserrents of attorneys, financial acwisors, accounting firms, consultants and other professionals, fees and charges for preparation, execution and safekeeping of the Bands, any prerni urn for bond insurance and any other cost, charge or fee in connection with the original issuance of the Bonds. "Credit Enhanced Obligations" rreans Obligations, the i:ayrrents with respect to which are secured b,t an irrevocable letter of credit, surety bond, insurance policy or other credit facility or arrangerrentwith an entity which the City is obligated to reimburse for acwances rrade for amounts due on such Credit Enhanced Obligations. "Credit Enhancer" rreans the entity issuing or providing the irre.1ocable letter of credit, surety bond, insurance policy or other credit facility or arrangerrent securing i:ayrrents with respect to Credit Enhanced Obligations. C-5 "Debt Service" rreans, for any period, for any Obligation, that portion of the Obligation Payrrents for such Obligation required to be rrade in such period, and; prc,,1ided, hcwever, that (a) if amounts constituting accrued interest or capitalized interest have been deposited with an Obligation Trustee for Obligations, then the interest i:ayable with respect to such Obligations from such amounts shall be disregarded and not included in calculating Debt Service, (b) if moneys or Defeasance Securities have been deposited b,t the City into a sei:arate fund or account or are otherwise held b,t the City or b,t a fiduciary to be used to l'.0-Y Debt Service on specified Obligations, and such Obligations are discharged, or no longer outstanding, pursuant to the terms of the instrurrent under which they are issued or arise, then the Debt Service to be i:aid from such moneys or Defeasance Securities, or from the earnings thereon, shall be disregarded and not included in calculating Debt Service, (c) interest incorre received on investrrent of moneys in an Obligation Reserve Fund and transferred to the City in such period shall, for the purposes of calculating Debt Service, offset interest payrrents and princii:al i:ayrrents with respect to such Obligation Payrrents required to be rrade in such period, (cl) the armunt on deposit in an Obligation Reserve Fund on any date of cal cul ati on of Debt Service shal I be deducted from the arnount of pri nci i:al due at the final rraturity of the Obligations for which such Obligation Reserve Fund was established and in each preceding year until such arnount is exhausted, and ( e) with respect to Obi igation Payrrents that are not comprised of sei:arate i:ayrrents of interest and pri nci i:al but which, rather, are required pursuant to the i nstrurrent under which they arise to be i:ai d i n amounts sufficient to pay pri nci pll and i nterest on bonds, notes or other obligations of an entity other than such City, for purposes of calculating Debt Service, interest i:ayrrents and principll i:ayrrents (whether at rraturity or b,t redemption or prepayrrent) with respect to such bonds, notes or other obligations shall be deerned to be interest payrrents and princii:al payrrents with respect to such OI:Hgation Payrrents. "Debt Service Fund" has the rreani ng ascribed to such terrn in the Indenture, pursuant to which the fund so defined is established. "Defeasance Securities" rreans (a) direct general obligations of the United States of Arrerica (including obligations issued or held in book entry forrnon the books of the Dei:artrrent of the Treasury of the United States of Arrerica) and(b) obligations of any agency, departrrentor instrurrentality of the United States of Arrerica the tirrely payrrent of princii:al of and interest on which are fully guaranteed b,t the United States of Arrerica. "DTC" rreans The Depository Trust Company, a linited--purpose trust comi:any organized under the laws of the State of New York, and its successors as securities depository for the Book-Entry Bonds, including any such successor appointed pursuant to the Indenture. "Electronic Means" rreans e--rrail, facsimile transnission, secure electronic transnission contai ni ng applicable authorization codes, passwords and/or authentication keys issued b,t the Trustee, or another rrethod or systern specified b,t the Trustee as avai Iable for use i n connection with its services under the I ndenture. "Escrcw Agreement" rreans the Escrcw Agreerrent, dated as ofJanuary 1, 2018, b,t and between the Anaheim Public Financing Authority and the Escrcw Bank, as originally executed and as it rray from ti rre to ti rre be amended or supplerrented in accordance with the terms thereof. "Escrcw Bank" rreans The Bank of NewY ork Mellon Trust Corni:any, N.A., as prior trustee and as escrcw bank, and any successor thereto. "Event of Default" rreans an event described in the I nstallrrent PurchaseAgreerrent. C--6 "Existing Improvements" means the improvements to the System described in the Installment Purchase Agreement. "Financial Contract" means any interest rate swap agreement, currency swap agreement, forward i:avment conversion agreement, future or contract entered into b,t the City with respect to any Obligation prc,,1iding for i:avment based on levels of, or changes in, interest rates, currency exchange rates, stock or other indices, or a contract entered into b,t the City with respect to any Obligation to exchange cash flews or a series of payments, or a contract entered into b,t the City with respect to any Obligation, including, without !irritation, interest rate floors or caps, options, rates or calls, to hedge payment, currency, rate, spread, or sirrilar exposure or any sirrilar contract entered into b,t the City with respect to any Obligation. "Fiscal Year" means the period beginningonJ uly 1 of each year andendingonthe next succeeding June 30, or any other twelve--rronth period selected and designated as the official Fiscal Year of the City. "Generally Accepted Accounting Principles" means the uniform accounting and reporting procedures set forth in publications of the American Institute of Certified Public Accountants or its successor, or b,t any other generally accepted authority on such procedures, and includes, as applicable, the standards set forth b,t the Governmental Accounting Standards Board or its successor. "Indenture" means the Indenture, elated as ofJanuary 1, 2018, b,t and between the Authority and U.S. Bank National Association, as Trustee, as originally executed and as it may be amended or supplemented from ti me to ti me b,t any Supplemental I ndenture. " I nstal I ment Payments" means the I nstal I ment Payments required to be made b,t the City pursuant to the I nstal Iment Purchase Agreement. "Installment Purchase Agreement" means the Installment Purchase Agreement, elated as of January 1, 2018, b,t and between the City and the Authority, as originally executed and as it may from time to ti me be amended or supplemented in accordance with the terms thereof. "Interest Account" has the meaning ascribed to such term in the Indenture, pursuanttowhich the account so defi ned is establ i shed. "Interest Payment Date" means February 1 andAugust 1 of each year, commencing August 1, 2018. "Letter of Representations" means the Letter of Representations from the Authority to DTC, or any successor securities depository for Book-Entry Bonds, in which the Authority makes certain representations with respect to issues of its securities for deposit b,t DTC or such successor depository. "Liquidity Backer" means any bank or other financial institution whose long term indebtedness is rated "AA" or better b,t S& P or whose long term indebtedness is rated "Aa'' or better b,t Moody's, such ratings to be deterrri ned without regard to any subcategory or modifier. " Moody's" means Moody's Investors Service, Inc., a corporation duly organized and existing under and b,t virtue of the laws of the State of Delaware, and its successors and assigns, except that if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term" Moody's" shal I be deemed to referto any other nati anally recognized securities rati ng agency selected b,t the Authority. C-7 "Net Proceeds" rreans, when used with respect to any insurance, self-insurance or condemnation award, the proceeds from such award rerraining after payrrent of all expenses (including attorneys' fees) incurred i n the col I ecti on of such proceeds. "Obligation Payments" rreans Senior Obligation Payrrents and Subordinate Obligation Payrrents. "Obligation Reserve Fund" means, with respect to an Obligation, any debt service reserve fund or account established to secure the i:avrrent of the Obligation Payrrents with respect to such Obligation or to secure the i:ayrrent of debt service on debt i nstrurrents or other obi i gati ons payable from the Obligation Payrrents with respect to such Obligation, as the case may be. "Obligation Trustee" rreans, with respect to an Obligation, the trustee, fiscal agent or other fiduciary authorized to act for the benefit and on behalf of the cwners of such Obligation orthe cwners of debt i nstrurrents or other obi i gati ons i:ayabl e from the Obi i gati on Payrrents with respect to such Obi i gati on, as the case rray be; the Trustee is an Obi i gati on Trustee. "Obligations" rreans Senior Obligations and Subordinate Obligations. "Office of the Trustee" means the princii:al corporate trust office of the Trustee in Los Angeles, California or such other or additional offices as may be specified to the Authority b,t the Trustee in writing and, with respect to presentation of Bonds for i:ayrrent or for registration of transfer and exchange, such term shall rrean the office or agency of the Trustee at which, at any particular tirre, its corporate trust agency busi ness shal I be conducted. "Operation and Maintenance Expenses" means, for any period, the reasonable and necessary costs spent or incurred b,t the City for rrai ntai ni ng and operating the System, calculated in accordance with General ly Accepted Accounting Pri nci pl es, incl udi ng ( a) al I reasonable expenses of managerrent and rei:ai r and all other expenses necessary to rraintain and preserve the System in good rei:air and working order, (b) all administrative costs of the City that are charged directly or apportioned to the operation of the System, such as salaries and wages of empl O{ees, overhead, taxes (if any) and i nsurance preni urns ( i ncl udi ng i:avrrents required to be pli d into any self insurance funds), ( c) al I other costs or charges required to be plid b,t the City to comply with the terms of the I nstallrrent Purchase Agreerrent or of any Obligation, including Administrative Costs, fees and expenses of Independent Certified Public Accountants and deposits to the Rebate Fund, and (cl) all other costs or charges which are expenses of operating or maintainingthe System in accordance with Generally Accepted Accounting Principles; but excluding in all cases (i) charges forthe payrrent of any Obligation Payrrents, (ii) costs of capital additions, replacerrents, betterrrents, extensions or imprOJerrents which under Generally Accepted Accounting Principles are chargeable to a capital account, (iii) depreciation, replacerrent and obsolescence charges or reserves therefor, amortization of intangibles and unrealized gains or losses due to rrarking assets and liabilities to market, and (iv) transfers from the System Revenue Fund to other funds or accounts of the City other than the adninistrative costs of the City described abOJe. "Opinion of Bond Counsel" rreans a written opinion of Bond Counsel. "Option Obligations" means Obligations which b,t their terms, or b,t the terms of the instrurrent pursuant to which they were incurred, rray be or are required to be tendered b,t and at the option of the holder thereof for i:ayrrent or purchase b,t the City or a third party prior to the stated rraturity thereof. "Original Purchaser" rreans the original purchaser of the Bonds from the Authority. C--8 "Outstanding'', when used as of any particular tirre with reference to Bonds, rreans (sul::iject to the prc,,1isions of the Indenture described underthe heading" MISCELLANEOUS - Disqualified Bonds'') al I Bands theretofore or thereupon executed b,t the Authority and authenticated and delivered b,t the Trustee pursuantto the I ndenture, except ( a) B ands theretofore canceled b,t the Trustee or surrendered to the Trustee for cancellation, (b) Bonds paid or deerred to have been i:aid within the rreaning of the provisions of the Indenture described underthe heading" DEFEASANCE," and (c) Bonds in lieu of which other Bonds shall have been executed b,t the Authority and authenticated and del ivered pursuant to the I ndenture. "Owner" rreans any Person who shall be the registered cwner of any Outstanding Bond, as shewn on the Registration Books. "Participant" rreans any entity which is recognized as a i:articii:ant b,t DTC in the book-entry system of maintaining records with respect to Book-Entry Bonds. "Participating Underwriter" has the rreani ng ascribed to such term in the Continuing Disclosure A greerrent. "Payment Dates" rreansJ anuary 25 andJ uly 25 of each year, comrrencingJ uly 25, 2018. "Permitted Investments" rreans the follcwing (1) (a) Direct obligations (other than an obligation sul::iject to variation in principal rei:ayrrent) of the U ni ted States of A rreri ca (" U nited States Treasury Obi i gati ons"), ( b) obi i gati ons fully and unconditionally guaranteed as totirrely i:ayrrent of princii:al and interest b,t the United States of Arrerica, (c) obligations fully and unconditionally guaranteed as to tirrely i:ayrrent of principal and interest b,t any agency or instrurrentality of the United States of Arrerica when such olbligations are backed b,t the full faith and credit of the United States of Arrerica, or (cl) evidences of cwnershi p of proportionate interests in future interest and pri nci i:al i:ayrrents on obi i gati ons descri bed above held b,t a bank or trust comi:any as custodian, under which the cwner of the investrrent is the real party in interest and has the rightto proceed directly and individually against the olbligor and the underlying gOJernrrent olbligations are not available to any person claining through the custodian or to whom the custodian may be olbl i gated. (2) Federal HousingAdninistration debentures. ( 3) The Ii sted obi i gati ons of gOJernrrent -5ponsored agencies which are not backed b,t the full faith and credit of the United States of Arrerica: Federal Horne Loan Mortgage Corporation ( FH L M C) Senior debt obligations and i:articii:ation certificates (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts) Farm Credit System ( forrrerly: Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives) Consoli dated system wide bonds and notes Federal Horne Loan Banks (FHL Banks) Consoli dated debt obi i gati ons Federal National Mortgage Association (FNMA) Senior debt obi i gati ons M ortgage--backed securities ( excl uded are stri pped mortgage securities which are purchased C--9 at prices exceedi ng their pri nci pl! amounts) ( 4) Unsecured certificates of deposit, ti rre deposits or other bank deposit products, and bankers' acceptances (having rraturities of not more than 365 days) of any bank, the short-term obi i gati ons of which are rated "A -1 -t'' or better b,t S& P and "Pri rre-1" b,t Moody's. ( 5) Deposits the aggregate amount of which are fully insured b,t the Federal Deposit Insurance Corporation, in banks which have capital and surplus of at least $15 nil lion. (6) Comrrercial paper (having original rraturities of not more than 270 days) rated at the ti rre of purchase" A -1 -t'' b,t S& P and "Pri rre-1" b,t Moody's. (7) Money market mutual funds rated "AAm'' or "AAm-G" b,t S& P, or better and, if rated b,t Moody's, rated "Aa2" or better, including a fund for which the Trustee, its parent holding company, if any, or any affi Ii ates or subsi diaries of the Trustee prOJi de transfer agency, custodial, i nvestrrent ad.ii sory or other rranagerrent services, and, sul::ij ect to the prior written consent of S& P and Moody's, the investrrent pool maintained b,t the county in which the Authority is located or other investrrent pools, in either case so long as such pool is rated in one of the two highest rating categories b,t S& P and M oody' s. (8) State Obligations, which rreans (a) Direct general obligations of any state of the United States of Arrerica or any subdivision or agency thereof to which is pledged the full faith and credit of a state the unsecured general obligation debt of which is rated at least "A3" b,t Moody's and at least "A.l.' b,t S& P, or better, or any obligation fully and unconditionally guaranteed b,t any state, subdivision or agency whose unsecured general obligation debt is so rated. (b) Direct, general short-term obligations of any state agency or subdivision or agency thereof descri bed i n ( a) albOJe and rated "A-1 -t'' b,t S& P and " M I G-1 " b,t Moody's. ( c) Special Revenue Bands (as defined in the United States Bankruptcy Code) of any state or state agency in (a) albOJe and rated "AA-'-' or better b,t S&P and "Aa3" or better b,t Moody's. (9) Pre-refunded municipli obligations rated "AA-t'' b,t S&P and "Aaa'' b,t Moody's meeting the fol Io.vi ng requi rerrents: (a) the munici pl! obi igations are (i) not sul::ijectto redemption prior to rraturity or (ii) the trustee for the municipal obligations has been given irrevocable instructions concerning their call and redemption and the issuer of the municipli obligations has cOJenanted not to redeem such municipal obligations other than as set forth in such instructions; (b) the municipal obligations are secured b,t cash or United States Treasury Obligations which may be applied only to payrrent of the principal of, interest and preniumon such municipli obligations; (c) the principal of and interest on the United States Treasury Obligations ( pl us any cash i n the escro.v) has been verified b,t the report of independent certified publ i c C-10 accountants to be sufficientto pay in full all principal of, interest, and premium, if any, due and to become due on the municipal obligations ("Verification Report"); (cl) the cash or United States Treasury Obligations serving as security for the municipal obligations are held b,t an escrcw agent or trustee in trust for cwners of the muni ci pal obi i gati ons; (e) no substitution of a United States Treasury Obligation shall be pernitted except with another United States Treasury Obligation and upon delivery of a new Verification Report; and (f) the cash or the United States Treasury Obligations are not available to satisfy any other cl ai ms, i ncl udi ng those b,t or agai nst the trustee or escrcw agent. ( 1O) Repurchase agreements: A. With (i) any domestic bank, or domestic branch of a foreign bank, the long term de!:( of which is rated at least "A.l.' b,t S&P and "Aa3" b,t Moody's; (ii) any broker deal er with " retai I customers'' or a related affi Ii ate thereof which broker-deal er has, or the parent company (which guarantees the prOJi der) of which has, I ong-term de!:( rated at Ieast "A.l.' b,t S&P and "Aa3" Moody's, which broker-dealer falls under thejurisdiction of the Securities Investors Protection Corporation; or (iii) any other entity rated at least "A.l.' b,t S&P and "A3" b,t Moody's (each, an" Eligible Provider''), prOJided that: a The (i) permitted collateral shall include U.S. Treasury Obligations, or senior debt obligations of GNMA, FNMA or FHLMC (no col Iateral i zed mortgage obi i gati ons shal I be perni tted for these prOJi ders), and (ii) col Iateral Ieve Is must be at Ieast 102% of the total pri nci pal when the col I ateral type is U .S. Treasury Obi i gati ons, 103% of the total pri nci pal when the col I ateral type is GNMAs and 104% of the total principal when the collateral type is FNMA and FHLMC ("Eligible Collateral"); b. The Trustee or a third party acting solely as agent therefor or for the Authority (the "Custodian") has possession of the collateral or the collateral has been transferred to the Custodian in accordance with applicable state and federal I aws ( other than b,t means of entries on the transferor's books); c. The collateral shall be marked to market on a daily basis and the prOJi der or Custodian shal I send monthly reports to the Trustee and the Authority setting forth the type of col I ateral, the col I ateral percentage required for that col Iateral type, the market val ue of the col Iateral on the val uati on date and the name of the Custodian hold ng the col I ateral; d. The repurchase agreement shal I state, and an opi ni on of counsel shall be rendered at the time such collateral is delivered that the Custodian has a perfected first priority security interest in the collateral, any substituted collateral and al I proceeds thereof; and e. The repurchase agreement shal I provide that if duri ng its term the prc,,1ider's rating b,t either Moody's or S&P is withdrawn or suspended or falls belcw "A-2' b,t S& P or "A3" b,t Moody's, as appropriate, the prOJider must, notify C-11 the Trustee and the Authority within five days of receipt of such notice. Within ten days of receipt of such notice, the prOJider shall either (i) post Eligible Col Iateral , or (ii) assign the agreement to an EI i g bl e Provider. I f the prOJi der does not perform a remedy wi thi n ten business days, the prOJi der shal I, at the direction of the Trustee or the Authority repurchase all collateral and terminate the repurchase agreement, with no penalty or preni um to the Trustee or the Authority. (11) Investment agreements with a domestic or foreign bank or corporation the long- term debt of which, or, in the case of a guaranteed corporation the long-term debt, or, in the case of a monoline financial guaranty insurance company, claims paying ability, of the guarantor is rated at least "AA" b,t S&P and "Aa3" b,t Moody's (each, an "Eligible Provider"); prc,,1ided, that, b,t the terms of the i nvestment agreement: (a) interest payments are to be made to the Trustee attimes and in amounts as necessary to pay debt service on the B ands; (b) the invested funds are available for withdrawal without penalty or prenium, at any time upon not more than seven days' prior notice; the Trustee and the Authority agree to give or cause to be given notice in accordance with the terms of the investment agreement so as to receive funds thereunder with no penalty or premium paid; (c) the provider shall send monthly reports to the Trustee and the Authority setting forth the balance the Authority or the Trustee has invested with the provider and the amounts and dates of i nterest accrued and paid b,t the provider; ( cl) the investment agreement shal I state that it is an unconditional and general obligation of the prc,,1ider, and is not subordinated to any other obligation of, the prc,,1ider thereof or, if the prc,,1ider is a bank, the agreement orthe opinion of counsel shall state that the obi i gati on of the prOJi der to make payments thereunder ranks pari passu with the obligations of the prc,,1ider to its other depositors and its other unsecured and unsubordi nated creditors; ( e) the Trustee and the Authority shal I receive an opinion of dornesti c counsel to the prOJi der that such investment agreement is I egal , valid and bi ndi ng and enforceable against the prOJi der in accordance with its terms; (f) the Trustee and the Authority shall receive an opinion of foreign counsel to the prc,,1ider (if applicable) that (i) the investment agreement has been duly authorized, executed and delivered b,t the provider and constitutes the legal, valid and binding obligation of the provider, enforceable against the prc,,1ider in accordance with its terms, (ii) the choice of I aw of the state set forth in the i nvestment agreement is valid under that country's laws and a court in such country would uphold such choice of law, and (iii) any judgment rendered b,t a court in the United States would be recognized and enforceable in such country; (g) the investment agreement shall provide that if during its term (i) the prc,,1ider's rating b,t either S&P or Moody's falls belcw "AA-2' or "Aa3", respectively, the prc,,1ider shall, at its option, within ten days of receipt of publication of such dONngrade, either (A) post Eligible Collateral with the Trustee, the Authority or a third party acting solely as agent therefor (the "Custodian") free and clear of any third party liens or claims, (B) assign the agreementtoan Eligible Provider, or (C) repay the principal of and accrued C-12 but unpc1.id interest on the investrrent, and (ii) the provider's rating 0y either S&P or Moody's falls belcw "A-'' or "A3", respectively, the provider must, atthe direction of the Trustee or the Authority, wi thi n ten days of recei pt of such direction, reply the pri nci pal of and accrued but unpc1.id interest on the investrrent, in either case with no penalty or preni um to the Trustee or the Authority; (h) in the event the provider is required to collateralize, permitted collateral shall include U.S. Treasury Obligations, or senior debt obligations of GNMA, FNMA or FH L MC ( no col Iateral i zed mortgage obi i gati ons shal I be perni tted for these prOJi ders) and collateral levels must be 102% of the total principc1.I when the collateral type is U.S. Treasury Obligations, 103% of the total principal when the collateral type is GNMAs and 104% of the total principc1.I when the collateral type is FNMA and FHLMC ("Eligible Collateral"). In addition, the collateral shall be marked to market on a daily basis and the prc,,1ider or Custodian shall send monthly reports to the Trustee and the Authority setting forth the type of col Iateral , the col Iateral percentage requi red for that col Iateral type, the market value of the collateral on the valuation date and the narre of the Custodian holding the col I ateral; (i) the investrrent agreerrent shall state, and an opinion of counsel shall be rendered, in the event collateral is required to be pledged 0y the prc,,1ider underthe terms of the i nvestrrent agreerrent, at the ti rre such col I ateral is del ivered, that the Custodian has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof; and U) the investrrent agreerrent must prOJide that if during its term (i) the prc,,1ider shall default in its payrrent obligations, the prOJider's obligations under the i nvestrrent agreerrent shal I, at the direction of the Trustee or the Authority, be accelerated and amounts invested and accrued but unpal d interest thereon shal I be repli d to the Trustee or the Authority, as appropriate, and (ii) the prc,,1ider shall become insolvent, not pay its debts as they become due, be declared or petition to be declared bankrupt, etc. ("event of insolvency"), the prc,,1ider's obligations shall automatically be accelerated and amounts invested and accrued but unpc1.id interest thereon shall be repel.id to the Trustee or the Authority, as appropriate. (12) lnvestrrents in the Local Agency lnvestrrent Fund created pursuant to Section 16429.1 of the California Governrrent Code provided, hcwever, that the Trustee may restrict investrrents in the Local Agency lnvestrrent Fund