NEW ISSUE – BOOK-ENTRY ONLY RATING: S&P: “AA”
See the caption “RATING.”
In the opinion of Best Best & Krieger LLP, Riverside, California, Bond Counsel, subject, however, to certain
qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal
income tax purposes, and such interest is not an item of tax preference for purposes of the federal alternative minimum
tax imposed on individuals and corporations, although for the purpose of computing the federal alternative minimum
tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings.
In the further opinion of Bond Counsel, interest on the Bonds is exempt from State of California personal income taxes.
See the caption “TAX EXEMPTION.”
$20,890,000
Corona UTILITY Authority
2013 WASTEWATER Revenue Bonds
(Wastewater Projects)
Dated: Date of DeliveryDue: September 1, as shown on inside front cover
The Bonds are being issued in fully registered form and, when issued, will be registered in the name of Cede & Co., as
nominee of The Depository Trust Company, New York, New York. Individual purchases will be made in integral multiples of
$5,000 and will be in book‑entry form only. Purchasers of the Bonds will not receive certificates representing their beneficial
ownership in the Bonds but will receive credit balances on the books of their respective nominees. Interest on the Bonds is
payable on March 1 and September 1 of each year, commencing March 1, 2014. Payment of the principal of and interest on
the Bonds is to be made to Cede & Co., which is to disburse said payments to the Beneficial Owners of the Bonds through
their nominees.
The Bonds are subject to optional redemption and mandatory sinking fund redemption, all as more fully
described in this Official Statement.
The Bonds are being issued to provide funds: (i) to currently refund a portion of the outstanding City of Corona
Certificates of Participation (Clearwater Cogeneration and Recycled Water Project) Series 2003; (ii) to currently refund all
of the outstanding City of Corona 1997 Refunding Certificates of Participation (Wastewater Treatment Facilities Project);
(iii) to prepay all outstanding amounts under a loan contract with the State of California Water Resources Control Board;
(iv) to acquire certain improvements for the Wastewater Enterprise; and (v) to pay costs incurred in connection with the
issuance of the Bonds.
The Bonds are being delivered pursuant to the Indenture of Trust, dated as of June 1, 2013, by and between the Corona
Utility Authority and The Bank of New York Mellon Trust Company, N.A., as trustee. The Bonds are a special limited
obligation of the Utility Authority payable solely from Net Revenues of the Wastewater Enterprise on a parity with payments
under two loan contracts with the State of California Water Resources Control Board, and from certain other funds and
accounts held by the Trustee pursuant to the Indenture. The Wastewater Enterprise is operated by the City’s Department
of Water and Power on behalf of the Utility Authority, which leases the Wastewater Enterprise from the City pursuant to
the Wastewater Enterprise Lease Agreement. Neither the full faith and credit nor any other revenues or funds of the Utility
Authority are pledged to or available for the payment of debt service on the Bonds. The obligation of the Utility Authority to
make payments of principal of and interest on the Bonds does not constitute an obligation for which the Utility Authority is
obligated to levy or pledge any form of taxation or for which the Utility Authority has levied or pledged any form of taxation.
The Utility Authority has no taxing power.
The Bonds are not a debt of the City of Corona, the County of Riverside, the State of California or any of its political
subdivisions in contravention of any constitutional or statutory limitations, and neither the City, the County of Riverside, the
State of California nor any of its political subdivisions is liable on the Bonds, nor in any event will the Bonds be payable out
of any funds or properties of the Utility Authority other than the Net Revenues.
THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS
ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE
MAKING OF AN INFORMED INVESTMENT DECISION.
MATURITY SCHEDULE
(See inside front cover)
The Bonds are offered when, as and if delivered and received by the Underwriter, subject to approval as to legality
by Best Best & Krieger LLP, Riverside, California, acting as Bond Counsel, and certain other conditions. Certain legal
matters will be passed upon for the City and the Utility Authority by the City Attorney, for the Utility Authority by
Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, acting as Disclosure Counsel,
and for the Trustee by its counsel. It is anticipated that the Bonds will be available for delivery through the facilities of
The Depository Trust Company on or about June 26, 2013.
Dated: June 4, 2013
$20,890,000
Corona UTILITY Authority
2013 WASTEWATER Revenue Bonds
(WASTEWATER Projects)
MATURITY SCHEDULE
BASE CUSIP† 219706
$18,030,000 Serial Bonds
Maturity
(September 1)
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
Principal
Amount
$ 2,145,000
2,330,000
2,400,000
1,940,000
2,015,000
590,000
615,000
640,000
665,000
690,000
725,000
760,000
800,000
840,000
875,000
Interest
Rate
2.000%
3.000
4.000
4.000
4.000
4.000
4.000
4.000
4.000
5.000
5.000
5.000
5.000
4.000
5.000
Yield
0.250%
0.400
0.600
0.840
1.100
1.420
1.700
2.010
2.270
2.480
2.760*
2.930*
3.090*
3.330*
3.000*
CUSIP†
AA6
AB4
AC2
AD0
AE8
AF5
AG3
AH1
AJ7
AK4
AL2
AM0
AN8
AP3
AQ1
$2,860,000 4.000% Term Bonds Due September 1, 2031 – Yield 3.850%* CUSIP† AT5
* Yield to first optional redemption date of September 1, 2023 at par.
†
CUSIP® is a registered trademark of the American Bankers Association. Copyright© 1999-2013 Standard & Poor’s Ratings Services, a
Standard & Poor’s Financial Services LLC business. All rights reserved. CUSIP® data herein is provided by Standard & Poor’s CUSIP
Service Bureau. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service Bureau.
CUSIP® numbers are provided for convenience of reference only. None of the City, the Utility Authority or the Underwriter takes any
responsibility for the accuracy of such numbers.
CORONA UTILITY AUTHORITY
BOARD OF DIRECTORS
Jason Scott, President
Karen Spiegel, Vice-President
Dick Haley, Director
Eugene Montanez, Director
Stan Skipworth, Director
CITY OF CORONA
CITY COUNCIL MEMBERS
Jason Scott, Mayor
Karen Spiegel, Vice-Mayor
Dick Haley, Council Member
Eugene Montanez, Council Member
Stan Skipworth, Council Member
CITY STAFF
Bradly Robbins, City Manager
Randy Fox, City Treasurer
Kerry Eden, Finance Director
Jonathan Daly, General Manager, Department of Water and Power
Dean Derleth, Esq., City Attorney
SPECIAL SERVICES
Bond Counsel
Financial Advisor
Best Best & Krieger LLP
Riverside, California
CSG Advisors Incorporated
San Francisco, California
Trustee and Escrow Agent
Disclosure Counsel
The Bank of New York Mellon Trust Company, N.A.
Los Angeles, California
Stradling Yocca Carlson & Rauth, a Professional Corporation
Newport Beach, California
Verification Agent
Causey Demgen & Moore P.C.
Denver, Colorado
No dealer, broker, salesperson or other person has been authorized by the City, the Utility Authority or
the Underwriter to give any information or to make any representations, other than those contained in this
Official Statement, and if given or made, such information or representation must not be relied upon as having
been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in
which it is unlawful for such person to make such offer, solicitation or sale. The information and expressions
of opinion in this Official Statement are subject to change without notice, and neither the delivery of this
Official Statement nor any sale of the Bonds shall under any circumstances create any implication that there
has been no change in the affairs of the City or the Utility Authority or other matters described in this Official
Statement since the date hereof.
CERTAIN STATEMENTS CONTAINED IN THIS OFFICIAL STATEMENT REFLECT NOT
HISTORICAL FACTS BUT FORECASTS AND “FORWARD-LOOKING STATEMENTS.”
NO
ASSURANCE CAN BE GIVEN THAT THE FUTURE RESULTS DISCUSSED IN THIS OFFICIAL
STATEMENT WILL BE ACHIEVED, AND ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
THE FORECASTS DESCRIBED HEREIN.
IN THIS RESPECT, THE WORDS “ESTIMATE,”
“PROJECT,” “ANTICIPATE,” “EXPECT,” “INTEND,” “BELIEVE” AND SIMILAR EXPRESSIONS ARE
INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. ALL PROJECTIONS, FORECASTS,
ASSUMPTIONS, EXPRESSIONS OF OPINIONS, ESTIMATES AND OTHER FORWARD-LOOKING
STATEMENTS ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY
STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HAVE
NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.
The Underwriter has provided the following sentence for inclusion in this Official Statement:
The Underwriter has reviewed the information in this Official Statement in
accordance with, and as part of, its responsibilities to investors under the
federal securities laws as applied to the facts and circumstances of this
transaction, but the Underwriter does not guarantee the accuracy or
completeness of such information.
This Official Statement and the information contained herein are subject to completion or amendment
without notice. These securities may not be sold nor may an offer to buy be accepted prior to the time the
Official Statement is delivered in final form. Under no circumstances shall this Official Statement constitute
an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY
OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE
UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND DEALER
BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC OFFERING
PRICE STATED ON THE INSIDE FRONT COVER PAGE OF THIS OFFICIAL STATEMENT AND SAID
PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.
The City maintains a website. However, the information presented on such website is not part of this
Official Statement and should not be relied upon in making an investment decision with respect to the Bonds.
TABLE OF CONTENTS
Page
Page
Future Wastewater Enterprise
Improvements .................................................. 28
WASTEWATER ENTERPRISE FINANCIAL
INFORMATION ................................................. 30
Financial Statements ........................................ 30
Wastewater Enterprise Reserves ...................... 30
Historic Wastewater Enterprise Operating
Results and Debt Service Coverage ................. 31
Projected Wastewater Enterprise Operating
Results and Debt Service Coverage ................. 32
PENSION OBLIGATIONS AND OTHER
POST-EMPLOYMENT BENEFITS................... 34
Pension Plan ..................................................... 34
Other Post-Employment Benefits .................... 38
ELECTRIC DISTRIBUTION SYSTEM ............ 40
Retail Electric System ...................................... 40
Electric Distribution System Operating
Results .............................................................. 41
CONSTITUTIONAL LIMITATIONS ON
APPROPRIATIONS AND CHARGES .............. 42
Article XIIIB .................................................... 42
Proposition 218 ................................................ 42
Future Initiatives .............................................. 44
APPROVAL OF LEGAL PROCEEDINGS ....... 44
LITIGATION ...................................................... 44
The City ........................................................... 44
The Utility Authority ....................................... 44
TAX EXEMPTION ............................................. 44
CONTINUING DISCLOSURE .......................... 46
RATING .............................................................. 46
FINANCIAL ADVISOR ..................................... 46
UNDERWRITING .............................................. 46
MISCELLANEOUS ............................................ 47
INTRODUCTION .................................................1
General ............................................................... 1
Refunding Plan ...................................................2
The 2013 Project ................................................3
Estimated Sources and Uses of Funds ................4
THE BONDS .........................................................4
General Provisions .............................................4
Book-Entry Only System ...................................5
Transfers and Exchanges Upon
Termination of Book-Entry Only System ..........5
Redemption ........................................................ 6
Selection of Bonds for Redemption ...................6
Notice of Redemption ........................................7
Effect of Redemption .........................................7
Debt Service Schedule........................................8
SECURITY FOR THE BONDS ............................8
General ............................................................... 8
Net Revenues Consist of Gross Revenues
Minus Direct Costs and Allocated Costs ..........10
Power Sales Agreement....................................11
Rate Covenant ..................................................13
No Reserve Fund ..............................................14
Additional Indebtedness ...................................14
THE UTILITY AUTHORITY.............................15
THE CITY ...........................................................15
THE WASTEWATER ENTERPRISE ................15
Service Area .....................................................15
Land Use ..........................................................15
Treatment and Transmission Facilities .............15
Western Riverside County Regional
Wastewater Authority Treatment Plant ............17
Regulatory Matters ...........................................19
Management .....................................................19
Employees and Employee Benefits .................. 20
Budget Process .................................................20
Insurance ..........................................................20
Outstanding Obligations ...................................20
Historic and Projected Wastewater
Enterprise Connections.....................................22
Historic and Projected Wastewater
Enterprise Daily Average Flow ........................23
Historic and Projected Wastewater
Enterprise Service Charge Revenues................ 24
Largest Wastewater Enterprise Customers .......25
Wastewater Enterprise Rates and Charges .......25
Wastewater Enterprise Collection
Procedures ........................................................28
APPENDIX A - AUDITED FINANCIAL
STATEMENTS ...................... A-1
APPENDIX B - DEFINITIONS AND
SUMMARY OF CERTAIN
PROVISIONS OF THE
INDENTURE ......................... B-1
APPENDIX C - FORM OF OPINION OF
BOND COUNSEL ................. C-1
APPENDIX D - INFORMATION
CONCERNING DTC ............ D-1
APPENDIX E - FORM OF CONTINUING
DISCLOSURE
CERTIFICATE ...................... E-1
APPENDIX F - CITY AND COUNTY
INFORMATION .....................F-1
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[THIS PAGE INTENTIONALLY LEFT BLANK]
SUMMARY STATEMENT
This summary is subject in all respects to the more complete information contained in this Official
Statement, and the offering of the Bonds to potential investors is made only by means of the entire Official
Statement.
Purpose. The Bonds are being issued to provide funds: (i) to currently refund a portion of the
outstanding City of Corona Certificates of Participation (Clearwater Cogeneration and Recycled Water
Project) Series 2003; (ii) to currently refund all of the outstanding City of Corona 1997 Refunding Certificates
of Participation (Wastewater Treatment Facilities Project); (iii) to prepay all outstanding amounts under a loan
contract with the State of California Water Resources Control Board, all as described under the caption
“INTRODUCTION—Refunding Plan;” (iv) to acquire certain improvements for the Wastewater Enterprise, as
described under the caption “INTRODUCTION—The 2013 Project;” and (v) to pay costs incurred in
connection with the issuance of the Bonds.
Security for the Bonds. The Bonds are a special limited obligation of the Utility Authority payable
solely from Net Revenues of the Wastewater Enterprise on a parity with payments under two loan contracts
with the State Water Resources Control Board, and from certain other funds and accounts held by the Trustee
pursuant to the Indenture. Neither the full faith and credit nor any other revenues or funds of the Utility
Authority are pledged to or available for the payment of debt service on the Bonds. The obligation of the
Utility Authority to make payments of principal and interest on the Bonds does not constitute an obligation for
which the Utility Authority is obligated to levy or pledge any form of taxation or for which the Utility
Authority has levied or pledged any form of taxation. The Utility Authority has no taxing power.
The Bonds are not a debt of the City of Corona, the County of Riverside, the State of California or any
of its political subdivisions in contravention of any constitutional or statutory limitations, and neither the City,
the County of Riverside, the State of California nor any of its political subdivisions is liable on the Bonds, nor
in any event will the Bonds be payable out of any funds or properties of the Utility Authority other than the
Net Revenues.
Rate Covenant. The Utility Authority will fix, prescribe, revise and collect rates and charges for the
services and facilities furnished by the Wastewater Enterprise, or cause the City to do so, during each Fiscal
Year which are sufficient to yield Net Revenues, at least equal to 125% of Debt Service (including the
payments of principal of and interest on the Bonds) becoming due and payable during such Fiscal Year. See
the caption “SECURITY FOR THE BONDS—Rate Covenant.”
Additional Indebtedness. The Indenture does not permit the Utility Authority to issue or incur any
bond, note, warrant evidence of indebtedness, contract, instrument or other agreement payable from Net
Revenues the payment of which is prior to and senior to the payment of principal of and interest on the Bonds.
The Indenture permits the Utility Authority to incur Parity Obligations payable on a parity with the payments
of principal of and interest on the Bonds provided that certain conditions are satisfied as described in the
Indenture. See the caption “SECURITY FOR THE BONDS—Additional Indebtedness.”
Nothing in the Indenture precludes the Utility Authority from entering into obligations which
constitute Direct Costs or Allocated Costs and are, therefore, payable from Gross Revenues of the Wastewater
Enterprise prior to the payments of principal of and interest on the Bonds. See the caption “SECURITY FOR
THE BONDS—Net Revenues Consist of Gross Revenues Minus Direct Costs and Allocated Costs.”
Redemption. The Bonds are subject to optional redemption and mandatory sinking fund redemption,
all as more fully described under the caption “THE BONDS—Redemption.”
The Wastewater Enterprise. The Wastewater Enterprise includes approximately 44 miles of
wastewater mains, 12 lift stations, 5.7 miles of force mains and 423 miles of gravity-fed pipelines ranging in
i
size from 6 inches to 42 inches in diameter, the majority of which were constructed in the 1980s and 1990s.
The Wastewater Enterprise has a total treatment capacity of approximately 15.5 million gallons per day.
Wastewater is treated at three facilities: (i) Water Reclamation Facility #1; (ii) Water Reclamation Facility #2;
and (iii) Water Reclamation Facility #3.
Wastewater flow from Water Reclamation Facility #1, Water Reclamation Facility #2 and Water
Reclamation Facility #3 is fully interconnected and the sludge from each facility is currently treated at Water
Reclamation Facility #1 alone.
In Fiscal Year 2012, the average daily flow of the Wastewater Enterprise was approximately 12.90
million gallons per day from 35,015 residential connections and 2,199 commercial connections.
The Wastewater Enterprise is operated by the City’s Department of Water and Power on behalf of the
Utility Authority, which leases the Wastewater Enterprise from the City pursuant to the Wastewater Enterprise
Lease Agreement. See the caption “SECURITY FOR THE BONDS—Net Revenues Consist of Gross
Revenues Minus Direct Costs and Allocated Costs.”
ii
$20,890,000
CORONA UTILITY AUTHORITY
2013 WASTEWATER REVENUE BONDS
(WASTEWATER PROJECTS)
INTRODUCTION
General
This Official Statement, including the cover page and all appendices, provides certain information
concerning the sale and delivery of the Corona Utility Authority 2013 Wastewater Revenue Bonds
(Wastewater Projects) (the “Bonds”). Descriptions and summaries of various documents set forth in this
Official Statement do not purport to be comprehensive or definitive, and reference is made to each document
for complete details of all applicable terms and conditions. All statements in this Official Statement are
qualified in their entirety by reference to each such document. Capitalized terms used and not otherwise
defined in this Official Statement have the meanings ascribed thereto in Appendix B.
The Bonds are being issued pursuant to an Indenture of Trust, dated as of June 1, 2013 (the
“Indenture”), by and between the Corona Utility Authority (the “Utility Authority”) and The Bank of New
York Mellon Trust Company, N.A., Los Angeles, California, as trustee (the “Trustee”). The Bonds are limited
obligations of the Utility Authority payable solely from Net Revenues of the Wastewater Enterprise, consisting
of all of the Gross Revenues of the Wastewater Enterprise minus the amount required to pay all Direct Costs
and Allocated Costs of the Wastewater Enterprise, and from certain other funds and accounts held by the
Trustee pursuant to the Indenture. The Wastewater Enterprise is operated by the City of Corona (the “City”)
Department of Water and Power (“DWP”) on behalf of the Utility Authority, which leases the Wastewater
Enterprise from the City pursuant to the Wastewater Enterprise Lease Agreement described under the caption
“SECURITY FOR THE BONDS—Net Revenues Consist of Gross Revenues Minus Direct Costs and
Allocated Costs.”
Neither the full faith and credit nor any other revenues or funds of the Utility Authority (other than the
Net Revenues) are pledged to or available for the payment of debt service on the Bonds. The obligation of the
Utility Authority to make payments of principal and interest on the Bonds does not constitute an obligation for
which the Utility Authority is obligated to levy or pledge any form of taxation or for which the Utility
Authority has levied or pledged any form of taxation. The Utility Authority has no taxing power.
The Bonds are not a debt of the City, the County of Riverside (the “County”), the State of California
(the “State”) or any of its political subdivisions in contravention of any constitutional or statutory limitations,
and neither the City, the County, the State nor any of its political subdivisions is liable on the Bonds, nor in
any event will the Bonds be payable out of any funds or properties of the Utility Authority other than the Net
Revenues.
See the caption “SECURITY FOR THE BONDS.”
The Bonds are being issued to provide funds: (i) to currently refund a portion of the outstanding City
of Corona Certificates of Participation (Clearwater Cogeneration and Recycled Water Project) Series 2003 (the
“2003 Certificates”); (ii) to currently refund all of the outstanding City of Corona 1997 Refunding Certificates
of Participation (Wastewater Treatment Facilities Project) (the “1997 Certificates”); (iii) to prepay all
outstanding amounts under State Revolving Fund Contract No. 6-807-550-0 (Loan No. C-06-4461-110) dated
September 12, 1996 (as amended by Amendment No. 1 on June 25, 1997, the “1997 SRF Loan”), with the
State Water Resources Control Board (the “SWRCB”), all as described under the caption “—Refunding Plan;”
(iv) to acquire certain improvements for the Wastewater Enterprise, as described under the caption “—The
2013 Project;” and (v) to pay costs incurred in connection with the issuance of the Bonds.
1
Refunding Plan
2003 Certificates. The 2003 Certificates, which are currently outstanding in the aggregate principal
amount of $51,745,000, were executed and delivered pursuant to a Trust Agreement, dated as of May 1, 2003
(the “2003 Trust Agreement”), by and among the City, the Corona Public Financing Authority (the “Financing
Authority”) and The Bank of New York Mellon Trust Company, N.A., formerly known as BNY Western Trust
Company, as trustee (the “2003 Trustee”). The Utility Authority plans to apply a portion of the proceeds of
the Bonds to effect the current refunding of a $12,515,000 portion of the outstanding obligations with respect
to the 2003 Certificates attributable to the financing of a biosolids dryer (the “Refunded 2003 Certificates”),
which was acquired pursuant to the 2003 Cogeneration Project Installment Purchase Agreement (as such term
is defined below). See the caption “SECURITY FOR THE BONDS—Power Sales Agreement.”
Under an Escrow Deposit and Trust Agreement, dated as of June 1, 2013 (the “2003 Escrow
Agreement”), by and among the City, the Financing Authority, the Utility Authority and the 2003 Trustee, the
Utility Authority will deliver a portion of the proceeds of the Bonds to the 2003 Trustee for deposit in the
escrow fund established under the 2003 Escrow Agreement (the “2003 Escrow Fund”). Additionally, the City
will transfer certain amounts from funds and accounts relating to the 2003 Certificates to the 2003 Trustee for
deposit in the 2003 Escrow Fund. The 2003 Trustee will invest a portion of the amounts deposited in the 2003
Escrow Fund in Federal Securities as set forth in the 2003 Escrow Agreement. From the maturing principal of
the Federal Securities and related investment income and other moneys on deposit in the 2003 Escrow Fund,
the 2003 Trustee will pay on September 1, 2013 the principal with respect to the Refunded 2003 Certificates
maturing after September 1, 2013, plus related interest accrued to such date, without premium.
Sufficiency of the deposits in the 2003 Escrow Fund for such purposes will be verified by Causey
Demgen & Moore P.C., Denver, Colorado (the “Verification Agent”). Assuming the accuracy of such
computations, as a result of the deposit and application of funds as provided in the 2003 Escrow Agreement,
the Refunded 2003 Certificates will be defeased pursuant to the provisions of the 2003 Trust Agreement and
the Installment Purchase Agreement (Cogeneration Project), dated as of May 1, 2003 (the “2003 Cogeneration
Project Installment Purchase Agreement”), by and between the City and the Financing Authority, as of the date
of issuance of the Bonds. See the caption “—Verification.”
Upon the defeasance of the Refunded 2003 Certificates, $39,230,000 aggregate principal amount of
2003 Certificates will remain outstanding. The Utility Authority expects the City of Riverside to deposit with
the 2003 Trustee on or before August 1, 2013 moneys sufficient, together with approximately $1,000,000 from
the City’s Electric Distribution System, to prepay all remaining amounts due with respect to the 2003
Certificates on September 1, 2013. See the captions “SECURITY FOR THE BONDS—Power Sales
Agreement” and “ELECTRIC DISTRIBUTION SYSTEM.”
The amounts held and invested by the 2003 Trustee in the 2003 Escrow Fund are pledged solely to the
payment of the Refunded 2003 Certificates. Neither the funds deposited in the 2003 Escrow Fund nor the
interest on the invested funds will be available for the payments of principal of and interest on the Bonds.
1997 Certificates. The 1997 Certificates, which are currently outstanding in the aggregate principal
amount of $1,965,000, were executed and delivered pursuant to a Trust Agreement, dated as of January 1,
1997 (the “1997 Trust Agreement”), by and among the City, the Corona Public Improvement Corporation
(“CPIC”) and Wells Fargo Bank, National Association, as trustee (the “1997 Trustee”). The Utility Authority
plans to apply a portion of the proceeds of the Bonds to effect the current refunding of all outstanding
obligations with respect to the 1997 Certificates.
Under an Escrow Deposit and Trust Agreement, dated as of June 1, 2013 (the “1997 Escrow
Agreement”), by and among the City, CPIC, the Utility Authority and the 1997 Trustee, the Utility Authority
will deliver a portion of the proceeds of the Bonds to the 1997 Trustee for deposit in the escrow fund
established under the 1997 Escrow Agreement (the “1997 Escrow Fund”). Additionally, the City will transfer
2
certain amounts from funds and accounts relating to the 1997 Certificates to the 1997 Trustee for deposit in the
1997 Escrow Fund. From the moneys on deposit in the 1997 Escrow Fund, the 1997 Trustee will pay on July
9, 2013 the principal with respect to the 1997 Certificates, plus related interest accrued to such date, without
premium.
Sufficiency of the deposits in the 1997 Escrow Fund for such purposes will be verified by the
Verification Agent. Assuming the accuracy of such computations, as a result of the deposit and application of
funds as provided in the 1997 Escrow Agreement, the 1997 Certificates will be defeased pursuant to the
provisions of the 1997 Trust Agreement and the Amended and Restated Lease Agreement, dated as of January
1, 1997, by and between the City and CPIC, as of the date of issuance of the Bonds. See the caption “—
Verification.”
The amounts held and invested by the 1997 Trustee in the 1997 Escrow Fund are pledged solely to the
payment of the 1997 Certificates. Neither the funds deposited in the 1997 Escrow Fund nor the interest on the
invested funds will be available for the payments of principal of and interest on the Bonds.
1997 SRF Loan. The 1997 SRF Loan is currently outstanding in the aggregate principal amount of
approximately $8,197,886. The Utility Authority plans to apply a portion of the proceeds of the Bonds to
prepay all outstanding amounts under the 1997 SRF Loan on or about the date of issuance of the Bonds.
Verification. Upon the issuance of the Bonds, the Verification Agent, an independent firm of certified
public accountants, will deliver to the Utility Authority its report indicating that it has examined, in accordance
with standards established by the American Institute of Certified Public Accountants, the information and
assertions provided by the City, the Utility Authority and their representatives. Included in the scope of the
Verification Agent’s examination will be: (i) a verification of the mathematical accuracy of the computations
of the adequacy of the cash deposited with the 2003 Trustee and the maturing principal of and interest on the
Federal Securities to pay the interest, principal and prepayment price with respect to the Refunded 2003
Certificates, on and prior to their prepayment date; (ii) a verification of the mathematical accuracy of the
computations of the adequacy of the cash deposited with 1997 Trustee to pay the interest, principal and
prepayment price with respect to the 1997 Certificates, on and prior to their prepayment date; and (iii) the
computations of yield of the Bonds and the Federal Securities which support Bond Counsel’s opinion that the
interest on the Bonds is excluded from gross income for federal income tax purposes.
