CITY OF COSTA MESA, CALIFORNIA Comprehensive Annual Financial Report For the fiscal year ended June 30, 2002 TABLE OF CONTENTS Exhibit Page INTRODUCTORY SECTION: Letter of Transmittal i List of Principal Officials xvii Organizational Chart xviii GFOA Certificate of Achievement for Excellence in Financial Reporting xix CSMFO Certificate of Award for Outstanding Financial Reporting xx FINANCIAL SECTION: Independent Auditors’ Report 1 General Purpose Financial Statements: • Combined Balance Sheet - All Fund Types and Account Groups 1 4 • Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types 2 7 • Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - All Governmental Fund Types 3 8 • Combined Statement of Revenues, Expenses and Changes in Retained Earnings - Proprietary Fund Types (Internal Service Funds) 4 10 • Combined Statement of Cash Flows - Proprietary Fund Types (Internal Service Funds) 5 11 • Notes to Financial Statements 12 Combining, Individual Fund, and Account Group Statements and Schedules: General Fund: • Comparative Balance Sheets A-1 46 • Comparative Statements of Revenues, Expenditures and Changes in Fund Balances A-2 47 • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual A-3 49 CITY OF COSTA MESA, CALIFORNIA Comprehensive Annual Financial Report For the fiscal year ended June 30, 2002 TABLE OF CONTENTS, (CONTINUED) Exhibit Page Special Revenue Funds: • Combining Balance Sheet B-1 52 • Combining Statement of Revenues, Expenditures and Changes in Fund Balances B-2 54 Special Gas Tax Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual B-3 56 Proposition 172 Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual B-4 57 Air Quality Improvement Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual B-5 58 HOME Program Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual B-6 59 Community Development Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual B-7 60 Park Development Fees Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual B-8 61 Drainage Fees Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual B-9 62 CITY OF COSTA MESA, CALIFORNIA Comprehensive Annual Financial Report For the fiscal year ended June 30, 2002 TABLE OF CONTENTS, (CONTINUED) Exhibit Page Supplemental Law Enforcement Services Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual B-10 63 Traffic Impact Fees Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual B-11 64 Rental Rehabilitation Program Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual B-12 65 Narcotics Forfeiture Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual B-13 66 Low and Moderate Income Housing Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual B-14 67 Local Law Enforcement Block Grant Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual B-15 68 Debt Service Funds: • Combining Balance Sheet C-1 70 • Combining Statement of Revenues, Expenditures and Changes in Fund Balances C-2 71 1974 Open Space Bond Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual C-3 72 Redevelopment Debt Service Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual C-4 73 Capital Projects Funds: • Combining Balance Sheet D-1 76 • Combining Statement of Revenues, Expenditures and Changes in Fund Balances D-2 77 CITY OF COSTA MESA, CALIFORNIA Comprehensive Annual Financial Report For the fiscal year ended June 30, 2002 TABLE OF CONTENTS, (CONTINUED) Exhibit Page Capital Outlay Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual D-3 78 Measure “M” Construction Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual D-4 79 CENTROCCS Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual D-5 80 Financing Authority Construction Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual D-6 81 Redevelopment Projects Fund: • Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual D-7 82 Internal Service Funds: • Combining Balance Sheet E-1 84 • Combining Statement of Revenues, Expenses and Changes in Retained Earnings E-2 85 • Combining Statement of Cash Flows E-3 86 Agency Funds: • Combining Balance Sheet F-1 88 • Combining Statement of Changes in Assets and Liabilities F-2 89 General Fixed Assets Account Group: • Comparative Schedule of General Fixed Assets - by Source G-1 92 • Schedule of General Fixed Assets - by Function and Activity G-2 93 • Schedule of Changes in General Fixed Assets - by Function and Activity G-3 94 General Long-Term Debt Account Group: • Comparative Statements of General Long-Term Debt H-1 95 CITY OF COSTA MESA, CALIFORNIA Comprehensive Annual Financial Report For the fiscal year ended June 30, 2002 TABLE OF CONTENTS, (CONTINUED) Table Page STATISTICAL SECTION: General Governmental Expenditures by Function - Last Ten Fiscal Years 1 97 General Governmental Revenues by Source - Last Ten Fiscal Years 2 98 General Governmental Tax Revenues by Source - Last Ten Fiscal Years 3 99 Retirement Plan for Safety Employees - Revenues by Source and Expenses by Type - Last Ten Fiscal Years 4 100 Statement of Direct and Overlapping Bonded Debt 5 101 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita - Last Ten Fiscal Years 6 102 Computation of Legal Debt Margin 7 103 Ratio of Annual Debt Service Expenditures for General Obligation Bonded Debt to Total General Governmental Expenditures - Last Ten Fiscal Years 8 104 Tax Rates - Last Ten Fiscal Years 9 105 Property Tax Levies and Collections-General Fund - Last Ten Fiscal Years 10 106 Principal Taxpayers 11 107 Special Assessment Billings and Collections - Last Ten Fiscal Years 12 108 Net Taxable Assessed Values - Last Ten Fiscal Years 13 109 Property Value – Last Ten Fiscal Years 14 110 Construction Value – Last Ten Fiscal Years 15 111 Demographic Statistics 16 112 Miscellaneous Statistics 17 113 The City of Costa Mesa is required to have an annual single audit performed in conformity with the provisions of the Single Audit Act of 1984 and the United States Office of Management and Budget's Circular A-128, Audits of State and Local Governments. Information related to this single audit, including a schedule of federal financial assistance, the independent auditors' reports on internal controls and compliance with applicable laws and regulations, and a schedule of findings and recommendations are included in a separately issued single audit report. THE FINANCIAL REPORTING ENTITY The financial reporting entity (the City of Costa Mesa) includes all the funds and account groups of the City of Costa Mesa as well as all of its component units. Component units are legally separate entities for which the City is fully accountable. The City is not a full service city in the generally accepted meaning of that term, but it does provide a wide range of services. These services include: police and fire protection; animal control; emergency medical aid; building safety regulation and inspection; street lighting; land use planning and zoning; housing and community development; maintenance and improvement of streets and related structures; traffic safety maintenance and improvement; and a full range of recreational and cultural programs. Blended component units, although legally separate entities, are, in substance, part of the City's operations and are included as part of the City. Accordingly, the Costa Mesa Redevelopment Agency and the Costa Mesa Public Financing Authority have been reported as debt service and capital projects funds, as appropriate. LOCATION AND AREA The City of Costa Mesa, incorporated in 1953, has an estimated population of 110,932 and has a land area of 16.8 square miles. It is located in the southern coastal area of Orange County, California, and is bordered by the cities of Santa Ana, Newport Beach, Huntington Beach, Fountain Valley, and Irvine. The City is approximately 35 miles southeast of Los Angeles and 85 miles northwest of San Diego. At its nearest point, the City is approximately 1.5 miles from the Pacific Ocean. The City is also home to the Orange County Performing Arts Center and the Orange County Fairgrounds. ORGANIZATION AND POWERS The City has operated under the council-manager form of government since incorporation. Policy making and legislative authority are vested in the City Council, which consists of a Mayor, Mayor Pro Tem, and a three-member Council. The City Council is responsible, among other things, for passing ordinances, adopting the budget, appointing members to commissions and committees, appointing the Treasurer, and hiring the City Manager and City Attorney. The City Manager is responsible for carrying out the policies and ordinances of the City Council, overseeing the day-to-day operations of the City and appointing the City's department heads. The City Council is elected at large on a non-partisan