if required to keep monies available for the purposes of the Indenture. "Person" rreans an individual, a corporation, a pc1.rtnership, an association, a linited liability compc1.ny, a joint stock coITTP3-ny, a trust, any unincorporated organization or a gOJernrrent or political subdivision thereof. "Principal Account" has the rreaning ascribed to such term in the Indenture, pursuant to which the account so defi ned is establ i shed. "Prior Bonds" rreans the Anaheim Public Financing Authority Sewer Revenue Bonds, Series 2007, maturing on February 1 of each of the years 2019 through 2027, inclusive, 2033 and 2039 issued under and pursuant to the Prior Indenture. C-13 "Prior Indenture'' rreans the Indenture of Trust, dated as of May 1, 2007, b,t and between the Anaheim Public Financing Authority and The Bank of Ne.v Yark Trust Comi:any, N.A., as trustee, as originally executed and as it rray from tirre to tirre be arrended or supplerrented in accordance with its terms. "Purchased lmprOJements" rreans collectively, the Existing lrnprOJerrents and the Additional I mprOJerrents. "Rate Stabilization Account" means the account b,t that narre within the System Revenue Fund that rray be established and held b,t the City pursuanttothe I nstallrrent PurchaseAgreerrent. " Rebate Fund" has the rreani ng ascribed to such term in the Indenture, pursuanttowhi ch the fund so defined is establ i shed. "Rebate Requirement" has the rreaning ascribed to such term in the Tax Certificate. " Record Date" means the fifteenth day of the month preceding an Interest Payrrent Date, whether or not such day is a Busi ness Day. "Redemption Fund" has the rreaning ascribed to such term in the Indenture, pursuant to which the fund so defined is established. "Redemption Price" means the aggregate amount of princii:al of and premium, if any, on the Bands upon the redernpti on thereof pursuant to the Indenture. "Registration Books" rreans the records maintained b,t the Trustee for the registration of cwnershi p and registration of transfer of the Bands pursuant to the I ndenture. "Reserve Facility" means any line of credt, letter of credit, insurance policy, surety bond or other credit source deposited in lieu of cash in an Obligation Reserve Fund. "Reserve Facility Agreement" means the contract or agreerrent entered into b,t the City and the issuer of a Reserve Facility in connection with the issuance of such Reserve Facility prOJiding for the reimburserrent of such issuer for claims i:aid under such Reserve Facility, the payrrent of interest on the amounts so pli d and the i:avrrent of reasonable costs, expenses and other amounts. "Reserve Facility Costs" means, with respect to a Reserve Facility, interest on any claims plid under such Reserve Facility, as prOJidedtherein or in Reserve Facility Agreerrent entered into b,t the City and the issuer of such Reserve Facility in connection with the issuance of such Reserve Facility, and any other amounts i:ayabl e to such issuer pursuantto such Reserve Faci Ii ty or such Reserve Faci I ity A greerrent; prOJi ded, hcwever, that Reserve Faci Ii ty Costs shal I not i ncl ude amounts to rei rnburse such issuer for claims plid under such Reserve Facility. "Retained Earnings Account" rreans the account maintained b,t the City for the deposit and expenditure of, among other amounts, System Net Revenues retained b,t the City as retained earnings of the System. "S& P" rreans S& P Global Ratings, a corporation duly organized and existing under and bf virtue of the laws of the State of Ne.v Yark, and its successors and assigns, except that if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term C-14 "S& P" shal I be deemed to refer to any other nati anally recognized securities rating agency selected b,t the Authority. "Senior Obligation Payment Account" rreans the account b,t that narre within the System Revenue Fund established and held b,t the City pursuant to the I nstal I rrent Purchase Agreerrent. "Senior Obligation Payments" rreans the installrrent, lease or other i:ayrrents of interest and princii:al or, if there are no sei:arate payrrents of interest and princii:al, the installrrent, lease or other i:avrrents, i:ayable b,t the City under and pursuantto Senior Obi igations. "Senior Obligations" rreans the lnstallrrent PurchaseAgreerrent and all contracts or leases of the City authorized and executed b,t the City under and pursuant to applicable law, the installrrent, lease or other i:ayrrents under which are i:ayable from the System Net Revenues on a i:arity with the I nstal lrrent Payrrents. "Short-Term Obligations" means Obligations having an original maturity of less than or equal to one year and which are not renewable at the option of the City for a term greater than one year beyond the date of original incurrence. "State" rreans the State of California. "Subordinate Obi igation Payment Account" rreans the account b,t that narre within the System Revenue Fund to be established and held b,t the City pursuantto the I nstal I rrent Purchase A greerrent if the City has incurred Subordinate Obligations. "Subordinate Obligations" rreans all contracts or leases of the City authorized and executed b,t the City under and pursuant to applicable law, the installrrent, lease or other i:ayrrents under which are i:avable from the System Net Revenues on a basis that is junior and subordinate toe the i:ayrrent of Senior Obligation Payrrents. "Subordinate Obligation Payments" rreans the installrrent, lease or other i:ayrrents of interest and pri nci i:al or, if there are no sei:arate i:ayrrents of interest and pri nci i:al, the i nstal I rrent, I ease or other i:avrrents, i:ayabl e b,t the City under and pursuantto Subordinate Obi igati ons. " Supplemental I ndentu re'' rreans any suppl errental i ndenture arrendatory of or suppl errental to the Indenture, but only if and to the extentthat such Supplerrental Indenture is specifically authorized under the I ndenture. "System" rreans the whole and each and every i:art of the wastewater col I ecti on, conveyance, treatrrent and disposal facilities of the City, all real and personal property, or any interest therein, constituting a i:art thereof and all additions, irnprOJerrents, betterrrents and extensions thereto whether presently existing or hereafter acquired, constructed or i nstal I ed. "System Revenue Fund" rreans the account designated as the Sewer Maintenance Revenue Account or such other fund or account established and held b,t the City for the deposit of System Revenues pursuant to the I nstal I rrent Purchase Agreerrent. "System Net Revenues" rreans, for any period, the System Revenues for such period, less the Operation and Maintenance Expenses for such period. C-15 "System Pledged Revenues" means all System Revenues, including arrounts on deposit in the System Revenue Fund and the System Net Revenues on deposit in the Retained Earnings Account, incl udi ng the investments of such moneys. "System Revenues'' means, for any period, all gross income and revenue received or receivable b,t the City from the cwnership or operation of the System, deternined in accordance with Generally Accepted Accounting Principles, including the City's Sewer Maintenance Fee and all other fees (including connection fees), rates, charges and all arrounts paid under any contracts received b,t or cwed to the City in connection with the operation of the System and al I proceeds of insurance relating to the System and investment income allocable to the System and al I other income and revenue hcwsoever derived b,t the City from the cwnershi p or operation of the System or arising from the System, together with amounts, if any, transferred during such period from the Rate Stabi I i zati on Account to the System Revenue Fund; provided, hcwever, that System Revenues shall not include (a) refundable deposits made to establish credit and ad.lances or contributions i n aid of construction, or ( b) any devel oprnent fees which b,t I aw are not avai I able, or any grants which b,t I aw or the terms of the grant are not avai Iable, to pay Operation and Maintenance Expenses or Obi igations Payments. "Tax Certificate'' means the Tax Certificate executed b,t the Authority at the time of issuance of the Bonds relating to the requirements of Section 148 of the Code, as originally executed and as it may from ti me to ti me be amended or supplemented in accordance with the terms thereof. "Trustee" means U.S. Bank National Association, a national banking association organized and exi sti ng under and b,t vi rtue of the I aws of the U nited States of America, or any successor thereto as Trustee underthe Indenture, substituted therefor as provided in the Indenture. "Variable Rate Indebtedness" means any portion of any Obligation the interest rate on which is not establ i shed at the ti me of i ncurri ng such Obi i gati on and has not, at some subsequent date, been established at a rate which is not sul::iject to fluctuation or subsequent acjjustment. "Verification Report" means, with respect to the deemed payment of Bonds pursuant to the Indenture, a report of a nationally recognized certified public accountant, or firm of such accountants, verifying that the Defeasance Securities and cash, if any, deposited in connection with such deemed payment satisfy the requirements of the Indenture. "Written Certificate" and"Written Request" mean (a) with respect to the Authority, a written certificate or written request, respectively, signed in the name of the Authority b,t an Authorized Representative of the Authority, and (b) with respect to the City, a written certificate or written request, respectively, signed in the name of the City b,t an Authorized Representative of the City. Any such certificate or request may, but need not, be combined in a single instrument with any other instrument, opi ni on or representation, and the two or more so cornbi ned shal I be read and construed as a single instrument. INDENTURE Issuance of Bands Authorization and Purpose of Bonds; Linited Liability. (a) The Authority authorizes the issuance of the Bonds under and sul::iject to the terms of the Indenture and other applicable laws of the State. (b) The Bonds shall be linited obligations of the Authority and shall be payable solely from the Authority Revenues and the other assets pledged therefor under the Indenture. The Bonds do not C-16 constitute a debt or liability of the City or of the State of California and neither the faith and credit of the City nor of the State are pledged to the i:ayrrent of the pri ncii:al of, or interest on the Bonds. (c) Notwithstanding anything contained in the Indenture, the Authority shall not be required to advance any money derived from any source of i ncorne otherthan the Authority Revenues as prOJided in the I ndenture for the payrrent of the i nterest on or pri nci i:al of or redemption preni urns, if any, on the Bonds or for the performance of any agreerrents or covenants in the Indenture contained. The Authority may, hcwever, acwance funds for any such purpose so long as such funds are derived from a source legally avai Iable for such purpose without i ncurri ng an i ndebtedness. Registration Books. The Trustee shall keep or cause to be kept, at the Office of the Trustee, sufficient records for the registration and transfer of cwnershi p of the B ands, which shal I be open to inspection during regular business hours and upon reasonable notice b,t the Authority; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on such records, the cwnership of the Bonds. Transfer and Exchange of Bonds. (a) Any Bond may, in accordance with its terms, be transferred upon the Registration Books b,t the Person in whose narre it is registered, in person or b,t such person's duly authorized attorney, upon surrender of such Bond for cancellation, accomi:anied b,t delivery of a written instrurrent of transfer, duly executed in a form acceptable to the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and shal I deliver a new Bond or Bands of the same maturity in a Ii ke aggregate principal amount, in any Authorized Denomination. The Trustee shall require the Bond owner requesting such transfer to pay any tax or other gOJernrrental charge required to be pal d with respect to such transfer. ( b) The Bands may be exchanged at the Office of the Trustee for a Ii ke aggregate pri nci pal amount of Bonds of the same maturity of other Authorized Denominations. The Trustee shall require the i:avrrent b,t the Band owner requesting such exchange of any tax or other gOJernrrental charge required to be i:aid with respect to such exchange. (c) The Trustee shall not be obligated to make any transfer or exchange of Bonds pursuant to the prc,,1isions of the Indenture described under the heading "ISSUANCE OF BONDS - Transfer and Exchange of Bands" during the period established b,t the Trustee fort he selection of B ands for redemption, or with respect to any Bands selected for redernpti on. Boak-£ ntry B ands. ( a) The Bands shal I i ni ti al ly be issued as Boak-£ ntry B ands and the Bands of each maturity shall be in the form of a separate single fully registered Bond (which may be type.vritten). Except as prc,,1ided in i:aragraph (c) belcw, the registered owner of all of the Book-Entry Bonds shall be DTC and the Book-Entry Bonds shall be registered in the name of Cede& Co., as noninee of DTC. Notwithstanding anything to the contrary contained in the Indenture, i:ayrrent of interest with respect to any Book-Entry Bond registered as of each Record Date in the name of Cede & Co. shall be made bf wire transfer of sarre-day funds to the account of Cede & Co. on the i:ayrrent date forthe Book-Entry Bonds at the address indicated on the Record Date for Cede& Co. in the Registration Books or as otherwise prOJided in the Letter of Representati ans. (b) The Trustee and the Authority may treat DTC (or its nominee) as the sole and exclusive OWner of the Book-Entry Bonds registered in its narre for the purposes of i:ayrrent of the princii:al, preni um, if any, or i nterest with respect to the Boak-£ ntry B ands, sel ecti ng the B oak-£ ntry Bands or portions thereof to be redeerred, giving any notice pernitted or required to be given to owners of Book Entry Bonds under the Indenture, registering the transfer of Book-Entry Bonds, obtaining any consent or C-17 other action to betaken 0y owners of Book-Entry Bonds and for all other purposes whatsoeJer, and neither the Trustee nor the Authority shall be affected 0y any notice to the contrary. Neither the Trustee nor the Authority shall have any responsibility or obligation to any Participant, any person claiming a beneficial cwnership interest in the Book-Entry Bonds under or through DTC or any Participant, or any other person which is not shewn on the Registration Books as being an owner, with respect to the accuracy of any records maintained 0y DTC or any Participant, the P3-Yment 0y DTC or any Participant of any amount in respect of the principal, prenium, if any, or interest with respect to the Book-Entry Bonds, any notice which is permitted or required to be given to owners of Book-Entry Bonds underthe Indenture, the selection 0y DTC or any Participant of any person to receive payment in the event of a partial redemption of the Book Entry Bonds, or any consent given or other action taken 0y DTC as owner of Book-Entry Bonds. The Trustee shall pay all principal, prenium, if any and interest with respect to the Book-Entry Bonds, only to DTC, and all such payments shall be valid and effective to fully satisfy and discharge the Authority's obligations with respect to the principal, premium, if any, and interest with respect to the Book-Entry Bonds to the extent of the sum or sums so paid. Except under the conditions of paragraph (c) belcw, no person otherthan DT C shal I receive an executed Book-£ ntry B and for each separate stated maturity. U pon delivery 0y DTC to the Trustee ofwrinen notice to the effect that DTC has deternined to substitute a new nominee in place of Cede & Co., and sul::iject to the prc,,1isions in the I ndenturewith respect to record dates, the term "Cede & Co." in the Indenture shall refer to such new noninee of DTC. (c) In the event (i) DTC, including any successor as securities depository the Bonds, deternines not to continue to act as securities depository for the Bonds, or (ii) the Authority determines that the incumbent securities depository shall no longer so act, and delivers a written certificate to the Trustee to that effect, then the Authority will discontinue the book-€ntry system with the incumbent securities depository for the Bonds. If the Authority determines to replace the incumbent securities depository for the Bonds with another qualified securities depository, the Authority shall prepare or direct the preparation of a new si ngl e, separate ful ly registered Band for the aggregate outstandi ng pri nci pal amount of Bands of each maturity, registered i n the name of such successor or substitute qualified securities depository, or its nominee, or make such other arrangement acceptable to the Authority, the Trustee and the successor securities depository for the Bands as are not inconsistent with the terms of the Indenture. If the Authority fai Is to identify another qual i fi ed successor securities depository for the Bands to replace the incumbent securities depository, then the Bonds shall no longer be restricted to being registered in the Regi strati on B oaks i n the name of the i ncumbent securities depository or its noni nee, but shal I be registered in whatever name or names the incumbent securities depository for the Bonds, or its nominee, shall designate. In such event the Authority shall execute, and deliver to the Trustee, a sufficient quantity of Bonds to carry out the transfers and exchanges provided in the Indenture. All such Bonds shall be in fully registered form in denoni nati ans authorized 0y the I ndenture. (cl) Notwithstanding any other prc,,1ision of the I ndenturetothe contrary, so long as any Book- Entry Bond is registered in the name of DTC, or its nominee, all payments with respect to the principal, preni um, if any, and interest with respect to such Boak-£ ntry B and and al I notices with respect to such Book-Entry Bond shall be made and given, respectively, as prc,,1ided in the Lener of Representations. (e) In connection with any notice or other communication to be provided to owners of Book- Entry Bonds pursuanttothe Indenture 0y the Authority or the Trustee with respect to any consent or other action to be taken 0y owners, the Authority or the Trustee, as the case may be, shall establish a record date for such consent or other action and give DTC notice of such record date not less than 15 calendar days in ad.lance of such record date to the extent possi bl e. Mutilated. Destrcyed, Stolen or Lost Bonds. (a) If any Bond shall become mutilated, the Trustee, at the expense of the owner thereof, shall thereupon authenticate and deliver a new Bond of like maturity and Authorized Denonination in exchange and substitution for the Bond so mutilated, but only upon C-18 surrender, at the Office of the Trustee, of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled b,t the Trustee and delivered to, or upon the order of, the Authority. ( b) If any Bond shal I be I ost, destrO{ed or stolen, evidence of such Ioss, destruction or theft may be subnined to the Trustee and, if such evidence be satisfactory to the Trustee and indemnity satisfactory to the Trustee shall be given, the Trustee, at the expense of the owner, shall thereupon authenticate and deliver a new Bond of like maturity and Authorized Denomination in lieu of and in substitution forthe Bond so lost, destrO{ed or stolen. (c) The Trustee may require i:ayment of a reasonable sum for each new Bond issued underthe prc,,1isions of the Indenture described underthe heading" ISSUANCE OF BONDS - Mutilated, DestrO{ed, Stolen or Lost Bonds" and of the expenses which may be incurred b,t the Authority and the Trustee in the prenises. Any Bond issued underthe prc,,1isions of the Indenture described underthe heading "ISSUANCE OF BONDS - Mutilated, DestrO{ed, Stolen or Lost Bonds" in lieu of any Bond alleged to be lost, destrO{ed or stolen shall be equally and proportionately entitled to the benefits of the Indenture with all other Bonds secured b,t the Indenture. Neither the Authority nor the Trustee shall be required to treat both the original Bond and any replacement Bond as being Outstanding for the purpose of determining the pri nci i:al amount of Bands which may be issued under the Indenture or for the purpose of deterni ni ng any percentage of Bonds Outstanding under the Indenture, but both the original and replacement Bond shall be treated as one and the same. Temporary Bonds. The Bonds issued under the Indenture may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such Authorized Denoninations as may be deternined b,t the Authority, shall be in fully registered form and may contain such reference to any of the prc,,1isions of the Indenture as may be appropriate. Every temporary Bond shall be executed and authenticated in accordance with the terms of the Indenture. If the Authority issues temporary Bonds it will execute and furnish definitive Bands with out delay and thereupon the temporary Bands shal I tie surrendered, for cancel Iati on, at the Office of the Trustee, and the Trustee shall deliver in exchange for such temporary Bonds an equal aggregate princii:al amount of definitive Bonds of Authorized Denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under the Indenture as definitive Bonds delivered under the I ndenture. Security for Bonds; Flew of Funds; Investments Pledge of Authority Revenues. (a) Sul::iject only to the provisions of the Indenture pernining the application thereof for the purposes and on the terms and conditions set forth i n the I ndenture, al I Authority Revenues and amounts on deposit i n the funds and accounts established underthe I ndenture ( otherthan the Rebate Fund) are i rrevocably pl edged to the i:ayment of the interest on and pri nci i:al of the Bands as prOJi ded in the I ndenture, and the Authority Revenues shal I not be used for any other purpose whi I e any of the Bands remai n Outstandi ng. (b) In order to secure the pledge of the Authority Revenues contained in the Indenture described underthe heading "SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS - Pledge of Authority Revenues," the Authority transfers, conveys and assigns to the Trustee, for the benefit of the OWners, all of the Authority's rights under the Installment Purchase Agreement (excepting its right to indemnification and its right to receive notices thereunder), including the right to receive Installment Payments and the right to exercise any remedies provided therein in the event of a default b,t the Authority thereunder. The Trustee accepts said assignment for the benefit of the owners, sul::iject to the prc,,1isions of the I ndenture. C-19 (c) The Trustee shall be entitled to and shall receive all of the Authority Revenues, and any Authority Revenues collected or received 0y the Authority shall be deerred to be held, and to have been collected or received, 0y the Authority as agent of the Trustee and shall forthwith be i:aid 0y the Authority to the Trustee. Establishrrent of Funds and Accounts. The Trustee shall establish and rraintain the follcwing special trust funds to be held 0y the Trustee: the "Anaheim Housing and Public I rrprOJerrents Authority Se.ver Revenue Bonds, Series 2018 Debt Service Fund' (the "Debt Service Fund"), the "Anaheim Housing and Public lmproverrents Authority Se.ver Revenue Bonds, Series 2018 Redemption Fund' (the "Rederrption Fund') and the "Anaheim Housing and Public lmproverrents Authority Se.ver Revenue Bonds, Series 2018 Rebate Fund' (the "Rebate Fund"). Within the Debt Service Fund the Trustee shall establish and rraintain an I nterestAccount (the "I nterestAccount'') and a Princii:al Account (the "Principal Account''). Receipt and Deposit of Authority Revenues in the Debt Service Fund. (a) In orderto carry out and effectuate the p edge contai ned in the I ndenture, the Authority agrees and cOJenants that al I Authority Revenues when and as received shall be received in trust under the Indenture forthe benefit of the owners and shall be deposited when and as received in the Debt Service Fund. All Authority Revenues shall be accountedforthrough and held in trust in the Debt Service Fund, and the Authority shall have no beneficial right or interest in any of the Authority Revenues except only as prOJided in the Indenture. All Authority Revenues, whether received 0y the Authority in trust or deposited with the Trustee as prOJided in the Indenture, shall nevertheless be allocated, applied and disbursed solely to the purposes and uses set forth in the Indenture, and shal I be accounted for sei:arately and ai:art from al I other accounts, funds, money or other resources of the Authority. (b) All I nstallrrent Payrrents i:aid 0y the City shall be deposited, as and when received 0y the Trustee, in the Debt Service Fund and shall be allocated, applied and disbursed as prOJided in the Indenture. Establishrrent and Maintenance of Accounts for Use of Money- in the Debt Service Fund. (a) All money i n the Debt Service Fund shal I be set aside 0y the Trustee in the fol I cwi ng respective special accounts within the Debt Service Fund in the follcwing order of priority: (i) Interest Account, and (ii) Principal Account. All money in each of such accounts shall be held in trust 0y the Trustee and shall be applied, used and withdrawn only for the purposes authorized in the Indenture. (b) On each Interest Payrrent Date, the Trustee shall transfer from the Debt Service Fund and deposit in the Interest Account an amount equal to the aggregate amount of interest beconing due and payable on all Outstanding Bonds on such Interest Payrrent Date. No deposit need be rrade in the Interest Account if the amount contai ned in the I nterest Account is at I east equal to the aggregate amount of i nterest becoming due and payable on all Outstanding Bonds on such Interest Payrrent Date. All money in the I nterest Account shal I be used and with drawn 0y the Trustee solely for the purpose of i:ayi ng the interest on the Bonds as it shall become due and i:ayable (including accrued interest on any Bonds purchased or redeerred prior to rraturity). ( c) After havi ng made the transfers requi red pursuant to the preceding i:aragraph, the Trustee shall, on February 1 of each year transfer from the Debt Service Fund and deposit in the Principal Account the amount, if any, necessary to cause the amount on deposit in the Principal Account to be equal to the C-20 pri nci i:al, if any, due on the Bands on such February 1, i ncl udi ng pri nci i:al due and payable 0y reason of mandatory sinking fund redemption of such Bonds. No deposit need be made in the Principal Account if the amount contained therei n is at I east equal to the pri nci i:al, if any, due on the Bands on such February 1, including principal due and i:ayable 0y reason of