The 2013 Project
A portion of the proceeds of the Bonds is expected to be used by the City, as agent of the Utility
Authority pursuant to an Agency Agreement, dated as of June 1, 2013 (the “Agency Agreement”), by and
between the City and the Utility Authority, to finance a portion of the costs of the following capital
improvements (collectively, the “2013 Project”): (i) the replacement and upgrade of both influent screening
units at WRF 1 (as such term is defined under the caption “THE WASTEWATER ENTERPRISE—Treatment
and Transmission Facilities—Water Reclamation Facility #1”) and the addition of a third influent screening
unit; (ii) improvements to Plant 1B at WRF 1 to add primary clarifiers and upgrade the aeration system; (iii)
the installation of an automated centrifuge facility at WRF 1 to increase biosolids dryness; (iv) the replacement
of an existing digester dome at WRF 1 with a flexible membrane dome capable of storing larger amounts of
methane gas for use as fuel for the digester boiler; (v) the replacement of a biosolids mixing tank, the
installation of new pumps and other upgrades to processing facilities at WRF 1; and (vi) certain other
miscellaneous Wastewater Enterprise capital improvements.
The above-described capital improvements are expected to cost a total of approximately $6,500,000.
The City expects to apply Wastewater Enterprise reserves to pay the portion of such costs that are not financed
from proceeds of the Bonds.
3
The City currently expects to receive all necessary environmental and other approvals in connection
with the 2013 Project in a timely manner and to complete the construction of all components of the 2013
Project before June 2016.
Pursuant to the terms of the Agency Agreement, the City, as agent of the Utility Authority, has the
right to make any changes to the description of the 2013 Project or of any project component, whenever the
City deems such changes to be necessary and appropriate; provided, however, that any such change may not
alter (except as otherwise provided in the Indenture) the essential nature of the 2013 Project, and that an
increase in construction costs will not result from such change, unless the City confirms that funds with the
Utility Authority are sufficient to pay such increase.
Estimated Sources and Uses of Funds
The following table sets forth the estimated sources and uses of funds in connection with the issuance
of the Bonds:
Sources(1):
Principal Amount of Bonds
Plus Original Issue Premium
City Contribution(2)
Transfer from 2003 Certificates Funds and Accounts(3)
Transfer from 1997 Certificates Funds and Accounts(4)
Total Sources:
$20,890,000
2,132,976
2,735,698
1,030,000
563,139
$27,351,813
Uses(1):
2003 Escrow Fund
1997 Escrow Fund
Prepayment of 1997 SRF Loan
Project Fund
Costs of Issuance Fund(5)
Total Uses:
$12,823,600
2,012,229
8,352,826
3,903,158
260,000
$27,351,813
(1)
(2)
(3)
(4)
(5)
Amounts rounded to the nearest dollar.
Reflects moneys contributed by City for scheduled August 1, 2013 payment with respect to 1997 Certificates, scheduled
September 1, 2013 payment with respect to 2003 Certificates and scheduled October 23, 2013 payment with respect to the
1997 SRF Loan.
Includes debt service reserve fund moneys held by the 2003 Trustee for the Refunded 2003 Certificates.
Includes debt service reserve fund moneys held by the 1997 Trustee for the 1997 Certificates.
Includes fees of Bond Counsel, Disclosure Counsel, the Financial Advisor, the Verification Agent, the Trustee and S&P,
Underwriter’s discount and printing costs.
THE BONDS
General Provisions
The Bonds will be issued in the aggregate principal amount of $20,890,000. The Bonds will bear
interest from and be dated the date of initial issuance, and will be payable upon maturity on the dates set forth
on the inside front cover page. Interest on the Bonds will be payable on March 1 and September 1 of each
year, commencing March 1, 2014, and will be calculated at the rates set forth on the inside front cover page of
this Official Statement on the basis of a year of 360 days comprised of twelve 30 day months.
The Bonds will be delivered only in fully registered form and, when issued, will be registered in the
name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). DTC
will act as securities depository for the Bonds. Ownership interests in the Bonds may be purchased in
4
book-entry form only in integral multiples of $5,000. See the caption “—Book-Entry Only System” below and
Appendix D.
In the event that the book-entry only system described below is discontinued, the principal of any
Bond will be payable by check or draft of the Trustee upon presentation and surrender thereof at maturity or
upon prior redemption at the Trust Office in Los Angeles, California. Such principal and interest will be
payable in lawful money of the United States of America.
Book-Entry Only System
One fully-registered Bond will be issued for each maturity of the Bonds in the principal amount of the
Bonds of such maturity, registered in the name of Cede & Co. and deposited with DTC. As long as the
ownership of the Bonds is registered in the name of Cede & Co., the term “Owner” as used in this Official
Statement will refer to Cede & Co. and not to the actual purchasers of the Bonds (the “Beneficial Owners”).
The Utility Authority may decide to discontinue use of the system of book-entry transfers through
DTC (or a successor securities depository). In such event, the Bonds will be printed and delivered and will be
governed by the provisions of the Indenture with respect to payment of principal and interest and rights of
exchange and transfer.
The Utility Authority cannot and does not give any assurances that DTC participants or others will
distribute payments with respect to the Bonds received by DTC or its nominee as the registered Owner, or any
redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or that DTC
will serve and act in the manner described in this Official Statement. See Appendix D for additional
information concerning DTC.
Transfers and Exchanges Upon Termination of Book-Entry Only System
In the event that the book-entry system described above is discontinued, the Bonds will be printed and
delivered as provided in the Indenture. Thereafter, any Bond may, in accordance with its terms, be transferred
on the Registration Books by the person in whose name it is registered, in person or by his or her duly
authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written
instrument of transfer, duly executed in a form acceptable to the Trustee. Transfer of any Bond will not be
permitted by the Trustee during the period established by the Trustee for selection of Bonds for redemption or
if such Bond has been selected for redemption pursuant to the Indenture. Whenever any Bond or Bonds are
surrendered for transfer, the Utility Authority will execute and the Trustee will authenticate and deliver a new
Bond or Bonds for a like aggregate principal amount and of like maturity. The Trustee may require the Bond
Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to
such transfer. The cost of printing Bonds and any services rendered or expenses incurred by the Trustee in
connection with any transfer will be paid by the Utility Authority. The cost of printing Bonds and any services
rendered or expenses incurred by the Trustee in connection with any exchange will be paid by the Utility
Authority.
Any Bond may be exchanged at the Trust Office for a like aggregate principal amount of Bonds of
other authorized denominations and of like maturity. Exchange of any Bond is not permitted during the period
established by the Trustee for selection of Bonds for redemption or if such Bond has been selected for
redemption pursuant the Indenture. The Trustee will require the Bond Owner requesting such exchange to pay
any tax or other governmental charge required to be paid with respect to such exchange.
5
Redemption
Optional Redemption. The Bonds maturing on or before September 1, 2023 are not subject to
optional redemption prior to maturity. The Bonds maturing on September 1, 2024 and thereafter are subject to
redemption prior to their stated maturity at the option of the Utility Authority, as a whole or in part on any
date, by such maturities as are selected by the Utility Authority from any available source of funds on or after
September 1, 2023 at a redemption price equal to the principal amount of the Bonds to be redeemed together
with accrued interest thereon to the date fixed for redemption.
Mandatory Redemption. The Term Bonds are subject to mandatory redemption, in part by lot, from
Sinking Account payments set forth in the following schedule on September 1, 2029 with respect to Term
Bonds maturing September 1, 2031, and on September 1 each year thereafter, at a redemption price equal to
the principal amount thereof to be redeemed (without premium), together with interest accrued thereon to the
date fixed for redemption; provided, however, that if some but not all of the Bonds have been redeemed
pursuant to the optional redemption provisions of the Indenture, the total amount of Sinking Account payments
to be made subsequent to such redemption will be reduced in an amount equal to the principal amount of the
Bonds so redeemed by reducing each such future Sinking Account payment on a pro rata basis (as nearly as
practicable) in integral multiples of $5,000, as will be designated pursuant to written notice filed by the Utility
Authority with the Trustee:
Redemption Date
(September 1)
Principal
Amount
2029
2030
2031*
$920,000
950,000
990,000
* Final Maturity.
In lieu of such redemption, the Trustee may apply amounts in the Sinking Account to the purchase of
Term Bonds at public or private sale for cancellation, as and when and at such prices (including brokerage and
other charges, but excluding accrued interest, which is payable from the Interest Account) as may be directed
by the Utility Authority, except that the purchase price (exclusive of accrued interest) may not exceed the
redemption price then applicable to the Term Bonds, as set forth in a Written Request of the Utility Authority
and subsequently cancelled or surrendered to the Trustee for cancellation. The par amount of any Term Bonds
so purchased by the Utility Authority in any twelve-month period immediately preceding any August 15 in the
table above will be credited towards and will reduce the principal amount of Term Bonds required to be
redeemed on the succeeding September 1.
Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Utility
Authority will execute and the Trustee will authenticate and deliver to the Owner thereof, at the expense of the
Utility Authority, a new Bond or Bonds of authorized denominations equal in aggregate principal amount to
the unredeemed portion of the Bonds surrendered.
Selection of Bonds for Redemption
Whenever provision is made in the Indenture for the redemption of less than all of the Bonds, (other
than mandatory sinking fund redemption of Term Bonds) the Trustee will select the Bonds to be redeemed
from all Bonds or such given portion of the Bonds not previously called for redemption, among maturities as
directed by the Utility Authority and within each maturity in a manner selected by the Trustee; provided,
however, that if less than all of the Bonds are called for redemption at any one time, upon the written direction
of the Utility Authority, the Utility Authority will specify a reduction in any pending Sinking Account
payments required to be made under the Indenture which, to the extent practicable, results in substantially level
Debt Service on the Bonds. For purposes of such selection, the Trustee will treat each Bond as consisting of
6
separate $5,000 portions and each such portion will be subject to redemption as if such portion were a separate
Bond.
Notice of Redemption
Notice of redemption will be mailed by first class mail, postage prepaid, not less than 30 nor more
than 60 days before any redemption date, to respective Owners of any Bonds designated for redemption at
their addresses appearing on the Registration Books, and to the Securities Depositories and to the Information
Services. Each notice of redemption must state the date of the notice, the redemption date, the place or places
of redemption, whether less than all of the Bonds (or all Bonds of a single maturity) are to be redeemed, the
CUSIP numbers and (if less than all Bonds are redeemed) Bond numbers of the Bonds to be redeemed, the
maturity or maturities of the Bonds to be redeemed and in the case of Bonds to be redeemed in part only, the
respective portions of the principal amount thereof to be redeemed. Each such notice will also state that on the
redemption date there will become due and payable on each of said Bonds the redemption price, and that from
and after such redemption date interest thereon will cease to accrue, and will require that such Bonds be then
surrendered. Neither the failure to receive any notice nor any defect therein will affect the proceedings for
such redemption or the cessation of accrual of interest from and after the redemption date. Notice of
redemption of Bonds will be given by the Trustee, at the expense of the Utility Authority, for and on behalf of
the Utility Authority.
With respect to any notice of optional redemption of the Bonds, such notice will state that such
redemption will be conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption
of moneys sufficient to pay the principal of, premium, if any, and interest on such Bonds to be redeemed and
that, if such moneys have not been so received, said notice will be of no force and effect and the Trustee will
not be required to redeem such Bonds. In the event that such notice of redemption contains such a condition
and such moneys are not so received, the redemption will not be made, and the Trustee will within a
reasonable time thereafter give notice in the manner in which the notice of redemption was given, that such
moneys were not so received.
Effect of Redemption
Notice of redemption having been duly given as set forth under the caption “—Notice of
Redemption,” the Bonds (or related portions) so called for redemption will become due and payable, interest
on the Bonds so called for redemption will cease to accrue, said Bonds (or related portions) will cease to be
entitled to any benefit or security under the Indenture, and the Owners of said Bonds will have no rights in
respect thereof except to receive payment of the redemption price thereof. All Bonds redeemed pursuant to the
provisions of the Indenture will be canceled by the Trustee upon surrender thereof and destroyed.
7
Debt Service Schedule
Set forth below is a schedule of payments of principal of and interest on the Bonds for each annual
period ending on June 30 of the years indicated.
Fiscal Year Ending
June 30
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
Total
Principal
$
$
Interest
2,145,000.00
2,330,000.00
2,400,000.00
1,940,000.00
2,015,000.00
590,000.00
615,000.00
640,000.00
665,000.00
690,000.00
725,000.00
760,000.00
800,000.00
840,000.00
875,000.00
920,000.00
950,000.00
990,000.00
20,890,000.00
$
549,820.84
786,450.00
730,050.00
647,100.00
560,300.00
481,200.00
429,100.00
405,000.00
379,900.00
353,800.00
323,250.00
287,875.00
250,750.00
211,750.00
174,950.00
136,275.00
96,000.00
58,600.00
19,800.00
$ 6,881,970.84
Total
$
$
549,820.84
2,931,450.00
3,060,050.00
3,047,100.00
2,500,300.00
2,496,200.00
1,019,100.00
1,020,000.00
1,019,900.00
1,018,800.00
1,013,250.00
1,012,875.00
1,010,750.00
1,011,750.00
1,014,950.00
1,011,275.00
1,016,000.00
1,008,600.00
1,009,800.00
27,771,970.84
SECURITY FOR THE BONDS
General
The Bonds are a special limited obligation of the Utility Authority payable solely from Net Revenues
of the Wastewater Enterprise on a parity with future Parity Obligations, and from certain other funds and
accounts held by the Trustee pursuant to the Indenture. Neither the full faith and credit nor any other revenues
or funds of the Utility Authority are pledged to or available for the payment of debt service on the Bonds. The
obligation of the Utility Authority to make payments of principal and interest on the Bonds does not constitute
an obligation for which the Utility Authority is obligated to levy or pledge any form of taxation or for which
the Utility Authority has levied or pledged any form of taxation. The Utility Authority has no taxing power.
The Bonds are not a debt of the City, the County, the State or any of its political subdivisions in
contravention of any constitutional or statutory limitations, and neither the City, the County, the State nor any
of its political subdivisions is liable on the Bonds, nor in any event will the Bonds be payable out of any funds
or properties of the Utility Authority other than the Net Revenues.
Subject only to the provisions of the Indenture, all of the Net Revenues and any other amounts
(including proceeds of the sale of the Bonds) held in any fund or account established pursuant to the Indenture
have been pledged to secure the payment of the principal of and interest on the Bonds in accordance with their
terms and the provisions of the Indenture. Such pledge, charge and assignment constitutes a first lien on and
security interest in the Net Revenues and will attach, be perfected and be valid and binding from and after the
Closing Date, without any physical delivery thereof or further act.
In order to secure the payment of principal of and interest on the Bonds, the Utility Authority will
cause the City to deposit all of the Gross Revenues immediately upon receipt in the Wastewater Enterprise
Fund. The Wastewater Enterprise Fund will be held by the City on behalf of the Utility Authority. On or after
the first day of each month, amounts deposited in the Wastewater Enterprise Fund will be disbursed in the
following order of priority: (i) payment of Direct Costs and Allocated Costs for the preceding month; and (ii)
8
payment of debt service coming due on any bonds, notes or obligations of the Utility Authority relating to the
Wastewater Enterprise, including the Bonds. See the caption “—Net Revenues Consist of Gross Revenues
Minus Direct Costs and Allocated Costs.”
Amounts remaining in the Wastewater Enterprise Fund immediately after making the transfers
required to be made pursuant to the Indenture will be used by the Utility Authority for any lawful purpose of
the Utility Authority, including making lease payments under the Wastewater Enterprise Lease Agreement (as
such term is defined under the caption “—Net Revenues Consist of Gross Revenues Minus Direct Costs and
Allocated Costs”).
The Utility Authority has transferred in trust, granted a security interest in and assigned to the Trustee,
for the benefit of the Owners from time to time of the Bonds, all of the Net Revenues and all of the rights of
the Utility Authority under the Indenture (but none of its duties or obligations thereunder). The Trustee is
entitled to and will, subject to the provisions of the Indenture, take all steps, actions and proceedings which the
Trustee determines to be reasonably necessary in its judgment to enforce, all of the rights of the Trustee under
the Indenture.
All Net Revenues will be promptly deposited by the Trustee upon receipt in a special fund designated
as the “Bond Fund” which the Trustee will establish, maintain and hold in trust; except that all moneys
received by the Trustee and required under the Indenture to be deposited in the Redemption Fund will be
promptly deposited in such Fund. All Net Revenues deposited with the Trustee will be held, disbursed,
allocated and applied by the Trustee only as provided in the Indenture.
Not later than the first Business Day preceding each date on which principal of or interest on the
Bonds becomes due and payable, the Trustee will transfer from the Bond Fund and deposit into the following
respective accounts (each of which the Trustee will establish and maintain within the Bond Fund), the
following amounts in the following order of priority, the requirements of each such account at the time of
deposit to be satisfied before any transfer is made to any account subsequent in priority:
(a)
The Trustee will deposit in the Interest Account an amount required to cause the aggregate
amount on deposit in the Interest Account to be at least equal to the amount of interest becoming due and
payable on such date on all Bonds then Outstanding.
(b)
The Trustee will deposit in the Principal Account an amount required to cause the aggregate
amount on deposit in the Principal Account to equal the principal amount of the Bonds coming due and
payable on such date.
(c)
The Trustee will deposit in the Sinking Account an amount equal to the aggregate principal
amount of the Term Bonds required to be redeemed on such date, if any, pursuant to the Indenture.
All amounts in the Interest Account will be used and withdrawn by the Trustee solely for the purpose
of paying interest on the Bonds as it becomes due and payable (including accrued interest on any Bonds
purchased or redeemed prior to maturity pursuant to the Indenture). All amounts in the Principal Account will
be used and withdrawn by the Trustee solely to pay the principal amount of the Bonds at their respective
maturity dates. All moneys on deposit in the Sinking Account will be used and withdrawn by the Trustee for
the sole purpose of redeeming or purchasing (in lieu of redemption) Term Bonds pursuant to the Indenture.
Nothing contained in the Indenture or in the Bonds affects or impairs the obligation of the Utility
Authority, which is absolute and unconditional, to pay the principal of and interest and premium (if any) on the
Bonds to the respective Owners of the Bonds at their respective dates of maturity, or upon call for redemption,
as provided in the Indenture, but only out of the Net Revenues and other assets pledged therefor in the
Indenture, or affects or impairs the right of such Owners, which is also absolute and unconditional, to enforce
such payment by virtue of the contract embodied in the Bonds.
9
Net Revenues Consist of Gross Revenues Minus Direct Costs and Allocated Costs
In 2002, the City and the former Redevelopment Agency of the City of Corona formed the Utility
Authority, which leased the Wastewater Enterprise from the City pursuant to a Wastewater Enterprise Lease
Agreement, dated as of February 6, 2002 (the “Wastewater Enterprise Lease Agreement”). The Utility
Authority also leased the City’s water system from the City pursuant to a Water Enterprise Lease Agreement,
dated as of February 6, 2002 (the “Water Enterprise Lease Agreement”). The City, through DWP, continues to
operate the Wastewater Enterprise and the water system pursuant to two Management Agreements, each dated
as of February 6, 2002, by and between the City and the Utility Authority.
Pursuant to the Wastewater Enterprise Lease Agreement, the Utility Authority makes annual lease
payments to the City in an amount determined by agreement between the City and the Utility Authority. Such
lease payments are payable on a subordinate basis to the payments of principal of and interest on the Bonds
from surplus revenues of the Wastewater Enterprise remaining after paying Direct Costs and Allocated Costs,
the Bonds and future Parity Obligations. Pursuant to the Water Enterprise Lease Agreement, the Utility
Authority makes annual lease payments to the City in an amount determined by agreement between the City
and the Utility Authority.
The obligation of the Utility Authority to pay the principal of and interest on the Bonds is payable
from Net Revenues of the Wastewater Enterprise on a parity with future Parity Obligations.
“Net Revenues” means, for any Fiscal Year, an amount equal to all of the Gross Revenues received
with respect to such Fiscal Year, minus the amount required to pay all Direct Costs and Allocated Costs
becoming payable with respect to such Fiscal Year.
“Gross Revenues” means, for any Fiscal Year, the sum of all gross charges received for, and all other
gross income and receipts derived by the Utility Authority from the lease and operation of the Wastewater
Enterprise or otherwise arising from the Wastewater Enterprise, including but not limited to investment
earnings thereon, including Wastewater Capital Impact Fees (as such term is defined in Appendix B),
including any fees levied with respect to reclaimed water, to the extent that such fees are allocable to the 2013
Project or the 2003 Project, and any operational participation revenues received. Gross Revenues do not
include reimbursements from the United States of America pursuant to Section 54AA of the Code (Section
1531 of Title I of Division B of the American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5, 23
Stat. 115 (2009), enacted February 17, 2009)), or any future similar program.
“Direct Costs” means the reasonable and necessary costs, expenses and purchases paid for
maintaining and operating the Wastewater Enterprise, including but not limited to: (a) cost of electricity and
other forms of energy supplied to the Wastewater Enterprise, which includes payments under the Power Sales
Agreement relating to the Wastewater Enterprise discussed under the caption “—Power Sales Agreement;” (b)
the reasonable expenses of management and repair and other costs and expenses necessary to maintain and
preserve the Wastewater Enterprise in good repair and working order; and (c) the reasonable administrative
costs of the Utility Authority attributable to the operation and maintenance of the Wastewater Enterprise, but in
all cases excluding: (i) debt service payable on obligations incurred by the Utility Authority with respect to the
Wastewater Enterprise; (ii) depreciation replacement and obsolescence charges or reserves therefor; and (iii)
amortization of intangibles or other bookkeeping entries of a similar nature. Direct Costs also include
operating and capital contributions to WRCRWA, all as described under the caption “THE WASTEWATER
ENTERPRISE—Western Riverside County Regional Wastewater Authority Treatment Plant.”
“Allocated Costs” means an amount payable by the Utility Authority to the City based on an
allocation of City overhead to the Wastewater Enterprise.
In order to secure the payment of the principal of and interest on the Bonds, all of the Net Revenues
will be pledged as described under the caption “—General.”
10
Power Sales Agreement
The City financed certain electric production facilities and a biosolids dryer (the “Cogeneration
Project”) from proceeds of the 2003 Cogeneration Project Installment Purchase Agreement and certain
recycled water facilities from proceeds of the Installment Purchase Agreement (Recycled Water Project), dated
as of May 1, 2003 (the “2003 Recycled Water Installment Purchase Agreement”), by and between the City and
the Financing Authority. Additionally, in 2005, the City financed additional improvements to the
Cogeneration Project, an electric distribution system (the “Electric Distribution System”) and certain biosolids
handling facilities from proceeds of an Installment Purchase Agreement, dated as of June 1, 2005 (the “2005
Installment Purchase Agreement”), by and between the City and the Financing Authority.
The City sold the biosolids dryer to the Utility Authority pursuant to a Loan and Asset Transfer
Agreement, dated June 30, 2008 (the “Loan Agreement”), by and between the Utility Authority and the City.
Pursuant to the Loan Agreement, the City loaned the Utility Authority $14,667,175.08 (the “Interfund Loan”),
representing the cost of construction of the biosolids dryer. The Utility Authority agreed to repay the Interfund
Loan amount in semiannual installments equal to the payments under the 2003 Cogeneration Project
Installment Purchase Agreement attributable to the biosolids dryer. The Utility Authority’s obligation to make
payments under the Interfund Loan is payable from Wastewater Enterprise Gross Revenues on a subordinate
basis to Parity Obligations of the Wastewater Enterprise. The Interfund Loan is currently outstanding in the
principal amount of approximately $12,515,000. The Utility Authority will prepay the Interfund Loan from
proceeds of the Bonds, which prepayment will be applied to prepay the portion of the 2003 Cogeneration
Project Installment Purchase Agreement attributable to the biosolids dryer.
See the caption
“INTRODUCTION—Refunding Plan.”
The City’s obligation to make payments under the remaining portion of the 2003 Cogeneration Project
Installment Purchase Agreement and the 2005 Installment Purchase Agreement is payable from: (i) moneys
received by the City from the Utility Authority in exchange for the sale of electricity from the Cogeneration
Project to the Utility Authority pursuant to two “take-or-pay” Power Sales Agreements (one relating to the
Wastewater Enterprise and one relating to the water system, and each, a “Power Sales Agreement”) between
the City and the Utility Authority; and (ii) revenues of the Electric Distribution System remaining after the
payment of operational costs of the Electric Distribution System. The Utility Authority’s obligation to make
payments under the Power Sales Agreements, including all operating and non-operating expenses,
depreciation, capital replacement charges and payments under the 2005 Installment Purchase Agreement, is
payable as a Direct Cost of the Wastewater Enterprise and an operation and maintenance expense of the water
system, respectively. See the caption “WASTEWATER ENTERPRISE FINANCIAL INFORMATION” for
historic Direct Costs attributable to the Power Sales Agreement relating to the Wastewater Enterprise.
Payments under the 2003 Recycled Water Project Installment Purchase Agreement were not Direct
Costs of the water system, but were payable from net revenues of the water system. All payments under the
2003 Recycled Water Installment Purchase Agreement were prepaid in 2012.
The Power Sales Agreements establish that the Wastewater Enterprise is responsible for 32% of the
costs attributable to the Cogeneration Project and the Electric Distribution System and that the City’s water
system is responsible for 68% of such costs. However, in the event that the Utility Authority fails to make
payments under the Power Sales Agreement relating to the water system, the Wastewater Enterprise is
obligated to make “step-up” payments under the Power Sales Agreement relating to the Wastewater Enterprise
to cover the shortfall of the water system. The Wastewater Enterprise has never made such shortfall payments,
as water system revenues have been sufficient to make such payments.
Although the Utility Authority had previously sold a portion of the electric power purchased pursuant
to the Power Sales Agreements, such sales of electricity were insufficient to cover the operational costs of the
Cogeneration Project. As a result, such costs were Direct Costs and were payable from Gross Revenues of the
Wastewater Enterprise and water system revenues. See the caption “WASTEWATER ENTERPRISE
11
FINANCIAL INFORMATION—Historic Wastewater Enterprise Operating Results and Debt Service
Coverage.”
The City sold a portion of the Cogeneration Project called the Clearwater Power Plant to the City of
Riverside for approximately $53,400,000 in September 2010 pursuant to an agreement (the “Clearwater Power
Plant Sale Agreement”) with the City of Riverside. Upon the sale of the Clearwater Power Plant, the City
discontinued the sale of electricity to the Utility Authority. Although the Utility Authority is still obligated to
make payments under the Power Sales Agreements (because they are “take-or-pay” agreements), the City of
Riverside has made all such payments since September 2010 in accordance with the Clearwater Power Plant
Sale Agreement.
The Clearwater Power Plant Sale Agreement requires the City of Riverside:
(a)
To pay that portion of the payments under the 2003 Cogeneration Project Installment
Purchase Agreement that is attributable to the Clearwater Power Plant. The remaining portion of such
payments (the portion attributable to the biosolids dryer) is being refunded from proceeds of the Bonds as
described under the caption “INTRODUCTION—Refunding Plan;”
(b)
To pay that portion of the 2005 Installment Purchase Agreement that is attributable
to the Clearwater Power Plant. The remaining portion such payments is payable from the net revenues of the
Electric Distribution System, or, if such funds are insufficient, as a Direct Cost of the Wastewater Enterprise
(32% of such portion) and the water system (68% of such portion);
(c)
To assume operation of the Cogeneration Project; and
(d)
To prepay: (1) the outstanding obligations under the 2003 Cogeneration Project
Installment Purchase Agreement that are attributable to the Clearwater Power Plant on the first available
prepayment date, September 1, 2013; and (2) the outstanding obligations under the 2005 Installment Purchase
Agreement that are attributable to the Cogeneration Project on the first available prepayment date, September
1, 2015.
