Comprehensive Annual Financial Report For the Years Ended June 30, 2019 and 2018 Oxnard Harbor District Port Hueneme, California 1 The Port of Hueneme (Port) is the only deep-water harbor between Los Angeles and the San Francisco Bay and is a US Port of Entry. The Port plays a vital role in the intermodal logistics supply chain and is critical to the economic vitality of Ventura County and Southern California. The Port facilitates the transport of over $9.5 billion in cargo, generates a $1.7 billion economic impact, and provides more than 15,834 direct, indirect, induced and influenced jobs regionally. The niche markets that the Port serves include the import and export of automobiles, non- automotive roll-on roll-off cargo, project cargo, fresh produce and liquid bulk. Its unique positioning near the Santa Barbara Channel and fertile fishing grounds has also made the Port the primary support facility for the offshore oil industry along California’s Central Coast region and an active squid offloading hub. In fiscal year 2019, the Port handled over 1.65 million metric tons of cargo transported on calls from over 350 deep draft ocean-going vessels. This strong performance generated the Port’s highest revenue year in its 82 year history. Port of Hueneme – Oxnard Harbor District Board of Harbor Commissioners as of June 30, 2019 Name Title Elected/Appointed Current Term Jess Herrera President Elected 1/19 – 1/23 Jess Ramirez Vice President Elected 1/17 – 1/21 Jason T. Hodge Secretary Elected 1/19 – 1/23 Dr. Manuel M. Lopez Commissioner Elected 1/17 – 1/21 Mary Anne Rooney Commissioner Elected 1/19 – 1/23 Prepared by: Kristin Decas – CEO & Port Director Andrew Palomares – Deputy Executive Director, CFO/CAO Austin Yang – Director of Finance Oxnard Harbor District 333 Ponoma Street • Port Hueneme, California 93041 (805) 488-3677 • www.portofH.org 2 Commissioners as of June 30, 2019 Jess Herrera Jess Ramirez Jason Hodge Dr. Manuel Lopez Mary Anne Rooney PRESIDENT VICE PRESIDENT SECRETARY COMMISSIONER COMMISSIONER Senior Staff Kristin Decas Andrew Palomares CEO & PORT DEPUTY EXECUTIVE DIRECTOR DIRECTOR, CFO/CAO DIRECTOR OF FINANCE Austin Yang CHIEF OPERATING OFFICER Christina Birdsey CHIEF COMMERCIAL & PUBLIC AFFAIRS OFFICER Dona Toteva Lacayo Comprehensive Annual Financial Report 2019 3 Table of Contents The Port of Hueneme 2 Commissioners and Senior Staff 3 Introductory Section Letter of Transmittal 7 Profile 8 Niche as a Southern California Port - The California Ports 9 FY 2019 Cargo Performance and Cargo Trends 10-11 Autos Import/Export Trade 12-13 Agriculture Sector Import/Export Trade 14 Fertilizer Import Trade - Real Estate Investments 15 Domestic Trade 16 Strategic Planning 17 Jobs/Economic Impact 18 Marketing - Environment 19 Strategic Partnerships - Community Outreach - Capital Planning 21-22 Organizational Chart 26 Awards and Acknowledgments 27-30 2019 Information 31-34 Financial Section Independent Auditor’s Report 36-38 Management’s Discussion and Analysis (Unaudited) 40-44 Basic Financial Statements: Balance Sheet 45 Statement of Revenues, Expenses and Changes in Net Position 46 Statements of Cash Flows 47-48 Notes to the Basic Financial Statements 49-80 Required Supplementary Information Schedule of the District’s Proportionate Share of the Plan’s (PERF C) Net Pension Liability 82 Schedule of Contribution – Pension Plan 83 Schedule of Changes in the District’s Net OPEB Liability and Related Ratio 84 Supplemental Information Schedule of Expenditures of Federal Awards 86 Schedule of Operating Expenses 87-88 Schedule of Non-Operating Revenues and Expenses 89 Schedule of Debt Service Net Revenues Coverage Ratio 89 Statistical Information Net Position by Component – Last Ten Fiscal Years 91 Summary of Revenues, Expenses and Changes in Net Position – Last Ten Fiscal Years 92-93 Revenue Bond Coverage – Last Ten Fiscal Years 94-95 Largest Revenue Customers – Last Ten Fiscal Years 96-97 Ten Year Trend – Cargo Revenue Tons – Last Ten Fiscal Years 98-99 Ten Year Trend in Tonnages for California Ports – Last Ten Fiscal Years 100-101 Employees Statistics – Last Ten Fiscal Years 102 Demographic and Economic Statistics – Last Ten Fiscal Years 103 Other Independent Auditor’s Reports Independent Auditor’s Report on Internal Control and Compliance - Single Audit Report 104-106 4 Introductory Section Comprehensive Annual Financial Report 2019 5 5 Introductory Section Issued November 30, 2019 FY 2019 Port Performance Analysis The following report provides a comprehensive review of the Port’s performance for Fiscal Year 2019. The information