mandatory sinking fund redemption of such Bonds. All money in the Pri nci i:al Account shal I be used and withdrawn 0y the Trustee solely forthe purpose of i:ayi ng the principal of the Bonds as it shall become due, including princii:al due and i:ayable 0y reason of mandatory sinking fund redemption of such Bands. Rederrption Fund. Any moneys which, pursuanttothe Installment Purchase Agreement, are to be used to redeem Bonds pursuant to the provisions of the Indenture described under the heading "REDEMPTION OF BONDS- Optional Redemption" shall be deposited 0ytheTrustee in the Redemption Fund. The Trustee shall, on the scheduled redemption date, withdraw from the Redemption Fund and l'.0-Y to the owners entitled thereto an amount equal to the Redemption Price of the Bonds to be redeemed on such date. Rebate Fund. (a) There shall be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuanttothe Tax Certificate, as specified in a Written Request of the City. All money at any time deposited in the Rebate Fund shall be held 0y the Trustee in trust, to the extent required to satisfy the Rebate Requi rement, for i:ayment to the U ni ted States of America Notwi thstandi ng defeasance of the Bonds pursuanttothe prOJisions of the Indenture described underthe headng "DEFEASANCE" or anything to the contrary contained in the Indenture, al I amounts required to be deposited into or on deposit in the Rebate Fund shall be gc,,1erned exclusively 0y the provisions of the Indenture described under the heading "SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS - Rebate Fund' and 0y the Tax Certificate (which is incorporated in the Indenture 0y reference). The Trustee shall be deemed conclusively to have complied with such provisions if it fol lo.vs the written directions of the City, and shall have no liability or responsibility to enforce compliance 0y the Authority or the City with the terms of the Tax Certificate. The Trustee may conclusively rely upon the City's deterninations, calculations and certifications required 0y the Tax Certificate. The Trustee shall have no responsibility to independently make any calculation or determination or to revie.v the City's calculations. (b) Any funds remaining in the Rebate Fund after i:ayment in full of all of the Bonds and after i:avment of any amounts described in the Indenture underthe heading"SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS - Rebate Fund," shall be withdrawn 0y the Trustee and renitted to the Authority. Costs of Issuance Fund. (a) The Trustee shall establish and maintain a sei:arate fund designated the "Costs of Issuance Fund." On the Closing Date, the Trustee shall deposit in the Costs of Issuance Fund the amount required to be deposited therein pursuant to the Indenture. (b) The moneys in the Costs of Issuance Fund shal I be used and withdrawn 0y the Trustee from time to time to pay the Costs of Issuance upon subnission of a Written Request of the City stating (i) the Person to whom payment is to be made, (ii) the amount to be i:aid, (iii) the purpose for which the obligation was incurred, (iv) that such i:ayment is a proper charge againstthe Costs of Issuance Fund, and (v) that such amounts have not been the sul::iject of a prior disbursement from the Costs of Issuance Fund, in each case together with a statement or i nvoi ce for each amount requested thereunder. I f, on the Iast Business Day that is no later than six months after the Closing Date, any amount remains in the Costs of Issuance Fund, the Trustee shall transfer said amount to the Interest Account and the Costs of Issuance Fund shal I be closed. C-21 Construction Fund. (a) The Trustee shall establish and rraintain a separate fund designated the "Construction Fund." On the Closing Date, the Trustee shall deposit in the Construction Fund the amount required to be deposited therei n pursuant to the I ndenture. (b) The moneys in the Construction Fund shall be used and withdriM'n 0y the Trustee from tirre totirre to pay the Construction Costs upon submission of a Written Request of the City stating (i) the Person to whom payrrent is to be rrade, (ii) the arnountto be paid, (iii) the purpose for which the obligation was incurred, (iv) that such payrrent is a proper charge against the Construction Fund, and (v) that such amounts have not been the sul::ij ect of a prior di sburserrent from the Construction Fund, in each case together with a staterrent or invoice for each amount requested thereunder. (c) Upon the filing of a Written Certificate of the City stating (i) that the portion of the Additional I rnprOJerrents to be financed from the Construction Fund has been completed and that all costs of such Additional I rnprOJerrents have been paid, or (ii) that such portion of the Additional I rnprOJerrents has been substantially completed and that all remaining costs of such portion of the Additional I rnprOJerrents have been determined and specifying the amount to be retained therefor, the Trustee shal I (A) if the amount rerraining in the Construction Fund (less any such retention) is equal to or greater than $25,000, transfer the portion of such amount equal to the largest integral multiple of $5,000 that is not greater than such amount to the Redernpti on Fund, to be applied to the rederrpti on of Bands, and ( B) after rraking the transfer, if any, required to be rrade pursuant to the preceding clause (A), transfer all of the amount rerraining in the Construction Fund (less any such retention) to the I nterestAccount, to be applied to the payrrent of i nterest on the B ands. lnvestrrent of Moneys in Funds and Accounts. (a) Moneys in the funds and accounts established under the Indenture and held 0y the Trustee shall, in accordance with a Written Request of the City, be invested 0y the Trustee in Permitted I nvestrrents. In the absence of a Written Request of the City, the Trustee rray invest moneys in such funds and accounts in Pernitted I nvestrrent described in subparagraph (7) of the definition of Permitted I nvestrrents; provided, hcwever, that any such i nvestrrent shal I be rrade 0y the Trustee only if, pricr to the date on which such investrrent is to be rrade, the Trustee shall have received a Written Request of the City specifying a specific money rrarket fund and, if no such Written Request of the City is so received, the Trustee shall hold such moneys uninvested. The obligations in which moneys in the said funds and accounts are invested shall mature prior to the date on which such moneys are esti mated to be requi red to be paid out under the I ndenture. The Trustee may act as pri nci pal or agent in the acquisition or disposition of Pernitted lnvestrrents. For investrrent purposes only, the Trustee may comni ngle the funds and accounts established underthe Indenture. The Trustee shal I incur no I iabi lity for losses arising from any investrrents rrade pursuant to the prOJisions of the Indenture described under the heading "SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS - lnvestrrent of Moneys in Funds and Accounts." (b) Sul::iject to the provisions of the Indenture described underthe heading "SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS - Rebate Fund," all interest, profits and other incorre received from the i nvestrrent of moneys in any fund or account established pursuant to the Indenture shal I be retained therei n. (b) For purposes of determining the amount of deposit in any fund or account held under the Indenture, al I Pernitted I nvestrrents credited to such fund or account shall be valued at the rrarket value (excluding accrued interest and brokerage comnissions, if any). The Trustee shall, on or before February I and August 1 of each year, value the investrrents in such funds and accounts on the basis of the market val ue thereof. C-22 (c) The Authority (and the City b,t execution of the Installment Purchase Agreement) ackncwledges that to the extent regulations of the Corrptroller of the Currency or other applicable regulatory entity grant the Authority or the City the right to receive brokerage confirrrations of security transactions as they occur, the Authority and the City specifically waive receipt of such confirrrations to the extent pernined b,t law. The Trustee will furnish the Authority and the City periodic cash transaction statements which shall include detail for all investment transactions rrade b,t the Trustee under the Indenture. COJenants of the Authority Punctual Payment and Perforrrance. The Authority shall punctually pay the interest on and the pri nci pal of and preni urns, if any, to become due on every Bond issued under the I ndenture i n strict confornity with the terms of the Indenture and of the Bonds, and shall faithfully observe and perform all the agreements and cOJenants contai ned in the I ndenture and i n the Bands. Installment Purchase Agreement and Other Documents. The Authority shall at all times rraintain and vigorously enforce all of its rights under the Installment Purchase Agreement, and shall promptly collect all Installment Payments as the same become due under the Installment Purchase Agreement, and shal I prorrptly and vigorously enforce its rights against the City if it does not pay such I nstal I ment Payments as they become due under the Installment Purchase Agreement. The Authority shall not do or perrnit anything to be done, or ornit or refrain frorn doing anything, in any case where any such act done or pernined to be done, or any such onission of or refraining frorn action, would or night be a ground for cancellation or ternination of the Installment Purchase Agreement b,t the City. Accounting Records and Reports. The Authority shall keep or cause to be kept proper books of record and accounts in which corrplete and correct entries shall be rrade of all transactions relating to the receipts, disbursements, allocation and application of the Authority Revenues, and such books shall be avai Iable for i nspecti on b,t the Trustee, at reasonable hours and under reasonable conditions. Other Liens. The Authority shall keep the Authority Revenues free frornall liens, claims, derrands and encumbrances of whatsoever prior nature or character to the end that the security for the Bands prOJi ded in the Indenture shall at all times be maintained and preserved free frornany clairn or liability which, in the judgment of the Trustee (and its determination thereof shall be final), night harnper the security of the Bands, and the Trustee at its option rray ( but shal I not be obi i gated to) defend agai nst any and al I actions or proceedings in which the validity of the Indenture is or rnight be questioned, or rray pay or cornpronise any clairn or derrand asserted in any such action or proceeding; provided, hcwever, that in defending such actions or proceedi ngs or i n payi ng or cornprorni si ng such cl ai ms or derrands the Trustee shal I not i n any event be deemed to have waived or released the Authority frorn liability for or on account of any of its agreements and cOJenants contained i n the I ndenture, or frorn its I i abl Ii ty underthe I ndenture to def end the validity of the Indenture and the pledge of the Authority Revenues rnade in the Indenture and to perform such agreements and cOJenants. Aqai nst Encurnbrances; Prosecution and Defense of Pledge. The Authority shal I not create, or pernitthe creation of, any pledge of, lien on, security interest in or charge or other encumbrance upon the assets pl edged underthe I ndenture, except as perni ned underthe I ndenture. The Authority shal I at al I ti mes, to the extent pernined b,t law, defend, preserve and protect said pledge of such assets, and the lien thereon and security interest therein created b,t the Indenture, against al I claims and derrands of al I Persons whomsoever. Tax COJenants. (a) The Authority shall not take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion frorn gross income of interest on the C-23 Bonds under Section 103 of the Code. Without limiting the generality of the foregoing, the Authority shall comply with the requirements of the Tax Certificate, which is incorporated in the Indenture as if fully set forth in the Indenture. This cOJenant shall survive payment in full or defeasance of the Bonds. (b) In the event that at any time the Authority is of the opinion that for purposes of the Indenture as described under the heading "COVENANTS OF THE AUTHORITY - Tax Covenants" it is necessary or helpful to restrict or limit the yield on the investment of any moneys held b,t the Trustee in any of the funds or accounts established underthe Indenture, the Authority shal I so instruct the Trustee in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions. (c) Notwithstanding any prOJisions of the Indenture as described under the heading "COVENANTS OF THE AUTHORITY - Tax Covenants'' if the Authority shall provide to the Trustee an Opinion of B and Counsel to the effect that any specified action required under I ndenture as descri bed under the heading "COVENANTS OF THE AUTHORITY - Tax COJenants" is no longer required or that sorre further or different action is required to maintain the exclusion from federal incorre tax of interest on the Bonds, the Trustee may conclusively rely on such opinion in complying with the requirements of the prc,,1isions of the Indenture described under the heading "COVENANTS OF THE AUTHORITY - Tax COJenants" and of the Tax Certificate, and the cOJenants under the Indenture shall be deemed to be modified to that extent. Continuing Disclosure. The Trustee shall comply with and carry out all of the provisions of the Continuing Disclosure Agreement applicable to it. Notwithstanding any other prOJision of the Indenture or the Installment Purchase Agreement, failure of the Trustee to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; prc,,1ided, hcwever, that the Trustee may (and, at the written direction of any Participating Underwriter or the holders of at least 25% aggregate principal amount of Outstandi ng Bands, and upon i ndernni fi cation of the Trustee to its reasonable satisfaction, shal I) or any owner or Benefi ci al owner of the B ands may, take such acti ans as may be necessary and appropriate to compel performance, i ncl udi ng seeking mandate or specific performance b,t court order. Annual Reports and Notifications Required b{ the Bond Law. If at any time the Trustee fails to pay principal or interest due on any scheduled payment date for the Bonds, the Trustee shall notify the Authority in writing of the occurrence of such event and, in accordance with Section 6599.l(c) of the California Government Code, the Authority shall notify the California Debt and Investment AdJisory Comnission of the occurrence of such event within 10 days of such occurrence. Further Assurances. Whenever and so often as requested to do so b,t the Trustee, the Authority shal I prorrptly execute and deliver or cause to be executed and delivered al I such other and further assurances, documents or instruments, and prorrptly do or cause to be done al I such other and further things as may be necessary or reasonably required in order to further and more fully vest in the owners al I rights, interests, pcwers, benefits, privileges and adJantages conferred or intended to be conferred upon them b,t the I ndenture. Events of Default and Remedies Events of Default. The follcwing shall be Events of Default under the Indenture, and Event of Default shall mean any one or more of the follcwing events: (a) if default shall be made in the due and punctual payment of the interest on any Bond when and as the same shal I becorre due and payable; C-24 (b) if default shall be made in the due and punctual payment of the principc1.I of or prenium, if any, on any Bond when and as the same shall become due and pc1.yable, whether at rraturity as therein expressed or b,t proceedi ngs for rederrpti on; (c) if default shall be rrade b,t the Authority in the perforrrance of any of the other agreements or cOJenants required in the Indenture to be performed b,t the Authority, and such default shal I have continued for a period of 30 days after the Authority shal I have been given notice in writing of such default b,t the Trustee; provided, hcwever, that such default shall not constitute an Event of Default under the Indenture if the Authority shall commence to cure such default within such 30 day period and thereafter diligently and in good faith shall proceed to cure such default within a reasonable period ohime; (cl) if any Event of Default shall have occurred and be continuing under the Installment Purchase Agreement; or (e) if the Authority shall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the Authority seeking arrangement or reorganization under the federal bankruptcy I aws or any other appl i cable law of the United States of America or any state therein, or if underthe prOJisions of any other law for the relief or aid of debtors any court of cornpetentjurisdiction shall assume custody or control of the Authority or of the whole or any substantial pc1.rt of its property. Proceedings b{ Trustee. Upon the happening and continuance of any Event of Default, the Trustee in its discretion rray, and atthewritten request of the owners of not less than 25% in aggregate amount of Bonds Outstanding shall (but only to the extent indemnified to its satisfaction from fees and expenses, including attorneys' fees), do the follONing: (a) b,t rrandarnus, or other suit, action or proceeding at law or in equity, enforce all rights of the owners and require the Authority to enforce all rights of the owners of Bonds, including the right to require the Authority to receive and collect Authority Revenues and to enforce its rights under the I nstal Iment Purchase Agreement and to require the Authority to carry out any other cOJenant or agreement with owners of Bonds and to perform its duties under the Indenture, (b) bring suit upon the Bands; ( c) b,t action or suit i n equity er)j oi n any acts or thi ngs which rray be uni awful or in violation of the rights of the owners; and (cl) to have a receiver or receivers appointed for the Authority Revenues and the issues, earnings, income, products and profits thereof, pending such proceedings, with such pcwers as the court rraki ng such appoi ntment shal I confer. Effect of Discontinuance or Abandonment. I n case any proceeding taken b,t the Trustee on account of any default or Event of Default shall have been discontinued or abandoned for any reason, or shall have been deterni ned acwersely to the Trustee, then and in every such case the Authority, the City, the Trustee and the owners shal I be restored to thei r former positions and rights underthe I ndenture, respectively, and al I rights, remedies and pcwers of the Trustee shal I continue as though no such proceedi ng had been taken. Rights of owners. Anything in the Indenture to the contrary notwithstanding, sul::iject to the Ii ni tati ons and restrictions as to the rights of the owners in the I ndenture, upon the happeni ng and continuance of any Event of Default, the owners of not less than 25% in aggregate amount of Bands then C-25 Outstanding shal I have the right upon providing the Trustee security and i ndemni ty reasonably satisfactory to it against the costs, expenses and liabilities to be incurred therein or there0y, b,t an instrument in writing executed and del ivered to the Trustee, to direct the method and pl ace of conducting al I remedial proceedi ngs to be taken b,t the Trustee under the I ndenture. The Trustee may refuse to foll cw any direction that conflicts with law or the Indenture or that the Trustee deterni nes is pr~ udi ci al to rights of other owners or would sul::ij ect the Trustee to personal I i abi Ii ty. Restriction on owners' Action. In addition to the other restrictions on the rights of owners to request action upon the occurrence of an Event of Default and to enforce remedies set forth in the Indenture described underthe heading"EVENTS OF DEFAULT AND REMEDIES," no Owner of any of the Bonds shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of any trust under the Indenture, or any other remedy under the Indenture or on said Bonds, unless such owner previously shal I have given to the Trustee written notice of an Event of Default as provided i n the I ndenture and unless the owners of not less than 25% in aggregate amount of Bonds then Outstanding shall have made written request of the Trustee to institute any such suit, action, proceeding or other remedy, afterthe right to exercise such pcwers or rights of action, as the case may be, shall have accrued, and shall have afforded the Trustee a reasonable opportunity either to proceed to exercise the pcwers in the Indenture granted, or to i nsti tute such action, suit or proceedi ng i n its or their name; nor uni ess there al so shal I have been offered to the Trustee security and indemnity satisfactory to it agai nstthe costs, expenses and I i abi Ii ti es to be incurred therein or thereb,t, and the Trustee shall not have complied with such request within a reasonable time; and such notification, request and offer of indemnity are declared in every such case, at the option of the Trustee, to be conditions precedent to the execution of the trusts of the Indenture or for any other remedy under the Indenture; it being understood and intended that no one or more owners of the Bands secured 0y the I ndenture shal I have any right i n any manner whatever b,t the action of such owner or owners to affect, disturb or pr~ udi ce the security of the I ndenture, or to enforce any right under the Indenture or under the Bands, except in the manner in the Indenture prOJi ded, and that al I proceedings at law or in equity shall be instituted, and maintained in the manner in the Indenture prc,,1ided, and for the equal benefit of al I owners of Outstanding B ands; sul::ij ect, hew ever, to the prOJi si ans of this paragraph. Pcwer of Trustee to Enforce. All rights of action under the Indenture or under any of the Bonds secured b,t the I ndenturewhich are enforceable 0y the Trustee may be enforced b,t it without the possession of any of the Bands, or the production thereof atthe trial or other proceedi ngs relative thereto, and any such suit, action or proceedings instituted b,t the Trustee shall be brought in its cwn name, as Trustee, for the equal and ratable benefit of the owners of the Bands sul::ij ect to the provi si ans of the I ndenture. Remedies Not Exclusive. No remedy in the Indenture conferred upon or reserved to the Trustee or to the owners of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative, and shall be in addition to every other remedy given underthe Indenture or new or hereafter existing at I aw or in equity or b,t statute. Waiver of Events of Default; Effect ofW aiver. (a) The Trustee shall waive any Event of Default under the Indenture and its consequences, upon the written request of the owners of at least a majority in aggregate amount of Bonds Outstanding. If any Event of Default shall have been waived as in the Indenture prc,,1ided, the Trustee shall promptly give written notice of such waiver to the Authority and shall give notice thereof b,t first cl ass mai I, postage prepaid to al I owners of Outstanding Bands if such owners had previously been given notices of such Event of Default; but no such waiver and annulment shall extend to or affect any subsequent Event of Default, or impair any right or remedy consequentthereon. ( b) No delay or oni ssi on of the Trustee or of any owner of the Bands to exercise any right or pcwer accruing upon any default or Event of Default shall impair any such right or pcwer or shall be C-26 construed to be a waiver of any such default or Event of Default, or an acquiescence therein; and every paver and rerredy given b,t the prOJisions of the Indenture described under the heading "EVENTS OF DEFAULT AND REMEDIES" to the Trustee and to the owners of the Bonds, respectively, rray be exercised from ti rre to ti rre and as often as rray be deemed expedient. Application of Moneys. (a) Any moneys received b,t the Trustee pursuanttothe prc,,1isions of the Indenture described under the heading "EVENTS OF DEFAULT AND REMEDIES," together with any moneys which upon the occurrence of an Event of Default are held b,t the Trustee in any of the funds and accounts under the I ndenture ( other than moneys held for Bands not presented for payrrent) shal I , after payrrent of all fees and expenses of the Trustee, and the fees and expenses of its counsel, be applied to the payrrent of the whole amount then cwi ng and unpaid on the Outstanding Bands for principal, and preni um, if any, and interest, with interest on the OJerdue pri nci pal , and preni um, if any, and interest at a rate per annum equal to the highest interest rate borne b,t the Bonds, and in case such moneys shall be insufficient to pay in ful I the whole amount so cwi ng and unpaid on the Bands, to the payrrent of the principal, and prenium, if any, and interest then due and unpaid upon the Outstanding Bonds without preference or priority of any of principal, preni um or interest over the others or of any i nstal I rrent of interest, or of any Outstanding Band OJer any other Outstanding Band, ratably, according to the amounts due respectively for principal, premium, and interest, to the Persons entitled there without any discrimination or preference except as to any difference in the respective amounts of interest specified in the Outstanding Bonds. (b) Whenever moneys are to be applied pursuant to the prc,,1isions the Indenture described under the heading "EVENTS OF DEFAULT AND REMEDIES - Application of Moneys," such moneys shal I be appl i eel at such ti rres, and from ti rre to ti rre, as the Trustee shal I deterni ne, havi ng due regard to the amount of such moneys available for application and the likelihood of additional moneys beconing available for such application in the future. The Trustee shall give, b,t mailing b,t first class rrail as it may deem appropriate, such notice of the deposit with it of any such moneys. The Trustee Duties and Liabilities of Trustee. The Trustee shall, prior to an Event of Default, and after the curing or waiver of all Events of Default which rray have occurred, perform such duties and only such duties as are expressly and specifically set forth in the Indenture. The Trustee shall, during the existence of any Event of Default which has not been cured or waived, exercise such of the rights and po.vers vested in it b,t the I ndenture, and use the sarre degree of care and ski 11 i n thei r exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's cwn affairs. Qualifications; Removal and Resignation; Successors. (a) The Trustee initially a party to the Indenture and any successor thereto shall at all tirres be a trust corrpany, national banking association or bank having trust po.vers in good standing in or incorporated under the Iaws of the United States or any state thereof, which is (or if such trust company, national banking association or bank is a rreniber of a bank holding company system, its parent bank holding company is) (i) a