The Utility Authority expects the City of Riverside to deposit with the 2003 Trustee on or before
August 1, 2013 moneys sufficient, together with approximately $1,000,000 from the City’s Electric
Distribution System, to prepay the remaining outstanding obligations under the 2003 Cogeneration Project
Installment Purchase Agreement that are attributable to the Clearwater Power Plant and all other amounts due
with respect to the 2003 Certificates on September 1, 2013. See the caption “ELECTRIC DISTRIBUTION
SYSTEM.”
Accordingly, although the pledge and lien of Wastewater Enterprise revenues still exists, so long as
the City of Riverside does not default on its obligations under the Clearwater Power Plant Sale Agreement, the
Wastewater Enterprise will not be economically liable for the operation of the Clearwater Power Plant, the
payment of that portion of the 2003 Cogeneration Project Installment Purchase Agreement that is attributable
to the Clearwater Power Plant (in the aggregate principal amount of $39,230,000) or that portion of the 2005
Installment Purchase Agreement that is attributable to the Clearwater Power Plant (in the aggregate principal
amount of $8,231,972). Upon issuance of the Bonds and refunding of the portion of the 2003 Cogeneration
Project Installment Purchase Agreement that is attributable to the biosolids dryer, the 32% portion of the
payments under the 2005 Installment Purchase Agreement that is attributable to the biosolids handling
facilities will remain as a Direct Cost of the Wastewater Enterprise. See the caption “WASTEWATER
ENTERPRISE FINANCIAL INFORMATION—Historic Wastewater Enterprise Operating Results and Debt
Service Coverage.”
Neither the City nor the Utility Authority makes any assurance regarding the City of Riverside’s
ability to continue to make the payments that are described in clauses (a) and (b) in the preceding paragraph or
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the City of Riverside’s willingness to make the prepayments described in clause (d) in the preceding
paragraph. Financial information with respect to the City of Riverside as well as a variety of other operating
information is included in certain disclosure documents prepared by the City of Riverside. The City of
Riverside has certain publicly available documents and has entered into certain continuing disclosure
agreements pursuant to which it is contractually obligated for the benefit of owners of certain of its outstanding
obligations to file certain annual reports, notices of certain enumerated events as defined under Rule 15c2-12
promulgated under the Securities Exchange Act of 1934 (“Rule 15c2-12”) and annual audited financial
statements (the “City of Riverside Information”) with the Municipal Securities Rulemaking Board’s Electronic
Municipal Market Access system (“EMMA”) at http://emma.msrb.org. None of the City of Riverside
Information is incorporated into this Official Statement by reference thereto, and the Utility Authority makes
no representation as to the accuracy or completeness of such information. THE CITY OF RIVERSIDE HAS
NOT ENTERED INTO ANY CONTRACTUAL COMMITMENT WITH THE CITY, THE UTILITY
AUTHORITY, THE TRUSTEE OR THE OWNERS OF THE BONDS TO PROVIDE CITY OF RIVERSIDE
INFORMATION TO THE CITY, THE UTILITY AUTHORITY OR THE OWNERS OF THE BONDS.
THE CITY OF RIVERSIDE HAS NOT REVIEWED THIS OFFICIAL STATEMENT AND HAS
NOT MADE REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR
COMPLETENESS OF THE INFORMATION CONTAINED OR INCORPORATED HEREIN, INCLUDING
INFORMATION WITH REGARD TO THE CITY OF RIVERSIDE. THE CITY OF RIVERSIDE IS NOT
CONTRACTUALLY OBLIGATED, AND HAS NOT UNDERTAKEN, TO UPDATE SUCH
INFORMATION FOR THE BENEFIT OF THE CITY, THE UTILITY AUTHORITY OR THE OWNERS
OF THE BONDS UNDER RULE 15c2-12.
The Electric Distribution System was not included in the facilities that were sold to the City of
Riverside under the Clearwater Power Plant Sale Agreement. The Electric Distribution System’s share of the
payments under the 2005 Installment Purchase Agreement in the amount of $16,918,028 will remain
outstanding. Following the prepayment by the City of Riverside of the portion of the 2005 Installment
Purchase Agreement attributable to the Cogeneration Project, the Electric Distribution System’s share of the
payments under the 2005 Installment Purchase Agreement will remain Direct Costs of the Wastewater
Enterprise and operation and maintenance costs of the water system pursuant to the applicable Power Sales
Agreements. However, the Electric Distribution System has historically generated sufficient revenues to cover
its operational costs. As a result, Gross Revenues of the Wastewater Enterprise and revenues of the water
system have not been used to pay the operational costs of the Electric Distribution System or the Electric
Distribution System’s share of the payments under the 2005 Installment Purchase Agreement. See the caption
“ELECTRIC DISTRIBUTION SYSTEM—Electric Distribution System Operating Results” for historic
information with respect to the coverage of the Electric Distribution System’s operational costs from Electric
Distribution System revenues.
Rate Covenant
The Indenture requires the Utility Authority to fix, prescribe, revise and collect rates and charges for
the services and facilities furnished by the Wastewater Enterprise, or cause the City to do so, during each
Fiscal Year which (together with other funds accumulated from Gross Revenues and which are lawfully
available to the Utility Authority for payment of any of the following amounts during such Fiscal Year) are at
least sufficient, after making allowances for contingencies and errors in estimates, to pay the following
amounts in the following order:
(i)
all Direct Costs and Allocated Costs of the Wastewater Enterprise estimated by the Utility
Authority to become due and payable in such Fiscal Year;
(ii)
all Debt Service becoming due and payable in such Fiscal Year; and
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(iii)
all payments required to meet any other obligations of Utility Authority which are charges,
liens or encumbrances upon, or payable from, the Net Revenues.
The Utility Authority will fix, prescribe, revise and collect rates and charges for the services and
facilities furnished by the Wastewater Enterprise, or cause the City to do so, during each Fiscal Year which are
sufficient to yield Net Revenues, at least equal to 125% of the amounts payable under clause (ii) above in such
Fiscal Year.
No Reserve Fund
The Indenture does not establish a reserve fund for the Bonds. As discussed under the caption “—
Additional Indebtedness—Parity Obligations,” any debt service reserve fund established in connection with
Parity Obligations will not be available to support payment of the Bonds.
Additional Indebtedness
No Senior Obligations. Other than Direct Costs and Allocated Costs, after the Closing Date, as long
as any Bonds are outstanding and payable, the Utility Authority will not issue or incur any bond, note, warrant,
evidence of indebtedness, contract, instrument or other agreement payable from Net Revenues the payment of
which is prior and senior to the payment of the Bonds.
Parity Obligations. The Utility Authority may issue or incur any bond, note, warrant, evidence of
indebtedness, contract, instrument or other agreement secured by a pledge of and lien on Net Revenues equally
and ratably with the Bonds (referred to as “Parity Obligations”) subject to the following provisions:
(a)
The Utility Authority is not in default under the term of the Indenture;
(b)
(i) Net Revenues, as certified by the Utility Authority, for the most recent audited Fiscal Year
preceding the date of execution of the Parity Obligations; plus (ii) projected Net Revenues (as described
below) are at least equal to 125% of Aggregate Maximum Annual Debt Service (as such term is defined in
Appendix B).
The projections described in clause (b)(ii) above may take into account: (1) increases in the charges
made for service from the Wastewater Enterprise which have been adopted by the Utility Authority prior to the
date of issuance or incurrence of such Parity Obligations, but which were not in effect for all or part of such
preceding Fiscal Year, and which are scheduled to be effective in the period of Debt Service shown for such
Parity Obligations; and (2) an allowance for estimated additional average annual Net Revenues from any
additions or connections to or improvements or extensions of the Wastewater Enterprise which have occurred
from the end of Fiscal Year preceding the date of execution of the Parity Obligations.
(c)
Notwithstanding the requirements described above, Parity Obligations may be issued or
incurred to refund outstanding Parity Obligations if, after giving effect to the application of the proceeds
thereof, total Debt Service will not be increased in any Fiscal Year in which Parity Obligations (outstanding on
the date of issuance or incurrence of such refunding Parity Obligations, but excluding such refunding Parity
Obligations) not being refunded are outstanding.
(d)
The Utility Authority may but is not required to fund a reserve fund or obtain a reserve fund
surety or instrument with respect to any Parity Obligations. If a reserve fund is funded for any Parity
Obligations or a qualified reserve fund surety or instrument is obtained with respect to any Parity Obligations,
such funded reserve fund or qualified reserve fund surety or instrument will secure only the related Parity
Obligations and will not support the Bonds or any other Parity Obligations.
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Subordinate Obligations. The Utility Authority has covenanted that the Utility Authority will not
issue or incur any obligations that are payable from Net Revenues on a subordinate basis to the payments of
principal of and interest on the Bonds (“Subordinate Obligations”) unless Net Revenues or projected Net
Revenues, calculated in the same manner as described in clause (b) above, are equal to at least 100% of the
sum of Debt Service on all Parity Obligations and Subordinate Obligations outstanding immediately
subsequent to the incurring of such additional obligations.
THE UTILITY AUTHORITY
The Utility Authority is a joint powers authority of the State organized and existing under and by
virtue of Article 1, Chapter 5, Division 7, Title 1 (commencing with Section 6500) of the California
Government Code, as amended (the “JPA Law”). The Utility Authority was established pursuant to a Joint
Exercise of Powers Agreement, dated February 6, 2002, as amended by an Amended and Restated Joint
Exercise of Powers Agreement, dated February 6, 2013, by and among the City, the Successor Agency to the
Redevelopment Agency of the City of Corona (the “Successor Agency”) and the Housing Authority of the City
of Corona. The Utility Authority is governed by a five-member Board comprised of the same individuals who
comprise the City Council of the City. The Utility Authority was created for the purpose of leasing, owning,
operating, managing and maintaining the Wastewater Enterprise and the City’s water system and providing
financing for public capital improvements for the City and the Successor Agency. Under the JPA Law, the
Utility Authority is authorized to issue bonds to pay the costs of any public capital improvements.
THE CITY
The City is located approximately 45 miles southeast of Los Angeles in western Riverside County.
The City encompasses an area of 39.2 square miles and the City’s 2012 population was estimated to be
approximately 152,000. The City’s Fiscal Year 2012 comprehensive annual financial report is set forth in
Appendix A. Further information with respect to the City and the County is set forth in Appendix F.
THE WASTEWATER ENTERPRISE
Service Area
The service area of the Wastewater Enterprise encompasses approximately 48 square miles, including
all of the City and certain unincorporated areas of the County that are located adjacent to City boundaries. The
total population of the service area is estimated to be approximately 155,000. The service area has elevations
varying from 430 feet in the Green River area to over 1,600 feet in the South Corona area.
Land Use
The Wastewater Enterprise service area is mostly built out and includes single family residences,
multifamily residential units, industrial and commercial properties. Approximately 9% of the land within the
Wastewater Enterprise service area is undeveloped. The City currently expects the Wastewater Enterprise
service area to be fully built out in 2035 with an estimated population of 165,000.
Treatment and Transmission Facilities
The Wastewater Enterprise includes approximately 44 miles of wastewater mains, 12 lift stations, 5.7
miles of force mains and 423 miles of gravity-fed pipelines ranging in size from 6 inches to 42 inches in
diameter, the majority of which were constructed in the 1980s and 1990s. The Wastewater Enterprise has a
total treatment capacity of approximately 15.5 million gallons per day (“mgd”) and treats an average of
approximately 13.2 mgd of wastewater at three facilities: (i) Water Reclamation Facility #1 (“WRF 1”); (ii)
Water Reclamation Facility #2 (“WRF 2”); and (iii) Water Reclamation Facility #3 (“WRF 3”).
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Wastewater flow from WRF 1, WRF 2 and WRF 3 is fully interconnected and the sludge from each
facility is currently treated at WRF 1 alone.
Water Reclamation Facility #1. WRF 1 was last expanded in 1998 and has a permitted capacity of
11.5 mgd and treats an average of 9.8 mgd. Preliminary, secondary and tertiary treatment processes are
employed at WRF 1. Secondary treatment is carried out at two separate plants within WRF 1, Plant 1A and
Plant 1B.
Plant 1A, which has a capacity of 5.5 mgd, provides a biological nitrogen removal activated sludge
and secondary clarification process consisting of: (i) two primary sedimentation tanks, each with a surface area
of 2,400 square feet; (ii) three aeration tanks configured in a serpentine flow pattern, each with an aeration
zone and an anoxic zone; and (iii) and six secondary clarifiers, each with a surface area of 1,836 square feet.
Plant 1B, which has a capacity of 6.0 mgd, provides a biological nitrogen removal activated sludge
and secondary clarification process consisting of: (i) two oxidation ditches, each with a volume of 3,700,000
gallons; and (ii) two clarifiers, each with a surface area of 12,076 square feet. See the caption
“INTRODUCTION—The 2013 Project” for a discussion of the planned expansion of Plant 1B.
Plants 1A and 1B share: (i) a common equalization basin for tertiary treatment; (ii) twelve tertiary
filter cells, each with a surface area of 200 square feet; (iii) two chlorine contact tanks; (iv) two gravity belt
thickeners, with flow limited through sludge strain presses to 200 gallons per minute; (v) two primary digesters
and one secondary digester, each with an approximate capacity of 19,500 gallons per day; (vi) two belt presses,
each with a capacity of 300 gallons per minute; and (vii) a headworks that splits wastewater into three
channels, two of which have channel grinders.
Secondary effluent from Plants 1A and 1B is sent to WRF 1’s tertiary treatment facility. The tertiary
treatment process produces reclaimed water that meets the standards of Chapter 3 of Division 4 of Title 22 of
the California Code of Regulations (“Title 22”) and is used for irrigation, discharged to Butterfield Drain, a
tributary of Temescal Creek, or sent to the Utility Authority’s Lincoln Avenue and Cota Street percolation
ponds. The Utility Authority’s reclaimed water system does not constitute part of the Wastewater Enterprise
and neither the expenses nor revenues of the reclaimed water system are reflected in the Wastewater
Enterprise’s revenues and expenses set forth under the caption “WASTEWATER ENTERPRISE FINANCIAL
INFORMATION.” The maximum flow to the tertiary facility is 15.0 mgd.
WRF 1’s treatment process consists of six steps, including: (a) screenings and major solids removal;
(b) primary clarification, in which sedimentation basins slow the wastewater’s velocity so that organic particles
and grease can be removed to reduce the strength of the wastewater; (c) aeration, in which the wastewater is
oxygenated to sustain reproduction and growth of bacteria (micro-organism mass) that consume the organic
wastes; (d) secondary clarification, in which the wastewater’s velocity is slowed down again to allow the
micro-organism mass to settle for collection and return to aeration to further consume organic material; (e)
filtering, in which sand filters remove suspended solids; and (f) disinfection.
The City leases the site on which WRF 1 is located pursuant to a 1967 Lease (the “WRF 1 Site
Lease”) with the United States Army Corps of Engineers (“USACE”). The term of the WRF 1 Site Lease
expires on April 30, 2017 and the current annual payment rental payment is $90,768. Under the WRF 1 Site
Lease, the City is not permitted to assign or sublet its interest without USACE’s approval. The WRF 1 Site
Lease may be terminated by the Secretary of the Army upon reasonable notice to the City if the Secretary of
the Army deems such termination to be in the interest of public health and safety, although the City believes
that USACE is highly unlikely to terminate the WRF 1 Site Lease prior to its scheduled expiration date of
April 30, 2017 because WRF 1’s purpose is the protection of public health.
The City has commenced negotiations to purchase the site from USACE prior to the WRF 1 Site
Lease expiration date and expects to obtain fee title by January 2014. USACE has indicated a willingness to
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renew the WRF 1 Site Lease for a minimum of 25 years if the City is unable to purchase the site by the WRF 1
Site Lease expiration date. The City currently anticipates applying Wastewater Enterprise reserves to fund the
purchase of the WRF 1 site, which is expected to cost approximately $400,000.
Water Reclamation Facility #2. WRF 2 became operational in 1988 and has a permitted capacity of
3.0 mgd and treats an average of 2.9 mgd. WRF 2 is a conventional activated sludge facility and includes: (i) a
headworks consisting of grinding channels and grit removal; (ii) two primary clarifiers, each with a flow
capacity of 1.9 mgd; (iii) two equalization basins with a total capacity of 651,485 gallons; (iv) three screw
pumps that lift wastewater flow from the equalization basins to the aeration basins; (v) two aeration basins,
only one of which is currently in use; (vi) three secondary clarifiers with a total surface area of 8,600 square
feet; (vii) two membrane filter trains with a total capacity of 1.0 mgd; and (viii) two chlorine contact tanks.
Secondary effluent from WRF 2 is sent to the Lincoln Avenue and Cota Street percolation ponds.
WRF 2 produces Title 22 reclaimed water for use by the Utility Authority’s reclaimed water system.
The Utility Authority’s reclaimed water system does not constitute part of the Wastewater Enterprise and
neither the expenses nor revenues of the reclaimed water system are reflected in the Wastewater Enterprise’s
revenues and expenses set forth under the caption “WASTEWATER ENTERPRISE FINANCIAL
INFORMATION.”
Water Reclamation Facility #3. WRF 3 became operational in 2001 and has a permitted capacity of
1.0 mgd and treats an average of 0.5 mgd. The facility utilizes membrane technology to treat wastewater and
includes: (i) a headworks consisting of two drum screens and a compactor; (ii) three bioreactors, each with
seven membrane cassettes; and (iii) a chlorine contact tank.
WRF 3 produces Title 22 reclaimed water for use by the Utility Authority’s reclaimed water system.
The Utility Authority’s reclaimed water system does not constitute part of the Wastewater Enterprise and
neither the expenses nor revenues of the reclaimed water system are reflected in the Wastewater Enterprise’s
revenues and expenses set forth under the caption “WASTEWATER ENTERPRISE FINANCIAL
INFORMATION.”
The Utility Authority is currently exploring the feasibility of decommissioning WRF 3 upon the
projected completion of the expansion of the WRCRWA Treatment Plant in Fiscal Year 2016. See the caption
“—Western Riverside County Regional Wastewater Authority Treatment Plant.”
The costs of
decommissioning WRF 3, if the Utility Authority elects to do so, will be paid from Wastewater Enterprise
revenues or Wastewater Enterprise reserves.
Western Riverside County Regional Wastewater Authority Treatment Plant
Western Riverside County Regional Wastewater Authority (“WRCRWA”), a joint exercise of powers
authority, operates a regional wastewater treatment plant (the “WRCRWA Treatment Plant”) and wastewater
collection system on behalf of its members in the County. In 2012, the City executed Addendum No. 6 to the
Joint Exercise of Powers Agreement Creating the Western Riverside County Regional Wastewater Authority,
thereby becoming a member of WRCRWA. Currently, the other members of WRCRWA are Home Gardens
Sanitary District, Jurupa Community Services District, the City of Norco and Western MWD.
As a condition of WRCRWA membership, the City agreed to make capital contributions in the
amount of $4,000,000, of which the City has paid $2,000,000 to date. The remaining $2,000,000 capital
contribution is due within 30 days of the opening of construction bids for the expansion of the WRCRWA
Treatment Plant (as discussed in the below paragraph), which is currently expected to occur in Fiscal Year
2014. The City anticipates funding its remaining $2,000,000 capital contribution from Water Reclamation
Capacity Fund moneys and such amount is expected to be appropriated in the City’s Fiscal Year 2014 budget.
In addition, the City paid $37,896 in Fiscal Year 2013 to fund the City’s share of WRCRWA’s operating
budget for Fiscal Year 2013, and anticipates paying approximately $67,101 in Fiscal Year 2014 to fund the
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City’s share of WRCRWA’s operating budget for Fiscal Year 2014. Such costs are Direct Costs of the
Wastewater Enterprise and are incorporated in the financial projections for the Wastewater Enterprise. See the
captions “SECURITY FOR THE BONDS—Net Revenues Consist of Gross Revenues Minus Direct Costs and
Allocated Costs” and “WASTEWATER ENTERPRISE FINANCIAL INFORMATION—Projected
Wastewater Enterprise Operating Results and Debt Service Coverage.”
On March 8, 2012, the members of WRCRWA, including the City, executed the Project and Capacity
Agreement for the Expansion of the Western Riverside County Regional Wastewater Authority Treatment
Plant, as amended by Amendment No. 1 thereto effective July 31, 2012, pursuant to which the City agreed to
participate in financing an expansion of the WRCRWA Treatment Plant from 8 mgd to 13.25 mgd. The City’s
share of the costs of expansion is approximately 38%, or an estimated total of approximately $20,000,000,
which will constitute a Direct Cost of the Wastewater Enterprise payable prior to payment of the Bonds.
The Utility Authority understands that WRCRWA intends to apply for a loan (the “WRCRWA SRF
Loan”) from the SWRCB in the approximate principal amount of $53,000,000 to finance the expansion of the
WRCRWA Treatment Plant. Approximately 38% of the total payments under the WRCRWA SRF Loan
would be attributable to the Wastewater Enterprise and are expected to be paid beginning in Fiscal Year 2017
as Direct Costs of the Wastewater Enterprise prior to payment of the Bonds. See the caption
“WASTEWATER ENTERPRISE FINANCIAL INFORMATION—Projected Wastewater Enterprise
Operating Results and Debt Service Coverage.” There can be no assurance that the WRCRWA SRF Loan will
be entered into in the expected principal amount.
In the event that WRCRWA does not enter into the WRCRWA SRF Loan, the Utility Authority may
consider funding its $20,000,000 share of the costs of the expansion of the WRCRWA Treatment Plant from
Wastewater Enterprise reserves, future Parity Obligations or a combination thereof. The use of a significant
amount of reserves for such costs could cause the Utility Authority to delay certain Wastewater Enterprise
capital improvements planned for future years. See the caption “—Future Wastewater Enterprise
Improvements.”
The expansion of the WRCRWA Treatment Plant is expected to be completed in or about Fiscal Year
2016. There can be no assurance that the City’s share of the costs of the expansion of the WRCRWA
Treatment Plant will not exceed the current estimate of approximately $20,000,000 or that the expansion will
be completed on budget on the currently anticipated schedule.
The City will own 1/6th (2 mgd) of the capacity of the expanded WRCRWA Treatment Plant upon
completion of the expansion. The City expects that its ownership of 2 mgd of the WRCRWA Treatment
Plant’s capacity will be a cost-effective means of treating wastewater flows from future Wastewater Enterprise
customers, with savings and efficiencies resulting from reduced electrical energy and solids disposal costs.
DWP staff is currently assessing the Wastewater Enterprise capacity fee structure to determine
whether to increase capacity fees to reflect the 2 mgd expansion of the WRCRWA Treatment Plant’s capacity.
Any such fee increases are subject to City Council approval and there can be no assurance that fees will be
increased. See the caption “—Wastewater Enterprise Rates and Charges—Capacity Fees.” The projected
Wastewater Enterprise operating results set forth under the caption “WASTEWATER ENTERPRISE
FINANCIAL INFORMATION—Projected Wastewater Enterprise Operating Results and Debt Service
Coverage” do not reflect increases in capacity fees being considered in connection with the expansion of the
WRCRWA Treatment Plant’s capacity.
The City’s capital contributions to WRCRWA for its membership interest, its share of WRCRWA’s
operating budget and its share of the cost of expansion of the WRCRWA Treatment Plant constitute Direct
Costs of the Wastewater Enterprise. Such contributions are reflected in the projected operating results set forth
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under the caption “WASTEWATER ENTERPRISE FINANCIAL INFORMATION—Projected Wastewater
Enterprise Operating Results and Debt Service Coverage.”
Regulatory Matters
The Utility Authority operates WRF 1 pursuant to the terms of the Regional Water Quality Control
Board, Santa Ana Region (the “Regional Board”) Waste Discharge and Producer/User Reclamation
Requirements Order No. R8-2012-0008, National Pollutant Discharge Elimination System (“NPDES”) No.
CA80000383 (the “WRF 1 Permit”). The WRF 1 Permit expires on December 31, 2017. The Utility
Authority expects to renew the WRF 1 Permit prior to its expiration date. However, there can be no assurance
that the WRF 1 Permit will be renewed on similar terms. In the event that the WRF 1 Permit is not renewed
prior to its expiration date, the Utility Authority would expect to operate WRF 1 in accordance with the terms
of the existing permit while a renewal application is considered.
The Utility Authority operates WRF 2 pursuant to the terms of the Regional Board Waste Discharge
Requirements Order No. R8-2011-0015 (the “WRF 2 Permit”). The WRF 2 Permit does not have an
expiration date.
The Utility Authority operates WRF 3 pursuant to the terms of the Regional Board Waste Discharge
and Producer/User Reclamation Requirements Order No. R8-2007-007, NPDES No. CA8000395 (the “WRF 3
Permit”). The WRF 3 Permit expired on April 1, 2012 and the Utility Authority timely submitted an
application for renewal thereof to the Regional Board. The Regional Board is currently reviewing the
application for renewal and the Utility Authority expects the WRF 3 Permit to be renewed. However, there
can be no assurance that the WRF 3 Permit will be renewed on similar terms. While the application for
renewal is being considered, the Utility Authority is operating WRF 3 under the terms of the expired WRF 3
Permit.
The Utility Authority is operating WRF 1, WRF 2 and WRF 3 in compliance with the terms of the
above-described permits.
On May 2, 2006, the State Water Resources Control Board issued General Waste Discharge
Requirements for Sanitary Sewer Systems, Water Quality Order No. 2006-0003 (the “General Order”)
requiring public agencies that own sanitary sewer systems comprised of more than one mile of pipes or sewer
lines to develop sanitary sewer management plans and report all sanitary sewer overflows. The Utility
Authority is currently enrolled under the General Order and has a certified sanitary sewer management plan.
Management
The key personnel responsible for management of the Wastewater Enterprise include the City
Manager, the Finance Director and the General Manager of DWP. The City Attorney provides legal services
to the Wastewater Enterprise.
Bradly Robbins is the City Manager of the City. Mr. Robbins was appointed City Manager in August
2008 and has worked for the City since 1988. Mr. Robbins previously served as Planning Director from 2000
to 2002 and Assistant City Manager from 2002 to 2008. Mr. Robbins has a Bachelor of Science degree in
geography from the University of California and a Master’s degree in Liberal Studies/Urban Planning from the
University of Oklahoma. He is a Certified Planner by the American Institute of Certified Planners and a
Certified Building Inspector by the International Conference of Building Officials.
Kerry Eden is the Finance Director of the City. Ms. Eden was appointed Finance Director in February
2012. She has been with the City since 1996, beginning in the Finance Department as an accountant. In 2006,
Ms. Eden was appointed Assistant General Manager of DWP with responsibility for finance and operations.
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She has a Bachelor’s degree and a Master’s degree in Business Management and Management, respectively,
from the University of Redlands.