provided supports the conclusions outlined in the Fiscal Year 2019 Audit. Comprehensive Annual Financial Report 2019 6 Jess Herrera President Jess Ramirez Vice President Jason T. Hodge Secretary Dr. Manuel M. Lopez Commissioner Mary Anne Rooney Commissioner November 30, 2019 To the Board of Harbor Commissioners of the Oxnard Harbor District Port Hueneme, California Dear: Commissioner, Jess Herrera, President Commissioner, Jess Ramirez, Vice President Commissioner, Jason T. Hodge, Secretary Commissioner Dr. Manuel M. Lopez Commissioner Mary Anne Rooney State law requires that every general-purpose government publish within six months of the close of each fiscal year a complete set of audited financial statements. This report is published to fulfill that requirement for the fiscal year ended June 30, 2019 and 2018. The Chief Executive Officer and Port Director, and the Deputy Executive Director and CFO/CAO, along with the rest of the man- agement team assume full responsibility for the completeness and reliability of the information contained in the Management’s Discussion and Analysis (MD&A) and Financial Statements, based upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. Nigro & Nigro, PC, has issued an unmodified (“clean”) opinion on the Port’s financial statements for the year ended June 30, 2019 and 2018. The independent auditor’s report is located at the front of the financial section of this report. A comprehensive FY 2019 Port Performance Analysis immediately follows this letter and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. Sincerely, 7 Introductory Section Port of Hueneme Profile The Port of Hueneme, an official US Port of Entry located within Ventura County, is one of the eleven California deep water seaports vital to the statewide economy. The Port of Hueneme was initially built to serve the agricultural sector in the County. Today the Port serves as the strategic auto and reefer hub on the US West Coast, situated within sixty miles of the largest populated area on the West Coast-Los Angeles, with over 4 million people. Serving as the Ventura County region’s engine for the economy and one of the state’s strategic intermodal transportation Ports, the Port of Hueneme provides the County with competitive advantages to attract private investment while creating family sustaining jobs in California. Over $9.5 billion in cargo value moves through the Port on annual basis generating a $1.7 billion economic impact and impacting over 15,834 trade related direct, induced, indirect, and influenced jobs. Trade activity resulting from the Port generates $119 million in state, county and local tax revenues to support vital community services. The Oxnard Harbor District (District) is a political subdivision of the State of California and operates as an independent special district. The District owns and manages the commercial Port of Hueneme. The District was created in 1937 pursuant to authority of the State of California Harbors and Navigation Code, the state legislation that provides for the formation and governance of Harbor Districts (Section § 6000 et. al). A five-member Board of Harbor Commissioners, elected at large from the District, sets the policies for the Port of Hueneme. The District’s current political boundaries are comprised of the City of Oxnard (population 215,265), the City of Port Hueneme (population 22,173) and a few unincorporated beach communities within Ventura County. Each Harbor Commissioner is popularly elected for a four-year term by the voters of the Oxnard Harbor District as defined by the Local Agency Formation Commission (LAFCo). Their terms are staggered to maintain a level continuity in Board leadership across elections. The day-to-day business operations of the District [Herein called the Port] are administered by the CEO and professional staff. The Port is empowered to acquire, construct, own, operate, control and develop any and all harbor works or facilities necessary to the efficient undertaking of its mission. The Port prepares and controls its own budget, administers and controls its fiscal activities, and is responsible for all Port construction and operations. The Port does not assess taxes. Port operating expenses are funded by the revenues generated through tariff charges, leases and other contract revenues assessed upon Port users. Port Terminal Schedule No. 8, as amended from time to time, sets forth the rules, regulations and fees applicable to the use of Port facilities. The Port has long-term contracts with customers that provide for minimum guarantees and