national banking association that is supervised b,t the Office of the Comptroller of the Currency and has at least $250 nillion of assets, or (ii) a state-chartered comrrercial bank that is a rreniber of the Federal Reserve System and has at least $1 billion of assets. If such trust company, national banking association or bank publishes a report of condition at least annually, pursuant to law or to the requirerrents of any supervising or examining agency abOJe referred to, then for the purpose of this paragraph the combined capital and surplus of such trust company, national banking association or bank shall be deerred to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) The Authority rray, b,t an instrurrent in writing, upon at least 30days' noticetotheTrustee, remove the Trustee initially a party to the Indenture and any successorthereto unless an Event of Default C-27 shall have occurred and then be continuing, and shall remove the Trustee initially a i:arty to the Indenture and any successor thereto if (i) at any tirre requested to do so 0y an instrurrent or concurrent instrurrents in writing signed 0y the owners of not less than a majority in aggregate principal arrount of the Bonds then Outstanding (or their attorneys duly authorized in writing), or (ii) the Trustee shall cease to be eligible in accordance with i:aragraph (a) above, or shall becorre incai:able of acting, or shall be acjjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, in each case 0y gvingwritten notice of such rerroval to the Trustee. (c) The Trustee may at any tirre resign 0y giving written notice of such resignation 0y first class mail, postage prei:aid, to the Authority, and to the owners at the respective addresses shewn on the Regi strati on Boaks. I n case at any ti rre the Trustee shal I cease to be el i gi bl e in accordance with the prc,,1isions of i:aragraph (a) abOJe, the Trustee shall resign imrrediately in the manner and with the effect specified in the provisions of the Indenture described underthe heading "THE TRUSTEE - Qualifications; Removal and Resignation; Successors." (cl) Upon rerroval or resignation of the Trustee, the Authority shall promptly appoint a successor Trustee 0y an instrurrent in writing. Any rerroval or resignation of the Trustee and appointrrent of a successor Trustee shal I becorre effective upon acceptance of appoi ntrrent 0y the successor Trustee; prOJi ded, hew ever, that any successor Trustee shal I be qual i fi ed as prOJi ded i n i:aragraph ( a) abOJe. If no qualified successor Trustee shal I have been appoi nted and have accepted appoi ntrrent wi thi n 45 days follewing notice of removal or notice of resignation as aforesaid, the removed or resigning Trustee or any OWner (on behalf of such owner and all other owners) may petition any court of competentjurisdiction for the appointrrent of a successor Trustee, and such court may thereupon, after such notice, if any, as it may deem proper, appoi nt such successor Trustee. Any successor Trustee appoi nted under the I ndenture shall signify its acceptance of such appointrrent 0y executing and delivering to the Authority and to its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shal I becorre vested with al I the moneys, estates, properties, rights, pcwers, trusts, duties and obi i gati ons of such predecessor Trustee, with I i ke effect as if ori gi nal ly narred Trustee in the I ndenture; but, nevertheless at the W ri tten Request of the Authority or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instrurrents of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirning to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held 0y it underthe Indenture and shal I l'.0-Y OJer, transfer, assign and del iverto the successor Trustee any money or other property sul::iject to the trusts and conditions in the Indenture set forth. Upon acceptance of appoi ntrrent 0y a successor Trustee as prOJi ded i n this paragraph, the successor Trustee shal I, within 15 days after such acceptance, mail, 0y first class mail postage prepaid, a notice of the succession of such Trustee to the trusts under the Indenture to the owners at the addresses shewn on the Registration Books. ( e) Any trust comi:any, nati anal banki ng association or bank into which the Trustee may be rrerged or converted or with which it may be consolidated or any trust corni:any, national banking association or bank resulting from any rrerger, conversion or consolidation to which it shall be a i:arty or any trust company, national banking association or bank to which the Trustee may sell or transfer all or substantially all of its corp:>rate trust business, prc,,1ided such trust comi:any, national banking association or bank shall be eligible under i:aragraph (a) above, shall be the successor to such Trustee, without the execution or fi Ii ng of any i:aper or any further act, anythi ng i n the I ndenture to the contrary notwi thstandi ng. Liability of Trustee. (a) The recitals of facts in the Indenture and in the Bonds contained shall be taken as staterrents of the Authority, and the Trustee shall not assurre responsibility for the correctness of the sarre or incur any resp:>nsi bi I ity in respect thereof, other than as expressly stated in the Indenture in C-28 connection with the respective duties or obi igati ans in the Indenture or in the Bands assigned to or i rrposed upon it. The Trustee shall, hcwever, be responsible for its representations contained in its certificate of authentication on the Bands. ( b) The Trustee makes no representati ans as to the validity or sufficiency of the I ndenture or of any Bands, or in respect of the security afforded 0y the Indenture and the Trustee shal I incur no responsibility in respect thereof. The Trustee shall be under no responsibility or duty with respect to the issuance of the B ands for value, the application of the proceeds thereof except to the extent that such proceeds are received 0y it in its capacity as Trustee, orthe application of any moneys paid to the Authority or others i n accordance with the I ndenture. (c) The Trustee shall not be liable in connection with the perforrrance of its duties underthe Indenture, except for its cwn negligence or willful nisconduct. (cl) No prOJision of the Indenture or any other docurrent related to the Indenture shall require the Trustee to risk or advance its cwn funds. (e) The Trustee rray execute any of its pcwers or duties underthe Indenture through attorneys, agents or receivers and shal I not be answerable for the acti ans of such attorneys, agents or receivers if selected 0y it with reasonable care. (f) The Trustee shall not be liable for any error of judgrrent rrade in good faith 0y a responsible officer, unless it shall be prc,,1ed that the Trustee was negligent in ascertaining the pertinent facts. (g) The immunities and protections extended to the Trustee also extend to its directors, officers, empl O{ees and agents. (h) Before taking action under the prc,,1isions of the Indenture under the headings" EVENTS OF DEFAULT AND REMEDIES," "THE TRUSTEE" or upon the direction of the owners, the Trustee rray requi re i ndernni ty satisfactory to the Trustee be furnished to i tto protect it agai nst al I fees and expenses, including those of its attorneys and acwisors, and protect it against all liability it may incur. (i) The Trustee shall not be liable with respect to any action taken or onitted to be taken 0y it in good faith in accordance with the direction of the owners of not less than a majority in aggregate principal amount of the Bands at the ti rre Outstanding relating to the ti rre, rrethod and pl ace of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or pcwer conferred upon the Trustee under the Indenture. U) The Trustee rray become the owner of Bonds with the sarre rights it would have if it were not Trustee and, to the extent permitted 0y law, rray act as depository for and pernit any of its officers or di rectors to act as a rrember of, or i n any other capacity with respect to, any comni ttee forrred to protect the rights of owners, whether or not such comnittee shall represent the owners of a majority in aggregate pri nci pal amount of the Bands then Outstanding. ( k) The Trustee shal I have no responsi bi Ii ty with respect to any i nforrrati on, staterrent, or recital in any official staterrent, offering rremorandum or any other disclosure rraterial prepared or distributed with respect to the Bands. (I) The Trustee shall not be liable for the failure to take any action required to be taken 0y it under the Indenture if and to the extent that the Trustee's taking such action is prevented 0y reason of an C-29 act of God, terrorism, war, riot, strike, fire, flood, earthquake, epidenic or other, sinilar occurrence that is beyond the control of the Trustee and could not have been avoided b,t exercising due care. (ni) The Trustee shall not be deemed to have kncwledge of an Event of Default under the Indenture unless it has actual kncwledge thereof. (n) The pernissive right of the Trustee to do things enumerated in the Indenture shall not be construed as a duty and it shall not be answerable for otherthan its negligence or willful misconduct. (o) The Trustee shall not be responsible for or accountable to anyone for the subsequent use or application of any moneys which shall be released or withdrawn in accordance with the provisions of the I ndenture. Right to Rely on Documents and Opinions. (a) The Trustee shal I be protected in acting upon any notice, resolution, request, requisition, facsimile, consent, order, certificate, report, opinion, bond or other pc1per or document believed b,t it to be genuine and to have been signed or presented b,t the proper party or parties. Each statement of facts contained in a Written Request of the Authority or a Written Certificate of the Authority shall be sufficient evidence to the Trustee of the facts so stated and the Trustee shall have no duty to confirm the accuracy of such facts. (b) The Trustee shall have the right to accept and act upon a Written Request of the Authority delivered using Electronic Means. If the Authority elects to deliver a Written Request of the Authority to the Trustee using Electronic Means and the Trustee acts upon such Written Request, the Trustee's understanding of such Written Request shal I be deemed control I i ng. The Authority understands and agrees that the Trustee cannot determine the identity of the actual sender of such Written Request and that the Trustee shal I conclusively presume that Written Requests of the Authority that purport to have been sent b,t an Authorized Representative of the Authority have been sent b,t such Authorized Representative. The Authority shall be responsible for ensuring that only Authorized Representatives transnit such Written Requests of the Authority to the Trustee and that the Authority is solely responsible to safeguard the use and confidentiality of appiicable user and authorization codes, passwords and;br authentication keys upon receipt thereof b,t the Authority. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee's reliance upon and compliance with such Written Requests of the Authority delivered using Electronic Means notwithstanding such directions conflict or are inconsistent with a subsequent written Written Requests of the Authority. The Authority agrees (i) to assume all risks arising out of the use of Electronic Means to subnit Written Requests of the Authority to the Trustee, including without linitation the risk of the Trustee acting on unauthorized Written Requests of the Authority, and the risk of interception and nisuse b,t third parties, (ii) that it is fully informed of the protections and risks associated with the various methods of transmitti ngW ritten Requests of the Authority to the Trustee and that there may be more secure methods of transni tti ng W ri tten Requests of the Authority than the method selected b,t the Authority, (iii) that the security procedures, if any, to be follcwed in connection with its transnission of Written Requests of the Authority provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances, and (iv) to notify the Trustee immediately upon I earni ng of any comproni se or unauthorized use of the security procedures. Notwithstandi ng the foregoing, the prOJi si ons of this paragraph, and the Trustee's actions pursuant to the Indenture, are sul::ijecttothe Trustee's standard of care and linitations on liability set forth in the Indenture described underthe headings "THE TRUSTEE - Liability of Trustee" and"- Rightto Rely on Documents and Opinions" provided, hcwever, that the Trustee's reliance on a Written Request of the Authority that purports to have been sent b,t an Authorized Representative of the Authority delivered in accordance with the provisions of the Indenture described under the heading "THE TRUSTEE - "Right to Rely on Documents and Opinions" using Electronic Means shall not, in and of itself, be construed as negligence. C-30 (c) Whenever in the adninistration of the duties imposed upon it 0y the Indenture the Trustee shal I deem it necessary or desi rabl e that a matter be prc,,1ed or established prior to taki ng or sufferi ng any action under the I ndenture, such matter ( uni ess other evidence i n respect thereof be i n the I ndenture specifically prescribed) may be deemed to be conclusively proved and established b,t a Written Certificate of the Authority, and such Written Certificate shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of the Indenture in reliance upon such Written Certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additi anal evidence as it may deem reasonable. (cl) The Trustee may consult with counsel, who may be counsel to the Authority, with regard to I egal questions, including with respect to cornpl i ance of amendments to the Indenture, and the opinion of such counsel shall be full and corrplete authorization and protection in respect of any action taken or suffered 0y it underthe Indenture in good faith and in accordance there.vi th. Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with prudent corporate trust industry standards, in which accurate entries shal I be made of al I transactions made b,t it relating to the proceeds of the Bonds, the Special Tax Revenues received b,t it and all funds and accounts established b,t it pursuant to the Indenture. Such books of record and account shall be available for inspection 0ytheAuthority during regular business hours and upon reasonable notice and under reasonable circumstances as agreed to b,t the Trustee. The Trustee shall del iverto the Authority a monthly accounting of the funds and accounts it holds underthe Indenture; prc,,1ided, hcwever, that the Trustee shall not be obligated to deliver an accounting for any fund or account that ( a) has a balance of zero, and ( b) has not had any activity si nee the Iast reporti ng date. Preservation and Inspection of Documents. All documents received b,t the Trustee under the prc,,1isions of the Indenture shall be retained in its possession and shall be sul::iject during business hours and upon reasonable notice to the i nspecti on of the Authority, the owners and their agents and representatives duly authorized in writing. Corrpensation and Indemnification. The Authority shall pay or cause to be paid to the Trustee from ti me to ti me al I reasonable compensation pursuant to a pre-approved fee I etter for al I services rendered under the I ndenture, and al so al I reasonable expenses, charges and other disbursements and those of its attorneys, agents and emplO{ees, incurred in and about the performance of their pcwers and duties under the Indenture. The Authority shall, to the extent pernitted 0y law, indemnify and save the Trustee and its officers, directors and emplO{ees harniess against any costs, suits,judgments, damages, liabilities, claims, expenses, including legal fees and expenses, and liabilities which it may incur in the exercise and performance of its pcwers and duties under the Indenture, including the enforcement of any remedies and the defense of any suit, and which are not due to its negligence or its willful misconduct. The duty of the Authority to i ndemni fy the Trustee shal I survive the resignation or removal of the Trustee and the discharge and satisfaction of the I ndenture. Supplemental Indentures Supplemental Indentures. (a) The Indenture and the rights and olbligations of the Authority, the OWners of the Bands and the Trustee may be modified or amended from ti me to ti me and at any ti me b,t a Supplemental I ndenture, which the Authority and the Trustee may enter into with the written consent of the OWners of a majority in aggregate principal amount of al I Bands then Outstanding, which shal I have been filed with the Trustee. No such modification or amendment shall (i) extend the fixed maturity of any Bonds, or reduce the amount of pri nci pal thereof or the rate of i nterest thereon, or extend the ti me of payment, without the consent of the owner of each Bond so affected, (ii) reduce the aforesaid percentage of Bonds C-31 the consent of the owners of which is required to effect any such mxlification or amendment, or(iii) permit the creation of any lien on the Authority Revenues and other assets pledged under the Indenture prior to or on a parity with the lien created 0y the Indenture or deprive the owners of the Bonds of the lien created 0y the Indenture on such Authority Revenues and other assets (except as expressly provided in the Indenture), without the consent of the owners of all of the Bonds then Outstanding. It shall not be necessary for the consent of the Bond owners to apprOJe the particular form of any Supplemental Indenture, but it shall be sufficient if such consent shal I approve the substance thereof. (b) The Indenture and the rights and obligations of the Authority, the Trustee and the owners of the Bonds may also be mxlified cr amended from time to time and at any time 0y a Supplemental I ndenture, which the Authority and the Trustee may enter into with out the consent of any Bond owners for any one or more of the fol Io.vi ng purposes: ( i) to add to the cOJenants and agreements of the Authority contained in the I ndenture other cOJenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or po.ver in the Indenture reserved to or conferred upon the Authority, prOJided that such mxlification or amendment does not materially acwersely affect the interests of the B and owners under the I ndenture; (ii) to make such prOJisions for the purpose of curing any ambiguity, inconsistency or onission, or of curing or correcting any defective prOJision contained in the Indenture; (iii) to mxlify, amend or supplement the Indenture in such manner as to pernit the qualification of the Indenture under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter i n effect, and to add such other terms, condi ti ans and prOJi si ans as may be perni tted 0y said act or si mi I ar federal statute; (iv) to mxlify, amend or supplement the Indenture in such manner as to cause interest on the Bands to be excl udabl e from gross i ncorne for purposes of federal i ncorne taxation 0y the U ni ted States of America; and (v) in any other respect whatsoever as the Authority may deem necessary or desirable, prOJi ded that such mxli fi cation or amendment does not materially acwersely affect the i nterests of the Bond Owners under the Indenture. (c) Promptly after the execution 0y the Authority and the Trustee of any Supplemental Indenture, the Trustee shall mail a notice (the form of which shall be furnished to the Trustee 0y the Authority), 0y first class mail postage prepaid, setting forth in general terms the substance of such Supplemental I ndenture, to the owners of the B ands at the respective addresses sho.vn on the Regi strati on Books. Any failuretogive such notice, or any defect therein, shall not, ho.vever, in anyway impair or affect the validity of any such Supplemental Indenture. (cl) The Trustee may in its discretion, but shall not be obligated to, enter into any such Supplemental Indenture authorized 0y paragraphs (a) or (b) abOJe which materially acwersely affects the Trustee's o.vn rights, duties or immunities underthe Indenture or otherwise. Effect of Supplemental I ndenture. U pon the execution of any Supplemental I ndenture pursuantto the Indenture described under the heading "SUPPLEMENTAL INDENTURES," the Indenture shall be deemed to be mxli fi ed and amended in accordance therewith, and the respective rights, duties and obligations under the Indenture of the Authority, the Trustee and all owners of Bonds Outstanding shall thereafter be determined, exercised and enforced under the Indenture sul::iject in all respects to such C-32 mxli fi cation and amendrrent, and al I the terms and con di ti ons of any such Suppl errental I ndenture shal I be deerred to be i:art of the terms and conditions of the Indenture for any and all purposes. Endorserrent of Bonds; Prei:aration of New Bonds. Bonds delivered after the execution of any Supplerrental Indenture pursuant to the prc,,1isions of the Indenture described under the heading "SUPPLEMENTAL INDENTURES" rray, and if the Authority so deternines shall, bear a notation Or endorserrent or otherwise in form approved 0y the Authority and the Trustee as to any mxlification or amendrrent prOJided for in such Supplerrental Indenture, and, in that case, upon derrand of the owner of any Bonds Outstanding at the tirre of such execution and presentation of such owner's Bonds for the purpose at the Office of the Trustee a suitable notation shall be rrade on such Bonds. If the Supplerrental Indenture shall so prOJide, new Bonds so mxlified as to conform, in the opinion of the Authority and the Trustee, to any mxlification or arrendrrent contained in such Supplerrental Indenture, shall be prei:ared and executed 0y the Authority and authenticated 0y the Trustee, and upon derrand of the owners of any Bonds then Outstanding shall be exchanged at the Office of the Trustee, without cost to any Bond owner, for Bonds then Outstanding, upon surrender for cancellation of such Bonds, in equal aggregate princii:al amount of the same interest rate and maturity. Arrendrrent of Particular Bonds. The prc,,1isions of the Indenture described under the heading "SUPPLEMENTAL INDENTURES" shall not prevent any Bond owner from accepting any arrendrrent as to the i:articular Baids held 0y such owner. Defeasance Discharge of Bonds. (a) If the Authority shall l'.0-Y or cause to be i:aid or there shall otherwise be paid to the owners of any Outstandi ng Bands the i nterest thereon and the pri nci i:al thereof and the redemption preni urns, if any, thereon at the ti rres and i n the rranner sti pul ated i n the I ndenture and therein, then the owners of such Bands shal I cease to be enti tied to the pl edge of the Authority Revenues as prOJi ded in the I ndenture, and al I agreerrents, cOJenants and other obi i gati ons of the Authority to the Owners of such Bands under the I ndenture shal I thereupon cease, terni nate and becorre void and be discharged and satisfied. I f al I of the Outstanding Bands are so paid, the I ndenture shal I be discharged and satisfied and, the Trustee shall execute and delivertotheAuthority all such instrurrents as rray be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shal I l'.0-Y OJer or del iver to the Authority al I money or securities held 0y it pursuant to the Indenture which are not required for the i:ayrrent of the interest on and pri nci pal of and redemption preni urns, if any, on the Bands. (b) Sul::iject to the prc,,1isions of the abOJe paragraph, when any of the Bonds shall have been paid and if, at the ti rre of such i:ayrrent, the Authority shal I have kept, perforrred and observed al I the cOJenants and proni ses in such Bands and in the Indenture required or contemplated to be kept, performed and observed 0y the Authority or on its i:art on or prior to that ti rre, then the I ndenture shal I be considered to have been discharged i n respect of such B ands and such Bands shal I cease to be enti tied to the Ii en of the Indenture and such lien and all cOJenants, agreerrents and other obligations of the Authority under the Indenture shall cease, terninate become void and be completely discharged as to such Bonds. (c) Notwithstanding the satisfaction and discharge of the Indenture or the discharge of the Indenture in respect of any Bonds, those prc,,1isions of the Indenture relating to the maturity of the Bonds, interest i:avrrents and dates thereof, exchange and transfer of B ands, repl acerrent of muti Iated, destrO{ed, lost or stolen Bonds, the safekeeping and cancellation of Bonds, nonpresentrrent of Bonds, and the duties of the Trustee in connection with all of the foregoing, rerrain in effect and shall be binding upon the Trustee and the owners of the Bands and the Trustee shal I con ti nue to be obi i gated to hold i n trust any moneys or investrrents then held 0y the Trustee for the i:ayrrent of the principal of, redemption prenium, if any, and interest on the Bonds, to l'.0-Y to the owners of Bonds the funds so held 0y the Trustee as and when such C-33 i:avrrent becorres due. Notwi thstandi ng the satisfaction and discharge of the I ndenture or the discharge of the Indenture in respect of any Bonds, those provisions of the Indenture contained in the prc,,1isions of the Indenture described underthe heading"THE TRUSTEE - Corrpensation and Indemnification" relating to the cornpensati on of the Trustee shal I rerrai n i n effect and shal I be binding upon the Trustee and the Authority. Bonds DeerredToHave Been Paid. (a) If moneys shall have been set aside and held b,tthe Trustee for the i:ayrrent or rederrpti on of any Bond and the i:ayrrent of the interest thereon to the rraturity or redemption date thereof, such Bond shall be deerred to have been i:aid within the rreaning and with the effect provided in the Indenture described underthe heading" DEFEASANCE - Discharge of Bonds." Any Outstanding Bond shal I prior to the maturity date or redemption date thereof be deemed to have been pal d within the meaning of and with the effect expressed in the provisions of the Indenture described under the heading "DEFEASANCE - Discharge of Bonds" if (i) in case any of such Bonds are to be redeerred on any date priorto their rraturity date, the Authority shall have given to the Trustee in form satisfactory to it irrevocable i nstructi ons to rrai I, on a date i n accordance with the prOJi si ons of the I ndenture descri bed under the heading "REDEMPTION OF BONDS - Notice of Redemption," notice of redemption of such Bond on said redemption date, said notice to be given in accordance with the prc,,1isions of the Indenture described under the heading" REDEMPTION OF BONDS - Notice of Redemption," (ii) there shall have been deposited with the Trustee either (A) money in an amount which shall be sufficient, or (B) Defeasance Securities, the principal of and the interest on which when due, and without any reinvestrrent thereof, together with the money, if any, deposited there.vi