Jonathan Daly is the General Manager of DWP. Mr. Daly began his career with the City in 1987 and
has spent the past 25 years in DWP. Mr. Daly is responsible for the overall operations of DWP, which
provides water, reclaimed water, electric service and water reclamation to residents and businesses within the
DWP’s service area. In addition to Mr. Daly’s 28 years of experience in the utility industry and has multiple
certifications in water, water reclamation and mechanics, Mr. Daly has a Bachelor of Arts Degree in Business
Administration.
Employees and Employee Benefits
As of July 1, 2012, DWP had 111 full-time equivalent employees (“FTEs”), of whom 41 work in
operations, 5 work in engineering and 26 work in maintenance and 39 work in administration. DWP
employees are represented by the Corona General Employees Association (the “CGEA”) and the Corona
Supervisors Association (the “CSA”). The current memorandum of understanding between the City and the
CGEA expires on June 30, 2015 and the current memorandum of understanding between the City and the CSA
expires on June 30, 2014. The City has never experienced a work stoppage or other employee action.
See the caption “PENSION OBLIGATIONS AND OTHER POST-EMPLOYMENT BENEFITS” for
information with respect to the City’s pension plans and other post-employment benefits.
Budget Process
Prior to July 1 of each year, the Finance Director of the City submits a proposed DWP budget for the
Fiscal Year commencing July 1 to the City Council. The City Council generally conducts public workshops to
obtain comments from residents and ratepayers. Subsequent to the public workshops, the City Council
generally approves the budget prior to July 1. The City Council approved the DWP’s operating budget for
Fiscal Year 2013 on June 20, 2012.
Insurance
Insurance for the Wastewater Enterprise is maintained through commercial carriers as follows:
Property Damage. Coverage is maintained for losses of up to $100,000,000, with a $50,000
deductible. The Wastewater Enterprise does not maintain coverage for earthquake damage.
General Liability. The Wastewater Enterprise is self-insured up to $750,000 and maintains coverage
for losses between $750,000 to $10,000,000, with no deductible. The general liability policy includes
automobile liability and public officials errors and omissions coverage.
Workers Compensation.
insurance up to statutory limits.
The City is self-insured up to $1,000,000 and has purchased excess
The City has not settled any claims that exceeded its insurance coverage in the past three years.
Outstanding Obligations
Senior Obligations. In June 2005, the City entered into the 2005 Installment Purchase Agreement in
the aggregate principal amount of $29,020,000, of which $25,150,000 is currently outstanding. The obligation
to make payments under the 2005 Installment Purchase Agreement is payable as a Direct Cost of the
Wastewater Enterprise, among other sources, prior to payment of the principal of and interest on the Bonds.
See the caption “SECURITY FOR THE BONDS—Power Sales Agreement” for a discussion of the obligation
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of the City of Riverside to pay all amounts due on the portion of the 2005 Installment Purchase Agreement that
is attributable to the Clearwater Power Plant, and to prepay such amounts on September 1, 2015. As a result of
such payments by the City of Riverside, the payments under the 2005 Installment Purchase Agreement that are
attributable to the Clearwater Power Plant are no longer being paid by the Wastewater Enterprise or the City’s
water system. The remaining portion of the payments under the 2005 Installment Purchase Agreement, which
is currently outstanding in the aggregate principal amount of $16,918,028, has historically been paid from net
revenues of the Electric Distribution System. See the caption “ELECTRIC DISTRIBUTION SYSTEM—
Electric Distribution System Operating Results.”
In May 2003, the City entered into the 2003 Cogeneration Project Installment Purchase Agreement in
the aggregate principal amount of $60,875,000, of which $51,745,000 is currently outstanding. The portion of
the payments under the 2003 Cogeneration Project Installment Purchase Agreement that is attributable to the
biosolids dryer is being refunded from proceeds of the Bonds, as described under the caption
“INTRODUCTION—Refunding Plan,” and the obligation to make the portion of the payments under the 2003
Cogeneration Project Installment Purchase Agreement that is attributable to the Clearwater Power Plant is
payable from water system revenues. See the caption “SECURITY FOR THE BONDS—Power Sales
Agreement” for a discussion of the obligation of the City of Riverside to pay the amounts due under the 2003
Cogeneration Project Installment Purchase Agreement that are attributable to the Clearwater Power Plant, and
to prepay such amounts on or before August 1, 2013. As a result of such payments by the City of Riverside,
the payments under the 2003 Cogeneration Project Installment Purchase Agreement that are attributable to the
Clearwater Power Plant are no longer being paid by the City’s water system or the Wastewater Enterprise. See
the caption “SECURITY FOR THE BONDS—Power Sales Agreement” for a description of certain
circumstances under which such payments under the 2003 Cogeneration Project Installment Purchase
Agreement could be payable from Wastewater Enterprise Gross Revenues if the City of Riverside fails to
make such payments and insufficient water system revenues are available.
The Utility Authority intends to participate in the expansion of the WRCRWA Treatment Plant and
expects that approximately 38% of the payments thereunder will be attributable to the Wastewater Enterprise.
Such amounts will be payable as Direct Costs of the Wastewater Enterprise prior to payment of the Bonds.
See the caption “—Western Riverside County Regional Wastewater Authority Treatment Plant.”
Parity Obligations. The City has applied for a loan (the “2013 SRF Loan”) from the SWRCB in the
approximate aggregate principal amount of $11,731,039 plus accrued interest to the first payment date to
finance the construction of certain Wastewater Enterprise improvements. The 2013 SRF Loan is expected to
bear interest at the rate of approximately 1.7% per annum and is expected to be payable in annual installments
of approximately $696,830 commencing in 2015, with a final payment in 2035. The 2013 SRF Loan is
expected to be payable from Net Revenues of the Wastewater Enterprise on a parity with the payments of
principal of and interest on the Bonds. See the caption “WASTEWATER ENTERPRISE FINANCIAL
INFORMATION—Projected Wastewater Enterprise Operating Results and Debt Service Coverage.”
The SWRCB is currently reviewing the City’s loan application and supporting documentation and
there can be no assurance that the 2013 SRF Loan will be entered into as currently contemplated. See the
caption “—Future Wastewater Enterprise Improvements.”
In the event that the City does not enter into the 2013 SRF Loan, the City would anticipate financing
the proposed projects from Wastewater Enterprise reserves, the proceeds of additional Parity Obligations or a
combination thereof. See the caption “SECURITY FOR THE BONDS—Additional Indebtedness—Parity
Obligations.”
21
Historic and Projected Wastewater Enterprise Connections
The following table shows the number of active Wastewater Enterprise connections for the five most
recent Fiscal Years.
CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE
Historic Wastewater Enterprise Connections
Fiscal Year
Residential
Connections
Commercial
Connections
Total
Connections
Percentage
Change
2008
2009
2010
2011
2012
34,380
34,000
34,088
34,813
35,015
1,922
2,004
2,067
2,097
2,199
36,302
36,004
36,155
36,910
37,214
N/A %
(0.82)
0.42
2.09
0.82
Source: Corona Utility Authority.
The following table shows the projected number of active Wastewater Enterprise connections for the
current and next four Fiscal Years.
CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE
Projected Wastewater Enterprise Connections(1)
Fiscal Year
Residential
Connections
2013
2014
2015
2016
2017
35,204
35,380
35,592
36,802
37,759
Commercial
Connections
2,152(2)
2,163
2,176
2,250
2,308
Total
Connections
37,356
37,543
37,768
39,052
40,067
Percentage
Change
0.38%
0.50
0.60
3.40
2.60
(1)
Reflects City projections of additional growth based upon approved multifamily or infill developments.
Projected decrease from Fiscal Year 2012 connections reflects closure of certain business and government accounts. Daily
average flow is projected to increase from Fiscal Year 2012 amount despite such closures. See the caption “—Historic and
Projected Wastewater Enterprise Daily Average Flow.”
Source: Corona Utility Authority.
(2)
Increases in projected connections reflect the Utility Authority’s estimates of development within the
Wastewater Enterprise service area based on information provided by the City’s Planning Department relating
to project entitlement applications.
22
Historic and Projected Wastewater Enterprise Daily Average Flow
The following table shows the Wastewater Enterprise daily average wastewater flow in mgd per day
for the five most recent Fiscal Years.
CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE
Historic Wastewater Enterprise Daily Average Flow
Fiscal Year
Daily Average
Flow (mgd)
2008
2009
2010
2011
2012
13.19
13.05
13.47
13.63
12.90
Percentage
Change
N/A %
(1.06)
3.22
1.19
(5.36)(1)
(1)
Decrease in Fiscal Year 2012 daily average flow reflects conservation measures as well as the replacement of a meter at
WRF 2 with two new meters, improving the accuracy of flow measurements.
Source: Corona Utility Authority.
The following table shows the projected Wastewater Enterprise daily average wastewater flow in mgd
for the current and next four Fiscal Years.
CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE
Projected Wastewater Enterprise Daily Average Flow
Fiscal Year
Daily Average
Flow (mgd)(1)
2013
2014
2015
2016
2017
13.01
13.07
13.15
13.57
13.90
(1)
Percentage
Change
0.85%
0.46
0.61
3.19
2.43
Projected increases in daily average flow reflect projected increases in Wastewater Enterprise connections. See the caption
“—Historic and Projected Wastewater Enterprise Connections.”
Source: Corona Utility Authority.
23
Historic and Projected Wastewater Enterprise Service Charge Revenues
The following table shows the Wastewater Enterprise service charge revenues for the five most recent
Fiscal Years. During such period, an average of approximately 84% of such revenues were attributable to
residential customers and an average of approximately 16% of such revenues were attributable to commercial,
industrial and public agency customers.
CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE
Historic Wastewater Enterprise Service Charge Revenues
Fiscal Year
2008
2009
2010
2011
2012
Wastewater Enterprise
Service Charge
Revenues
$22,563,807
24,780,759
26,167,119
26,317,303
28,055,728
Percentage
Change
N/A %
9.83
5.59
0.06
6.61(1)
(1)
Increase in Wastewater Enterprise service charge revenues in Fiscal Year 2012 reflects implementation of rate increases.
See the caption “—Wastewater Enterprise Rates and Charges.”
Source: Corona Utility Authority.
The following table shows the projected Wastewater Enterprise service charge revenues for the
current and next four Fiscal Years. The Utility Authority estimates that, during such period, an average of
approximately 84% of such revenues will be attributable to residential customers and an average of
approximately 16% of such revenues will be attributable to commercial and other customers.
CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE
Projected Wastewater Enterprise Service Charge Revenues
Fiscal Year
2013
2014
2015
2016
2017
Wastewater Enterprise
Service Charge
Revenues(1)
$28,900,000
29,767,000
30,689,777
32,653,923
34,645,812
(1)
Percentage
Change
3.01%
3.00
3.10
6.40(2)
6.10(2)
Reflects increases in projected Wastewater Enterprise connections and daily average wastewater flow described under the
captions “—Historic and Projected Wastewater Enterprise Connections” and “—Historic and Projected Wastewater
Enterprise Daily Average Flow,” respectively, adopted rate increases of approximately 2.7% and 2.0% for Fiscal Years 2013
and 2014, respectively, as well as projected rate increases described under the caption “—Wastewater Enterprise Rates and
Charges.” Such projected rate increases are subject to the notice, hearing and protest provisions of Proposition 218 and
there can be no assurance that the Board of Directors will adopt such rate increases as currently projected. See the caption
“CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES—Proposition 218.”
(2)
Reflects increases in projected Wastewater Enterprise connections based on development estimates. See the caption “—
Historic and Projected Wastewater Enterprise Connections.”
Source: Corona Utility Authority.
24
Largest Wastewater Enterprise Customers
The following table sets forth the ten largest Wastewater Enterprise customers for Fiscal Year 2012,
as determined by annual payments.
CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE
Ten Largest Wastewater Enterprise Customers
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Customer
Type of Business
Waterstone at Corona Pointe
Corona-Norco Unified School District
EWR, Inc.
MG Properties
Triana at Corona Ranch Maintenance Corp.
ERP Operating Limited Partnership
Steadfast Companies
Sage Canyon Maintenance Corp.
Marquessa Apartments
Green River Village Mobilehome Community
TOTAL
646 commercial units
Government
456 multifamily units
412 multifamily units
328 multifamily units
330 multifamily units
360 multifamily units
320 multifamily units
336 multifamily units
333 mobilehome spaces
Fiscal Year 2012
Payment
$ 310,747.54
238,298.73
229,699.11
196,503.40
167,834.28
162,454.62
161,691.29
161,470.39
159,066.96
158,694.35
$1,946,460.67
Percentage of Total
Wastewater Enterprise
Service Charge Revenues
1.11%
0.85
0.82
0.70
0.60
0.58
0.58
0.58
0.56
0.56
6.94%
Source: Corona Utility Authority.
These ten largest customers accounted for approximately 6.94% of total Wastewater Enterprise
service charge revenues for Fiscal Year 2012.
Wastewater Enterprise Rates and Charges
General. Rates and charges for wastewater service within the Wastewater Enterprise service area are
set by the City Council and are not subject to the jurisdiction of, or regulation by, the California Public
Utilities Commission or any other regulatory body. The City is, however, required to comply with the notice,
hearing and majority protest provisions of Article XIIID of the State Constitution, which is popularly known as
Proposition 218. See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND
CHARGES—Proposition 218” for further information with respect to Proposition 218.
DWP staff annually determines the adequacy of the charge structure for wastewater service in the
Wastewater Enterprise service area after full consideration of expected operations, maintenance, capital costs
and capital repayment obligations of the Wastewater Enterprise. The City Council currently sets wastewater
charges at a level that it determines is sufficient to pay all Direct Costs of the Wastewater Enterprise, to
recover Allocated Costs and other operating expenses of the Wastewater Enterprise, to pay debt service
payments and to maintain appropriate reserves for the Wastewater Enterprise. The current charge consists of a
monthly fixed service charge based on meter size and/or customer type. See the caption “—Wastewater
Enterprise Collection Procedures” for further information with respect to the collection of Wastewater
Enterprise rates and charges.
On May 18, 2011, the City Council adopted Ordinance No. 3076, which permits, but does not require,
wastewater service charge increases for Fiscal Years 2012 through 2017. Ordinance No. 3076 was adopted in
accordance with Proposition 218. The City Council adopted a rate increase of approximately 2.7% effective
July 1, 2012 and a rate increase of approximately 2.0% to be effective July 1, 2013 in accordance with
Ordinance No. 3076. Rate increases, if adopted in subsequent years in accordance with Ordinance No. 3076,
reflect Consumer Price Index adjustments based on the cost of providing wastewater services and are not
subject to further Proposition 218 proceedings other than 30 days’ notice before going into effect. Rate
increases adopted pursuant to Ordinance No. 3076 may not exceed the Consumer Price Index increase for the
25
Los Angeles-Orange County-Riverside County Metropolitan Statistical Area, provided that the maximum
increase may not exceed 7.5% per annum.
The projected revenues set forth under the caption “WASTEWATER ENTERPRISE FINANCIAL
INFORMATION—Projected Wastewater Enterprise Operating Results and Debt Service Coverage” reflect
adopted rate increases of approximately 2.7% and 2.0% for Fiscal Years 2013 and 2014, respectively, and
assume implementation of annual Consumer Price Index adjustments of approximately 2.5%, 3.0% and 3.5%
in Fiscal Years 2015, 2016 and 2017, respectively, all in accordance with Ordinance No. 3076. There is no
assurance that the City Council will enact wastewater service charge increases under Ordinance No. 3076 as
projected herein. Furthermore, there is no assurance that the City Council will not repeal or modify such rate
increases in the future or that the City’s ratepayers will not approve an initiative to repeal or modify any
increase in wastewater service charges approved by the City Council.
The Utility Authority is subject to certain covenants with respect to the Bonds which require that the
Utility Authority fix, prescribe, revise and collect rates and charges for the services and facilities furnished by
the Wastewater Enterprise, or cause the City to do so, during each Fiscal Year which are sufficient to yield Net
Revenues at least equal to 125% of debt service of the Wastewater Enterprise in such Fiscal Year. See the
caption “SECURITY FOR THE BONDS—Rate Covenant.”
Selected Rates. The Utility Authority charges a fixed monthly service charge for all Wastewater
Enterprise customers based on customer type. Wastewater Enterprise monthly rates effective July 1, 2012 are
set forth below. Such rates will be increased by an average of approximately 2.0% effective July 1, 2013 as set
forth below. See the caption “—General.”
CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE
Selected Wastewater Enterprise Rates
Fiscal Years 2013 and 2014
Fiscal Year 2013 Fiscal Year 2014
Monthly Fixed Monthly Fixed
Service Charge Service Charge(1)
Service Type
Inside Standard Wastewater
Residential/Mobile Home Parks (per space)
Motels & Hotels (per unit)
Motels & Hotels (per living unit)
Restaurants, supermarkets, mortuaries and bakeries – meter 1” or smaller
Restaurants, supermarkets, mortuaries and bakeries – meter greater than 1”
Laundries (per machine)
Inside Commercial 5/8” or City park restroom
Inside Commercial 3/4”
Inside Commercial 1”
Inside Commercial 1 1/2”
Inside Commercial 2”
Inside Commercial 3”
Inside Commercial 4”
Inside Commercial 6”
Inside Commercial 8”
(1)
$
44.71
7.44
44.71
160.08
261.12
23.73
44.71
70.61
101.45
182.41
285.83
526.87
858.26
1,719.12
2,765.22
$
45.60
7.59
45.60
163.28
266.34
24.20
45.60
72.02
103.48
186.06
291.55
537.41
875.43
1,753.50
2,820.52
Ordinance No. 3076 (described above under the caption “—General”) authorized Fiscal Year 2014 monthly service charges
subject to implementation by the City Manager. The Fiscal Year 2014 charges have not yet been approved by the City
Manager and are subject to change prior to July 1, 2013.
Source: Corona Utility Authority.
26
Comparative Rates. Set forth below is a comparison of the Wastewater Enterprise’s typical monthly
bill for a single family residential customer as compared to other neighboring communities as of March 21,
2013.
CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE
Typical Residential Customer Sewer Bill
Community
Monthly Charge
Elsinore Valley Municipal Water District (Canyon Lake)
City of Norco
Corona Utility Authority Wastewater Enterprise
Elsinore Valley Municipal Water District
Lee Lake Water District
Western Municipal Water District
City of Riverside
Eastern Municipal Water District
$
54.00
46.00
44.71
42.00
35.30
35.29
26.55 – 30.66
21.62 – 29.65
Source: Corona Utility Authority.
The projected wastewater service charge revenues set forth under the captions “—Historic and
Projected Wastewater Enterprise Service Charge Revenues” and “WASTEWATER ENTERPRISE
FINANCIAL INFORMATION—Projected Wastewater Enterprise Operating Results and Debt Service
Coverage” reflect adopted wastewater service charge rate increases in Fiscal Years 2013 and 2014 and
projected wastewater service charge rate increases in Fiscal Years 2015 through 2017, as described under the
caption “—General.” Such rate increases are subject to the notice, hearing and protest provisions of
Proposition 218 described under the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS
AND CHARGES—Proposition 218.” There can be no assurance that the City Council will adopt such rate
increases for Fiscal Years 2015 through 2017 as currently projected.
Capacity Fees. Sample fees for each new connection to the Wastewater Enterprise are set forth
below.
CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE
Capacity Fees
Type of Connection
Base Rate(1)
Multiplied By
Total Connection Fee
Single Family Dwelling
Multi-Family Dwelling
Apartment
Office Building
Warehouse
Manufacturing
$11.32
11.32
11.32
N/A
N/A
N/A
300 gallons per day
240 gallons per day
200 gallons per day
N/A
N/A
N/A
$3,396 per dwelling
$2,717 per dwelling
$2,264 per dwelling
$169.80 per 100 square feet
$33.96 per 100 square feet
$56.60 per 100 square feet
(1)
Rate per gallon per day.
Source: Corona Utility Authority.
From July 1, 2012 through March 27, 2013, the Wastewater Enterprise received approximately
$946,640 in capacity fees, during which period approximately 327 new connections to the Wastewater
Enterprise came online. Capacity fees are paid when building permits are issued, which may not necessarily
occur in the same Fiscal Year that the Wastewater Enterprise begins service to new connections. See the
caption “WASTEWATER ENTERPRISE FINANCIAL INFORMATION” for historical and projected
capacity fee revenues.
27
DWP staff is currently assessing the Wastewater Enterprise capacity fee structure to determine
whether to increase capacity fees to reflect the costs of the City’s participation in the expansion of the
WRCRWA Treatment Plant. Any such fee increases are subject to City Council approval and there can be no
assurance that fees will be increased. See the caption “—Western Riverside County Regional Wastewater
Authority Treatment Plant.” The projected Wastewater Enterprise operating results set forth under the caption
“WASTEWATER ENTERPRISE FINANCIAL INFORMATION—Projected Wastewater Enterprise
Operating Results and Debt Service Coverage” do not reflect increases in capacity fees being considered in
connection with the expansion of the WRCRWA Treatment Plant’s capacity.
Wastewater Enterprise Collection Procedures
DWP is on a monthly billing cycle for water, wastewater, sanitation, electric and emergency
management system service, as applicable. A consolidated bill is sent out every month to DWP customers.
Payment is due by the 28th day after the billing date and is considered delinquent if not paid by that date. If
payment is not received, a delinquency message appears on a reminder bill, with a 10% penalty assessment.
The delinquency message also informs customers that service will be discontinued if the bill is not paid in full
within 46 days. Thirty-nine days after the date billed, a notice of shutoff of service will be mailed to the billing
address of the customer. A processing charge will be assessed on that notice and the date of discontinuance of
service will again be noted. Accounts that have been shut off may be reconnected upon payment in full of
outstanding balances and a reconnection fee of $40. As of April 1, 2013, less than 2.5% of accounts are more
than 46 days delinquent. Such delinquencies are in the total amount (including amounts due for services other
than wastewater service) of approximately $125,666.
Future Wastewater Enterprise Improvements
The Utility Authority projects total capital improvements to the Wastewater Enterprise of
approximately $65,000,000 in the current and next four Fiscal Years, as set forth in the below table. Certain
projected capital improvements have not yet been approved by the City Council and all of such projections are
subject to change at any time.
28
CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE
Projected Capital Improvement Projects
Fiscal Year
Project Description
(2)
WRF 1/Treatment
WRF 2/Treatment(3)
WRF 3/Treatment
Pipelines
Liftstations
Ponds
WRCRWA(4)
Asset Management
Program
Global Information
Systems
Total
(1)
2013
2014
$ 5,459,813
5,543,828
1,157,659
1,218,983
200,000
2,266,138
$ 2,780,000
10,931,039
2,000,000
-
1,050,000
-
63,594
$15,910,014
$16,761,039
$22,950,000
2015
2016
$
2,950,000
20,000,000
$
2017
4,169,691
2,700,000
-
$
Total
2,500,000
-
$ 8,239,813
16,474,867
4,169,691
6,807,659
3,718,983
200,000
24,266,138
-
-
1,050,000
$ 6,869,691
$ 2,500,000
63,594
$64,990,745
(1)
Reflects Fiscal Year 2013 appropriated amounts. DWP expects that approximately $9.9 million of such amounts will be
expended in Fiscal Year 2014. Such expenditures are not reflected in the Fiscal Year 2014 column.
(2)
Includes approximately $1,430,000 for WRF 1 upgrades that has not yet been approved by the City Council. Also includes
components of the 2013 Project. See the caption “INTRODUCTION—The 2013 Project.”
(3)
Includes approximately $5,501,000 for WRF 2 tertiary treatment upgrades and approximately $430,000 for WRF headworks
screening that have not yet been approved by the City Council.
(4)
Reflects projected costs for membership buy-in and City share of costs of expansion of WRCRWA Treatment Plant. See the
caption “—Western Riverside County Regional Wastewater Authority Treatment Plant.”
Source: Corona Utility Authority.
The Utility Authority currently anticipates funding such improvements through the sources described
in the below table. Other than the Bonds and the 2013 SRF Loan, the Utility Authority does not currently
expect to enter into any additional installment purchase agreements or loan agreements or to issue any
additional bonds in the next five years to finance such capital improvements. However, if WRCRWA does not
enter into the WRCRWA SRF Loan, the Utility Authority may elect to issue or incur Parity Obligations to
fund all or a portion of its share of WRCRWA Treatment Plant expansion costs. See the captions
“SECURITY FOR THE BONDS—Additional Indebtedness—Parity Obligations” and “—Western Riverside
County Regional Wastewater Authority Treatment Plant.”
29
CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE
Projected Capital Improvement Projects
Fiscal Year
Project Description
Bonds
2013 SRF Loan(1)
WRCRWA SRF Loan(2)
Capacity Fees
Cash Reserves
Total
2013
2014
4,258,804
11,651,210
$15,910,014
$ 4,000,000
11,731,039
1,030,000
$16,761,039
$
2015
$
20,000,000
1,939,447
1,010,553
$22,950,000
2016
$
6,869,691
$ 6,869,691
2017
$
2,500,000
$ 2,500,000
Total
$ 4,000,000
11,731,039
20,000,000
2,939,447
26,320,258
$64,990,745
(1)
The SWRCB is currently reviewing the City’s 2013 SRF Loan application and supporting documentation and there can be
no assurance that the 2013 SRF Loan will be entered into as currently contemplated. In the event that the 2013 SRF Loan is
not entered into, the Utility Authority anticipates applying grant moneys, Gross Revenues (including capacity fees) and
reserves to fund the improvements that are expected to be funded from 2013 SRF Loan proceeds.
(21
If WRCRWA does not enter into the WRCRWA SRF Loan, the Utility Authority may elect to issue or incur Parity
Obligations to fund all or a portion of its share of WRCRWA Treatment Plant expansion costs. See the captions
“SECURITY FOR THE BONDS—Additional Indebtedness—Parity Obligations” and “—Western Riverside County
Regional Wastewater Authority Treatment Plant.”
Source: Corona Utility Authority.
WASTEWATER ENTERPRISE FINANCIAL INFORMATION
Financial Statements
A copy of the most recent financial statements (the “Financial Statements”) of the City and the Utility
Authority audited by Lance, Soll & Lunghard, LLP, Certified Public Accountants & Consultants, Brea,
California (the “Auditor”) are set forth in Appendix A and should be read in their entirety. The Financial
Statements are public documents and are included within this Official Statement without the prior approval of
the Auditor. Accordingly, the Auditor has not performed any post-audit analysis of the financial condition of
the City or the Utility Authority, nor has the Auditor reviewed or audited this Official Statement.
The Wastewater Enterprise and the Wastewater Enterprise Fund, as described in this Official
Statement, are referred to as the Water Reclamation utility and the Water Reclamation Fund, respectively, in
the Financial Statements.
The summary operating results contained under the caption “—Historic Wastewater Enterprise
Operating Results and Debt Service Coverage” are derived from the Financial Statements and audited financial
statements for prior Fiscal Years (excluding certain non-cash items and after certain other adjustments) and are
qualified in their entirety by reference to such statements, including the attached notes. The Auditor has not
reviewed or audited the summary operating results or any other portion of this Official Statement.
Wastewater Enterprise Reserves
A formal reserve policy is not maintained for the Wastewater Enterprise Fund. However, the City
maintains a cash and investment pool that is available for all funds, including the Wastewater Enterprise Fund.
Each fund type balance in the pool is reflected on the combined balance sheet set forth in Appendix A as cash
and investments. The City apportions interest earnings to all funds based on their monthly cash balances.