th, will prc,,1ide moneys which shall be sufficientto l'.0-Y when due the i nterest to becorre due on such Bond on and prior to the rraturi ty date or redemption date thereof, as the case rray be, and the princii:al of and prenium, if any, on such Bond, and (iii) in the event such Bond is not b,t its terms sul::iject to rederrption within the next succeeding 60 days, the Authority shall have given the Trustee in form satisfactory to it irrevocable instructions to mail as soon as practicable, a notice to the owner of such B ond that the deposit requi red b,t clause (ii) above has been made with the Trustee and that such B ond is deerred to have been i:ai d in accordance with the provisions of the I ndenture described under the heading "DEFEASANCE - Bonds Deemed To Have Been Paid' and stating the maturity date or redemption date upon which money is to be available for the i:ayrrent of the princii:al of and preni um, if any, on such Bond. ( b) No Bond shal I be deerred to have been i:ai d pursuant to clause (ii) of i:aragraph ( a) abOJe unless the Authority shall have caused to be deliveredtotheAuthority and the Trustee (i) an executed cop,t of a V eri fi cation Report with respect to such deerred i:ayrrent, addressed to the Authority and the Trustee, in form and in substance acceptable to the Authority, (ii) a cop,t of the escrcw agreerrent entered into in connection with the deposit pursuant to clause (ii)(B) of paragraph (a) above resulting in such deemed i:avrrent, which escrcw agreerrent shal I be in form and in substance acceptable to the Authority and which escrcw agreerrent shal I prc,,1ide that no substitution of Defeasance Securities shall be pernined except with other Defeasance Securities and upon delivery of a new Verification Report, and no reinvestrrent of Defeasance Securities shal I be permitted except as conterrpl ated b,t the original Verification Report or upon delivery of a new Verification Report, and (iii) a COP{ of an Opinion of Bond Counsel, dated the date of such deerred i:ayrrent and addressed to the Authority and the Trustee, in form and in substance acceptable to the Authority, to the effect that such Bond has been i:ai d withi n the meani ng and with the effect expressed in the I ndenture, the I ndenture has been discharged i n respect of such B ond and al I agreerrents, covenants and other obi i gati ons of the Authority under the I ndenture as to such Bond have ceased, terni nated, become void and been completely discharged and satisfied. U ncl aimed Money-. A nythi ng contai ned in the I ndenture to the contrary notwi thstandi ng, the Trustee shall notify the Authority of any money held b,t the Trustee in trust for the i:ayrrent and discharge of any of the Bands which has rerrai ned uncl ai rred for two years after the date when such Bands have become due and i:ayalble, either at their stated rraturity dates or b,t cal I for redemption prior to rraturity, if C-34 such m:J11ey was held b,t the Trustee at such date, or for two years after the date of deposit of such rmney if deposited with the Trustee. The Trustee shal I repay such m:J11ey to the Authority as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the OWners shall look only to the Authority for the payrrent of such Bonds. Miscellaneous Benefits of the Indenture Limited. Nothing contained in the Indenture, expressed or implied, is intended to give to any Person other than the Authority, the Trustee and the owners any right, rerredy or claim under or b,t reason of the Indenture. Any agreerrent or covenant required in the Indenture to be performed b,t or on behalf of the Authority or any rrember, officer or errplO{ee thereof shall be for the sole and excl usive benefit of the Trustee and the owners. Successor Is Deerred Included In Al I References To Predecessor. Whenever in the Indenture either the Authority or any rrember, officer or errplO{ee thereof is narred or referred to, such reference shall be deerred to include the successor to the pcwers, duties and functions of the Authority or such rrember, officer or errpl O{ee, and al I agreerrents and cOJenants requi red b,t the I ndenture to be performed b,t or on behalf of the Authority or any rrember, officer or errplO{ee thereof shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Execution of Docurrents b{ owners. Any declaration, request or other instrurrent which is perni tted or required in the I ndenture to be executed b,t owners may be i n one or more i nstrurrents of si ni I ar tenor and may be executed b,t owners in person or b,t their attorneys appointed in writing. The fact and date of the execution b,t any owner or such owner's attorney of any declaration, request or other instrurrent or of any writing appointing such attorney may be proved b,t the certificate of any notary public or other officer authorized to make ackncwledgrrents of deeds to be recorded in the state or territory in which he purports to act that the Person signing such declaration, request or other instrurrent or writing ackncwledgedto him the execution thereof, or b,t an affidavit of a witness of such execution duly sworn to before such notary public or other officer. The cwnership of any Bonds and the amount, maturity, number and date of holding the sarre may be prc,,1ed b,t the Regi strati on B oaks. Any declaration, request or other instrurrent or writing of the owner of any Bond shall bind all future owners of such Bond with respect to anything done or suffered to be done b,t the Authority in good faith and in accordance therewith. Waiver of Personal Liability. No rrember, officer or errplO{ee of the Authority shall be individually or personally liable for the payrrent of the interest on or principal of or redemption premiums, if any, on the Bands b,t reason of thei r issuance, but not hi ng i n the I ndenture contained shal I rel i eve any rrember, officer or emplO{ee of the Authority from the performance of any official duty prOJided b,t any applicable prOJi si ons of I aw or b,t the I ndenture. Destruction of Cancelled Bonds. Whenever prc,,1ision is made for the return to the Authority of any Bands which have been cancel Ied pursuant to the provisions of the I ndenture, Trustee shal I destrO{ such Bonds and furnish to the Authority a certificate of such destruction. Accounts and Funds. Any account or fund required in the Indenture to be established and mai ntai ned b,t the Trustee may be establ i shed and maintained in the accounti ng records of the Trustee either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any reports or staterrents with respect thereto, be treated either as an account or a fund; but al I such records with respect to all such accounts and funds shall at all times be maintained in accordance with sound C-35 industry practice and with due regard for the protection of the security of the Bonds and the rights of the OWners. Payrrent on Non-Business Days. In the event any i:ayrrent is required to be made under the Indenture on a day which is not a Business Day, such payrrent shall be made on the next succeeding Business Day with the sarre effect as if made on such non-Business Day. Partial Invalidity. If any one or more of the agreerrents or cOJenants or portions thereof required b,t the Indenture to be perforrred b,t or on the i:art of the Authority or the Trustee shall be contrary to law, then such agreerrent or agreerrents, such cOJenant or cOJenants or such porti ans thereof shal I be nul I and void and shal I be deerred sei:arabl e from the rerrai ni ng agreerrents and cOJenants or porti ans thereof and shal I in no way affect the validity of the Indenture or of the Bands, and the owners shal I retain al I the benefit, protection and security afforded to them under the Indenture or any applicable prc,,1isions of law. The Authority and the Trustee declare that they would have executed and del ivered the I ndenture and each and every other Article, Section, i:aragraph, subdivision, sentence, clause and phrase of the Indenture and would have authorized the issuance of the Bands pursuant to the I ndenture i rrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases of the Indenture or the application thereof to any Person or ci rcumstance rray be held to be unconstituti anal , unenforceable or invalid. Disqualified Bonds. In deternining whether the owners of the requisite aggregate principal amount of Bands have concurred in any demand, request, direction, consent or waiver underthe Indenture, Bonds which are kncwn b,t the Trustee to be cwned or held b,t or for the account of the Authority, or b,t any other obligoronthe Bonds, or b,t any Person directly or indirectly controlling or controlled b{, or under direct or indirect common control with, the Authority or any other obligor on the Bonds, shall be disregarded and deerred not to be Outstanding for the purpose of any such deternination. Bonds so cwned which have been pledged in good faith rray be regarded as Outstanding for the purposes of this i:aragraph if the pl edgee shal I establish to the satisfaction of the Trustee the pl edgee' s right to vote such Bands and thatthe pledgee is not a Person directly or indirectly controlling or controlled b{, or under direct or indirect common control with, the Authority or any other obligor on the Bonds. In case of a dispute as to such right, any decision b,t the Trustee taken upon the acwice of counsel shall be full protection to the Trustee. Upon request of the Trustee, the Authority shal I specify to the Trustee those Bands disqualified pursuant to this paragraph. Law GOJerning. The Indenture shall be gOJerned exclusively b,t the prc,,1isions thereof and b,t the laws of the State as the sarre fromtirre totirre exist. INSTALLMENT PURCHASE AGREEMENT Representations and Warr anti es Representati ans and Warranties of the City. The City represents and warrants that: (a) the City is a municipal corporation and chartered city organized and existing under and b,t virtue of its charter and the I aws of the State; (b) the City has full legal right, pcwer and authority to enter into the lnstallrrent Purchase A greerrent and carry out its obi i gati ons thereunder and to carry out and consumrrate al I transacti ans contemplated b,t the lnstallrrent Purchase Agreerrent, and the City has complied with the provisions of applicable I aw in al I rratters rel ati ng to such transacti ans; C-36 ( c) b,t proper action, the City has duly authorized the execution, delivery and due perforrrance of the lnstallrrent PurchaseAgreerrent; and (cl) the execution and delivery of the I nstallrrent PurchaseAgreerrent and the consumrration of the transacti ans therei n contemplated wi 11 not viol ate, i n a mannerthat would rrateri al ly acwersely affect the City's ability to perform its obligations under the lnstallrrent Purchase Agreerrent, any prc,,1ision of law, any order of any court or other agency of governrrent, or any indenture, rraterial agreerrent or other instrurrent to which the City is a party or b,t which it or any of its properties or assets is bound, or be in conflict with, result in a breach of or constitute a default (with due notice or the passage of ti rre or both) under any such indenture, agreerrent or other i nstrurrent, which conflict, breach or default would materially acwersely affect the City's ability to perform its obligations under the I nstallrrent Purchase Agreerrent, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the City which lien, charge or encumbrance would rraterially acwersely affect the City's abi I ity to perform its obi igati ans underthe I nstal I rrent Purchase Agreerrent. Representati ans and Warranties of the Authority. The Authority represents and warrants that: (a) the Authority is ajoint exercise of pcwers authority organized and existing underthe laws of the State; (b) the Authority has ful I I egal right, pcwer and authority to enter into the I nstal Irrent Purchase Agreerrent and to carry out and consumrrate all transactions contemplated b,t the lnstallrrent Purchase Agreerrent, and the Authority has complied with the provisions of applicable law in all rraners relating to such transacti ans; (c) b,t proper action, the Authority has duly authorized the execution, delivery and due performance of the lnstallrrent PurchaseAgreerrent; and (cl) the execution and delivery of the I nstallrrent PurchaseAgreerrent and the consumrration of the transactions therein contemplated will not violate any prOJision of law, any order of any court or other agency of governrrent, or any indenture, rrateri al agreerrent or other i nstrurrent to which the Authority is a party or b,t which it or any of its properties or assets is bound, or be in conflict with, result in a l:reach of or constitute a default (with due notice or the passage of tirre or both) under any such indenture, agreerrent or other instrurrent, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Authority. Purchase of Existing Improvements by, and Sale thereof to, the Authority; Payment Purchase and Sale of Existing I mproverrents. The City represents and warrants that it is the sole and exclusive cwner of the Existing I mproverrents. The Authority purchases from the City, and the City sells to the Authority, the Existing lmproverrents in accordance with the provisions of the lnstallrrent PurchaseAgreerrent. All right, title and interest in the Existing I mprc,,1errents shall imrrediatelyvest in the Authority on the Closing Date without further action on the part of the Authority or the City. Payrrent. On the Closing Date, the Authority shall pay to the City, as and for the purchase price of the Exi sti ng I mproverrents, the amount i ndi cated i n the I nstal I rrent Purchase A greerrent, which amount shall be paid from the proceeds of the Authority Bonds and which the City directs shall be applied as prOJi ded i n the I ndenture. Acquisition, Construction and Installation of the Additional I mproverrents. The Authority agrees to cause the Additional I mprc,,1errents to be acquired, constructed and installed and appoints the City as its C-37 agent for purposes of such acquisition, construction and installation. The City shall enter into contracts, or cause contracts to be entered i nto, and, as agent of the Authority, prOJi de for the complete acqui si ti on, construction and installation of the Additional lrnproverrents. The City agrees that it will cause the acquisition, construction and installation of the Additional I mproverrents to be diligently perforrred. It is expressly understood and agreed that, except to the extent of proceeds of the Authority Bonds deposited in the I rnprc,,1errent Fund established pursuant to the I ndenture, and the i nvestrrent earni ngs thereon, the Authority shal I be under no Ii abi I ity of any kind or character whatsoever for the i:avrrent of any of the costs of the acquisition, construction and i nstal lati on of the Addi ti anal I mproverrents. In the event such amounts are i nsuffi ci ent to cornpl ete the acqui si ti on, construction and i nstal I ati on of the Additional I rnprc,,1errents, the City shall cause to be applied other legally available funds in an amount equal to that necessary to complete the acqui si ti on, construction and i nstal Iati on of the Additional I mproverrents. Changes to the Addi ti anal I rrprc,,1errents. The City may make any changes in the composition and description of the Additional lmprc,,1errents or any component thereof whenever the City deems such changes to be necessary and appropriate; prOJi ded, hcwever, that no such change shal I (a) i rnpai rthe abi I ity of the City to make the lnstallrrent Payrrents, (b) cause to be included in the Additional I mproverrents any property not constituting property useful in the performance of the City's pcwers, prqj ects and purposes, or (c) cause the Additional lrnprc,,1errents or any such component thereof to have an estimated useful life materially shorter than the estimated useful life of the Additional I rnprc,,1errents or such component prior to such change. Any such change shall be implerrented b,t the City's filing with the Authority and the Trustee a description of such change and, upon such fi Ii ng, the description of the Addi ti anal I mprc,,1errents contained in the lnstallrrent Purchase Agreerrent shall be deerred to have been modified in accordance therewith. No such change shall constitute an arrendrrent, change, modification or alteration of the lnstallrrent Purchase Agreerrent for purposes of the provisions of the lnstallrrent Purchase Agreerrent described underthe heading "MISCELLANEOUS - Arrendrrents." Purchase and Sale of Purchased I mprc,,1ements; Payments Purchase and Sale of Purchased I mproverrents. The City purchases from the Authority, and the Authority sel Is to the City, for the I nstal lrrent Payrrents, the Purchased I mprc,,1errents in accordance with the provisions of the lnstallrrent Purchase Agreerrent. All right, title and interest in the Purchased I mprc,,1errents shall imrrecliately vest in the City on the Closing Date without further action on the part of the City or the Authority. lnstallrrent Payrrents; Senior Obligation. (a) The City shall pay to the Authority the lnstallrrent Payrrents atthe ti mes and in the amounts provided in the I nstal Irrent Purchase Agreerrent. The I nstal I rrent Payrrents shall be paid from System Net Revenues. The amount of the lnstallrrent Payrrent payable b,t the City shall be equal to the interest on, or the principal of (including mandatory sinking fund redemptions) and interest on, as applicable, the Authority Bonds due on the follcwing Interest Payrrent Date. Pursuant to the Indenture, the I nstal Irrent Payrrents are to be applied to the i:avrrent of the principal of (including mandatory sinking fund redemptions) and interest on the Authority Bonds, and the I nstallrrent Payrrents shal I be made in amounts that are sufficient, but no more than sufficient, to i:av the scheduled payrrents of principal of (including mandatory sinking fund redemptions) and interest on the Outstanding Authority Bonds. If and to the extent that, on any Payrrent Date, there are amounts on deposit in the Payrrent Fund established underthe Indenture, said amounts shal I be credited agai nstthe I nstal I rrent Payrrent due on such date. Each I nstallrrent Payrrent shall be paid to the Trustee, as assignee of the Authority, no later than the applicable Payrrent Date, in lawful money of the United States of Arrerica, in funds which will be available not I ater than the B usi ness Day fol I cwi ng payrrent. (b) The lnstallrrent Purchase Agreerrent constitutes a Senior Obligation. The lnstallrrent Payrrents constitute Senior Obligation Payrrents. C-38 Late Payrrents. In the e.,,entthe City fai Is to rrake any of the I nstal Irrent Payrrents to be rrade b,t it underthe I nstallrrent PurchaseAgreerrent, such i:ayrrent shall continue as an obligation of the City until such amount shall have been fully i:aid and, to the extent pernitted b,t liM', the City agrees to pay the sarre with interest accruing thereon at a rate per annum equal to the highest interest rate borne b,t the Authority Bonds. Obligation Absolute. The obligation of the City to rrake the lnstallrrent Payrrents and other i:avrrents required to be rrade b,t it underthe prOJi sions of the I nstal I rrent Purchase Agreerrent described underthe heading"PURCHASE AND SALE OF PURCHASED IMPROVEMENTS; PAYMENTS," from System Net Revenues as described in the lnstallrrent PurchaseAgreerrent, is absolute and unconditional, and unti I such ti rre as the I nstal I rrent Payrrents and such other i:ayrrents shal I have been paid in ful I ( or the agreerrents, cOJenants and other obi i gati ons of the City under the I nstal I rrent Purchase A greerrent have been discharged and satisfied pursuant to the provisions of the under the I nstal I rrent Purchase A greerrent described under the heading "RIGHT TO REDEEM; DISCHARGE OF OBLIGATIONS - Discharge of Obligations''), the City shall not discontinue or suspend any lnstallrrent Payrrents or other i:ayrrents required to be made b,t it underthe I nstal I rrent PurchaseAgreerrentwhen due, whether or not the Purchased I mprc,,1errents or any i:art thereof are operating or operable, or their use is suspended, interfered with, reduced or curtailed or terminated in whole or in i:art, and such lnstallrrent Payrrents and other i:ayrrents shall not be sul::iject to reduction whether b,t offset or otherwise and shall not be conditional upon the performance or nonperformance b,t any party of any agreerrent for any cause whatsoever. Pledges; Funds and Accounts Pledge of System Net Revenues. Sul::iject to application for the purposes, and on the terms and conditions, contained in the lnstallrrent Purchase Agreerrent, the City irrevocably pledges and grants a security interest in, the System Pledged Re.1enues as security for the payrrent of the Obligation Payrrents and the other i:ayrrents required to be made b,t the City under the I nstal Irrent Purchase Agreerrent. The pledge of, and security interest in, the System Pledged Revenues shall, sul::iject to application as pernitted in the I nstallrrent PurchaseAgreerrent, constitute a first lien on System Pledged Revenues. Estalblishrrent of Funds and Accounts. The City agrees to rraintain, so long as any Obligations remain outstanding, the System Re.1enue Fund. Sul::iject to the prc,,1isions of the follcwing paragraph, the City agrees, to estalblish and rraintain within the System Revenue Fund, so long as any Obligations remain outstanding, the fol I cwi ng accounts: (a) Senior Obligation Payrrent Account; (b) Subordinate Obligation PayrrentAccount; and (c) Rate Stalbilization Account. Notwithstanding the foregoing, the City need not establish a Subordinate Obligation Payrrent Account unless and until it has incurred Subordinate Obligations; the City need only estalblish a Rate Stabi I i zati on Account if and when it deems the establ i shrrent of such accountto be necessary or appropriate for the managerrent of its financial affairs. A 11 ocati on of System Revenues. The City, in orderto carry out and effectuate the pl edge contai ned in the lnstallrrent Purchase Agreerrent described under the heading "PLEDGES; FUNDS AND ACCOUNTS - Please of System Re.1enues," the City agrees and cOJenants that all System Revenues received b,t it shall be deposited when and as received in the System Revenue Fund. The City shall l'.0-Y from the System Revenue Fund all Operation and Maintenance Expenses (including amounts reasonably C-39 required to be set aside in contingency reserves for Operation and Maintenance Expenses, the i:ayrrent of which is not i rnrredi ately requi red) as and when the sarre shal I be due and payable. After having i:ai d, or havi ng made prOJi si on for the payrrent of, Operation and Mai ntenance Expenses, the City shall set aside and deposit or transfer, as the case rray be, from the System Revenue Fund the amounts set forth belcw at the follcwing tirres and in the follcwing order of priority: (a) Senior Obligation Payrrent Account. On or before each Payrrent Date, the City shall transfer legally available System Net Revenues to the Senior Obligation Payrrent Account, an amount which, together with other amounts on deposittherein, is at least equal to Debt Service due and i:ayable on all Senior Obligations before the follcwing Payrrent Date; prOJided, hcwever, that no such deposit need be made if the amounts on deposit in such Senior Obligation PayrrentAccount are at least equal to the amount of such Debt Service. In the event that the City has insufficient System Net Revenues to rrake all of the transfers con tempi ated b,t this i:aragraph (a), then such transfers shal I be rrade, as nearly as practicable, pro rata, based on the respective princii:al amounts of the Senior Obligations, i:ayrrents with respect to which are required to be made. (b) Senior Obligation Reserve Funds. After having rrade the transfers required b,t paragraph (a), abOJe, the City shall, on or before each Payrrent Date, transfer to each Obligation Trustee for Senior Obligations, for deposit in the applicable Obligation Reserve Fund, legally available System Net Revenues in an amount equal to the amount, if any, required to be deposited therein to build up or replenish such Obi i gati on Reserve Fund as and to the extent required b,t the applicable i nstrurrent pursuantto which such Senior Obligation was incurred and to reimburse the issuer of any Reserve Facility on deposit in such Obligation Reserve Fund for any claims paid thereunder, as and to the extent required b,t the Reserve Facility Agreerrent pursuant to which such Reserve Facility was issued. In the event that there are insufficient System Net Revenues to rrake all of the transfers contemplated b,t this i:aragraph (b), then said transfers shal I be made, as nearly as practicable, pro rata, based on the respective pri nci i:al amounts of the Senior Obligations, deposits to the Obligation Reserve Funds for which are required to be rrade. (c) Subordinate Obligation Payrrent Account. After having rrade the transfers required b,t paragraphs (a) and (b), abOJe, on or before each Payrrent Date, the City shall transfer legally available System Net Revenues to the Subordinate Obi igation Payrrent Account in an amount which, together with other amounts on deposit therein, is at least equal to Debt Service due and payable on all Subordinate Obligations before the follcwing Payrrent Date; prc,,1ided, hcwever, that no such deposit need be rrade if the amounts on deposit in such Subordinate Obligation PayrrentAccount are at least equal to the amount of such Debt Service. In the event that the City has insufficient System Net Revenues to rrake all of the transfers contemplated b,t this paragraph (c) then such transfers shall be made, as nearly as practicable, pro rata, based on the respective pri nci i:al amounts of the Subordi nate Obi i gati ons, payrrents with respect to which are required to be made. ( cl) Subordinate Obi i gati on Reserve Funds. After having made the transfers required b,t paragraphs (a), (b) and (c), abOJe, the City shall, on or before each Payrrent Date, transfer to each Obligation Trustee for Sul:ordinate Obligations, for deposit in the applicable Obligation Reserve Fund, legally available System Net Revenues in an amount equal to the amount, if any, required to be deposited therein to build upor replenish such Obi igation Reserve Fund, as and to the extent required b,t the applicable i nstrurrent pursuant to which such Subordinate Obi i gati on was incurred, and to reimburse the issuer of any Reserve Facility on deposit in such Obligation Reserve Fund for any claims i:aid thereunder, as and to the C--40 extent required b,t the Reserve Facility Agreement pursuant to which such Reserve Facility was issued. In the e.,,entthat there are insufficient System Net Revenues to make all of the transfers contemplated b,t this paragraph (cl), then said transfers shall be made, as nearly as practicable, pro rata, based on the respective principal amounts of the Subordinate Obligations, deposits to the Obligation Reserve Funds for which are required to be made. ( e) Rate Sta bi Ii zati on Account. After havi ng made the transfers requi red b,t paragraphs (a), ( b), (c) and (cl), abo.ie, the City may, on or before the Interest Payment Date immediately follcwingthe date on which said transfers are required to be made, transfer all or a portion of the System Net Revenues remaining in the System Revenue Fund to the Rate Stabilization Account; provided, hcwever, that the City shall not make any such transferto the Rate Stabi Ii zation Account if and to the extentthat such transfer would result in there being i nsuffi ci ent amounts in the System Re.,,enue Fund to pay Reserve Faci I ity Costs then due and payable. (f) Surplus. After having made the transfers required or pernitted b,t paragraphs (a), (b), (c), (cl) and (e), above, amounts in the System Re.1enue Fund may be applied for any purpose pernitted b,t law, incl udi ng payments for capital improvements to the System and Reserve Faci Ii ty Costs. Senior Obligation Payment Account. During the period from each Payment Date to the day preceding the fol lcwi ng Payment Date, the City shal I transfer from the Senior Obi i gati on Payment Account to the appropriate entity the Senior Obligation Payments as and when due and payable, as required b,t the instrument pursuant to which such Senior Obi i gati ons were incurred. I n the event there are i nsuffi ci ent amounts on deposit in the Senior Obligation Payment Account to make all of such Senior Obligation Payments, then said payments shall be made, as nearly as practicable, pro rata, based on the respective principal amounts of the Senior Obligation Payments due and payable during such period. Subordinate Obi igation Payment Account. During the period from each Payment Date to the day preceding the follcwing Payment Date, the City shall transfer from the Subordinate Obligation Payment Account (a) to the Trustee on said Payment Date, the Installment Paymentthen due and payable, and (b) to the appropriate entity, the Subordinate Obligation Payments (otherthan the Installment Payments) as and when due and payable, as required b,t the instrument pursuantto which such Subordi nate Obi i gati ons were incurred. In the event there are insufficient amounts on deposit in the Subordinate Obligation Payment Accountto make all of such Subordinate Obligation Payments, then said payments shall be made, as nearly as practicable, pro rata, based on the respective principal amounts of the Installment Payments and Subordinate Obligation Payments due and payable during such period. Additional Obligations Additional Senior Obligations. The City may at any time incur Senior Obligations, prc,,1ided: (a) There shall not have occurred and be continuing an Event of Default underthe Installment Purchase Agreement. (b) The City prc,,1ides to each Obligation Trustee for Obligations a Written Certificate of the City demonstrating that either (i) the Acjj usted System Net Revenues, calculated on Generally Accepted Accounting Principles, as shewn b,t the books of the City for the latest Fiscal Year or any 12 consecutive month period within the last completed 18-m:Jnth period ended not more than one month before the incurrence of such additional Senior Obligations, or (ii) the estimated System Net Revenues for the first complete Fiscal Year when the improvements to the System financed with the proceeds of such additional Senior Obligations shall be in operation as estimated b,t and set forth in an opinion of an independent consulting engineer or firm of independent consulting engineers emplO{ed b,t the City, plus, at the option C-41 of the City, either or both of the items designated under clauses (x) and (y) in the follewing i:aragraph, shall have amounted to at least 11036 of Assurred Maximum Annual Debt Service on all Senior Obligations to be outstanding imrrediately subsequent to the incurring of such additional Senior Obligations; provided, hewever, that, in the eventthat all or a portion of such Senior Obligations are to be issued for the purpose of refunding and retiring any Senior Obligations then outstanding, interest and principal i:avrrents on the Senior Obligations to be so refunded and retired from the proceeds of such refunding Senior Obligations being issued shall be excluded from the foregoing corrputation of Assurred Maximum Annual Debt Service. For purposes of demonstrating compl i ance with the foregoi ng, Adj usted System Net Revenues may be aqjusted for (x) any increase in System Net Revenues (including, without limitation, a reduction in Operation and M ai ntenance Expenses) which may arise from any additions to and extensions and i rrprc,,1errents of the System to be made or acquired with the proceeds of such addi ti anal Senior Obi i gati ons or with moneys from any other source which, during all or any i:art of such Fiscal Year or such 12 consecutive month period within the I ast completed 18-month period were not in service, al I in an amount equal to the estimated additional average annual net revenues to be derived from such additions, extensions and irrprc,,1errents for the first 36-m:Jnth period in which each addition, extension or irrprc,,1errent is respectively to be in operation, all as shewn b,t the certificate or opinion of an independent consulting engineer or firm of independent consulting engineers emplO{ed b,t the City, and (y) earnings arising from any increase in the charges made forthe use of the Systemwhi ch has become effective prior to the incurring of such additional Senior Obligations but which, during all or any i:art of such Fiscal Year or such 12 consecutive month period within the last corrpleted 18--rmnth period, was not in effect, in an amount equal to the amount b,t which theAcjjusted System Net Revenues would have been increased if such increase in charges had been in effect during the whole of such Fiscal Year or such 12 consecutive month period within the last corrpleted 18-month period, as shewn b,t a Written Certificate of the City. Notwithstanding the foregoing, the City may at any tirre incur Senior Obligations to be incurred for the purpose of refunding and retiring any Senior Obi i gations then outstanding without compliance with the conditions set forth abOJe if the Assurred Debt Service for each Fiscal Year during which any Senior Obligations that are outstanding both before and after the incurrence of such refunding Senior Obligations will not be increased b,t reason of the incurrence of such refunding Senior Obligations. ( c) Any requi red transfer of System Net Revenues for repl eni shrrent of an Obi i gati on Reserve Fund for such Senior Obligations or for reimburserrent of a claim i:aid under a Reserve Facility on deposit therein, other than from delinquent Senior Obligation Payrrents with respect thereto, shall occur only on Payrrent Dates. Subordinate Obligations. The City may at any tirre incur Subordinate Obligations, prc,,1ided: (a) There shall not have occurred and be continuing an Event of Default underthe lnstallrrent Purchase Agreerrent. (b) The City prc,,1ides to each Obligation Trustee for Obligations a Written Certificate of the City demonstrating that either (i) the Acjj usted System Net Revenues, calculated on Generally Accepted Accounting Principles, as shewn b,t the books of the City for the latest Fiscal Year or any 12 consecutive month period within the last completed 18-month period ended not more than one month before the incurrence of such additional Subordinate Obligations, or (ii) the estimated System Net Revenues for the first complete Fiscal Year when the imprc,,1errents to the System financed with the proceeds of such additional Subordinate Obligations shall be in operation as estimated b,t and set forth in an opinion of an independent consulting engineer or firm of independent consulting engineers emplO{ed b,t the City, plus, at the option of the City, either or both of the items designated under clauses (x) and (y) in the fol lewing C-42 plfagraph, shall have arrountedto at least 11036 of Assurred MaxirnumAnnual Debt Service on all Senior Obi i gati ons and Subordinate Obi i gati ons to be outstandi ng i mrredi ately subsequent to the i ncurri ng of such additional Subordinate Obligations; provided, hewever, that, in the event that all or a portion of such Subordinate Obligations are to be issued for the purpose of refunding and retiring any Subordinate Obligations then outstanding, interest and principal payrrents on the Subordinate Obligations to be so refunded and retired from the proceeds of such refunding Subordinate Obligations being issued shall be excluded from the foregoing computation of Assurred Maximum Annual Debt Service. For purposes of demonstrating compl i ance with the foregoi ng, Adj usted System Net Revenues may be aqjusted for (x) any increase in System Net Revenues (including, without limitation, a reduction in Operation and M ai ntenance Expenses) which may arise from any additions to and extensions and irnprc,,1errents of the System to be made or acquired with the proceeds of such additional Subordinate Obligations or with moneys from any other source which, during all or any part of such Fiscal Year or such 12 consecutive month period within the last completed 18-month period were not in service, all in an amount equal to the estimated additional average annual net revenues to be derived from such additions, extensiais and imprOJerrents for the first 36-mJnth period in which each addition, extension or i rnprc,,1errent is respectively to be i n operation, al I as shewn 0y the certi fi care or opi ni on of a qualified independent engineer emplO{ed 0y the City, and (y) earnings arising from any increase in the charges made for the use of the System which has become effective priortothe incurring of such additional Subordinate Obligations but which, during all or any part of such Fiscal Year or such 12 consecutive month period within the last completed 18--rmnth period, was not in effect, in an amount equal to the amount 0y which theAcjjustedSystem Net Revenues would have been increased if such increase in charges had been in effect during the whole of such Fiscal Year or such 12 consecutive month period within the last completed 18- month period, as shewn 0y a Written Certificate of the City. Notwithstanding the foregoing, the City may at any tirre incur Subordinate Obligations to be incurred for the purpose of refunding and retiring any Subordinate Obligations then outstanding without compliance with the conditions set forth abOJe if the Assumed Debt Service for each Fiscal Year during which any Subordi nate Obi i gati ons that are outstandi ng both before and after the i ncurrence of such refunding Subordinate Obligations will not be increased 0y reason of the incurrence of such refunding Subordi nate Obi i gati ons. (c) The Subordinate Obligation Payrrents for such Subordinate Obligations shall not be sul::iject to acceleration in the event of a default 0y the City. ( cl) Any requi red transfer of System Net Revenues for repl eni shrrent of an Obi i gati on Reserve Fund for such Subordi nate Obi i gati ons or for rei rnburserrent of a claim paid under a Reserve Faci Ii ty on deposit therein, other than from delinquent Subordinate Obligation Payrrents with respect thereto, shall occur only on Payrrent Dates. No Other Additional Obligations. The City shall not incur any debt obligations payable from System Net Revenues except as prOJi ded i n the prOJi si ons of the I nstal Irrent Purchase A greerrent descri bed underthe heading"ADDITIONAL OBLIGATIONS." COJenants Corrpl i ance with Aqreerrents. The City shal I punctually pay the I nstal Irrent Payrrents and other payrrents required to be made 0y it underthe I nstallrrent PurchaseAgreerrent in strict confornitywith the terms of the I nstal Irrent Purchase Agreerrent, and shal I faithfully observe and perform al I the agreerrents, conditions, covenants and terms contained therein required to be observed and perforrred 0y it, and shall not terni nate the I nstal Irrent Purchase Agreerrent for any cause including, without Ii niti ng the generality C-43 of the foregoing, any acts or circumstances that rray constitute failure of consideration, destruction of or damage to the Purchased I rrproverrents, cornrrerci al frustration of purpose, any change i n the tax or other laws of the United States of Arrerica or of the State or any political subdivision of either or any failure of the Authority to observe or perform any agreerrent, con di ti on, covenant or term contained i n the I nstal I rrent PurchaseAgreerrent required to be observed and perforrred 0y it, whether express or irrplied, or any duty, liability or obligation arising out of or connected therewith or the insolvency, or deerred insolvency, or bankruptcy or liquidation of the Authority or any force majeure, including acts of God, tempest, storm, earthquake, war, rebellion, riot, civil disorder, acts of public enemies, blockade or embargo, strikes, industrial disputes, lock outs, lack of transportation facilities, fire, explosion, or acts or regulations of governrrental authorities. Legal Existence. The City shall use all rreans legally availabie to rraintain its existence. Against Encumbrances. (a) The City shall not mortgage or otherwise encumber, pledge or place any charge upon the System or any part thereof, or upon any of the System Revenues that would impair the City's ability to comply with its obligations underthe I nstallrrent PurchaseAgreerrent. (b) So long as any Obligations are outstanding, the City shall not issue any bonds or incur obligations payable from Pledged System Revenues or secured 0y a pledge, lien or charge upon Pledged System Revenues, except as provided i n the I nstal Irrent Purchase A greerrent. Against Sale or Other Disposition of Property. The City shall not sell, lease or otherwise dispose of the System or any part thereof essential to the proper operation of the System or to the rrai ntenance of System Revenues; prOJided, hcwever, that any real or personal property which has becorre non-operative or which is not needed forthe efficient and proper operation of the System, or any rraterial or equipment which has become worn out, rray be sold if such sale will not rraterially reduce System Net Revenues and if the proceeds of such sale are deposited in the System Revenue Fund. The City shall not enter into any agreerrent or I ease which impairs the operation of the System or any part thereof necessary to secure adequate System Revenues for the payrrent of the Obligations or which would otherwise impair the operation of the System. Notwithstanding the foregoing, the City rray sell or lease the System or any part thereof if (a) the System or such part thereof is sold or leased to another local governrrental agency (including the Authority) or to a nonprofit corporation that is organized for the purpose of assisting one or more local governrrental agencies in financing or refinancing capital prqjects, (b) in the case of a sale of the System or a part thereof, the City, as part of that same sale transaction, si rnultaneously repurchases the System or such part thereof, (c) in the case of a lease of the System or a part thereof, the City, as part of that same I ease transaction, simultaneously I eases back, for a term that is not substantial ly Iess than the term of that I ease, the System or such part thereof, and ( cl) the net financing proceeds obtained 0y the City from such sale and repurchase or lease and lease back are used 0y the City, or set aside for use 0y the City, either to pay for i rrprc,,1errents to the System or to refund or refinance Obi igations. Maintenance and Operation of the System The City shall rraintain and preserve the System in good repair and working order at all tirres and shall operate the System in an efficient and econonical manner and shall pay all of Operation and Maintenance Expenses as they become due and payable, but the City shall not be required to pay such Operation and Maintenance Expenses if the validity thereof shall be contested in good faith (so long as such nonpayrrent wil I not rraterially acwersely affect the City's ability to perfcrm its obi i gations underthe I nstal I rrent Purchase Agreerrent). Amount of Rates and Charges. The City, to the extent pernitted 0y applicable law, shall fix, prescribe and collect rates and charges for the services of the System which will be at least sufficient to yield during each Fiscal Year (a) System Revenues sufficient to rrake all payrrents required 0y the Indenture, including payrrents of Operation and Maintenance Expenses and any amounts payable under C--44 any Reserve Facility Agreement, (b) System Net Revenues equal to the sum of (i) 11036 of Annual Debt Service on Senior Obligations for such Fiscal Year, and (ii) 10036 of Annual Debt Service on Subordinate Obligations for such Fiscal Year, and (c) Aqjusted System Net Revenues equal to the sum of (i) 10036 of Annual Debt Service on Senior Obligations for such Fiscal Year, and (ii) 10036 of Annual Debt Service on Subordinate Obligations for such Fiscal Year. The City may make acjjustments from time to time in such rates and charges and may make such cl assi fi cation thereof as it deems necessary, but shal I not reduce the rates and charges then in effect unless System Revenues and System Net Revenues from such reduced rates and charges wi 11 at al I ti mes be sufficient to meet the requi rements of this i:aragraph. Payment of Claims. The City shall l'.0-Y and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, night become a lien on the System or System Net Revenues or any i:artthereof or on any funds in the hands of and Obligation Trustee that might imi:air the security of the Obligation Payments, but the City shall not be required to pay such claims if the validity thereof shall be contested in good faith (so long as such nonpaymentwi 11 not materially acwersely affect the City's ability to perform its obi i gati ons underthe I nstal I ment Purchase Agreement). Corrpl i ancewith Contracts. The City shal I comply with, keep, observe and perform al I agreements, con di ti ons, covenants and terms, express or i mpl i ed, requi red to be performed b,t it contai ned i n al I contracts for the use of the System and al I other contracts affecting or involving the System to the extent that the City's failure to so comply, keep, observe or perform would have a material acwerse effect on the City's ability to perform its obligations under the Installment Purchase Agreement. The City shall enforce all material prc,,1isions of any contracts to which it is a plrty, an assignee, successor in interest to a i:artv or third--p3.rty beneficiary, in any case where such contracts prc,,1ide for material i:ayments or services to be rendered to the System Insurance. (a) To the extent such insurance is available for reasonable premiums from a reputable insurance company, the City shall procure and maintain at all times insurance on the System against such risks (including accident to or destruction of the System) and in such amounts as are usually insured in connection with operations in the State sinilar to the System; prc,,1ided, hcwever, that such insurance cOJerage may be satisfied under a self--insurance program which is actuarial ly sound. (b) The City shall procure and maintain or cause to be procured and maintained public liability insurance cOJering claims against the City (including its city council, officers and emplO{ees) for bodily injury or death, or damage to property occasioned b,t reason of the City's operations, including any use of the System, and such insurance shal I afford protection in such amounts as are usually cOJered in connection with operations in the State si mi I arto the System; prOJi ded, hcwever, that such insurance cOJerage may be satisfied under a sel f--i nsurance program which is actuarially sound. (c) If all or any i:art of the System shall be damaged or destrO{ed, the Net Proceeds realized b,t the City as a resultthereof shall be deposited b,t the City in a special accountwithi n the System Revenue Fund which the City shall establish as needed in trust and applied b,t the City to the cost of acquiring and constructing repairs, replacements, additions, betterments, extensions or imprc,,1ements to the System if (i) the City first secures and files with the each Obligation Trustee a Written Certificate of the City shewing (A) the loss in annual System Revenues, if any, suffered, or to be suffered, b,t the City b,t reason of such damage or destruction, (B) a general description of the repairs, replacements, additions, betterments, extensi ms or improvements to the System then proposed to be acquired and constructed b,t the City from such Net Proceeds, and (C) an estimate of the System Revenues to be derived afterthe completions of such repai rs, replacements, additions, betterments, extensions or improvements; and (ii) each Obi i gati on Trustee has been furnished a Written Certificate of the City, certifying that the System Revenues after such rei:air, replacement, addition, betterment, extension or improvement of the System will sufficiently offset on a timely basis the loss of System Revenues resulting from such damage or destruction so that the ability of C-45 the City to l'.0-Y all Obligation Payments when due will not be substantially inµiired, and such Written Certificate of the City shall be final and conclusive, and any balance of such Net Proceeds not required b,t the City for such purpose shall be deposited in the System Revenue Fund and applied as prc,,1ided in the Installment Purchase Agreement described under the heading "PLEDGES, FUNDS AND ACCOUNTS - A 11 ocati on of System Revenues;" prOJi ded, hew ever, that if the foregoi ng conditions are not met, then such Net Proceeds shall be deposited in the System Revenue Fund, to be applied as prOJided in the Installment Purchase Agreement described under the heading "PLEDGES, FUNDS AND ACCOUNTS - Allocation of System Revenues." If such damage or destruction has had no effect, or at most an immaterial effect, upon the System Revenues and the security of the Obligations, and a Written Certificate of the City to such effect has been filed with each Obligation Trustee, then the City shall forthwith deposit such proceeds in the System Revenue Fund, to be applied as prOJided in the Installment Purchase Agreement described under the heading "PLEDGES, FUNDS AND ACCOUNTS -Allocation of System Revenues." Accounting Records; Financial Statements. (a) The City shall keep proper books of record and accounts in which complete and correct entries shall be made of all transactions relating to the System, the System Revenue Fund and all other accounts or funds established pursuant to the Installment Purchase Agreement, and upon request shall prc,,1ide information concerning such books of record and accounts to each OI:Hgation Trustee. (b) The City shall prei:are annually, not laterthan 180days afterthe close of each Fiscal Year, so long as any Obligations remain outstanding, Certified Financial Statements of the City for the preceding Fiscal Year relating to the System Revenue Fund and all other accounts or funds established pursuant to the Installment Purchase Agreement and held b,t the City, shewing the balances in each such account or fund as of the beginning of such Fiscal Year and the totals of all deposits in and withdrawals from each such account or fund during such Fi seal Year and the balances in each such account or fund as of the end of such Fiscal Year. Such Certified Financial Statements shall include a statement as to the manner and extent to which the City has complied with the prOJisions of the Installment Purchase Agreement as it rel ates to such accounts and funds. Annual Budget. Not less than 30 days prior to the commencement of each Fiscal Year, the City shall adopt and file with the Trustee an Annual Budget for the System for such Fiscal Year. Each such Annual Budget shall set forth in reasonable detail for such Fiscal Year, b,t month for such Fiscal Year, the estimated System Revenues, the Operation and Maintenance Expenses, the Annual Debt Service on Senior Obligations and the Annual Debt Service on Subordinate Obligations and may set forth such additional material as the City Shall deternine. If at any time during a Fiscal Year such estimates do not substantially correspond to the actual System Revenues, the Operation and Maintenance Expenses, the Annual Debt Service on Senior Obligations and the Annual Debt Service on Subordinate Obligations, or the City aqjusts its estimates of any of such items for the Fiscal Year, the City shall adopt and file with each Obligation Trustee an amended Annual Budget for the remainder of such Fiscal Year. No Obligation Trustee shall be charges with kncwl edge of, nor shal I be responsible for the sufficiency of, any such Annual Budget, it bei ng expressly agreed and understood that each Trustee shall receive such Annual Budget solely as a custodian to preserve a record of the transactions contemplated thereb,t. Protection of Security and Rights of the Authority. The City shall preserve and protect the security of the Installment Purchase Agreement and the rights of the Authority to the Installment Payments and other i:ayments requi red to be made b,t the City underthe I nstal I ment Purchase Agreement and shal I warrant and defend such rights against al I claims and demands of al I Persons. C--46 Payrrent of Taxes and Corrpliance with GOJernrrental Regulations. (a) The City shall l'.0-Y and discharge al I taxes, service charges, assessrrents and other governrrental charges which rnay hereafter be lawfully i rnposed upon the Systern or upon the Systern Revenues, when the sarre shal I become due; prOJided, hONever, that nothing contained in the I nstallrrent Purchase Agreerrent shall require the City to rrake any such i:ayrrents so long as the City in good faith shal I contestthe validity of any such taxes, service charges, assessrrents or other governrrental charges and such noni:ayrrent wi 11 not rrateri ally adversely affect the City's ability to perform its obligations underthe I nstal lrrent Purchase Agreerrent. (b) The City shall duly cornplywith all applicable state, federal and local statutes and all valid regulations and requi rerrents of any governrrental authority relative to the operation of the Systern or any i:art thereof, but the City shall not be required to cornply with any regulations or requirerrents so long as the validity or application thereof shall be contested in good faith and such noncompliance will not rraterially adversely affect the City's ability to perform its obligations under the lnstallrrent Purchase Agreerrent Collection of Charges, Fees and Rates. The City shall have in effect at all tirres rules and regulations requiring each user of the Systernto l'.0-Y the applicable charges, fees and rates and prOJiding for the bi 11 i ng thereof and for a due date and a delinquency date for each bi 11. In each case where such bi 11 remains unpaid in whole or in i:art after it becorres delinquent, the City shall enforce the collection procedures