For the past five years, the Wastewater Enterprise has maintained an average of approximately
$28,049,000 in cash on hand, capital replacement reserves, operating reserves and other available moneys. As
of June 30, 2012, the Wastewater Enterprise maintained approximately $31,016,644 in such reserves and other
available moneys, including $17,244,473 available to pay operating expenses, which is equivalent to
approximately 224 days’ operating expenses of the Wastewater Enterprise. The $31,016,644 amount includes
30
$13,772,171 for designated capital projects, $5,265,890 set aside to cover 90 days’ operating expenses in
accordance with Utility Authority practice and $11,978,583 in undesignated and unrestricted funds, which are
also available to pay operating expenses. See Note 2 to the Financial Statements set forth in Appendix A for
further information with respect to the City’s reserves and investment policies.
Historic Wastewater Enterprise Operating Results and Debt Service Coverage
The following table is a summary of operating results of the Wastewater Enterprise for the last five
Fiscal Years. These results have been derived from the audited financial statements of the City but exclude
certain receipts which are not included as Gross Revenues under the Indenture and certain non-cash items and
include certain other adjustments.
CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE
Historic Operating Results (Fiscal Year Ended June 30)(1)
2008
2009
2010
2011
2012
Gross Revenues
Wastewater Service Charges(2)
Fees and Permits
Fines and Penalties(3)
Capacity Fees
Operating Grants
Investment Earnings
Other Revenues(4)
Total Gross Revenues
$ 22,563,807
125,848
1,500
2,935,928
1,375,831
688,665
$ 27,691,579
$ 25,780,759
183,004
17,000
976,344
1,431,538
593,015
$ 28,981,660
$ 26,167,119
204,995
500
270,010
122,308
1,196,647
2,229,530(9)
$ 30,191,109
$ 26,317,303
461,067
370,058
325,863
693,193
212,775
$ 28,380,259
$ 28,055,728
405,721
540,066
905,148
565,823
470,606
$ 30,943,092
Direct Costs and Allocated Costs
Personnel Services
Contractual
Materials and Supplies(5)
Net Power Sales Payments(6)
Utilities(7)
Total Direct Costs and Allocated Costs
$ 6,169,818
1,780,773
8,289,889
1,264,735
3,664,879
$ 21,170,094
$ 5,537,962
777,539
9,449,136
601,720
3,301,464
$ 19,667,821
$ 5,241,066
790,727
8,405,536
1,864,767
3,497,436
$ 19,799,532
$ 4,764,074
1,405,091
8,206,714
2,695,946
$ 17,071,825
$ 4,803,750
1,642,243
11,838,218
2,779,347
$ 21,063,558
Net Revenues
$ 6,521,485
$ 9,313,839
$ 10,391,577
$ 11,308,434
$ 9,879,534
Debt Service
1997 SRF Loan
Total Debt Service
$ 1,503,293
$ 1,503,293
$ 1,503,293
$ 1,503,293
$ 1,503,293
$ 1,503,293
$ 1,503,293
$ 1,503,293
$ 1,503,293
$ 1,503,293
4.34
6.20
6.91
7.52
6.57
$ 5,018,192
$ 7,810,546
$ 8,888,284
$ 9,805,141
$ 8,376,241
$
551,893
1,027,600
$ 1,579,493
$
549,935
1,022,992
$ 1,572,927
$
551,750
1,023,332
$ 1,575,082
$
547,305
1,023,474
$ 1,570,779
$
546,563
1,023,672
$ 1,570,235
$ 3,438,699
$ 6,237,619
$ 7,313,202
$ 8,234,362
$ 6,806,006
Debt Service Coverage
Cash Available for Subordinate Debt Service
Subordinate Debt Service
1997 Lease Agreement
Interfund Loan – Biosolids Dryer(8)
Total Subordinate Debt Service
Cash Available for Capital Projects or Other
Improvements
(1)
(2)
(3)
(4)
(5)
Reflects certain accrued Gross Revenues and accrued Direct Costs and Allocated Costs of the Wastewater Enterprise.
Reflects wastewater service charge revenues set forth under the caption “THE WASTEWATER ENTERPRISE—Historic and Projected
Wastewater Enterprise Service Charge Revenues.”
As discussed under the caption “THE WASTEWATER ENTERPRISE—Wastewater Enterprise Collection Procedures,” DWP sends
customers a consolidated invoice for utility services. Prior to Fiscal Year 2011, all fines and penalties for such services were allocated to
the water system. Beginning in Fiscal Year 2011, such fines and penalties have been allocated to their respective source.
Includes pretreatment surcharges, penalties, reimbursements, and other miscellaneous income.
The increase in Materials and Supplies expenses in Fiscal Year 2012 reflects scheduled increases in Wastewater Enterprise system
maintenance and replacements.
(Footnotes Continued on Following Page)
31
(Continued from Previous Page)
(6)
Reflects payments for purchase of electric power from the Cogeneration Project pursuant to the Power Sales Agreement relating to the
Wastewater Enterprise, net of revenues from the sale of such electric power. Such payments terminated in September 2010 upon the sale of
the Cogeneration Project to the City of Riverside. As shown here, power sales payments are net of payments under the Power Sales
Agreement relating to the Wastewater Enterprise which are attributable to the Electric Distribution System’s share of 2005 Installment
Purchase Agreement payments. Such payments, if required, would have constituted Direct Costs. However, Electric Distribution System
net revenues have historically paid for such costs. See the captions “SECURITY FOR THE BONDS—Power Sales Agreement” and
“ELECTRIC DISTRIBUTION SYSTEM—Electric Distribution System Operating Results.”
(7)
Decrease in Fiscal Year 2011 amount reflects termination of payments to the Electric Distribution System for biosolids dryer energy costs
upon the sale of Cogeneration Project to the City of Riverside. See the caption “SECURITY FOR THE BONDS—Power Sales
Agreement.”
(8)
Reflects payments under the Interfund Loan for the portion of the 2003 Cogeneration Project Installment Purchase Agreement that is
attributable to the biosolids dryer. See the caption “SECURITY FOR THE BONDS—Power Sales Agreement.” Such amounts are being
prepaid from proceeds of the Bonds as described under the caption “INTRODUCTION—Refunding Plan.”
(9)
Includes reimbursement of overpayments of worker’s compensation payments and of interfund transfers from Electric Distribution System.
Source: Corona Utility Authority.
Projected Wastewater Enterprise Operating Results and Debt Service Coverage
The projected operating results for the Wastewater Enterprise for the current and next four Fiscal
Years are set forth below, reflecting certain significant assumptions concerning future events and
circumstances. The financial forecast represents the City’s estimate of projected financial results based on a
variety of assumptions, including the assumptions set forth in the footnotes to the chart set forth below. All of
such assumptions are material in the development of the Wastewater Enterprise’s financial projections, and
variations in the assumptions may produce substantially different financial results. Actual operating results
achieved during the projection period may vary from those presented in the forecast and such variations may
be material.
32
CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE
Projected Operating Results (Fiscal Year Ending June 30)
2013(1)
2014
2015
2016
Gross Revenues
Wastewater Service Charges(2)
Fees and Permits(3)
Fines and Penalties(3)
Capacity Fees(4)
Operating Grants
Investment Earnings(5)
Other Revenues(6)
Total Gross Revenues
$ 28,900,000
394,000
380,000
1,000,000
775,416
239,000
$ 31,688,416
$ 29,767,000
395,970
381,900
502,990
561,240
250,000
$ 31,859,100
$ 30,689,777
398,346
384,191
1,939,447
753,327
250,000
$ 34,415,088
$ 32,653,923
423,840
408,780
2,270,514
815,493
250,000
$ 36,822,550
$ 34,645,812
449,694
433,715
3,574,290
710,969
250,000
$ 40,064,480
Direct Costs and Allocated Costs
Personnel Services(7)
Contractual(7)
Materials and Supplies(8)
Net Power Sales Payments(9)
Utilities(10)
Total Direct Costs and Allocated Costs
$ 5,210,102
1,551,646
11,885,996
2,956,310
$ 21,604,054
$ 5,340,355
1,590,437
11,183,146
3,030,218
$ 21,144,156
$ 5,473,863
1,630,198
10,462,725
3,105,973
$ 20,672,759
$ 5,638,079
1,679,104
10,776,606
3,199,152
$ 21,292,941
$ 5,835,412
1,737,873
12,341,798(14)
3,311,123
$ 23,226,206
Net Revenues
$ 10,084,362
$ 10,714,944
$ 13,742,329
$ 15,529,609
$ 16,838,274
Debt Service
1997 SRF Loan(11)
2013 SRF Loan(12)
Bonds
Total Debt Service
$ 1,503,293
$ 1,503,293
$ 1,503,293
549,821
$ 2,053,114
$
$
$
6.71
Subordinate Debt Service
1997 Lease Agreement(11)
Interfund Loan – Biosolids Dryer(13)
Total Subordinate Debt Service
Cash Available for Capital Projects or Other
Improvements
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
696,830
3,060,050
$ 3,756,880
696,830
3,047,100
$ 3,743,930
5.22
4.69
4.13
$ 8,581,069
$ 8,661,830
$ 10,810,879
$ 11,772,729
$ 13,094,344
$
549,220
1,024,299
$ 1,573,519
$
503,805
723,064
$ 1,226,869
$
$
$
$ 7,007,550
$ 7,434,961
$ 10,810,879
Debt Service Coverage
Cash Available for Subordinate Debt Service
2,931,450
$ 2,931,450
2017
$
-
$
4.50
-
$ 11,772,729
$
$ 13,094,344
Reflects actual Wastewater Enterprise results through February 1, 2013 and projected results thereafter.
Reflects projected wastewater service charge revenues set forth under the caption “THE WASTEWATER ENTERPRISE—Historic and
Projected Wastewater Enterprise Sales Revenues” as well as rates and charges set forth under the caption “THE WASTEWATER
ENTERPRISE—Wastewater Enterprise Rates and Charges.” Assumes implementation of annual Consumer Price Index adjustments for
wastewater service charges in accordance with Ordinance No. 3076 in Fiscal Years 2015 through 2017. There can be no assurance that the
City Council will enact future rate adjustments that are permitted under Ordinance No. 3076.
Projected to increase approximately 0.5% per annum from Fiscal Year 2013 amount in Fiscal Years 2014 and 2015 and to increase
approximately 6.0% per annum from Fiscal Year 2015 amount thereafter. Increases after Fiscal Year 2015 reflect projected rate increases
in excess of annual Consumer Price Index adjustments for wastewater service charges in accordance with Ordinance No. 3076. Such rate
increases are subject to the notice, hearing and majority protest provisions of Proposition 218 and there can be no assurance that such
increases will be adopted as currently projected. See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND
CHARGES—Proposition 218.”
Reflects City projections of additional growth through approved multi-family or infill developments. See the caption “THE
WASTEWATER ENTERPRISE—Historic and Projected Wastewater Enterprise Connections.”
Based on City projections.
Includes pretreatment surcharges, penalties, reimbursements, and other miscellaneous income.
Projected to increase approximately 2.5% per annum from Fiscal Year 2013 amount in Fiscal Years 2014 and 2015, approximately 3.0%
from Fiscal Year 2015 amount in Fiscal Year 2016 and approximately 3.5% per annum thereafter.
Reflects completion of planned Wastewater Enterprise system maintenance in Fiscal Year 2013. Projected to decrease approximately 6.0%
per annum from Fiscal Year 2013 amount in Fiscal Years 2014 and 2015, to increase approximately 3.0% from Fiscal Year 2015 amount in
Fiscal Year 2016 and to increase approximately 3.5% per annum from Fiscal Year 2016 amount thereafter.
Such payments terminated in September 2010 upon the sale of the Cogeneration Project to the City of Riverside. See the caption
“SECURITY FOR THE BONDS—Power Sales Agreement.”
(Footnotes Continued on Following Page)
33
-
(Continued from Previous Page)
(10)
Projected to decrease approximately 2.0% per annum from Fiscal Year 2013 amount in Fiscal Years 2014 and 2015, to increase
approximately 3.0% from Fiscal Year 2015 amount in Fiscal Year 2016 and to increase approximately 3.5% per annum from Fiscal Year
2016 amount thereafter.
(11)
Expected to be prepaid from proceeds of the Bonds as described under the caption “INTRODUCTION—Refunding Plan.”
(12)
Reflects expected payments. See the caption “THE WASTEWATER ENTERPRISE—Future Wastewater Enterprise Improvements.”
(13)
Expected to be prepaid from proceeds of the Bonds as described under the caption “SECURITY FOR THE BONDS—Power Sales
Agreement.” The prepayment of the Interfund Loan is expected to be applied to prepay the portion of the 2003 Cogeneration Project
Installment Purchase Agreement attributable to the biosolids dryer. See the caption “INTRODUCTION—Refunding Plan.”
(14)
Includes payments with respect to the portion of the WRCRWA SRF Loan attributable to the Wastewater Enterprise, projected at an interest
rate of 1.7% per annum on $20,000,000 principal amount. See the caption “THE WASTEWATER ENTERPRISE—Western Riverside
County Regional Wastewater Authority Regional Treatment Plant.” There can be no assurance that the WRCRWA SRF Loan will be
entered into at the interest rate or in the principal amount projected.
Source: Corona Utility Authority.
PENSION OBLIGATIONS AND OTHER POST-EMPLOYMENT BENEFITS
Pension Plan
The City and the employees of DWP contribute to the California Public Employees’ Retirement
System (“PERS”), a multiple-employer public employee retirement system that acts as a common investment
and administrative agent for participating public entities in the State. PERS provides a contributory
defined-benefit pension plan for substantially all DWP employees, including retirement, disability and death
benefits to plan members and their beneficiaries. DWP employees are part of the City’s Miscellaneous Plan.
PERS issues a publicly available financial report that includes the applicable financial statements and
required supplementary information for PERS. The report may be obtained by writing to PERS at 400 Q
Street, Sacramento, California 95814.
Required employer and employee contributions are determined from rates established by PERS based
upon various actuarial assumptions which are revised annually. The City currently funds the normal pension
costs, which are determined by PERS using the Entry Age Normal Actuarial Cost Method, as well as an
amortization of the City’s unfunded actuarial liability. For Fiscal Year 2012, the City’s PERS contributions
for the Miscellaneous Plan were approximately $6,880,355, which was equal to the annual required
contribution (the “ARC”) described below and for Fiscal Year 2013, the City’s PERS contributions for the
Miscellaneous Plan are estimated to be approximately $7,240,250, which is equal to the annual required
contribution. The contribution rate for Fiscal Years 2014 has been established at 28.195% of annual covered
payroll.
Participants hired prior to January 1, 2013 are required to contribute 8% of their annual covered salary
under the City’s PERS Miscellaneous Plan, which provides benefits of 2.7% of highest annual salary at age 55
to such participants. The City pays the 8% contribution required of DWP employees who were hired prior to
January 1, 1999 on their behalf and for their account.
DWP employees who were hired on or after January 1, 1999 and prior to January 1, 2013 pay 3% of
the required member contribution and the City pays the remaining 5% on their behalf and for their account.
The City’s PERS Miscellaneous Plan provides benefits of 2.0% of highest average annual pensionable
compensation earned during a 36 month period at age 62 to such participants.
Contributions for participants hired on or after January 1, 2013 who were not already enrolled in
PERS through their previous employers are governed by Assembly Bill 340 (“AB 340”), which is described
below.
On September 12, 2012, the Governor of the State signed AB 340, which implements pension reform
in the State. Effective January 1, 2013, AB 340: (i) requires public retirement systems and their participating
employers to share equally with employees the normal cost rate for such retirement systems; (ii) prohibits
34
employers from paying employer-paid member contributions to such retirement systems for employees hired
after January 1, 2013 who were not already enrolled in PERS through their previous employers; (iii)
establishes a compulsory maximum non-safety benefit formula of 2.5% at age 67; and (iv) defines final
compensation as the highest average annual pensionable compensation earned during a 36 month period.
Other provisions cap pensionable income at $110,100 ($132,120 for employees not enrolled in Social
Security), subject to Consumer Price Index increases, and reduce the risk of agencies incurring additional
unfunded liabilities, including prohibiting retroactive benefits increases, generally prohibiting contribution
holidays, and prohibiting purchases of additional non-qualified service credit (“air time”).
Provisions in AB 340 will not likely have a material effect on the City’s Miscellaneous Plan
contributions in the short term. However, additional employee contributions, limits on pensionable
compensation and higher retirement ages for new members will reduce the City’s unfunded actuarial accrued
liability and potentially reduce the City’s contribution levels in the long term.
The City Council adopted a resolution creating an additional tier of PERS pension benefits for
employees hired after January 1, 2013 to comply with AB 340’s compulsory reduced formula. Participants
hired on or after January 1, 2013 who were not already enrolled in PERS through their previous employers are
required to contribute the percentage of their annual covered salary under the City’s PERS Miscellaneous Plan
required by PERS, which will not exceed 50% of the normal cost rate, as determined by PERS. The City does
not make any portion of such contributions for such participants.
The City had an unfunded actuarial accrued liability of $76,236,074 for its Miscellaneous Plan as of
June 30, 2011, based on an actuarial value of assets of $175,764,654, as set forth in the most recent actuarial
report prepared by PERS in October 2012. PERS does not prepare separate actuarial reports for DWP’s share
or the Wastewater Enterprise’s share of the unfunded liability. However, if the unfunded liability were spread
based on the ratio of FTEs of the Wastewater Enterprise to the FTEs of the City as a whole, approximately
16.8% of the estimated June 30, 2011 unfunded liability would be attributable to the Wastewater Enterprise.
Under Government Accounting Standards Board Statement No. 27, an employer reports an annual
pension cost equal to the ARC plus an adjustment for the cumulative difference between the annual pension
cost and the employer’s actual plan contributions for the year. The cumulative difference is called the net
pension obligation and may be positive or negative. The ARC for Fiscal Year 2013 was determined by an
actuarial valuation of the City’s Miscellaneous Plan as of June 30, 2010 and the ARC for Fiscal Year 2014 has
been determined by an actuarial valuation of the City’s Miscellaneous Plan as of June 30, 2011.
The staff actuaries at PERS annually prepare an actuarial valuation which covers a Fiscal Year ending
approximately 15 months before the actuarial valuation is delivered (thus, the actuarial valuation delivered to
the City in October 2012 covered the City’s Fiscal Year ended June 30, 2011). The actuarial valuations
express the City’s required contribution rates in percentages of covered payroll, which percentages the City
must contribute in the Fiscal Year immediately following the Fiscal Year in which the actuarial valuation is
prepared (thus, the City’s contribution rate derived from the actuarial valuation as of June 30, 2011, which was
delivered in October 2012, affects the City’s Fiscal Year 2014 required contribution rate). PERS rules require
the City to implement the actuary’s recommended rates.
In calculating the annual actuarially recommended contribution rates, the PERS actuary calculates on
the basis of certain assumptions the actuarial present value of benefits that PERS will fund under the PERS
plans, which includes two components, the normal cost and the unfunded actuarial accrued liability (the
“UAAL”). The normal cost represents the actuarial present value of benefits that PERS will fund under the
PERS plans that are attributed to the current year, and the actuarial accrued liability represents the actuarial
present value of benefits that PERS will fund that are attributed to past years. The UAAL represents an
estimate of the actuarial shortfall between actuarial value of assets on deposit at PERS and the present value of
the benefits that PERS will pay under the PERS plans to retirees and active employees upon their retirement.
35
The UAAL is based on several assumptions such as, among others, the rate of investment return, average life
expectancy, average age of retirement, inflation, salary increases and occurrences of disabilities. In addition,
the UAAL includes certain actuarial adjustments such as, among others, the actuarial practice of smoothing
losses and gains over multiple years (which is described in more detail below). As a result, the UAAL may be
considered an estimate of the unfunded actuarial present value of the benefits that PERS will fund under the
PERS plans to retirees and active employees upon their retirement and not as a fixed expression of the liability
that the City owes to PERS under its PERS plans.
In each actuarial valuation, the PERS actuary estimates the actuarial value of the assets (the “Actuarial
Value”) of the PERS plans at the end of the Fiscal Year (which assumes, among other things, that the rate of
return during that Fiscal Year equaled the assumed rate of return, currently 7.5%). The PERS actuary uses a
smoothing technique to determine Actuarial Value that is calculated based on certain policies. As described
below, these policies changed significantly in 2012 and 2005, affecting the Actuarial Value calculation
beginning in Fiscal Year 2007.
On March 14, 2012, the PERS Board approved a change in the inflation assumption used in the
actuarial valuations used to determine employer contribution rates. The inflation assumption was changed
from 3% to 2.75% effective July 1, 2012. The change impacts the inflation component of the annual
investment return assumption and the long term payroll growth assumption as follows:
x
The annual assumed investment return decreased from 7.75% to 7.5%.
x
The long term payroll growth assumption decreased from 3.25% to 3%.
x
The inflation component of individual salary scales decreased from 3.25% to 3%.
Although the full impact of the above changes is not yet clear, PERS has estimated that they could
result in net increases in future contribution levels of approximately 1% to 2%.
In April 2005, the PERS Board adopted new policies aimed at stabilizing rising employer costs.
These policies were used to set employer contribution rates for the City beginning in Fiscal Year 2007. These
policies include:
x
Spreading PERS market value asset gains and losses over 15 years rather than three years.
x
Widening the “corridor” limits for establishing the actuarial value of assets from 90% to 110% of
market value to 80% to 120% of market value (except for the 3-year phase-in of investment losses
from Fiscal Year 2009, as described below).
x
Establishing a rolling 30-year amortization on all remaining net unamortized gains or losses,
instead of amortizing 10% of the net unamortized gain or loss each year pursuant to prior policy.
Such an amortization schedule results in approximately 6% of unamortized gains and losses each
year. Due to the excess of accrued liability over actuarial value of plan assets, the amortization
payment of the total unfunded liability may be higher than the payment calculated over a 30-year
amortization period.
x
Requiring a minimum employer contribution rate equal to the employer normal costs minus a
30-year amortization of surplus (but not less than 0%).
Pursuant to the April 2005 policy change, multiple amortization bases (including those for benefit
improvement or changes in actuarial methods or assumptions, which are typically less than 30 years) were
combined into a single base (the gain and loss bases) and amortized over a rolling 30-year period to effect a
36
“fresh start” as of June 30, 2004. The April 2005 policy did not affect other existing amortization bases for
benefit improvements, assumptions changes and method changes.
Due to significant market investment losses of approximately 24% in the PERS trust fund for Fiscal
Year 2009, PERS implemented a 3-year phase-in of the Fiscal Year 2009 investment loss. This phased in
approach will be achieved by temporarily relaxing the constraints on the smoothed value of assets around the
actual market value. The corridor will be widened and then contracted as follows:
x
Increase the corridor limits from 80% to 120% of market value to 60% to 140% of market value
to determine the actuarial value of assets for the June 30, 2009 valuation, which impacted the
Fiscal Year 2012 contribution rate.
x
Reduce the corridor limits from 60% to 140% of market value to 70% to 130% of market value to
determine the actuarial value of assets for the June 30, 2010 valuation, which impacts the Fiscal
Year 2013 contribution rate.
x
Return to the 80% to 120% of market value corridor limits for the actuarial value of assets on
June 30, 2011 and thereafter, which impacts contribution rates for Fiscal Year 2014 and beyond.
x
Asset losses outside of the 80% to 120% corridor described above will be amortized pursuant to a
fixed 30-year amortization schedule.
In addition, in February 2010, the PERS Board adopted a resolution requiring additional contributions
for any plan or pool if the cash flows hamper adequate funding progress by preventing the expected funded
status on a market value of assets basis of the plan to either:
x
x
Increase by at least 15% by June 30, 2043; or
Reach a level of 75% funded by June 30, 2043.
Such contributions have been factored into the City’s contribution rates set by PERS.
On April 17, 2013, the PERS Board approved a plan: (i) to replace the current 15-year
asset-smoothing policy with a 5-year direct-rate smoothing process; and (ii) to replace the current 30-year
rolling amortization of unfunded liabilities with a 30-year fixed amortization period. PERS’ Chief Actuary has
stated that the revised approach provides a single measure of funded status and unfunded liabilities, less
volatility in extreme years, a faster path to full funding and more transparency to employers such as the City
about future contribution rates. These changes are expected to accelerate the repayment of unfunded liabilities
(including CalPERS’ fiscal year 2009 market losses described above) of the City’s Miscellaneous Plan in the
near term; the exact magnitude of the potential contribution rate increases is not known at this time, but may be
significant. These changes will be reflected beginning with the June 30, 2014 actuarial valuation affecting
contribution rates for Fiscal Year 2016 and thereafter.
The following table summarizes the City’s annual required contributions for its Miscellaneous Plan
(including Wastewater Enterprise employees) for Fiscal Years 2008 through 2012:
37
Fiscal
Year
Employer
Contribution
2008
2009
2010
2011
2012
$5,667,812
5,823,489
6,345,360
6,398,576
6,880,355
City-Funded
Employee
Contribution
$2,274,030
2,081,674
1,881,510
1,823,652
1,722,286
Employee
Contribution
Annual
Pension
Cost
Percentage
of Annual
Pension Cost
Contributed
$615,131
574,180
574,481
547,618
547,918
$8,556,973
8,479,343
8,801,351
8,769,846
9,150,559
100%
100
100
100
100
The following table sets forth the schedule of funding for the City’s Miscellaneous Plan as a whole,
including the Wastewater Enterprise, as of June 30, 2011. The employer contribution rate for Fiscal Year 2014
is 28.195%.
Valuation
Date
(June 30)
Entry Age
Normal
Accrued
Liability
Actuarial
Value
of Assets
UAAL
Market
Value
of Assets
2007
2008
2009
2010
2011
$170,067,849
206,180,050
217,616,331
239,840,884
252,000,728
$133,259,590
146,662,394
156,236,949
165,107,463
175,764,654
$36,808,259
59,517,656
61,379,382
74,733,421
76,236,074
$153,911,403
148,861,996
114,030,957
129,753,918
157,307,117
Funded
Ratio(1)
90.5%
72.2
52.4
54.1
62.4
Annual
Covered
Payroll
$36,161,760
35,994,622
30,576,507
30,614,756
29,739,813
(1)
Based on the market value of assets.
Source: PERS Actuarial Report Dated October 2012.
For additional information relating to the City’s Miscellaneous Plan, see Note 14.A to the City’s
Financial Statements set forth in Appendix A.
PERS reported significant investment losses in 2009, which accounts for a portion of the increase in
the City’s unfunded actuarial liability from June 30, 2008 to June 30, 2009. In addition, the increase in the
City’s unfunded actuarial liability is attributable to PERS studies performed in Fiscal Year 2009 and the
adjustment of assumptions made by PERS valuations for age at retirement, years of service, mortality rates,
and certain other assumptions. PERS earnings reports for Fiscal Years 2010, 2011 and 2012 report an
investment gain in excess of 13.0%, 21.7% and 1.0%, respectively. Future earnings performance may increase
or decrease future contribution rates for plan participants, including the City.
The City’s projections of Direct Costs and Allocated Costs shown under the caption
“WASTEWATER ENTERPRISE FINANCIAL INFORMATION—Projected Wastewater Enterprise
Operating Results and Debt Service Coverage” do not assume further unusual increases in PERS contributions
or other labor costs. However, no assurance can be provided that such expenses will not increase significantly
in the future.