contained in such rules and regulations. No Free Service. The City shall not perrnit any i:art of the Systernor any facility thereof to be used or taken adJantage of free of charge 0y any corporation, firrn or Person, or 0y any public agency (including the State of California and any city, county, public agency, political subdivision, public authority or agency or any thereof) , uni ess otherwise requi red b,t Iaw or exi sti ng written agreerrents. Erni nent Dornai n Proceeds. If al I or any i:art of the Systern shal I be taken b,t eni nent domal n proceedings, the Net Proceeds realized 0y the City as a result thereof shall be deposited 0y the City in a special account within the Systern Revenue Fund which the City shall establish as needed in trust and applied b,t the City to the cost of acquiring and constructing rei:airs, replacerrents, additions, betterrrents, extensiais or irnprOJerrents to the Systern if (i) the City first secures and files with the each Obligation Trustee a Written Certificate of the City shewing (A) the loss in annual Systern Revenues, if any, suffered, or to be suffered, 0y the City b,t reason of such eni nent dornai n proceedings, (B) a general description of the repairs, replacerrents, additions, betterrrents, extensions or irnproverrents to the Systernthen proposed to be acquired and constructed b,t the City frorn such Net Proceeds, and (C) an estirrate of the Systern Revenues to be derived after the completions of such repairs, replacerrents, additions, betterrrents, extensiais or irnprOJerrents; and (ii) each Obligation Trustee has been furnished a Written Certificate of the City, certi fyi ng that the Systern Revenues after such rei:ai r, repl acerrent, addition, betterrrent, extension or irnprOJerrent of the Systern will sufficiently offset on a tirrely basis the loss of Systern Revenues resulting frorn such eninent domain proceedings so that the ability of the City to l'.0-Y all Obligation Payrrents when due will not be substantially irni:aired, and such Written Certificate of the City shall be final and conclusive, and any balance of such Net Proceeds not required b,t the City for such purpose shall be deposited in the Systern Revenue Fund and applied as provided in the I nstallrrent PurchaseAgreerrent; prOJided, hONever, that if the fcregoing conditions are not rret, then such Net Proceeds shall be deposited in the Systern Revenue Fund, to be applied as prOJided in in the lnstallrrent Purchase Agreerrent as described underthe heading "PLEDGES, FUNDS AND ACCOUNTS -Allocation of Systern Revenues." If such eminent domain proceedings have had no effect, or at mast an irnrraterial effect, upon the Systern Revenues and the security of the Obligations, and a Written Certificate of the City to such effect has been filed with each Obligation Trustee, then the City shall forthwith deposit such proceeds in the C-47 System Revenue Fund, to be applied as prc,,1ided in the Installment Purchase Agreement described under the heading "PLEDGES, FUNDS AND ACCOUNTS -Allocation of System Revenues." Tax COJenants. The City shall not take any action, or fail to take any action, if such action or fai Iure to take such action would adversely affect the exclusion from gross i ncorne of interest on the Authority Bonds under Section 103 of the Code. Without liniting the generality of the foregoing, the City shal I corrply with the requi rements of the Tax Certificate, which is i ncorporated i n the I nstal Iment Purchase Agreement as if fully set forth therein. This cOJenant shall survive i:ayment in full or defeasance of the Authority Bands. Adninistrative Costs. The City shall l'.0-Y each charge constituting an Administrative Cost. Adninistrative Costs shall be i:aid b,t the City directly to the Person or Persons to whom such amounts shal I be i:ayabl e. The City shal I l'.0-Y al I such amounts when due or at such I aterti me as such amounts may be i:aidwithout penalty or, in any other case, within 30 days after notice in writing from the Trustee to the City stating the amount of Administrative Costs then due and i:ayable and the purpose thereof. Continuing Disclosure. The City shall corrply with and carry out all of the provisions of the Continuing Disclosure Agreement applicable to it. Notwithstanding any other prOJision of the Installment Purchase Agreement or the Indenture, failure of the City to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; prc,,1ided, hcwever, that the Trustee may (and, at the written direction of any Particii:ating Underwriter or the owners of at least 25% aggregate principal amount of Outstanding Authority Bands, and upon recei pt of i ndemni fi cation reasonably satisfactory to the Trustee, shall) or any owner or Beneficial owner of the Authority Bonds may, take such actions as may be necessary and appropriate to compel performance, i ncl udi ng seeki ng mandate or specific performance b,t court order. Indemnification. To the extent pernitted b,t law, the City agrees to indemnify and hold the Authority and the Trustee, as assignee of the Authority, and their officers and members harm ess against any and all liabilities which night arise out of or are related to the Purchased I mprc,,1ements or any portion thereof or the Authority Bonds, and the City further agrees to defend the Authority and the Trustee, as assignee of the Authority, and their officers and members in any action arising out of or related to the Purchased Improvements or any portion thereof or the Authority Bands. Further Assurances. The City shall adopt, deliver, execute and make any and all further assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to faci I itate the performance of the I nstal I ment Purchase Agreement and for the better assuring and confi rni ng unto the Authority of the rights and benefits prc,,1ided to it in the Installment Purchase Agreement. Right to Redeem; Discharge of Obligations Right to Redeem On or after February 1, 2028, the City shall have the right to cause Authority Bonds maturing on or after February 1, 2029tobe redeemed in accordance with the Indenture, b,t prc,,1iding the Trustee with funds sufficient for such purpose (which funds may be derived b,t the City from any source) and giving notice as provided in the Installment Purchase Agreement described underthe heading" RIGHT TO REDEEM; DISCHARGE OF OBLIGATIONS- Notice." Notice. Before exercising its right to cause Authority Bonds to be redeemed pursuant to the Installment Purchase Agreement described under the heading "RIGHT TO REDEEM; DISCHARGE OF OBLIGATIONS - Right to Redeem," the City shall give written notice to the Trustee of its intention to exercise such right, speci fyi ng the date on which such redemption shal I be made, which date shal I be not C--48 less than 45 nor more than 60 days from the date such notice is given, and specifying the amounts and maturities of Authority Bands to be redeemed. Discharge of Obligations. If the Authority shall pay or cause to be i:aid or there shall otherwise be plid to the ONners of all Outstanding Authority Bonds the interest thereon and the princii:al thereof and the preni urns, if any, thereon or if al I Outstanding Authority Bands shal I be deemed to have been i:ai d at the times and in the rranner stipulated in the Indenture, and if all amounts then due and i:ayable underthe Installment Purchase Agreement shall have been i:aid or provided for, then all agreements, cOJenants and other obligations of the City under the Installment Purchase Agreement shall thereupon cease, terninate and become void and be discharged and satisfied. Events of Default and Remedies of the Authority Events of Default. The follcwing shall be Events of Default under the Installment Purchase Agreement, and Event of Default shall mean any one or more of the follcwing events: (a) if default shal I be rrade b,t the City in the due and punctual i:ayment of or on account of any Senior Obligations as the same shall become due and payable; (b) if default shal I be rrade b,t the City in the performance of any of the agreements or cOJenants required in the Installment PurchaseAgreementto be performed b,t it (otherthan as specified in i:aragraph (a) above), and such default shall have continued for a period of 30days afterthe City shall have been given notice in writing of such default b,t the Authority orthe Trustee; prc,,1ided, hcwever, that such default shall not constitute an Event of Default underthe Installment Purchase Agreement if the City shall commence to cure such default within such 30 day period and thereafter diligently and in good faith shall proceed to cure such default within a reasonable period ohime; (c) if the City shall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall apprOJe a petition filed with or without the consent of the City seeking arrangement or reorganization under the federal bankruptcy I aws or any other applicable I aw of the United States of America or any state therein, or if under the prc,,1isions of any other law for the relief or aid of debtors any court of competent jurisdiction shall assume custody or control of the City or of the whole or any substantial part of its property; or (cl) if the i:ayment of any Senior Obligation Payments is accelerated in accordance with the terms thereof; then, and in each and every such case during the continuance of an Event of Default specified in i:aragraph (c) and (cl) above, the Authority shall, and for any other Event of Default the Authority rray, b,t notice in writing to the City, declare all uni:aid Installment Payments to be due and i:ayable immediately, and upon any such declaration the same shall become immediately due and payable; provided, hcwever, that, if, at any time after all unplid Installment Payments shall have been so declared due and i:ayable and before any judgment or decree for the i:ayment of the moneys due shal I have been obtained or entered, the City shall deposit with the Authority a sumsufficientto pay the unplid Installment Payments then due and payable (other than the Installment Payments due and payable solely b,t reason of such declaration), with interest on such overdue I nstal I ment Payments atthe I ate i:ayment rate specified in the I nstal I ment Purchase Agreementdescribedunderthe heading"PURCHASE AND SALE OF PURCHASED IMPROVEMENTS; PAYMENTS - Late Payments," and the reasonable expenses of the Authority and the Trustee shall have been plid or prc,,1ision deemed b,t the Authority or the Trustee, as applicable, to be adequate shall have been rrade therefor, and any and al I other Events of Default shal I have been rrade good or cured to the C-49 satisfaction of the Authority or prOJision deerred b,t the Authority to be adequate shall have been rrade therefor, then and in every such case the Authority, b,t written notice to the City, rray rescind and annul such declaration and its consequences; but no such rescission and annul rrent shal I extend to or shal I affect any subsequent default or shal I i rrp3.i r or exhaust any right or paver consequent thereon. Application of Funds Upon Acceleration. Upon the date of declaration of acceleration as prOJided in the lnstallrrent Purchase Agreerrent described under the heading "EVENTS OF DEFAULT AND REMEDIES OF THE AUTHORITY - Events of Default," all System Revenues thereafter received shall be applied as follCM/5 and in the follcwing order: ( a) to the payrrent of the fees, costs and expenses of the Trustee i n carrying out the prOJi si ans of the lnstallrrent Purchase Agreerrent described under the heading "EVENTS OF DEFAULT AND REMEDIES OF THE AUTHORITY," and each Senior Obligation Trustee, if any, in corrplyingwith the terms of the Senior Obligations for which it is Obligation Trustee, including reasonable compensation to accountants and counsel and si ni I ar costs and then to any fees and expenses i ncurred b,t the Authority i n carryi ng out the prOJi si ans of the I nstal Irrent Purchase A greerrent descri bed underthe heading " EVENTS OF DEFAULT AND REMEDIES OF THE AUTHORITY"; ( b) to the i:ayrrent of Operation and Maintenance Expenses; (c) to the i:ayrrent of the costs and expenses of the Authority if any, in carrying out the prc,,1isions of the I nstallrrent Purchase Agreerrent described under the heading "EVENTS OF DEFAULT AND REMEDIES OF THE AUTHORITY;" and ( cl) to the i:ayrrent of the entire principal amount of unpli d Senior Obi i gati ans, with interest on the OJerdue installrrents at the rate or rates of interest applicalble thereto, in accordance with their respective terms; prOJi ded, hcwever, that if such remaining System Revenues are not sufficient to l'.0-Y such amounts in full, then said remaining System Revenues shall be applied, as nearly as practicable, pro rata, based on the respective princii:al amounts of uni:aid Senior Obligations. Other Rerredi es on Defau It. I n addition to remedies elsewhere prOJi ded in the I nstal I rrent Purchase A greerrent, upon the occurrence and conti nuance of an Event of Default, the Authority shal I have the right: ( a) b,t rrandarnus or other action or proceedi ng or suit at Iaw or i n equity to enforce its rights against the City or any counci I rrember, officer or employee thereof, and to compel the City or any such council rrember, officer or errployee to perform and carry out his or her duties under applicalble law and the agreerrents and cOJenants required to be perforrred b,t him or her contained in the I nstal Irrent Purchase A greerrent; (b) b,t suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Authority; (c) b,t suit in equity require the City and its council rrembers, officers and errployees to account as the trustee of an express trust; and ( cl) to have a receiver or receivers appointed for the System and of the issues, earnings, i ncorne, products and profits thereof, pending such proceedings, with such po.vers as the court rraking such appoi ntrrent shal I confer. Non-Waiver. (a) Nothing in the prc,,1isions of the I nstallrrent PurchaseAgreerrent described under the heading "EVENTS OF DEFAULT AND REMEDIES OF THE AUTHORITY," or in any other C-50 prc,,1ision of the I nstallrrent PurchaseAgreerrent shall affect or irrp3.irthe obligation of the City, which is absolute and unconditional, to pay the lnstallrrent Payrrents to the Authority at the respective due dates from System Net Revenues after the i:avrrent or setting aside therefrom of amounts required for the i:avrrent of Debt Service on Senior Obligations and amounts required to build up or replenish Obligation Reserve Funds for Senior Obligations, and the other funds in the lnstallrrent Purchase Agreerrent comnitted for such payrrent, or shall affect or irrp3.irthe right of the Authority, which is also absolute and unconditional, to institute suitto enforce such i:ayrrent b,t virtue of the contract errbodi ed in the I nstal I rrent Purchase Agreerrent. (b) A waiver of any default or breach of duty or contract b,t the Authority shall not affect any subsequent default or breach of duty or contract or imi:air any rights or remedies on any such subsequent defau It or breach of duty or contract. No delay or omission b,t the Authority to exercise any right or remedy accruing upon any default or breach of duty or contract shall imi:air any such right or rerredy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or rerredy conferred upon the Authority b,t applicable I iM' or b,t the provisions of the I nstal I rrent PurchaseAgreerrent described under the heading "EVENTS OF DEFAULT AND REMEDIES OF THE AUTHOR ITY ," may be enforced and exercised from ti rre to ti rre and as often as shal I be deerred expedient b,t the Authority. (c) If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to the Authority, the City and the Authority shall be restored to their forrrer positions, rights and rerredies as if such action, proceeding or suit had not been brought or taken. Rerredies Not Exclusive. No rerredy in the lnstallrrent Purchase Agreerrent conferred upon or reserved to the Authority is intended to be exclusive of any other rerredy, and each such rerredy shall be cumulative and shal I be in addition to every other rerredy given underthe I nstal I rrent Purchase Agreerrent or new or hereafter existing in law or in equity or b,t statute or otherwise and may be exercised without exhausting and without regard to any other rerredy conferred b,t law. Miscellaneous Liability of City Linited. (a) Notwithstanding anything contained in the lnstallrrent Purchase Agreerrent, the City shall not be requiredtoacwance any moneys derived from any source of incorre other than System Net Revenues and the other funds provided in the lnstallrrent Purchase Agreerrent for the i:avrrent of the I nstal lrrent Payrrents and other i:ayrrents required to be rrade b,t it underthe Install rrent Purchase Agreerrent, or for the performance of any agreerrents or covenants required to be performed b,t it contained in the lnstallrrent Purchase Agreerrent. The City rray, hcwever, but in no event shall be obligated to, acwance moneys for any such purpose so long as such moneys are derived from a source legally available for such purpose and rray be legally used b,t the City for such purpose. (b) The obligation of the City to rrake the I nstallrrent Payrrents and other i:ayrrents required to be made b,t it under the lnstallrrent Purchase Agreerrent is a special obligation of the City i:ayable, in the rranner provided therein, solely from System Net Revenues and other funds prc,,1ided for in the lnstallrrent Purchase Agreerrent, and does not constitute a debt of the City or of the State of California or of any political subdivision thereof in contravention of any constitutional or statutory debt limitation or restriction. Neither the faith and credit nor the taxing pcwer of any City or the State or any political subdivision thereof is pledged to the i:ayrrent of the I nstal I rrent Payrrents or other payrrents required to be made underthe I nstal I rrent Purchase Agreerrent. Benefits of lnstallrrent Purchase Aqreerrent Linited to Parties. Nothing contained in the lnstallrrent Purchase Agreerrent, expressed or implied, is intended to give to any Person other than the C-51 City, the Authority and the assigis of the Authority any right, rerredy or claim under or pursuant thereto, and any agreerrent or cOJenant required therein to be perforrred b,t or on behalf of the City or the Authority shal I be for the sole and exclusive benefit of the other pc1.rty to the Install rrent Purchase Agreerrent. Arrendrrents. (a) The lnstallrrent Purchase Agreerrent and the rights and obligations of the City and the Authority under the lnstallrrent Purchase Agreerrent may be arrended in writing as may be mutually agreed b,t the City and the Authority, with the written consent of the owners of at least a majority in aggregate principc1.I amount of Authority Bonds Outstanding pursuant to the Indenture, prc,,1ided that no such arrendrrent shal I (i) extend the pc1.yrrent date of any I nstal I rrent Payrrent, or reduce the amount of any I nstal Irrent Payrrent without the prior written consent of the owner of each Authority Bond so affected, or (ii) reduce the percentage of Authority Bonds the consent of the owners of which is required for the execution of any arrendrrent of the I nstal I rrent Purchase A greerrent. (b) The lnstallrrent Purchase Agreerrent and the rights and obligations of the City and the Authority underthe lnstallrrent PurchaseAgreerrent may also be arrended at any tirre b,t an arrendrrent of the I nstallrrent Purchase Agreerrent, which shall become binding upon execution b,t the City and the Authority, without the written consents of any owners, but only for any one or more of the follcwing purposes: (i) to add to the cOJenants and agreerrents of the Authority or the City contained in the I nstal Irrent Purchase Agreerrent other covenants and agreerrents thereafter to be observed or to surrender any right or pcwertherei n reserved to or conferred upon the Authority or the City; (ii) to make such prc,,1isions for the purpose of curing any ambiguity, inconsistency or onission, or of curing or correcting any defective prc,,1ision contained in the I nstallrrent Purchase A greerrent; and (iii) in any other respect whatsoever as the Authority and the City may deem necessary or desirable, provided that such arrendrrent does not materially acwersely affect the interests of the OWners of the Authority Bonds. Successor Is Deerred Included in al I References to Predecessor. Whenever either the City or the Authority is narred or referred to in the I nstallrrent Purchase Agreerrent, such reference shall be deemed to include the successor to the pcwers, duties and functions that are presently vested in the City or the Authority, and all agreerrents and covenants required to be perforrred b,t or on behalf of the City or the Authority shal I bind and inure to the benefit of the respective successors thereof whether so expressed or not. Waiver of Personal Liability. No official, officer or employee of the City shall be individually or personally liable for the payrrent of the lnstallrrent Payrrents or other payrrents required to be made b,t the City under the lnstallrrent Purchase Agreerrent, but nothing contained in the lnstallrrent Purchase Agreerrent shall relieve any official, officer or errployee of any City from the performance of any official duty prOJided b,t any applicable prOJisions of law or b,t the I nstallrrent PurchaseAgreerrent. Partial Invalidity. If any one or more of the agreerrents or cOJenants or portions thereof required b,t the I nstallrrent PurchaseAgreerrent to be perforrred b,t or on the pc1.rt of any City ortheAuthority shall be contrary to Iaw, then such agreerrent or agreerrents, such cOJenant or covenants or such portions thereof shal I be nul I and void and shal I be deerred sepc1.rabl e from the remai ni ng agreerrents and cOJenants or portions thereof and shal I in no way affect the val i di ty of the I nstal Irrent Purchase A greerrent. C-52 Assignment. The I nstal I ment Purchase Agreement and any rights underthe I nstal Iment Agreement rray be assigned b,t the Authority to the Trustee, as a whole or in i:art, without the necessity of obtaining the prior consent of the City. The assignment of the I nstal I ment Purchase A greementto the Trustee is solely in its capacity as Trustee under the Indenture and the duties, pcwers and liabilities of the Trustee in acting under the I ndenture shal I be suqj ect to the prOJi si ons of the I ndenture. GOJerning Laws. The Installment Purchase Agreement shall be construed and qOJerned in accordance with the laws of the State. C-53 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX D DTCANDTHE BOOK-ENTRY SYSTEM The inforrration in this appendix has been prc,,1ided b,t DTC for use in securities offering documents, and the District takes no responsibility for the accuracy or corrpleteness thereof. The District cannot and does not give any assurances that DTC, DTC Participmts or Indirect Participants will distribute the Beneficial OMlers either (a) payments of interest, principal or preniurn if any, with respect to the Bonds or (b) certificates representing OM1ership interest in or other confirrration of OM1ership interest in the 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 rranner described in this Official Statement. 1. The Depository Trust Company ("DTC"), NewY ork, NY, will act as securities depository for the securities (the "Securities"). The Securities wi 11 be issued as ful ly,egi stered securities registered in the name of Cede & Co. (DTC's partnership noninee) or such other name as rray be requested b,t an authorized representative of DT C. One ful ly,egi stered Security certificate wi 11 be issued forthe Securities, in the aggregate principal annunt of such issue, and will be deposited with DTC. If, hcwever, the aggregate principal arrount of issue exceeds $500 nillion, one certificate will be issued with respect to each $500 nil lion of principal amount, and an additional certificate will be issued with respect to any rerraining pri nci pal arrount of such issue. 2. DTC, the world's largest securities depository, is a linited--purpose trust company organized under the Ne.v 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 N e.v Y ork U ni form Commercial Code, and a " cl eari ng agency" registered pursuantto the provi si ans of Section 17A of the Securities Exchange Act of 1934. DTC holds and prc,,1ides asset servicing for over 3.5 nillion issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments ( from OJer 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-€ntry transfers and pledges between Direct Participants' accounts. This elininates the need for physical mOJement 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--cwned subsidiary of The Depository Trust & Clearing Corporation(" DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is cwned b,t 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 rraintain 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 Comnission. More inforrration about DTC can be found atwww.dtcc.com. 3. Purchases of Securities under the DTC system must be rrade b,t or through Direct Participants, which wi 11 receive a credit for the Securities on DTC' s records. The cwnershi pi nterest of each actual purchaser of each Security ("Beneficial owner") is in turn to be recorded on the Direct and Indirect Parti ci pants' records. Benefi ci al owners wi 11 not receive written confi rrrati on from DT C of thei r purchase. Beneficial owners are, hcwever, expected to receive written confirrrations prOJiding details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participantthrough which the Beneficial owner entered into the transaction. Transfers of cwnership interests in the Securities are to be accomplished b,t entries made on the books of Direct and Indirect Participants acting on behalf of D-1 Benefi ci al owners. Benefi ci al owners wi 11 not receive certificates representi ng thei r cwnershi p i nterests i n Securities, except i n the eventthat use of the book-entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited b,t Direct Participants with DTC are registered in the name of DTC's partnership noninee, Cede & Co., or such other name as may be requested b,t an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC noninee do not effect any change in beneficial cwnership. DTC has no kncwledge 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 for keeping account of their hol di ngs on behalf of thei r customers. 5. Conveyance of notices and other comrnunicati ons b,t DTC to Direct Participants, b,t Direct Participants to Indirect Participants, and b,t Direct Participants and Indirect Participants to Beneficial OWners wi 11 be go.1erned b,t arrangements among them, suqj ect to any statutory or regulatory requirements as may be in effect from ti me to ti me. Benefi ci al 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 benefit has agreed to obtai n and transni t notices to Benefi ci al owners. I n the alternative, Benefi ci al owners may wish to provide their names and addresses to the registrar and request that copies of notices be prOJi ded 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 b,t 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 b,t a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mai Is an Omni bus Proxy to the Authority as soon as possible afterthe 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 (identified in a listing attached to the Omni bus Proxy). 