Other Post-Employment Benefits
In addition to the pension benefits described under the caption “—Pension Obligations,” the City
provides certain health care benefits (“OPEB”) for retired employees and eligible dependents. As of July 1,
2012, approximately 25 former Wastewater Enterprise employees and their dependents received OPEB
benefits. The City’s defined benefit post-employment healthcare plan, California Employers’ Retiree Benefit
Trust Program (“CERBT”), is an agent multiple-employer post-employment healthcare plan administered by
the PERS Board of Administration. The plan provides retiree healthcare benefits for employees who retire
38
with PERS pension benefits immediately upon termination of employment from the City. Eligible retirees
may elect coverage through the City’s contract with PERS. The plan benefits are established and may be
amended by the City Council. Under the plan, employees are classified into two tiers, which are based on hire
date.
Tier I DWP employee participants were hired prior to January 1, 1999 and are eligible to receive
reimbursement of medical premiums at 100% or capped at the second highest family premium rate available,
determined by the employee’s separation date. Tier II employees receive the minimum Public Employees
Medical and Hospital Care Act benefits paid by the City. In addition, all eligible retirees are provided life
insurance coverage of $50,000 until age 70. PERS issues a publicly available financial report that includes
financial statements and required supplementary information for CERBT. Such report may be obtained by
contacting PERS.
The contribution requirements of plan members and the City are established and may be amended by
the City Council. The CERBT program’s funding policy provides for the contributions by the City at
actuarially determined rates described as the annual required contribution (the actuarial value of benefits
earned during plus costs to amortize the unfunded actuarial accrued liability, or “OPEB ARC”) of the
employer. The OPEB ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover
the normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not
to exceed 30 years. The required contribution is based on projected pay-as-you-go financing requirements,
with an additional amount to prefund benefits as approved by the City Council. For Fiscal Year 2011, the City
contributed approximately $7.3 million to the plan, including approximately $4.7 million for current premiums
and approximately $2.6 million to prefund the plan. For Fiscal Year 2012, the City contributed approximately
$6.5 million to the plan, including approximately $5.2 million for current premiums and approximately $1.3
million to prefund the plan. Plan members pay the portion of premiums not paid by the City (e.g., in excess of
capped amounts).
Governmental Accounting Standards Board Statement No. 45 (“GASB 45”) requires governmental
agencies that fund OPEB on a pay-as-you-go basis, such as City, to account for and report the outstanding
obligations and commitments related to such OPEB in essentially the same manner as for pensions. The City
retained Bickmore Risk Services (the “Actuarial Consultant”) to calculate the City OPEB funding status. In a
report dated August 18, 2011 (the “Report”), the Actuarial Consultant concluded that, as of July 1, 2011, the
City’s unfunded actuarial accrued liability (the “OPEB UAAL”) for OPEB was $80,348,097, while the
actuarial value of OPEB plan assets was $16,182,147, for a funded ratio of 16.8%. The City allocates
approximately 7.2% of the foregoing liabilities to the Wastewater Enterprise of the DWP. The Actuarial
Consultant also concluded that the City’s OPEB ARC was $6,466,717. While requiring the City to disclose
the OPEB UAAL and the OPEB ARC in its financial statements, GASB 45 does not require the City to fund
the OPEB ARC.
For Fiscal Years 2012, 2011, 2010 and 2009, the City’s annual OPEB costs of $6,466,717,
$7,295,000, $7,043,000 and $7,862,000, respectively, for CERBT were equal to or exceeded the OPEB ARC.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of the occurrence of events far into the future. Amounts determined
regarding the funded status of the plan and the annual required contributions of the employer are subject to
continual revision as actual results are compared with past expectations and new estimates are made about the
future. The schedule of funding progress set forth below presents multi-year trend information about whether
the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability
for benefits. The most recent actuarial valuation for the City’s OPEB plan was obtained as of June 30, 2011.
39
Actuarial
Valuation
Date
(June 30)
Actuarial
Accrued
Liability
2009
2010
2011
$101,811,000
106,454,000
96,530,244
Actuarial
Value
of Assets
$ 6,796,000
9,840,000
16,182,147
OPEB
UAAL
$95,015,000
96,614,000
80,348,097
Funded
Ratio
6.7%
9.2
16.8
Annual
Covered
Payroll
$49,298,000
50,900,185
50,192,076
OPEB UAAL as a
Percentage of
Annual
Covered Payroll
192.7%
189.8
160.1
The City allocates approximately 7.2% of the above liabilities to the Wastewater Enterprise of the
DWP.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and plan members) and include the types of benefits provided at the time of each
valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that
point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term
volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term
perspective of the calculations.
In the Report, the entry age normal cost method was used. The actuarial assumptions included a 7.5%
discount rate and an annual healthcare cost trend rate of 9% initially, reduced by decrements to an ultimate rate
of 4.5% after 7 years. The actuarial assumptions also included a payroll growth of 3.25% per year. The OPEB
UAAL is being amortized as a level percentage of projected payroll on a closed basis over 30 years. The
remaining amortization period at June 30, 2012 was 26 years.
For Fiscal Year 2013, the City budgeted approximately $6,676,885 with respect to OPEB, which is
equal to the Fiscal Year 2013 OPEB ARC. Approximately $480,735, or 7.2%, of this amount is allocated to
the Wastewater Enterprise. The City currently does not expect that any increased funding of OPEB in the
future would have a material adverse effect on the ability of the Utility Authority to make payments of
principal of and interest on the Bonds.
ELECTRIC DISTRIBUTION SYSTEM
As discussed under the caption “SECURITY FOR THE BONDS—Power Sales Agreement,” revenues
of the Electric Distribution System do not constitute Gross Revenues securing the Bonds.
Retail Electric System
DWP is the exclusive provider to customers located within DWP’s electric service territory, which
currently includes customers located in the following developments within the administrative boundaries of the
City: Crossings, Corona Pointe, Dos Lagos, Sunkist and Clearwater. DWP’s electric distribution facilities
include, but are not limited to, underground distribution facilities, vaults, manholes, hand-holes, slab boxes,
transformers, switches, and protective structures as required. The construction of additional electric
distribution facilities is expected to progress in conjunction with the development of DWP’s electric
distribution service territory.
To date, five interconnections have been energized and wholesale distribution agreements have been
executed with Southern California Edison. The City has also entered into a contract with Pilot Power Group to
provide load balancing and scheduling coordination for its electric power requirements. DWP currently
provides distribution service to approximately 892 customers located within DWP’s electric service territory.
The City currently provides electricity to its retail customers from energy purchased under multi-year
contracts, with annual sales of approximately 143,000 megawatt hours. Upon build-out of the current electric
service territory, the City expects to serve approximately 999 customers with an average peak load of
approximately 25 megawatts.
40
Set forth below is information with respect to DWP’s electric customers for the year ended June 30,
2012.
CITY OF CORONA ELECTRIC DISTRIBUTION SYSTEM
Number of Customers
Customer Type
Number of Customers
Residential
Commercial
Industrial
Public Agency
TOTAL
470
374
8
40
892
Source: Corona Utility Authority.
Electric Distribution System Operating Results
The City’s obligation to make payments under the portion of the 2003 Cogeneration Project
Installment Purchase Agreement that is not being refunded from proceeds of the Bonds (as discussed under the
caption “INTRODUCTION—Refunding Plan”) and the 2005 Installment Purchase Agreement is payable
from: (i) moneys received by the City from the Utility Authority in exchange for the sale of electricity from the
Cogeneration Project to the Utility Authority pursuant to the Power Sales Agreements; and (ii) revenues of the
Electric Distribution System remaining after the payment of operational costs of the Electric Distribution
System. See the caption “SECURITY FOR THE BONDS—Power Sales Agreement.”
The Electric Distribution System’s share of the payments under the 2005 Installment Purchase
Agreement equals $16,918,028. Following the prepayment by the City of Riverside of the portion of the 2005
Installment Purchase Agreement attributable to the Cogeneration Project (as discussed under the caption
“SECURITY FOR THE BONDS—Power Sales Agreement”), the Electric Distribution System’s share of the
payments under the 2005 Installment Purchase Agreement will remain Direct Costs of the Wastewater
Enterprise and operation and maintenance costs of the water system pursuant to the applicable Power Sales
Agreements. However, the Electric Distribution System has historically generated sufficient revenues to cover
its operational costs. As a result, Gross Revenues of the Wastewater Enterprise and revenues of the water
system have not been used to pay the operational costs of the Electric Distribution System or the Electric
Distribution System’s share of the payments under the 2005 Installment Purchase Agreement.
The table below shows the coverage of the Electric Distribution System’s operational costs and share
of the payments under the 2005 Installment Purchase Agreement from Electric Distribution System revenues.
CITY OF CORONA ELECTRIC DISTRIBUTION SYSTEM
Historic Operating Results (Fiscal Year Ended June 30)
2009
2010
2011
2012
Revenues
Less Operation and Maintenance Costs
Net Revenues
$ 10,435,031
(7,113,691)
$ 3,321,340
$ 9,743,662
(6,926,045)
$ 2,817,617
$ 9,819,105
(6,666,798)
$ 3,152,307
$ 10,223,581
(5,727,540)
$ 4,496,041
Share of Payments under 2005 Installment
Purchase Agreement(1)
$ 1,228,626
$ 1,230,173
$ 1,231,317
$ 1,209,614
2.70
2.29
2.56
3.72
Coverage
(1)
Represents an operation and maintenance cost of the Electric Distribution System. Payments under Power Sales Agreements are paid from
Electric Distribution System revenues.
Source: Corona Utility Authority.
41
As discussed under the caption “SECURITY FOR THE BONDS—Power Sales Agreement,” revenues
of the Electric Distribution System do not constitute Gross Revenues securing the Bonds.
CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES
Article XIIIB
Article XIIIB of the State Constitution limits the annual appropriations of the State and of any district,
county, school district, corporation or other political subdivision of the State to the level of appropriations of
the particular governmental entity for the prior fiscal year, as adjusted for changes in the cost of living and
population. The “base year” for establishing such appropriation limit is the 1978-1979 State fiscal year and the
limit is to be adjusted annually to reflect changes in population and consumer prices. Adjustments in the
appropriations limit of an entity may also be made if: (a) the financial responsibility for a service is transferred
to another public entity or to a private entity; (b) the financial source for the provision of services is transferred
from taxes to other revenues; or (c) the voters of the entity approve a change in the limit for a period of time
not to exceed four years.
Appropriations subject to Article XIIIB generally include the proceeds of taxes levied by the State or
other entity of local government, exclusive of certain State subventions and refunds of taxes. “Proceeds of
taxes” include, but are not limited to, all tax revenues and the proceeds to an entity of government from: (i)
regulatory licenses, user charges, and user fees (but only to the extent that such proceeds exceed the cost of
providing the service or regulation); and (ii) the investment of tax revenues. Article XIIIB includes a
requirement that if an entity’s revenues in any year exceed the amounts permitted to be spent, the excess would
have to be returned by revising tax rates or fee schedules over the subsequent two years.
Certain expenditures are excluded from the appropriations limit including payments of indebtedness
existing or legally authorized as of January 1, 1979, or of bonded indebtedness thereafter approved by the
voters and payments required to comply with court or federal mandates which without discretion require an
expenditure for additional services or which unavoidably make the provision of existing services more costly.
The City is of the opinion that its charges for wastewater service do not exceed the costs it reasonably
bears in providing such services and therefore are not subject to the limits of Article XIIIB. The Utility
Authority has covenanted in the Indenture that it will fix, prescribe, revise and collect rates and charges for the
services and facilities furnished by the Wastewater Enterprise, or cause the City to do so, during each Fiscal
Year which are sufficient to yield Net Revenues, at least equal to 125% of the Debt Service payable in such
Fiscal Year.
Proposition 218
General. An initiative measure entitled the “Right to Vote on Taxes Act” (the “Initiative”) was
approved by the voters of the State at the November 5, 1996 general election. The Initiative added Article
XIIIC and Article XIIID to the State Constitution. According to the “Title and Summary” of the Initiative
prepared by the State Attorney General, the Initiative limits “the authority of local governments to impose
taxes and property-related assessments, fees and charges.”
Article XIIID. Article XIIID defines the terms “fee” and “charge” to mean “any levy other than an ad
valorem tax, a special tax or an assessment, imposed by an agency upon a parcel or upon a person as an
incident of property ownership, including user fees or charges for a property-related service.” A
“property-related service” is defined as “a public service having a direct relationship to property ownership.”
Article XIIID further provides that reliance by an agency on any parcel map (including an assessor’s parcel
map) may be considered a significant factor in determining whether a fee or charge is imposed as an incident
of property ownership.
42
Article XIIID requires that any agency imposing or increasing any property-related fee or charge must
provide written notice thereof to the record owner of each identified parcel upon which such fee or charge is to
be imposed and must conduct a public hearing with respect thereto. The proposed fee or charge may not be
imposed or increased if a majority of owners of the identified parcels file written protests against it. As a
result, if and to the extent that a fee or charge imposed by a local government for water or wastewater service
is ultimately determined to be a “fee” or “charge” as defined in Article XIIID, the local government’s ability to
increase such fee or charge may be limited by a majority protest.
In addition, Article XIIID includes a number of limitations applicable to existing fees and charges
including provisions to the effect that: (a) revenues derived from the fee or charge may not exceed the funds
required to provide the property-related service; (b) such revenues may not be used for any purpose other than
that for which the fee or charge was imposed; (c) the amount of a fee or charge imposed upon any parcel or
person as an incident of property ownership may not exceed the proportional cost of the service attributable to
the parcel; and (d) no such fee or charge may be imposed for a service unless that service is actually used by,
or immediately available to, the owner of the property in question. Property-related fees or charges based on
potential or future use of a service are not permitted.
Based upon the California Court of Appeal decision in Howard Jarvis Taxpayers Association v. City
of Los Angeles, 85 Cal. App. 4th 79 (2000), which was denied review by the State Supreme Court, it was
generally believed that Article XIIID did not apply to charges for water services that are “primarily based on
the amount consumed” (i.e., metered water rates), which had been held to be commodity charges related to
consumption of the service, not property ownership. The State Supreme Court stated in Bighorn-Desert View
Water Agency v. Verjil, 39 Cal. 4th 205 (2006) (the “Bighorn Case”), however, that fees for ongoing water
service through an existing connection were property-related fees and charges. The Supreme Court
specifically disapproved the holding in Howard Jarvis Taxpayers Association v. City of Los Angeles that
metered water rates are not subject to Proposition 218. The City has complied with the notice and public
hearing requirements of Article XIIID in determining whether to change Wastewater Enterprise rates and
charges since its first post-Bighorn Case rate increase in 2007.
Article XIIIC. Article XIIIC provides that the initiative power may not be prohibited or otherwise
limited in matters of reducing or repealing any local tax, assessment, fee or charge and that the power of
initiative to affect local taxes, assessments, fees and charges is applicable to all local governments. Article
XIIIC does not define the terms “local tax,” “assessment,” “fee” or “charge,” so it was unclear whether the
definitions set forth in Article XIIID referred to above are applicable to Article XIIIC. Moreover, the
provisions of Article XIIIC are not expressly limited to local taxes, assessments, fees and charges imposed
after November 6, 1996. On July 24, 2006, the State Supreme Court held in the Bighorn Case that the
provisions of Article XIIIC included rates and fees charged for domestic water use. In the decision, the Court
noted that the decision did not address whether an initiative to reduce fees and charges could override statutory
rate setting obligations. In any event, the City does not believe that Article XIIIC grants to the voters within
the City the power to repeal or reduce rates and charges for the wastewater service provided by the Wastewater
Enterprise in a manner which would be inconsistent with the contractual obligations of the City. However,
there can be no assurance of the availability of particular remedies adequate to protect the Beneficial Owners
of the Bonds. Remedies available to Beneficial Owners of the Bonds in the event of a default by the City are
dependent upon judicial actions which are often subject to discretion and delay and could prove both expensive
and time-consuming to obtain. So long as the Bonds are held in book-entry form, DTC (or its nominee) will
be the sole registered owner of the Bonds and the rights and remedies of the Bond Owners will be exercised
through the procedures of DTC.
In addition to the specific limitations on remedies contained in the applicable documents themselves,
the rights and obligations with respect to the Bonds and the Indenture, are subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the
application of equitable principles if equitable remedies are sought, and to the exercise of judicial discretion in
appropriate cases and to limitations on legal remedies against public agencies in the State. The various
43
opinions of counsel to be delivered with respect to such documents, including the opinion of Bond Counsel
(the form of which is attached as Appendix C), will be similarly qualified.
Future Initiatives
Articles XIIIB, XIIIC and XIIID were adopted as a measure that qualified for the ballot pursuant to
the State’s initiative process. From time to time other initiatives could be proposed and adopted affecting the
City’s revenues or ability to increase revenues.
APPROVAL OF LEGAL PROCEEDINGS
The validity of the Bonds is subject to the approval of Best Best & Krieger LLP, Riverside, California,
acting as Bond Counsel. The form of such legal opinion is attached as Appendix C to this Official Statement
and such legal opinion will be attached to each Bond. Certain legal matters will be passed upon for the City
and the Utility Authority by the City Attorney, for the Utility Authority by Stradling Yocca Carlson & Rauth, a
Professional Corporation, Newport Beach, California, acting as Disclosure Counsel, and for the Trustee by its
counsel.
LITIGATION
The City
At the time of delivery of and payment for the Bonds, the City will certify that there is no action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public
board or body, pending or, to the knowledge of the City, threatened against the City affecting the existence of
the City or the titles of its directors or officers to their respective offices or seeking to restrain or to enjoin the
sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Indenture, or in
any way contesting or affecting the validity or enforceability of the Bonds, the Indenture or any action of the
City contemplated by any of said documents, or in any way contesting the completeness or accuracy of this
Official Statement or any amendment or supplement to this Official Statement, or contesting the powers of the
City or its authority with respect to the Bonds or any action of the City contemplated by any of said
documents, nor to the knowledge of the City, is there any basis for such action, suit, proceeding, inquiry or
investigation.
The Utility Authority
At the time of delivery of and payment for the Bonds, the Utility Authority will certify that there is no
action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency,
public board or body, pending or, to the knowledge of the Utility Authority, threatened against the Utility
Authority affecting the existence of the Utility Authority or the titles of its directors or officers to their
respective offices or seeking to restrain or to enjoin the sale or delivery of the Bonds, the application of the
proceeds thereof in accordance with the Indenture, or in any way contesting or affecting the validity or
enforceability of the Bonds, the Indenture or any action of the Utility Authority contemplated by any of said
documents, or in any way contesting the completeness or accuracy of this Official Statement or any
amendment or supplement to this Official Statement, or contesting the powers of the Utility Authority or its
authority with respect to the Bonds or any action of the Utility Authority contemplated by any of said
documents, nor to the knowledge of the Utility Authority, is there any basis for such action, suit, proceeding,
inquiry or investigation.
TAX EXEMPTION
In the opinion of Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court
decisions, and assuming, among other matters, compliance with certain covenants, interest on the Bonds is
44
excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code
of 1986 (the “Code”) and is exempt from State of California personal income taxes. Bond Counsel is of the
further opinion that interest on the Bonds is not a specific preference item for purposes of the federal
individual or corporate alternative minimum taxes, provided however, that for the purpose of calculating
federal corporate alternative minimum tax imposed on corporations (as defined for federal income tax
purposes), such interest is taken into account in determining certain income and earnings.
The Code imposes various restrictions, conditions and requirements relating to the exclusion from
gross income for federal income tax purposes of interest on obligations such as the Bonds. The Utility
Authority has covenanted to comply with certain restrictions designed to insure that interest on the Bonds will
not be included in federal gross income. Failure to comply with these covenants may result in interest on the
Bonds being included in federal gross income, possibly from the date of original issuance of the Bonds. The
opinion of Bond Counsel assumes compliance with these covenants. Bond Counsel has not undertaken to
determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not
occurring) after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest
on, the Bonds.
Current and future legislative proposals, if enacted into law, clarification of the Code or court
decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to
be subject to or exempted from state income taxation, or otherwise prevent Bond Owners from realizing the
full current benefit of the tax status of such interest. As one example, the Obama Administration recently
announced a legislative proposal which, for tax years beginning on or after January 1, 2013, generally would
limit the exclusion from gross income of interest on obligations like the Bonds to some extent for taxpayers
who are individuals and whose income is subject to higher marginal income tax rates. Other proposals have
been made that could significantly reduce the benefit of, or otherwise affect, the exclusion from gross income
of interest on obligations like the Bonds. The introduction or enactment of any such legislative proposals,
clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or
marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors
regarding any pending or proposed federal or state tax legislation, regulations or litigation, and regarding the
impact of future legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.
Certain requirements and procedures contained or referred to in the Indenture, the Tax Certificate, and
other relevant documents may be changed and certain actions (including, without limitation, defeasance of the
Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in
such documents. Bond Counsel expresses no opinion as to the exclusion from gross income of interest on any
Bond if any such change occurs or action is taken or omitted upon the advice or approval of counsel other than
Best Best & Krieger LLP.
The Internal Revenue Service (the “IRS”) has initiated an expanded program for the auditing of taxexempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected
for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such
an audit of the Bonds (or by an audit of other similar bonds).
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 ownership or
disposition of, or the accrual or receipt of interest on, the Bonds may otherwise affect a Bond Owner’s federal
or state tax liability. The nature and extent of these other tax consequences will depend upon the particular tax
status of the Bondholder or the Bond Owner’s other items of income or deduction, and Bond Counsel
expresses no opinion regarding any such other tax consequences.
A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix C.
45
CONTINUING DISCLOSURE
The Utility Authority has covenanted in a Continuing Disclosure Certificate for the benefit of the
holders and Beneficial Owners of the Bonds to provide certain financial information and operating data
relating to the City by 270 days following the end of the Utility Authority’s Fiscal Year (currently its Fiscal
Year ends on June 30) (the “Annual Report”), commencing with the report for Fiscal Year ending June 30,
2013, and to provide notices of the occurrence of certain enumerated events. The Annual Report and the
notices of enumerated events will be filed by the Utility Authority with EMMA. The specific nature of the
information to be contained in the Annual Report and the notice of material events is set forth in
Appendix E—”FORM OF CONTINUING DISCLOSURE CERTIFICATE.” These covenants have been
made in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) promulgated under the
Securities Exchange Act of 1934. The Utility Authority has not failed to comply with its previous continuing
disclosure undertakings in all material respects during the last five years.
RATING
The Utility Authority expects that Standard & Poor’s Ratings Services, a Standard & Poor’s Financial
Services LLC business (“S&P”) will assign the Bonds the rating of “AA”. There is no assurance that any
credit rating given to the Bonds will be maintained for any period of time or that the rating may not be lowered
or withdrawn entirely by S&P if, in the judgment of S&P, circumstances so warrant. Any downward revision
or withdrawal of such rating may have an adverse effect on the market price of the Bonds. Such rating reflects
only the views of S&P and an explanation of the significance of such rating may be obtained from S&P.
FINANCIAL ADVISOR
The Utility Authority has retained CSG Advisors Incorporated, San Francisco, California (the
“Financial Advisor”) as financial advisor in connection with the sale of the Bonds. The Financial Advisor is
not obligated to undertake, and has not undertaken to make, an independent verification or to assume any
responsibility for the accuracy, completeness or fairness of the information contained herein.
The Financial Advisor is an independent advisory firm and is not engaged in the business of
underwriting, trading or distributing municipal or other public securities.
UNDERWRITING
The Bonds will be purchased by Stifel, Nicolaus & Company, Incorporated (the “Underwriter”)
pursuant to a Purchase Contract, dated June 4, 2013 (the “Purchase Contract”), by and between the Utility
Authority and the Underwriter, pursuant to which the Underwriter has agreed to purchase all, but not less than
all, of the $20,890,000 aggregate principal amount of the Bonds at a purchase price of $22,952,975.30 (being
the aggregate principal amount thereof plus an original issue premium of $2,132,975.65 and less an
Underwriter’s discount of $70,000.35). The obligation to make such purchase is subject to certain terms and
conditions set forth in the Purchase Contract, the approval of certain legal matters by counsel, and certain other
conditions.
The initial public offering prices stated on the inside front cover of this Official Statement may be
changed from time to time by the Underwriter. The Underwriter may offer and sell the Bonds to certain
dealers (including dealers depositing Bonds into investment trusts), dealer banks, banks acting as agents and
others at prices lower than said public offering prices.
46
MISCELLANEOUS
Insofar as any statements made in this Official Statement involve matters of opinion or of estimates,
whether or not expressly stated, they are set forth as such and not as representations of fact. No representation
is made that any of such statements made will be realized. Neither this Official Statement nor any statement
which may have been made verbally or in writing is to be construed as a contract with the Owners of the
Bonds.
The execution and delivery of this Official Statement have been duly authorized by the Utility
Authority and the City.
CORONA UTILITY AUTHORITY
By:
/s/Jason Scott
President
CITY OF CORONA
By:
47
/s/Bradly Robbins
City Manager
[THIS PAGE INTENTIONALLY LEFT BLANK]
APPENDIX A
AUDITED FINANCIAL STATEMENTS
[THIS PAGE INTENTIONALLY LEFT BLANK]
CITY OF CORONA,
CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Fiscal Year Ended June 30, 2012
Prepared by the City of Corona Finance Department
[THIS PAGE INTENTIONALLY LEFT BLANK]
CITY OF CORONA
Comprehensive Annual Financial Report
Table of Contents
Year Ended June 30, 2012
Page
INTRODUCTORY SECTION
Table of Contents ...................................................................................................................
i
GFOA Certificate of Achievement........................................................................................... iv
Letter of Transmittal................................................................................................................
v
Elected and Administrative Officers ........................................................................................
x
Organization Chart ................................................................................................................. xi
FINANCIAL SECTION
Independent Auditors’ Report .................................................................................................
1
Management’s Discussion and Analysis (Required Supplementary Information)...................
3
Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Position ............................................................................................ 23
Statement of Activities ................................................................................................. 24
Fund Financial Statements:
Governmental Funds:
Balance Sheet ........................................................................................................ 28
Reconciliation of the Governmental Funds Balance Sheet to the
Government-Wide Statement of Net Position ...................................................... 30
Statement of Revenues, Expenditures and Changes in Fund Balances ................ 32
Reconciliation of the Governmental Funds Statement of
Revenues, Expenditures and Changes in Fund Balances to the
Government-Wide Statement of Activities ........................................................... 34
Proprietary Funds:
Statement of Net Position ....................................................................................... 36
Statement of Revenues, Expenses and Changes in Fund Net Position ................. 38
Statement of Cash Flows ....................................................................................... 40
Fiduciary Funds:
Statement of Fiduciary Net Assets ......................................................................... 44
Statement of Changes in Fiduciary Net Position .................................................... 45
Notes to Basic Financial Statements................................................................................. 47
i
CITY OF CORONA
Comprehensive Annual Financial Report
Table of Contents
Year Ended June 30, 2012
FINANCIAL SECTION, Continued
Required Supplementary Information:
Budgetary Information ...................................................................................................... 111
Comparison Schedules ................................................................................................... 114
Modified Approach for Reporting Infrastructure................................................................ 117
Other Postemployment Benefit Plan (OPEB) Information ................................................ 119
Pension Trend Data ......................................................................................................... 119
Supplementary Information:
Nonmajor Governmental Funds:
Combining Balance Sheet .......................................................................................... 126
Combining Statement of Revenues, Expenditures and Changes
in Fund Balances .................................................................................................. 128
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual: Combining Schedule of
Revenues, Expenditures and Changes in Fund Balances – Budget and Actual
Nonmajor Special Revenue Funds........................................................................... 132
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual
Debt Service Funds.................................................................................................. 136
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual
Capital Project Funds ............................................................................................... 138
Non-major Enterprise Funds:
Combining Statement of Net Position ......................................................................... 143
Combining Statement of Revenues, Expenses, and Changes in Net Position ........... 144
Combining Statement of Cash Flows.......................................................................... 145
Internal Service Funds:
Combining Statement of Net Position ......................................................................... 149
Combining Statement of Revenues, Expenses, and Changes in Fund Net Position .. 150
Combining Statement of Cash Flows.......................................................................... 151
Fiduciary Funds:
Combining Statement of Changes in Assets and Liabilities – Agency Funds ............. 155
ii
CITY OF CORONA
Comprehensive Annual Financial Report
Table of Contents
Year Ended June 30, 2012
STATISTICAL SECTION ..................................................................................................... 157
Financial Trends:
Net Position by Component.............................................................................................. 160
Changes in Net Position................................................................................................... 162
Fund Balances – Governmental Funds ............................................................................ 166
Changes in Fund Balances – Governmental Funds......................................................... 168
Revenue Capacity:
Water Sales by User Type ............................................................................................... 170
Assessed Value and Actual Value of Taxable Property ................................................... 171
Potable Water Rates ........................................................................................................ 172
Reclaimed Water Rates ................................................................................................... 173
Direct and Overlapping Property Tax Rates..................................................................... 174
Principal Water Customers............................................................................................... 175
Principal Property Tax Payers.......................................................................................... 176
Property Tax Levies and Collections................................................................................ 177
Debt Capacity:
Ratios of Outstanding Debt by Type ................................................................................ 178
Ratios of General Bonded Debt Outstanding ................................................................... 180
Direct and Overlapping Governmental Activities Debt ..................................................... 181
Legal Debt Margin Information ......................................................................................... 183
Pledged Revenue Coverage ............................................................................................ 184
Demographic and Economic Information:
Demographic and Economic Statistics ............................................................................. 186
Principal Employers ......................................................................................................... 187
Operating Information:
Full-time Equivalent City Government Employees by Function/Program ......................... 188
Operating Indicators by Function/Program....................................................................... 189
Capital Assets Statistics by Function/Program................................................................. 190
iii
December 19, 2012
To the Honorable Mayor, City Council, and Citizens of the City of Corona, California:
It is with great pleasure that we present to you the City of Corona’s Comprehensive Annual Financial
Report (CAFR) for the fiscal year ended June 30, 2012. The report consists of three sections:
Introductory, Financial and Statistical. The Financial Section includes a complete set of financial
statements presented in conformity with Generally Accepted Accounting Principles (GAAP) and
audited in accordance with Auditing Standards Generally Accepted in the United States of America by
a firm of licensed certified public accountants. Management assumes full responsibility for the
accuracy and reliability of all information presented in this report. To provide a reasonable basis for
making these representations, management has established a comprehensive internal control
framework that is designed both to protect the City’s assets from loss, theft or misuse and to compile
sufficient reliable information for the preparation of the City of Corona’s financial statements in
conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the
objective of the City’s internal control framework is to provide reasonable rather than absolute
assurance that the financial statements are free from material misstatement. As management, we
assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all
material respects.
For certain debt issues, the City of Corona covenants to submit a continuing disclosure to the bond
holders. The City’s CAFR is a required part of that annual disclosure. The California State Controller
requests that the City’s audit report be delivered to the State Controller’s office as soon as available.
The City of Corona’s financial statements have been audited by Lance, Soll & Lunghard, LLP,
Certified Public Accountants. The goal of the independent audit was to provide reasonable assurance
that the financial statements of the City are free of material misstatement. The independent auditor
has issued an unqualified (“clean”) opinion of the City’s financial statements for the fiscal year ended
June 30, 2012. The independent auditor’s report is presented on the first page of the Financial
Section of this report.
The independent audit of the financial statements of the City of Corona was part of a broader,
federally mandated audit of state and local governments (“Single Audit”) designed to meet the special
needs of federal granting agencies. The standards governing Single Audit require the auditor to
report not only on the fair presentation of the financial statements, but also on the City’s internal
controls and compliance with legal requirements. These reports are available in the City of Corona’s
separately issued Single Audit Report.
GAAP require that management provide a narrative introduction, overview, and analysis to
accompany the basic financial statements in the form of Management’s Discussion and Analysis
(MD&A). This letter of transmittal is designed to complement MD&A and should be read in
conjunction with it. The MD&A can be found immediately following the report of the independent
auditors.
v
City of Corona
Letter of Transmittal
Profile of the City
The City of Corona is located approximately 45 miles southeast of Los Angeles in western
Riverside County. The community is ideally situated at the base of the mountainous Cleveland
National Forest on an alluvial plain leading down, or north to the Santa Ana River. Based on
data provided by the U.S. Census Bureau, as of July 2011 the City’s population was 155,896.
The City limits covered approximately 39.2 square miles. Corona is a General Law City. Five
Corona citizens make up the Corona City Council and each is elected to a four-year term of
office. The Mayor is appointed annually by and from the City Council.
The City of Corona was incorporated in 1896 under the general laws of the State of California.
The City operates under a Council-Manager form of government and provides the following
services: Public Safety (Police and Fire), Highways and Streets, Electric, Public Library, Parks,
Public Improvements, Planning and Zoning, Public Transportation (Dial-A-Ride and Corona
Cruiser programs) and General Administrative Services. Water and Water Reclamation
services are provided through the legally separate Corona Utility Authority, which functions as a
department of the City of Corona and therefore has been included as an integral part of the City
of Corona’s financial statements. The former Redevelopment Agency, the Corona Housing
Authority, the Corona Public Financing Authority and the Corona Public Improvement
Corporation are financially accountable by the City of Corona and are reported in the financial
statements. Additional information on all of these legally separate entities can be found in the
Notes to the Financial Statements, under the Description of Reporting Entity section.
The City maintains budgetary controls to ensure compliance with legal provisions embodied in
the annual appropriated budget approved by the City's governing body. Each year, a proposed
budget is submitted to the City Council and a public meeting is conducted to obtain taxpayer
comments. The budget is subsequently adopted by the City Council through passage of
resolutions. The legal level of budgetary control is at the department level. The City Council
may amend the budget to add or delete appropriations, transfer between appropriations within a
fund or change appropriations between funds.
Local Economy
The City of Corona continues to position itself as the prime location for companies looking for
industrial, commercial or office space. On the border of Orange County, Corona offers a
premium location well-suited for a variety of business needs as well as offering the quality of life
sought by management and workforce. As the economy continues in its correction mode,
Corona is seeing the impacts by having vacancy rates not seen since 2008. Commercial retail
vacancy is at 6.0% and the industrial inventory at a 3.0%. During the housing boom we saw
many of our rental units sold or leased leaving the City with a shortage. The year of 2012 was a
turning point for this where Corona saw 405 apartments constructed on North Main Street and
many developments at the entitlement phase with plans to break ground in 2013. There were
34 multi-family building permits attained through September 2012, three times higher than the
same type of permits issued in 2011. New construction in the industrial sector is slow, not due
to low demand, but the fact that Corona is nearly built-out and there are very few large parcels
for development of major projects. Among the few developments that were currently ongoing,
one of them is an 186,000 square-foot industrial building, which was constructed in 2012.
Another project of a 550,000 square-foot industrial building is currently in the entitlement phase.
Although the various development activities are not as active as in 2007, Corona’s economy
started showing signs of the upswing; this is consistent with the rising demand for space.
vi
City of Corona
Letter of Transmittal
With the downturn in the construction industry, Corona experienced some job losses. Another
sector heavily impacted during the recession years was logistics. Transportation and
warehouse were two major elements of this sector; however, they only represent 1.5% of the
City’s total employment. Corona has large shares of residents working in relatively high-skilled,
high-wage jobs. More than 20% of Corona’s working residents are employed in management,
business/financial, computer/mathematical, or architecture/engineering occupations.
This
percentage is much higher than the surrounding cities. With companies starting their hiring
activities, the unemployment rate in Corona has come down from 11.4% in September 2011 to
the current rate of 8.8%. The overall unemployment rate for the County of Riverside is currently
at 12.0%.
Property tax is the largest General Fund revenue source for the City for the fiscal year ended
June 30, 2012. Total taxable assessed valuation in Corona for Fiscal Year 2011-12 was $15.7
billion, this is a slight decrease of 1.3% from the previous year. Sales tax is another principal
General Fund revenue source for the City. Taxable retail sales were $2.7 billion in Fiscal Year
2011-12, an increase of 8.0% from the previous year, second consecutive year following the
3.3% increase from Fiscal Year 2009-10 to Fiscal Year 2010-11. Total property and sales tax
constituted 47.7 % of total governmental revenues, which are significant sources to support all
general government activities including public safety, public works, community services,
housing, and economic development.
Long Term Financial Planning
For Corona, the financial well-being of the City depends on enhancing the City's property and
sales tax revenue base as well as increasing the number of quality jobs available to City
residents. Corona is beginning to emerge from the previous several years of recession. There
is projected growth in the City’s primary revenue sources, property and sales taxes in Fiscal
Year 2012-13. However, this is not enough. The City has taken a strong approach to control
expenditure growth. There have been budgetary reductions in October 2008 and in February
2010. Additionally, the City offered an early retirement incentive in fall of 2011.
In the past, the City has wisely taken advantage of financial prosperity to secure its ongoing
stability, and will continue to take the same conservative approach in the future. The Fund
Balance Policy for the General Fund approved by City Council in June 2010 requires that the
City maintain a contingency reserve of $14.3 million through June 30, 2012. This amounts to
approximately a 12.8% set aside of the following year’s budgeted operating expenditures of the
General Fund to allow for contingencies and emergencies. The contingency reserve will be
increased to two months of regular General Fund operating expenditures in any fiscal year in
which recurring sources exceed recurring uses as approved by this policy. Other funds have
been set aside as reserves for budget shortfalls, facility projects, future technology needs,
vehicle and equipment replacement and changes in future debt service requirements. The
conservative budgets that were passed in prior fiscal years contributed to this overall financial
philosophy.
The City Council and the City leadership will continue to monitor the budget and make decisions
to balance its General Fund budget, while continuing to maintain our commitment to fiscal
responsibility, effective resource management, and providing the highest service levels to our
residents.
vii
City of Corona
Letter of Transmittal
Relevant Financial Policies
Corona follows the General Fund Expenditure Control Budget (ECB) guidelines as outlined in
the budget resolution. The Fiscal Year 2011-12 budget was the eighteenth year that the budget
was prepared in accordance with the ECB policies adopted by the City Council for the General
Fund. Departments are given increased flexibility and incentives for meeting their goals as well
as being assigned greater accountability for their performance in carrying out their mission.
In order to meet anticipated future General Fund budgetary shortfalls, prior budgetary savings
will be used. The City will continue to monitor expenditure and revenue assumptions
aggressively. The ECB savings are categorized in the General Fund Balance under the
classification of Committed Fund Balance.
Major Initiatives
Corona’s commitment to infrastructure improvements is demonstrated by the City’s five-year
Capital Improvement Program with the following highlights.
In Fiscal Year 2012-13, the City’s new capital improvement projects totaled $41.5 million. This is
divided among the categories of: Buildings, Facilities and Systems, Roads, Bridges and
Freeways, Lighting and Signals, Drainage, Parks and Airport, Housing and Economic Programs,
Water, Water Reclamation, Electric, and development financed infrastructure.
The majority of the capital budget, or 58.8%, was in the Water and Water Reclamation
categories, with a total amount of $24.4 million. Major projects in these two categories include
$3.1 million for the Mangular Blending Facility, $4.1 million for the Butterfield and Stagecoah
Park Reclaimed Waterlines, $4.3 million system upgrades for Water Reclamation Facility No. 1
and 2, $1.5 million for a new reservoir, and $3.0 million for various water and sewer line
replacements.
The Roads, Bridges and Freeways category totaled $5.2 million, or 12.6%, of the overall City
capital improvement project budget. The primary funding sources were from Measure A and
Gas Tax. The Housing and Economic programs represent 8.3% of the total City capital budget,
with a total amount of $3.4 million to fund various housing and development programs citywide.
Awards and Acknowledgements
The Government Finance Officers Association (GFOA) of the United States and Canada
awarded the twenty-second consecutive Certificate of Achievement for Excellence in Financial
Reporting to the City of Corona for its Comprehensive Annual Financial Report (CAFR) for the
fiscal year ending June 30, 2011. In order to be awarded a Certificate of Achievement, a
government must publish an easily readable and efficiently organized CAFR. This report must
satisfy both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
CAFR continues to meet the Certificate of Achievement Program’s requirements and we are
submitting it to the GFOA to determine its eligibility for another certificate.
viii
CITY OF CORONA
Elected Officials and Administrative Personnel
Elected Officials
EUGENE MONTANEZ .................................................................................... Mayor
JASON SCOTT ................................................................................ Mayor Pro Tem
STEVE NOLAN ................................................................................ Councilmember
STAN SKIPWORTH ......................................................................... Councilmember
KAREN SPIEGEL............................................................................. Councilmember
RICHARD O. HALEY ......................................................................... City Treasurer
Administrative Personnel
BRADLY L. ROBBINS ..........................................................................City Manager
GREG IRVINE...................................................................... Assistant City Manager
DARRELL TALBERT.............................................. Administrative Services Director
JOANNE COLETTA…...........................................Community Development Director
JONATHAN DALY ...............................................................DWP General Manager
KERRY D. EDEN ............................................................................Finance Director
JOHN MEDINA.......................................................................................... Fire Chief
STEVE LARSON.................................................... Information Technology Director
JULIE FREDERICKSEN....................................................................Library Director
GABRIEL GARCIA .....................................Parks and Community Services Director
MICHAEL ABEL .....................................................................................Police Chief
KIP FIELD ...............................................................................Public Works Director
BEST, BEST & KRIEGER .................................................................... City Attorney
x
CITY OF CORONA
City Organizational Chart
ELECTORATE
CITY COUNCIL
CITY TREASURER
CITY ATTORNEY
CITY MANAGER
Management Services
Human Resources
Community
Development
Information
Technology
Fire
Police
Public Works
Department of
Water & Power
Administrative Services
Finance
Library
Parks & Community
Services
xi
xii
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INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of City Council
City of Corona, California
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of the City of Corona (the City),
California, as of and for the year ended June 30, 2012, which collectively comprise the City's basic
financial statements as listed in the table of contents. These financial statements are the responsibility of
City's management. Our responsibility is to express opinions on these financial statements based on our
audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and the significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, each major fund,
and the aggregate remaining fund information of the City, as of June 30, 2012, and the respective
changes in financial position, and cash flows, where applicable, thereof for the year then ended in
conformity with accounting principles generally accepted in the United States of America.
We would like to draw the reader’s attention to Note 21 – “Successor Agency Trust for Former Corona
Redevelopment Agency”. The note provides information on the dissolution of the Redevelopment Agency
and the newly formed Successor Agency.
In accordance with Government Auditing Standards, we have also issued our report dated
November 28, 2012, on our consideration of the City’s internal control over financial reporting and on our
tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and
other matters. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on internal
control over financial reporting or on compliance. That report is an integral part of an audit performed in
accordance with Government Auditing Standards and should be considered in assessing the results of
our audit.
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis and budgetary comparison information as listed in the table of contents be
presented to supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board, who considers it to
be an essential part of financial reporting for placing the basic financial statements in an appropriate
Lance, Soll & Lunghard, LLP .ORTH"REA"OULEVARDs3UITEs"REA#!s4%,s&AXwww.lslcpas.com
Orange County
Temecula Valley
Silicon Valley
To the Honorable Mayor and Members of City Council
City of Corona, California
operational, economic, or historical context. We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the United States
of America, which consisted of inquiries of management about the methods of preparing the information
and comparing the information for consistency with management's responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements.
We do not express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City's financial statements as a whole. The introductory section, combining and individual
nonmajor fund financial statements and schedules, and statistical section, are presented for purposes of
additional analysis and are not a required part of the financial statements. The combining and individual
nonmajor fund financial statements and schedules are the responsibility of management and were
derived from and relate directly to the underlying accounting and other records used to prepare the
financial statements. The information has been subjected to the auditing procedures applied in the audit
of the financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the financial
statements or to the financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the information is
fairly stated in all material respects in relation to the financial statements as a whole. The introductory and
statistical sections have not been subjected to the auditing procedures applied in the audit of the basic
financial statements and, accordingly, we do not express an opinion or provide any assurance on them.
Brea, California
November 28, 2012
MANAGEMENT’S DISCUSSION AND ANALYSIS
Fiscal Year Ended June 30, 2012
The following Management Discussion and Analysis (MD&A) of the City of Corona’s financial
performance provides an introduction and overview to the financial activities of the City for the
fiscal year ended June 30, 2012. This narrative discussion and analysis focuses on the current
year’s activities, resulting changes and currently known facts; therefore, the information
presented here should be considered in conjunction with additional information furnished in the
letter of transmittal and the accompanying basic financial statements.
FINANCIAL HIGHLIGHTS
Government-Wide
x
Total assets and deferred outflows of the City exceeded its liabilities and deferred
inflows at June 30, 2012 by $1.1 billion (net position). Of this amount, $144.4 million
(unrestricted) may be used to meet the City’s ongoing obligations to citizens and
creditors.
x
The City’s net position increased by $103.1 million from the previous fiscal year. Of the
increase, $15.5 million was attributable to a restatement to the beginning balance of net
position, and $57.0 million was due to the extraordinary gain from the dissolution of the
former Corona Redevelopment Agency. An increase of $30.6 million was the result of
operations of the current fiscal year. Additional information regarding the restatement
and the extraordinary gain are provided in later discussion.
x
For governmental activities, expenses were $86.1 million greater than the program
revenues generated for governmental activities. Taxes, return on investments and other
income for $105.3 million provided sufficient funding for City-wide programs. Together
with transfers of $(0.1) million and extraordinary gain of $57.0 million, and a restatement
of $5.8 million, governmental activities’ net position increased by $81.9 million from the
previously reported amount.
x
For business-type activities, program revenues exceeded expenses by $7.3 million. Of
the total program revenues of $110.4 million, $11.7 million represents contributions of
capital assets such as infrastructure from developers. Adding the investment earnings
of $4.0 million to the revenue, the current fiscal year showed an $11.5 million surplus in
the business-type activities.
3
CITY OF CORONA
Management’s Discussion and Analysis (continued)
June 30, 2012
x
The City recognized an extraordinary gain in the amount of $57.0 million on its
government-wide financial statements. This was the direct result of the dissolution of the
former Corona Redevelopment Agency as of January 31, 2012. The City assumed the
successor agency role to its former Redevelopment Agency, the assets and liabilities
reported in the governmental activities as of January 31, 2012 were transferred to a
fiduciary fund that accounts for activities of the Successor Agency. Among the
transferred amounts, $81.6 million represented long-term obligations of the former
Corona Redevelopment Agency, net against the capital assets and net position held by
the former agency, the transfer resulted in an extraordinary gain of $57.0 million on the
government-wide statement of activities. For additional information on the dissolution of
the redevelopment agency and the impact to the City’s financial statements, please refer
to Notes 20 and 21 in the accompanying financial statements.
x
Of the restatement to the beginning net position of $15.5 million, $5.8 million was in the
governmental activities, and $9.7 million in the business-type activities. These
restatements were largely due to the recording of infrastructure assets contributed by
developers in the prior years. Please refer to Note 19 in the accompanying financial
statements for additional information.
Fund Based
x
As of the close of the current fiscal year, the City’s governmental funds reported
combined ending fund balances of $184.4 million, which is a decrease of $21.0 million
from the previous year. Among the total decrease, $19.8 million resulted from the
extraordinary loss caused by the dissolution of the former Corona Redevelopment
Agency, and $(5.4) million was restated to the beginning fund balance. Governmental
funds reported a combined excess of revenues over expenditures of $5.2 million for the
current year. With the net transfer out in the amount of $1.0 million, and the
extraordinary loss of $19.8 million, net decrease to the fund balances before restatement
was $15.6 million. Additional information on the extraordinary item and the restatement
are provided in later discussion.
x
Of the total fund balance for all governmental funds in the amount of $184.4 million,
$103.7 million, or 56.2% are either nonspendable or restricted due to the nature of the
restriction. An additional amount of $18.3 million was committed in the fund balance,
including $14.3 million that was committed to emergency contingencies, $2.2 million in
ECB savings, and $1.8 million in designated revenues.
x
The City recognized extraordinary loss on its governmental fund statements during the
current fiscal year with the dissolution of the former Corona Redevelopment Agency.
Certain notes entered between the City and the Agency before the dissolution was
invalidated by legislation and later reinstated by law with many conditions. Due to the
contingency nature of the possible repayment, the City set up an allowance account for
the potentially uncollectible amounts, resulted in an extraordinary loss of $2.1 million. In
addition, with the transfer of fund balances of the former Redevelopment Agency to the
Successor Agency as of February 1, 2012, $17.7 million extraordinary losses was
recognized on the City’s governmental fund financial statements. Additional information
regarding the dissolution of redevelopment agencies as well as extraordinary losses due
to the dissolution is fully discussed in Note 20 and 21 of the accompanying financial
statements.
4
CITY OF CORONA
Management’s Discussion and Analysis (continued)
June 30, 2012
x
The beginning fund balance of the governmental funds was restated by $(5.4) million
during the current fiscal year, largely due to the reclassification of a fund that was
reported in the General Fund in the prior year to internal service fund. For additional
information, please refer to Note 19 in the accompanying financial statements.
OVERVIEW OF THE FINANCIAL STATEMENTS
The financial statements presented herein include all of the activities of the City of Corona and
its component units using the integrated approach as prescribed by GASB Statement No. 34.
Government-Wide Financial Statements
The government-wide financial statements present the financial picture of the City from the
economic resources measurement focus using the accrual basis of accounting. They present
governmental activities and business type activities separately. These statements include all
assets of the City (including infrastructure) as well as all liabilities (including long-term debt).
Additionally, certain eliminations have occurred as prescribed by the statement in regards to
interfund activity, payables and receivables.
The statement of net position and the statement of activities report information about the City as
a whole for its governmental and business-type activities. These statements include all assets
and liabilities of the City using the accrual basis of accounting, which is similar to the accounting
used by most private-sector companies. All of the current year’s revenues and expenses are
taken into account regardless of when cash is received or paid.
These two statements report the City’s net position and changes in them. Net position is the
difference between the total of assets and deferred outflows of resources and the total of
liabilities and the deferred inflow of resources, which is a common way to measure the City’s
financial position. Over time, increases or decreases in the City’s net position are an indicator
of whether its financial position is improving or deteriorating. Other factors to consider are
changes in the City’s property tax base and the condition of the City’s roads.
In the statement of net position and the statement of activities, we distinguish the City’s
functions that are principally supported by taxes and intergovernmental revenues (governmental
activities) from other functions that are intended to recover all or a portion of their costs through
user fees and charges (business-type activities). The activities of these two distinctions are as
follows:
Governmental activities – Most of the City’s basic services are reported in this category,
including the General Government, Fire, Police, Public Works, Parks, Recreation and
Community Services and the Library. Property and sales taxes, user fees, interest income,
franchise fees, and state and federal grants finance these activities.
Business-type activities – The City charges a fee to customers to cover all or most of the cost
of certain services it provides. The City’s Water and Water Reclamation utilities, Electric, Transit
and Airport services are reported in this category.
The government-wide financial statements can be found on the pages immediately following this
discussion in the Basic Financial Statements section.
5
CITY OF CORONA
Management’s Discussion and Analysis (continued)
June 30, 2012
Fund Financial Statements
The fund financial statements include statements for each of the three categories of activities:
governmental, proprietary and fiduciary. The governmental activities are prepared using the
current financial resources measurement focus and modified accrual basis of accounting. The
proprietary and fiduciary activities are prepared using the economic resources measurement
focus and the accrual basis of accounting. Reconciliations of the fund financial statements to
the government-wide financial statements are provided to explain the differences created by the
integrated approach.
The fund financial statements provide detailed information about the most significant funds – not
the City as a whole. Some funds are required to be established by State law and by bond
covenants. However, management establishes many other funds to help it control and manage
money for particular purposes or to show that it is meeting legal responsibilities for using certain
taxes, grants, and other money.
Governmental funds – Most of the City’s basic services are reported in governmental funds,
which focus on how money flows into and out of those funds and the balances left at year-end
that are available for spending. These funds are reported using an accounting method called
modified accrual accounting, which measures cash and all other financial assets that can readily
be converted to cash. The governmental fund statements provide a detailed short-term view of
the City’s general government operations and the basic services it provides. Governmental fund
information helps determine whether there are more or fewer financial resources that can be
spent in the near future to finance the City’s programs. The differences of results in the
governmental fund financial statements to those in the government-wide financial statements
are explained in a reconciliation schedule following each governmental fund financial statement.
The governmental fund financial statements can be found in the Basic Financial Statements
section of this report.
Proprietary funds – When the City charges customers for the services it provides – whether to
outside customers or to other units of the City – these services are generally reported in
proprietary funds. Proprietary funds are reported in the same way that all activities are reported
in the statement of net position and the statement of revenues, expenses and changes in fund
net position. The City’s enterprise funds are the same as the business-type activities reported
in the government-wide statements but provide more detail and additional information, such as
cash flows, for proprietary funds. The City uses internal service funds (the other component of
proprietary funds) to report activities that provide supplies and services for the City’s other
programs and activities – such as the City’s self-insurance and fleet operations funds. The
internal service funds are reported with governmental activities in the government-wide financial
statements. The proprietary fund financial statements can be found in the Basic Financial
Statements section of this report.
Fiduciary funds – The City is the trustee, or fiduciary, for certain funds held to account for
activities reported in this category which includes the Successor Agency and the special taxes
and assessments districts. The City’s fiduciary activities are reported in separate statements of
fiduciary net position, statement of changes in fiduciary net position (Successor Agency Trust
only), and combining statement of changes in assets and liabilities (Pass-through Agency Fund
only).
6
CITY OF CORONA
Management’s Discussion and Analysis (continued)
June 30, 2012
Notes to Basic Financial Statements
The notes to basic financial statements provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements. They
are presented immediately following the Basic Financial Statements section of this report.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents
certain required supplementary information concerning the City’s progress in funding its
obligation to provide pension benefits to its employees, budgetary comparison schedules for the
General Fund and each major special revenue fund, and schedules and disclosure of the
modified approach for reporting the City’s infrastructure.
Combining and individual statements for non-major governmental and proprietary funds, internal
service funds and fiduciary funds are presented in the Supplementary Information section of this
report.
GOVERNMENT- WIDE FINANCIAL ANALYSIS
This analysis focuses on the City’s net position and changes in net position of the governmental
and business-type activities for the fiscal year ended June 30, 2012.
As noted earlier, the City’s net position as a whole increased 10.2% from $1.0 billion at June 30,
2011 to $1.1 billion at June 30, 2012. The largest portion, or 74.0% of the City’s net position
reflects the net investment in capital assets such as land, buildings, machinery and equipment,
less any related debt used to acquire those assets that were still outstanding. These assets are
used to provide services to the citizens of the City of Corona; therefore, they are not available
for future spending. Although the City’s investment in capital assets is reported net of related
debt, it should be noted that the resources needed to repay this debt must be provided from
other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
An additional portion or 13.0% of the City’s net position represents various resources subject to
external restrictions on how they may be used. The remaining balance of unrestricted net
position of $144.4 million may be used to meet the City’s ongoing obligations to citizens and
creditors.