8. Redemption proceeds, di stri buti ons, and dividend payments on the Securities wi 11 be made to Cede & Co., or such other noni nee as may be requested b,t an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Authority or Trustee, on payable date in accordance with their respective holdings shewn on DTC's records. Payments b,t Participants to Beneficial owners will be governed b,t standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in" street name," and wi 11 be the responsi bi Iity of such Participant and not of DTC, Trustee, or Authority, sul::iject to any statutory or regulatory requirements as may be in effect from ti me to time. Payment ofredemption proceeds, dstributions, and dividend payments to Cede & Co. (or such other noninee as may be requested b,t an authorized representative of DTC) is the responsibility of Authority or 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 b,t gving reasonable notice to Authority or Trustee. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. D-2 10. The Authority rray 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 for the accuracy thereof. D-3 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX E FORM OF CONTINUING DISCLOSURE AGREEMENT THIS CONTINUING DISCLOSURE AGREEMENT (this "DisclosureAgreerrent"), dated as of January 1, 2018, is b,t and between the CITY OF ANAHEIM, a rnunicipli corporation and chartered city organized and existing under and b,t virtue of its charter and the laws of the State of California (the "City"), and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing underthe laws of the United States of Arrerica, as Trustee (the ''Trustee"). WITNESSETH: WHEREAS, pursuant to the Indenture, dated as of January 1, 2018 (the "Indenture"), b,t and between the A nahei rn Housing and Public I rrprOJerrents Authority (the "Authority") and the Trustee, the Authority has issued its Anaheim Housing and Public lrnproverrents Authority Sewer Revenue Bonds, Series 2018 (the "Series 2018 Bonds"), in the aggregate principc1.I arnount of $45,705,000; WHEREAS, the Series 2018 Bonds are i:avable frorn and secured b,t installrrent pc1.yrrents to be rnade pursuant to the lnstallrrent Purchase Agreerrent, dated as of January 1, 2018 (the "lnstallrrent Purchase A greerrent"), b,t and between the City and the Authority; and WHEREAS, this Disclosure Agreerrent is being executed and delivered b,t the City and the Trustee for the benefit of the cwners and beneficial cwners of the Series 2018 Bonds and in orderto assist the underwriter of the Series 2018 Bonds in corrplyingwith Securities and Exchange Cornrnission Rule 15c2-12(b)(5); NOW, THEREFORE, for and in consideration of the mutual pronises and cOJenants herein contai ned, the pc1.rti es hereto agree as fol I cws: Section 1. Definitions. Unless the context otherwise requires, the terrns defined in this Section shall for all purposes of this Disclosure Agreerrent have the rreanings herein specified. Capitalized undefined terrns used herein shall have the rreanings ascribed thereto in the Indenture or, if not defined therein, in the Install rrent Purchase Agreerrent. "Annual Report" rreans any Annual Report provided b,t the City pursuantto, and as described in, Sections 2 and 3 hereof. "Annual Report Date" rreans the date in eachyearthat is the first day of the rnonth follcwingthe sixth month afterthe end of the City's Fiscal Year, which date, as of the date of this DisclosureAgreerrent, is December 31. "Authority" rreans theAnaheirn Housing and Public I rrprOJerrentsAuthority, a joint exercise of pcwers authority organized and existing under and b,t virtue of the laws of the State, and any successor thereto. "City" rreans the City of Anaheim, a rnunicipc1.I corporation and chartered city organized and existing under and bf virtue of its charter and the laws of the State, and its successors. "Dissemination Agent" rreans the Trustee, acting in its capc1.city as Dissenination Agent hereunder, or any successor Dissemination Agent designated in writing b,t the City and which has filed with the Trustee a written acceptance of such designation. E-1 "Indenture" means the Indenture, dated as ofJanuary 1, 2018, b,t and between the Authority and U.S. Bank National Association, as Trustee, as originally executed and as it may be arrended or suppl errented from ti rre to ti rre in accordance with its terms. "Listed Events" rreans any of the events listed in subsection (a) or subsection (b) of Section 4 hereof. "MSRB" means the Municipc1.I Securities Rulemaking Board or any other entity designated or authorized b,t the Securities and Exchange Comnission to receive reports pursuant to the Rule. Until otherwise designated b,t the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be rrade through the Electronic Municipc1.I Market Access (EM MA) website of the MSRB, currently I ocated at http:/;emrra. msrb.org. "Official Statement" means the Official Staterrent, datedJ anuary 11, 2018, relating to the Series 2018 Bonds. "Participating Underwriter" rreans the original underwriter of the Series 2018 Bonds required to comply with the Rule in connection with the offering of the Series 2018 Bonds. "Rule" rreans Rule 15c2-12(b)(5) adopted b,t the Securities and Exchange Comnission underthe Securi ti es Exchange A ct of 1934, as the sarre rray be arrended from ti rre to ti rre. " Trustee" rreans U .S. Bank Nati anal Association, as Trustee underthe I ndenture, or any successor thereto as Trustee thereunder, substituted in its pace as prOJi ded therein. Section 2. PrOJision of Annual Reports. (a) The City shall, or shall cause the Dissemination Agent to, prc,,1ide to the MSRB an Annual Report that is consistent with the requirerrents of Section 3 hereof, not later than the Annual Report Date, comrrencing with the report for the 2017-18 Fiscal Year. The Annual Report may include b,t reference other inforrration as provided in Section 3 hereof; prc,,1ided, hcwever, that the audited financial staterrents of the City, if any, may be subnitted separately from the balance of the Annual Report, and laterthan the date required abOJe for the filing of the Annual Report if they are not available b,t that date. If the City's Fiscal Year changes, it shall, or it shall instruct the Dissenination Agentto, give notice of such change in a filing with the MSRB. (b) Not laterthan 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 prc,,1ide the Annual Report to the Dissenination Agent and the Trustee (if the Trustee is not the Dissenination Agent). If b,t such date, the Trustee has not received a copy of the Annual Report, the Trustee shall contact the City and the Dissenination Agenttodetermine if the City is in compliance with the first sentence of this subsection (b). (c) If the Trustee is unabletoverify that an Annual Report has been prc,,1idedtothe MSRB b,t the date required in subsection (a) of this Section, the Trustee shall, in a tirrely manner, send a notice to the MSRB in substantially the form attached as Exhibit A. (cl) The DisseninationAgent shall: (i) prc,,1ide each Annual Report received b,t ittothe MSRB, as prc,,1ided herein; and (ii) file a report with the City and (if the Dissenination Agent is not the Trustee) the Trustee certifying that such Annual Report has been prOJided pursuant to this Disclosure Agreerrent and stating the date it was prc,,1ided to the MSRB. E-2 Section 3. Content of Annual Reports. The City's Annual Report shall contain or incorporate 0y reference the fol Io.vi ng: (a) The City's audited financial staterrents, if any, prepc1.red in accordance with generally accepted accounting principles as promulgated to apply to go.1emrrental entities frorn tirre to tirre 0y the GOJemrrental Accounting Standards Board. If the City's audited financial staterrents, if any, are not avai I able 0y the ti rre the Annual Report is required to be fi I eel pursuant to subsection (a) of Section 2 hereof, the Annual Report shall contain unaudited financial staterrents, in a forrrat similar to that used for the City's audited financial staterrents, and the audited financial staterrents, if any, shall be filed in the sarne rranner as the Annual Report when they becorre avai I able. (b) The follo.ving inforrration: (i) The principc1.I arnount of Series 2018 Bonds Outstanding as of the December 1 next preceding the Annual Report Date; (ii) The principc1.I arnount of any Additional Obligations, if any, outstanding as of the December 1 next precedi ng the Annual Report Date, and a staterrent as to whether such Additional Obligations are Senior Obligations or Subordinate Obligations; (iii) A table, substantially in the forrrat of Table 1 in the Official Staterrent (Nurnber of Billing Units), updated as of theJ une 30 next preceding the Annual Report Date; (iv) A table, substantially in the forrrat of Table 2 in the Official Staterrent (Percentage of Customer Billings 0y Customer Class), updated as of the June 30 next preceding the Annual Report Date; (v) A table, substantially in the forrrat of Table 3 in the Official Staterrent (Ten Largest Se.ver Accounts) , updated as of the J une 30 next preceding the Annual Report Date; (vi) A table, substantially in the forrrat of Table 4 in the Official Staterrent (Se.ver Fee Rate 0y User Category), updated as of theJ une 30 next preceding the Annual Report Date; (vii) A table, substantially in the forrrat of Table 5 in the Official Staterrent (Sumrrary of Revenues and Expenses), updated as of the June 30 next preceding the Annual Report Date; (c) In addition to any of the inforrration expressly required to be provided underthe preceding paragraphs (a) and (b), the City shall provide such further inforrration, if any, as rray be necessary to rrake the specifically required staterrents, in the light of the circumstances under which they are rnade, not mi sl eadi ng. Any or all of the iterns listed above rray be included 0y specific reference to other docurrents, including official staterrents of debt issues of the City or related public entities that have been rrade availabletothe public on the MSRB 's website. The City shall clearly identify each such other docurrent so i ncl uded 0y reference. E-3 Section 4. Reporting of Significant Events. (a) Pursuant to the prc,,1isions of this Section, the City shal I give, or cause to be given, notice of the occurrence of any of the fol I cwi ng events with respect to the Series 2018 Bonds in a tirrely rranner not laterthan ten business days after the occurrence of the event: (i) Principll and interest i:ayrrent delinquencies. (ii) Unscheduled draws on debt service reserves reflecting financial difficulties. (iii) Unscheduled draws on credit enhancerrents reflecting financial difficulties. (iv) Substitution of credit or liquidity prOJiders, or their failure to perform (v) AdJerse tax opinions or issuance b,t the Internal Revenue Service of proposed or final determination oftaxability or of a Notice of Proposed Issue (IRS Form 5701 TEB). (vi) Tender offers. (vii) Defeasances. (viii) Rating changes. (ix) Bankruptcy, insolvency, receivership or sinilar event of the City. For i:urposes of the event identified in i:aragraph (ix), the event is considered to occur when any of the follcwing occur: the appointrrent of a receiver, fiscal agent or sinilar officer for an obligated person in a proceedi ng underthe U .S. B ankruptcy Code or in any other proceeding under state or federal Iaw i n which a court or gOJernrrental authority has assumedjurisdiction OJer substantially all of the assets or business of the City, or if suchjurisdiction has been assurred b,t leaving the existing gOJernrrental body and officials or officers in possession but sul::iject to the supervision and orders of a court or gOJernrrental authority, or the entry of an order confi rni ng a pl an of reorganization, arrangerrent or Ii qui dati on b,t a court or gOJernrrental authority having supervision or j uri sdi cti on OJer substantially al I of the assets or busi ness of the City. (b) Pursuant to the prc,,1isions of this Section, the City shall give, or cause to be given, notice of the occurrence of any of the follcwing events with respect to the Series 2018 Bonds, if material, in a ti rrely rranner not I ater than ten busi ness days after the occurrence of the event: (i) Unless described in paragraph (v) of subsection (a) of this Section, material notices or deterninations b,t the Internal Revenue Service with respect to the tax status of the Seri es 2018 Bands or other rrateri al events affecting the tax status of the Seri es 2018 Bonds. (ii) Modifications to rights of holders of the Series 2018 Bonds. (iii) Series 2018 Bond calls. (iv) Release, substitution, or sale of property securing rei:avrrent of the Series 2018 Bonds. (v) Non--p3.yrrent related defaults. E-4 (vi) The consumrration 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. (vii) Appointment of a successor or additional Trustee or the change of name of a Trustee. (c) Whenever the City obtains kncwledge of the occurrence of a Listed Event described in subsection (b) of this Section, the City shall deternine if such event would be material under applicable Federal securities law. (cl) Whenever the City obtains kncwledge of the occurrence of a Listed Event described in subsection (a) of this Section, or determines that kncwledge of a Listed Event described in subsection (b) of this Section would be rraterial under applicable Federal securities law, the City shall, or shall cause the Dissenination Agent to, file a notice of the occurrence of such Listed Event with the MSRB, within ten busi ness days of such occurrence. (e) Notwithstanding the foregoing, notice of Listed Events described in plragraph (vii) of subsection (a) of this Section or i:aragraph (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 2018 Bonds pursuant to the I ndenture. Section 5. For mat for Filings with M SRB. Any report or filing with the MSRB pursuant to this Disclosure Agreement must be submitted in electronic format, accorrpanied 0y such identifying inforrration as is prescribed 0y the MSRB. Section 6. Termination of Repcrting Obligation. The City's obligations under this Disclosure Agreement shal I terminate upon the I egal defeasance, prior rederrpti on or i:ayment i n ful I of al I of the Seri es 2018 Bonds. If such ternination occurs prior to the final maturity of the Series 2018 Bonds, the City shall gve, or cause to be given, notice of such ternination in a filingwith the MSRB. Section 7. Dissemination Agent. The City may, from time to time, appoint or engage a Dissenination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and rray discharge any such Dissemination Agent, with or without appointing a successor DisseninationAgent. The DisseninationAgent rray resign 0y prOJiding 30 days' written notice to the City. If at any time there is not any other designated Di sseni nation A gent, the Trustee shal I be the Di sseni nation A gent. Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the City and the Trustee rray amend this Disclosure Agreement (and the Trustee shall agree to any amendment so requested 0y the City, so long as such amendment does not acwersely affect the rights or rraterially increase the cbligations of the Trustee), and any provision of this Disclosure Agreement rray be waived, prc,,1ided that the follcwing conditions are satisfied: (a) if the amendment or waiver relates to the prOJisions of subsection (a) of Section 2 hereof, Section 3 hereof or subsection (a) or (b) of Section 4 hereof, it rray only be rrade 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 2018 Bands, or the type of business conducted; E-5 (b) the undertakings herein, as proposed to be arrended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirerrents of the Rule at the ti rre of the pri n-ary offering of the Seri es 2018 Bands, after taking into account any arrendrrents or interpretations of the Rule, as wel I as any change i n ci rcumstances; and (c) the proposed arrendrrent or waiver (i) is approved 0y owners of the Series 2018 Bands in the n-anner prc,,1ided in the Indenture for arrendrrents to the Indenture with the consent of owners, or (ii) does not, in the opinion of nationally recognized bond counsel, n-aterially impair the interests of owners or Beneficial owners of the Series 2018 Bonds. In the event of any arrendrrent or waiver of a provision of this Disclosure Agreerrent, the City shall describe such arrendrrent or waiver in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the arrendrrent or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial inforn-ation or operating data being presented 0y the City. In addition, if the arrendrrent relates to the accounting principles to be follcwed in preparing financial staterrents (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 n-ade shall present a comparison (in narrative form and also, if feasible, in quantitative forni) between the financial staterrents as prepared on the basis of the ne.v accounting principles and those prepared on the basis of the forrrer accounting principles. Section 9. Additional Information. Nothing in this Disclosure Agreerrent shall be deerred to prevent the City from disseminating any other inforn-ation, using the means of dissemination set forth in this Disclosure Agreerrent or any other rreans of communication, or including any other inforn-ation in any Annual Report or notice required to be filed pursuanttothis DisclosureAgreerrent, in addition to that which is required 0y this Disclosure Agreerrent. If the City chooses to include any inforn-ation in any Annual Report or notice in addition to that which is specifically required 0y this DisclosureAgreerrent, the City shall have no obligation under this Disclosure Agreerrent to update such inforn-ation 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 Di sci osure A greerrent, the Trustee n-ay ( and, atthe written direction of any Parti ci pati ng Underwriter or the owners of at I east 25% of the aggregate principal amount of Outstanding Series 2018 Bonds, shall, upon receipt of indemnification reasonably satisfactory to the Trustee), or any owner or Beneficial owner of the Series 2018 Bonds n-ay, take such actions as may be necessary and appropriate, including seeking n-andate or specific performance 0y court order, to cause the City, the Trustee or the Dissemination Agent, as the case n-ay be, to comply with its obligations under this DisclosureAgreerrent. A default underthis DisclosureAgreerrent shall not be deerred an Event of Default underthe Indenture, and the sole rerredy under this DisclosureAgreerrent in the event of any failure of the City, the Trustee or the Di sseni nation A gentto comply with this Di sci osure A greerrent shal I be an action to compel performance. Section 11. Duties, Immunities and Liabilities of Trustee and Dissemination Agent. Article VIII of the Indenture is here0y made applicable to this Disclosure Agreerrent as if this Disclosure Agreerrent were (solely for this purpose) contained in the Indenture. The Dissenination Agent shall be entitled to the protections and limitations from liability afforded to the Trustee thereunder. Neither the Trustee nor the Dissenination 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 prc,,1ided under this Disclosure Agreerrent. The Dissenination Agent (if other than the Trustee or the Trustee in its capacity as Dissenination Agent) shall have only such duties as are specifically set forth in this Disclosure Agreerrent. To the extent pernined 0y law, the City agrees to indemnify and save the E--6 Di sseni nation A gent, its officers, di rectors, errpl oyees and agents, harm ess agai nst any I oss, expense and liabilities which it may incur in the exercise or perforrrance of its pcwers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, and which are not due to its negligence or its willful misconduct. The obiigations of the City under this Section shall survive resignation or rerroval of the Dissenination Agent and the termination of this Disclosure Agreement. Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the City, the Trustee, the Di sseni nation A gent, the Parti ci pc1.ti ng U nderwri ter and the owners and Benefi ci al owners from time to time of the Series 2018 Bonds, and shall create no rights in any other person or entity. Section 13. Counterparts. This Disclosure Agreement rray be executed in several counterpc1.rts, each of which shall be an original and all of which shall constitute but one and the same instrument. IN WITNESS WHEREOF, the pc1.rties hereto have executed this Disclosure Agreement as of the date first abo.ie written. CITY OF ANAHEIM By: ______ U.S. BANK NATIONAL ASSOCIATION,AS TRUSTEE By: -----~-~------Authorized Si gnatay E-7 EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Narre of Issuer: Anaheim Housing and Public I rrprc,,1errents Authority Narre of Issue: Anaheim Housing and Public lrrprOJerrents Authority Sewer Revenue Bonds, Series 2018 Date of Issuance: January 25, 2018 NOTICE IS HEREBY GIVEN that the City of Anaheim (the "City") has not provided an Annual Report with respect to the abOJe--named Bands as required b,t the Conti nui ng Di sci osure A greerrent, dated as ofJanuary 1, 2018, b,t and between the City and U.S. Bank National Association, as Trustee. [The City anticipc1.tes that such Annual Report will be filed b,t ______.] Dated ______U.S. Bank National Association, as Trustee, on behalf of the City of Anaheim cc: City of Anaheim E--8 APPENDIX F FORM OF PROPOSED OPINION OF BOND COUNSEL Upon delivery of the Bonds, Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority, proposes to render its final apprCNing opinion with respect to the Bonds in substantially the follONing form: [Date of Delivery] Anaheim Housing and Public I mprcwements Authority Anaheim, California Anaheim Housing and Public lmprcwementsAuthority Sevver Revenue Bonds, Series 2018 (Final Opinion) Ladies and Gentlemen: We have acted as bond counsel to the Anaheim Housing and Public lmpravements Authority (the "Authority") in connection with the issuance of $45,705,000 aggregate principal amount of its Anaheim Housing and Public lmprcwements Authority Sevver Revenue Bonds, Series 2018 (the "Bonds"), issued pursuant to the Indenture, dated as of January 1, 2018 (the "Indenture"), 0\/ and between the Authority and U.S. Bank National Association, as trustee (the "Trustee"). The Bonds are payable from installment payments to be made 0\/ the City of Anaheim (the "City") pursuant to the Installment Purchase Agreement, dated as of January 1, 2018 (the "Installment Purchase Agreement"), 0\/ and between the City and the Authority. Captalized undefined terms used herein have the meanings ascribed thereto in the Indenture. In such connection, we have revievved the Indenture, the Installment Purchase Agreement, the Tax Certificate, opinions of counsel to the Authority, the City and the Trustee, certificates of the Authority, the City, the Trustee and others and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein. The opinions expressed herein are based on an analysis of existing lctNs, regulations, rulings and court decisions and caver certain matters not directly addressed 0\/ such authorities. Such opnions may be affected 0\/ actions talken or omitted or events occurring after the date hereof. We have not undertalken to determine, or to inform any person, whether any such actions are talken or omitted or events do occur or any other matters come to our attention after the date hereof. Accardi ngly, this I etter spealks only as of its date and is nct intended to, and may not, be relied upon or otherwise used in connection with any such actions, events or matters. Our engagement with respect to the Bonds has concluded with their issuance, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and I egal execution and delivery thereof 0\/, and validity against, any parties other than the Authority and the City. We have assumed, without undertalking to verify, the accuracy of the factual matters represented, warranted or certified in the documents referred to in the second paragraph hereof. Furthermore, F-1 we have assumed compiance with all cavenants and agreements contained in the Indenture, the Installment Purchase Agreement and the Tax Certificate, including, without limitation, cavenants and agreements compliance with which is necessary to assure that future actions, omissions or events wi 11 not cause the interest on the Bands to be included in gross income for federal income tax purposes. In addition, we call attention to the fact that the rights and obligations under the Bonds, the Indenture, the Installment Purchase Agreement and the Tax Certificate and their enforceability may be suqject to bankruptcy, insolvency, receivership, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the app i cation of equi tall e pri nci pl es, to the exercise of j udi ci al discretion in appropriate cases, and to the limitations on legal remedies against gavernmental entities such as the Authority and the City in the State of California We express no opnion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of set-off, arbitration, judicial reference, chdce of lctvV, chdce of forum, chdce of venue, non-exclusivity of remedies, waiver or severability prcwisions contained i n the foregd ng documents, nor do we express any op ni on with respect to the state or qual i ty of title to or interest in any of the property described in the I nstal I ment Purchase Agreement or the accuracy or sufficiency of the descrip:ion of any such property. Our services did nct include financial or other non-legal advice. Finally, we undertake no responsibility for the accuracy, completeness or fai mess of the Official Statement or cther offering material relating to the Bonds and express no op ni on with respect thereto. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the fd lcwing opinions: 1. The Bonds constitute the valid and anding limited olligations of the Authority payable solely from the Authority Revenues and the other assets pledged therefor under the Indenture. 2. The Indenture has been duly executed and delivered by, and constitutes the valid and anding obligation of, the Authority. 3. The Installment Purchase Agreement has been duly executed and delivered by, and constitutes the valid and binding oll igation of, each of the City and the Authority. 4. Interest on the Bands is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. I nterest on the Bands is nct a specific preference i tern for purposes of the federal alternative minimum taxes. We express no opnion regarding other tax consequences related to the cwnershi p or di sposi ti on of, or the amount, accrual or receipt of interest on, the Bonds. Faithfully yours, F-2