As of the end of the current fiscal year, the City was able to report positive balances in all three
categories of net position.
7
CITY OF CORONA
Management’s Discussion and Analysis (continued)
June 30, 2012
The following graph demonstrates the components of the City’s net position at fiscal year ended
June 30, 2012.
City of Corona Net Position
Restricted for
Debt Service
1.3%
June 30, 2012
Restricted for
Other Purposes
Unrestricted
3.1%
13.0%
Restricted for
Capital Project
8.6%
Net Investment in
Capital Assets
74.0%
The following schedule is a condensed version of the City’s statement of net position for fiscal
year ended June 30, 2012. Comparative data from fiscal year ended June 30, 2011 is also
presented.
City of Corona's Net Position
(in millions)
Current and other assets
Internal balances
Capital assets
Total assets
Governmental activities
2012
2011
$ 267.8
$ 280.8
174.2
174.8
608.0
606.8
1,050.0
1,062.4
Deferred from debt refunding
Total deferred outflows
0.6
0.6
Long-term liabilities
Other liabilities
Total liabilities
81.1
35.9
117.0
Deferred from developer fees
Other deferred amounts
Total deferred inflows
Net investement in capital assets,
Restricted
Unrestricted
Total net position
1.7
0.5
2.2
$
547.4
132.4
251.6
931.4
$
Business-type activities
2012
2011
$ 164.2
$ 162.5
(174.2)
(174.8)
353.2
337.5
343.2
325.2
-
-
-
167.9
45.0
212.9
141.6
22.4
164.0
148.3
18.9
167.2
-
-
-
512.9
88.5
248.1
849.5
274.8
11.6
(107.2)
179.2
66.1
18.1
73.8
158.0
8
$
$
Total
2012
2011
$ 432.0
$ 443.3
961.2
944.3
1,393.2
1,387.6
0.6
0.6
222.7
58.3
281.0
1.7
0.5
2.2
822.2
144.0
144.4
$ 1,110.6
316.2
63.9
380.1
579.0
106.6
321.9
$ 1,007.5
CITY OF CORONA
Management’s Discussion and Analysis (continued)
June 30, 2012
The City’s programs for governmental activities include general government, fire, police, public
works, parks and community services and library. The programs for the business-type activities
include the water, water reclamation, electric, transit and airport services. A comparison of each
program’s revenues and expenses for the current year and prior year is presented below.
City of Corona's Changes in Net Position
(in millions)
Governmental
Activities
2012
2011
Revenues:
Program revenues:
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues:
Taxes:
Property taxes
Sales and use taxes
Other taxes
Lease and rental income
Grants and contributions not
restricted to specific programs
Gain on sale of capital assets
Investment earnings
Other
Extraordinary items - RDA dissolution
Transfers
Total revenues, extraordinary items
and transfers
Expenses:
General government
Public safety - Fire
Public safety - Police
Public works
Administrative Services
Parks and community services
Library
Interest on long-term debt
Water
Water reclamation
Electric
Transit services
Airport
Total expenses
Change in net position
Net position - beginning of year
Restatement
Net position - end of year
$
34.6
12.4
9.0
45.8
31.2
8.5
12.1
$
34.3
18.7
3.7
Business-Type
Activities
2012
2011
$
97.2
1.5
11.7
$
93.4
1.6
3.3
59.1
28.5
7.8
11.6
3.4
0.7
4.0
168.5
20.6
21.5
39.8
27.9
12.9
13.2
2.6
3.6
21.8
23.1
40.5
29.4
15.4
13.6
2.7
14.6
114.6
142.1
161.1
55.8
30.2
14.6
2.2
0.3
103.1
76.1
7.4
11.5
849.5
5.8
$ 931.4
849.8
(7.7)
$ 849.5
9
158.0
9.7
$ 179.2
131.8
13.9
20.7
$
127.7
20.3
7.0
59.1
28.5
7.8
11.6
8.1
3.7
57.0
-
0.7
2.3
6.6
0.7
-
103.8
332.8
272.3
46.8
25.9
17.7
2.1
0.3
92.8
20.6
21.5
39.8
27.9
12.9
13.2
2.6
3.6
55.8
30.2
14.6
2.2
0.3
245.2
21.8
23.1
40.5
29.4
15.4
13.6
2.7
14.6
46.8
25.9
17.7
2.1
0.3
253.9
11.0
87.6
18.4
2.3
3.2
0.2
218.2
$
2011
45.8
31.2
8.5
12.1
0.7
4.1
3.7
57.0
(0.2)
Total
2012
148.4
(1.4)
$ 158.0
1,007.5
15.5
$ 1,110.6
998.2
(9.1)
$ 1,007.5
CITY OF CORONA
Management’s Discussion and Analysis (continued)
June 30, 2012
Governmental Activities
Total resources available during the year to finance governmental operations were $1.1 billion
consisting of net position at July 1, 2011 of $849.5 million, program revenues of $56.0 million,
general revenues of $105.2 million, an extraordinary gain of $57.0 million, and a restatement of
$5.8 million. Total uses for governmental activities during the year were $142.1 million; thus,
net position increased by $76.1 million including the extraordinary gain. The chart below
presents revenues and expenses in governmental activities for the past five years.
Revenues and Expenses - Five-Year Trend
Governmental Activities
Amount (in millions)
250.0
200.0
150.0
100.0
50.0
2008
2009
2010
2011
2012
Fiscal Year
Revenues
Expenditures
The following analyses on governmental activities’ revenues and expenses do not include the
$57.0 million extraordinary gain that was discussed previously.
The cost of all governmental activities for fiscal year ended June 30, 2012 was $142.1 million.
However, as shown in the statement of activities, the amount that the taxpayers ultimately
financed for these activities was only $86.1 million because some of the cost was paid by those
who directly benefited from the programs ($34.6 million), or by other governments and
organizations that subsidized certain programs with operating grants and contributions ($12.4
million), and capital grants and contributions ($9.0 million). Overall, the City’s governmental
program revenues were $56.0 million. The City paid for the remaining “public benefit” portion of
governmental activities with $105.2 million in taxes (some of which could only be used for
certain programs) and other revenues, such as investment earnings and general entitlements.
The following is an in-depth analysis of the major revenue sources and expenses.
x
Taxes comprise 51.1% of the total revenues from governmental activities excluding the
extraordinary gain. Of this, 53.5% of total tax revenues are property taxes. Comparing to
the prior year, property taxes decreased $13.3 million, primarily due to the dissolution of the
former Corona Redevelopment agency. Property taxes distributed to the Successor Agency
was reported in the Successor Agency Trust Fund effective of February 1, 2012, it was no
longer part of the City’s tax revenue.
10
CITY OF CORONA
Management’s Discussion and Analysis (continued)
June 30, 2012
x
Sales and use taxes are the second largest revenue source in governmental activities. For
the fiscal year ended June 30, 2012, total sales and use taxes increased by $2.7 million, or
9.4% from the previous year to $31.2 million. This is the second consecutive positive year
since the pre-recession in Fiscal Year 2005-06.
x
Interest on long-term debt decreased by $11.0 million from the previous year as the result of
transferring all former Redevelopment Agency obligations to the Successor Agency Trust
fund as of February 1, 2012.
x
Administrative Services expenses decreased by $2.5 million from the previous year. This
category accounted for the former Corona Redevelopment Agency’s administrative
activities. Amount presented in the current year was for 7 month from July 1, 2011 to
January 31, 2012. Amount presented in the prior year was for a 12-month fiscal period.
x
Public Safety expenses decreased $2.3 million from the previous fiscal year, a positive
result of continued labor negotiations and budgetary cuts implemented during the current
year.
The chart below illustrates the total revenue from the governmental activities, excluding
extraordinary gains for the fiscal year ended June 30, 2012 and 2011 respectively.
Revenue Sources - Two-Year Comparison
Governmental Activities
Amount (in millions)
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
-
Taxes
Charges fo r
Services
Capital Grants &
Co ntributio ns
2012
Operating
Grants &
Co ntributio ns
2011
11
Investment
Earnings
Other
CITY OF CORONA
Management’s Discussion and Analysis (continued)
June 30, 2012
The chart below illustrates the total expenses of the governmental activities for the fiscal year
ended June 30, 2012 and 2011 respectively.
Expenses - Two-Year Comparison
Governmental Activities
Amount (in millions)
70.0
60.0
50.0
40.0
30.0
20.0
10.0
-
General
Go vernment
P ublic Safety
P ublic Wo rks A dministrative
Services
2012
P arks and
Co mmunity
Services
Library
Interest o n
Lo ng-Term
Debt
2011
Business-Type Activities
The City’s net position from business-type activities increased $21.2 million. The net increase
due to operations was $11.5 million, with a restatement of $9.7 million to the beginning net
position, overall net position were $179.2 at June 30, 2012. Net position invested in capital
assets, net of related debt was $274.8 million, this is an increase of $208.7 million from the
previous year, primarily due to the exclusion of $172.6 million internal balances in regards to the
capital lease from the calculation of net position invested in capital assets.
Total expenses of all business-type activities for the fiscal year ended June 30, 2012 were
$103.1 million. As shown in the statement of activities, the amount paid by users of the systems
was $97.2 million, operating grants and contributions were $1.5 million and capital grants and
contributions were $11.7 million, with total program revenue of $110.4 million. Investment
earnings were $4.0 million, a slight increase of $0.8 million from the previous year.
Total resources available during the year to finance business type activities were $282.3 million,
consisting of net assets at July 1, 2011 of $158.0 million, a restatement of $9.7 million, program
revenues of $110.4 million, and general revenues of $4.2 million. With the total expenses of
$103.1 million, net position of business type activities increased by $21.2 million from the
previous year to $179.2 million at June 30, 2012. The chart on next page presents revenues
and expenses in business-type activities for the past five years.
12
CITY OF CORONA
Management’s Discussion and Analysis (continued)
June 30, 2012
Revenues and Expenses - Five-Year Trend
Business-Type Activities
Amount (in millions)
140.0
120.0
100.0
80.0
60.0
40.0
20.0
2008
2009
2010
2011
2012
Fiscal Year
Revenues
Expenditures
Below is an analysis on major revenue sources and expenses for the business-type activities:
x
Capital grants and contributions increased by $8.5 million, nearly tripled the amount
collected in the prior year. The increase was contributable to the developer fees collected
for a large multi-unit apartment complex project.
x
Expenses for Water and Water Reclamation utilities increased by $9.0 million and $4.3
million respectively due to the combination of water purchase rate increases, the increase in
demand as well as a planned increase in equipment and facilities maintenance.
x
Expenses for Electric utility decreased by $3.1 million as the result of the sale of the
Cogeneration Plant to the City of Riverside in the prior fiscal year.
x
Transit and airport enterprises maintained at the same level when compared to the previous
year.
FUND FINANCIAL ANALYSIS
General Fund
The General Fund is the primary operating fund of the City. Fund balance for the General Fund
decreased by $6.9 million for the fiscal year ended June 30, 2012, with an ending balance of
$76.6 million. The net decrease was due to the following:
x
A restatement of $5.0 million to the beginning balance of the fund balance primarily due to
reclassifying the Equipment Capital Outlay fund from the General Fund to internal service
fund.
x
Recognition of $2.1 million of extraordinary loss due to the write off of a loan made from the
General Fund to the former Corona Redevelopment Agency during the current fiscal year.
13
CITY OF CORONA
Management’s Discussion and Analysis (continued)
June 30, 2012
Total fund balance of the General Fund consists of the following:
x
Nonspendable fund balance of $15.1 million. This amount represents $13.8 million in
interfund advances receivables, $0.9 million in due from other governments and long-term
receivables and $0.4 million in inventory and prepaid items.
x
Committed fund balance of $18.3 million, which includes the City Council’s commitment to
Emergency Contingency of $14.3 million, ECB Savings of $2.2 million, and Designated
Revenues of $1.8 million.
x
Assigned fund balance of $43.2 million, which includes the amounts to be used for specific
purposes of the City.
Below is a three-year trend analysis on the fund balance of the General Fund. For additional
details on this, please refer to Note 16 in the accompanying financial statements.
City of Corona's General Fund Fund Balance
Three-Year Trend Information
(in millions)
Fund Balances:
Nonspendable
Committed
Assigned
Total Fund Balance
Fund Balance - Beginning
Operating Surplus/(Deficit)
Transfers
Other Financing Sources
Extraordinary Item
Restatement
Fund Balance - Ending
FY 2011-12
FY 2010-11
FY 2009-10
$
15.1
18.3
43.2
76.6
$
15.1
18.1
50.3
83.5
$
83.5
0.2
$
77.6
(0.7)
6.6
$
$
83.5
$
$
$
(2.1)
(5.0)
76.6
$
$
$
19.7
17.6
40.3
77.6
74.9
(8.1)
3.5
2.4
4.9
77.6
Overall General Fund revenue increased $4.1 million comparing to the prior fiscal year, largely
due to a $3.0 million increase in sales and other taxes. Rental and lease income in the “Other
Revenues” category increased by $1.2 million attributable to the increased lease payment
received from the Corona Utility Authority capital lease.
Expenditures were $3.2 million higher than the previous year. Major contributors are public
safety (increased by $1.3 million), capital outlay (increased by $1.0 million) and parks and
community service (increased by $0.6 million).
14
CITY OF CORONA
Management’s Discussion and Analysis (continued)
June 30, 2012
The graph below illustrates General Fund revenues by source.
General Fund Revenues
Year Ended June 30, 2012
Other
15.1%
Payment in Lieu of
Services
7.7%
Property Taxes
28.3%
Current Services
11.9%
Sales and Use Tax
19.6%
Intergovernmental
0.7%
Investment
Earnings
2.1%
Other Taxes
13.2%
License, Fees and
Permits
1.4%
The graph below illustrates General Fund expenditures by category.
General Fund Expenditures
Year Ended June 30, 2012
Library
2.1%
Capital Outlay
1.0%
Debt Service
4.0%
General
Government
19.9%
Parks & Community
Services
6.2%
Public Works
13.4%
Public Safety
53.4%
15
CITY OF CORONA
Management’s Discussion and Analysis (continued)
June 30, 2012
The graph below presents a comparison of each General Fund revenue source for the fiscal
years ended June 30, 2012 and 2011.
General Fund Revenues - Two-Year Comparison
30.0
25.0
20.0
15.0
10.0
2012
Other
Payment in Lieu
of Services
Current Services
Intergovernmental
Investment
Earnings
License, Fees
and Permits
Other Taxes
-
Sales and Use
Tax
5.0
Property Taxes
Amount (in millions)
35.0
2011
The graph below illustrates a comparison of each expenditure category for the fiscal years
ended June 30, 2012 and 2011.
2012
16
2011
Debt Service
Capital
Outlay
Library
Parks &
Community
Services
Public Works
Public
Safety
70.0
60.0
50.0
40.0
30.0
20.0
10.0
-
General
Government
Amount (in millions)
General Fund Expenditures - Two-Year Comparison
CITY OF CORONA
Management’s Discussion and Analysis (continued)
June 30, 2012
Other Major Governmental Funds
The fund balance for the Development special revenue fund had an increase of $2.3 million
from the previous year as development activities citywide started to pick up since the recent
economic recession in 2008.
The combined fund balances of Redevelopment special revenue, debt service and capital
project fund decreased $17.7 million to zero as these funds were transferred to the Successor
Agency Trust fund during the current reporting period.
The Corona Housing Authority capital project fund was created in Fiscal Year 2010-11, and
became the Housing Successor during the current year after the dissolution of the former
Redevelopment Agency. The fund had very limited activities during this reporting period, fund
balance increased by $0.5 million from the previous year mostly attributable to investment
earnings.
CAPITAL ASSETS
The capital assets of the City are those assets which are used in the performance of the City’s
functions including infrastructure assets. At June 30, 2012, net capital assets totaled $608.0
million and $353.1 million for the governmental and the business-type activities respectively.
Depreciation on capital assets is recognized in the government-wide financial statements.
Please refer to the Note 6 of the accompanying financial statements for additional information.
The City has elected to use the “modified approach” as defined by GASB Statement No. 34 for
infrastructure reporting for its paving system (streets). Under GASB Statement No. 34, eligible
infrastructure capital assets are not required to be depreciated under the following
requirements:
x
The City manages the eligible infrastructure capital assets using an asset management
system with characteristics of (1) an up-to-date inventory; (2) condition assessments and
summary of the results using a measurement scale; and (3) estimation of the annual amount
to maintain and preserve at the established condition assessment level.
x
The City documents that the eligible infrastructure capital assets are being preserved
approximately at or above the established and disclosed condition assessment level.
The City policy is to achieve an average rating of 70 for all streets. The average rating for the
City’s streets at June 30, 2012 was 74, which is above the City’s policy level. The City’s streets
are constantly deteriorating resulting from traffic usage and sun and water damages. The City
is continuously taking actions to detain the deterioration through short-term maintenance
activities such as pothole patching, street sweeping, and sidewalk repair. Actual expenditures
for street maintenance for the fiscal year ended June 30, 2012 were $4.7 million. These
expenditures delayed deterioration, however, it did not seem sufficient to maintain the street
condition from the previous assessment, which had an average rate of 81. The City has
determined that the amount of annual expenditures required to maintain and preserve its streets
at the current level through the year 2021 is a minimum of $8.6 million per year. Please refer to
the Required Supplementary Information section of the accompanying financial statement for
additional information.
17
CITY OF CORONA
Management’s Discussion and Analysis (continued)
June 30, 2012
The table below presents summary information on the City’s capital assets.
City of Corona's Capital Assets
Net of Depreciation (in millions)
Land
Streets
Buildings and improvements
Machinery and equipment
Infrastructure
Construction in progress
Intangible assets
Governmental
Activities
2012
2011
$
62.7
$
63.7
177.2
172.2
117.1
125.4
9.9
10.5
208.2
195.5
32.8
39.4
0.1
0.1
Business-type
Activities
2012
2011
$
3.0
$
3.0
Total Capital Assets
$
$
608.0
$
606.8
58.3
36.2
232.8
13.5
9.3
353.1
$
61.0
40.3
216.6
7.4
9.2
Total
2012
2011
$
65.7
$
66.7
177.2
172.2
175.4
186.4
46.1
50.8
441.0
412.1
46.3
46.8
9.4
9.3
337.5
$
961.1
$
944.3
DEBT ADMINISTRATION
Long-term debt reported in governmental activities decreased by $90.2 million in Fiscal Year
2011-12 largely due to the former Redevelopment Agency’s debt being transferred to the
Successor Agency Trust fund in the amount of $81.6 million. Debt of the business-type
activities decreased by $6.6 million in the current year as a result of normal scheduled debt
service payments. Please refer to Note 8 in the accompanying financial statements for
additional information.
During the current reporting period, the City entered into a long-term lease in the amount of
$25.3 million to refund its 2002 Lease Revenue Bonds. The lease is for 15 years with an annual
interest rate of 3.4%. Net savings on debt service as the result of this refunding was $1.7
million.
The City issued the Corona Utility Authority 2012 Water Revenue Bond in August 2012 to
refund its 1998 Water Revenue Bond and part of the 2003 Certificate of Participation. The 2012
Bonds carries interest rates between 1.0% and 5.0 % and is payable in 20 years. Net savings
resulting from this refund was $5.7 million.
The schedule of outstanding long-term debt with comparative amounts for the previous fiscal
year is presented below:
City of Corona's Outstanding Debt
(in millions)
Loans and agreement payable
Lease payable
Tax allocation bonds
Lease revenue bonds
Water revenue bonds
Certificates of participation
Special assessment district bonds
Total Outstanding Debt
Governmental
Activities
2012
2011
$
$
3.3
25.3
82.1
35.2
65.0
$
0.7
1.0
61.2
$ 151.4
18
Business-type
Activities
2012
2011
$ 34.4
$ 37.2
26.4
87.5
27.4
90.3
$ 148.3
$ 154.9
Total
2012
2011
$ 34.4
$ 40.5
25.3
82.1
35.2
65.0
26.4
27.4
87.5
90.3
0.7
1.0
$ 209.5
$ 306.3
CITY OF CORONA
Management’s Discussion and Analysis (continued)
June 30, 2012
GENERAL FUND BUDGETARY HIGHLIGHTS
The original General Fund budget for Fiscal Year 2011-12 was $121.3 million. Continuing
appropriations of $2.2 million from prior fiscal year capital improvement projects and grants was
approved to carryover into the current fiscal year. An additional $0.6 million in committed
purchase orders from the prior year was added to the original budget to arrive at the adopted
budget in the amount of $124.1 million.
Comparing the adopted budget of $124.1 million to the final budget of $125.7 million, the
General Fund had a net budgetary increase in the amount of $1.6 million for current fiscal year.
These supplemental budgetary changes primarily included an increase of $2.0 million in ECB
budget savings approved for various City departments, net against a $0.5 million budget
savings due to the early retirement incentive program implemented by the City in December
2011.
Original Budget
Continued Appropriations
Encumbrances
Adopted Budget
Supplemental Changes
$
121,317,974
2,223,239
584,360
124,125,573
1,629,697
Final Budget
$
125,755,270
The General Fund final budget amount of $125.7 million compared to the actual expenditures of
$118.6 million for Fiscal Year 2011-12 represents a favorable variance of $7.1 million, due to a
combination of departmental and capital outlay savings. The departmental savings were related
to the actuarial changes in estimated Other Post-Employment Benefits as well as legal
expenses. The $2.8 million savings in capital outlay budget will be carried forward to the next
fiscal year.
Please refer to the Required Supplementary Information section of the
accompanying financial statement for additional information.
Final Budget
Actual Expenditures
Favorable Budget Variance
$
$
125,755,270
118,629,306
7,125,964
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and investors
and creditors with a general overview of the City’s finances and to demonstrate the City’s
accountability for the money it receives. If you have questions about this report, separate
reports of the City’s component units or need any additional financial information, contact the
City of Corona Finance Department at 400 South Vicentia, Corona, California, 92882, phone
951-279-3500 or e-mail finance@ci.corona.ca.us.
19
20
Government-Wide Financial Statements
Governmental Activities – Activities include General Government, Fire, Police,
Public Works, Redevelopment, Parks and Community Services and Library.
Revenues to finance these activities include property and sales taxes, user fees,
investment income, franchise fees and state and federal grants.
Business-Type Activities – Activities relate to the City’s water system, water
reclamation system, electric, transit and airport services.
Fees charged to
customers for the services provided cover all or most of the cost of the businesstype activities.
21
22
CITY OF CORONA
Statement of Net Position
June 30, 2012
Primary Government
Governmental
Activities
Assets
Current Assets
Cash and Investments
Accounts Receivable, Net
Interest Receivable
Due from Other Governmental Agencies
Inventories and Prepayments
Land Held for Resale
Restricted Cash and Investments
Total Current Assets
$
156,281,276
1,382,650
707,432
23,106,265
633,421
61,220,936
2,909,704
246,241,684
Business-Type
Activities
$
Total
84,123,866
11,978,028
347,284
2,124,334
2,989,501
$
18,564,198
120,127,211
240,405,142
13,360,678
1,054,716
25,230,599
3,622,922
61,220,936
21,473,902
366,368,895
Noncurrent Assets
Internal Balances
Long-term Receivable
Capital Assets:
Land and Construction in Progress
Other Capital Assets, Net of Depreciation
Total Capital Assets
Total Noncurrent Assets
Total Assets
Deferred Outflows of Resources
Deferred Amounts from Debt Refunding
174,232,976
(174,232,976)
21,577,458
44,140,619
65,718,077
272,717,824
335,239,525
607,957,349
803,767,783
25,640,922
327,517,537
353,158,459
223,066,102
298,358,746
662,757,062
961,115,808
1,026,833,885
1,050,009,467
343,193,313
1,393,202,780
628,588
-
-
628,588
Liabilities
Current Liabilities
Accounts Payable and Accrued Liabilities
Claims and Judgments Payable
Deposits
Interest Payable
Unearned Revenue
Compensated Absences Payable - Due within One Year
Long-term Debt - Due Within One Year
Liabilities Payable from Restricted Assets
Total Current Liabilities
10,204,853
3,618,000
7,383,791
508,915
3,492,170
6,886,708
3,654,332
145,042
35,893,811
12,333,284
Noncurrent Liabilities
Long-term Debt - Due in More than One Year
Claims and Judgments Payable
Pension Related Debt
Compensated Absences Payable
Total Noncurrent Liabilities
57,504,102
17,265,000
5,325,439
1,008,534
81,103,075
141,489,294
91,393
141,580,687
198,993,396
17,265,000
5,325,439
1,099,927
222,683,762
116,996,886
163,993,891
280,990,777
1,767,715
478,272
2,245,987
-
1,767,715
478,272
2,245,987
547,427,503
274,761,353
822,188,856
95,362,651
3,418,104
10,969,563
95,362,651
14,387,667
Total Liabilities
Deferred Inflows of Resources
Deferred Amounts from Developer Fees
Other Deferred Amounts
Total Deferred Inflows of Resources
Net Position
Net Investment in Capital Assets
Restricted for:
Capital Projects
Debt Service
Specific Projects and Programs:
Transportation and Public Works
Special Assessment District Projects
Development Projects
Other Purposes
Unrestricted
Total Net Position
1,185
2,132,367
746,825
6,787,054
412,489
22,413,204
14,494,532
11,655,625
6,763,589
708,280
251,564,898
$
931,395,182
The accompanying notes are an integral part of these financial statements.
23
22,538,137
3,618,000
7,384,976
508,915
5,624,537
7,633,533
10,441,386
557,531
58,307,015
637,926
15,132,458
11,655,625
6,763,589
708,280
144,395,478
(107,169,420)
$
179,199,422
$
1,110,594,604
CITY OF CORONA
Statement of Activities
Year Ended June 30, 2012
Program Revenues
Functions/Programs
Primary Government
Governmental Activities
General Government
Public Safety - Fire
Public Safety - Police
Public Works
Administrative Services
Parks and Community Services
Library
Interest and Fiscal Charges
Total Governmental Activities
Business-Type Activities
Water
Water Reclamation
Electric
Transit Services
Airport
Total Business-Type Activities
Total Primary Government
Charges for
Services
Expenses
$
20,551,027
21,506,851
39,791,147
27,925,122
12,860,222
13,161,044
2,640,592
3,648,700
$
7,331,352
3,926,888
3,079,224
12,716,140
Operating
Grants and
Contributions
Capital
Grants and
Contributions
$
$
7,327,626
264,464
849,937
1,652,729
5,421,478
1,273,633
2,819,765
332,505
142,084,705
34,645,694
12,350,047
8,977,103
55,972,844
55,837,945
30,224,698
14,569,429
2,148,857
307,538
50,243,765
29,472,121
16,531,675
633,355
265,838
3,514
7,686,989
4,001,501
1,528,277
42,010
57,934,268
33,473,622
16,531,675
2,203,642
265,838
103,088,467
97,146,754
1,531,791
11,730,500
110,409,045
$ 245,173,172
$ 131,792,448
20,707,603
$ 166,381,889
$
13,881,838
$
144,310
91,430
7,556,404
1,060,439
124,520
Total
$
7,331,352
4,921,135
4,823,383
25,694,022
2,334,072
10,271,911
596,969
General Revenues:
Taxes:
Property Taxes
Sales and Use Tax
Franchise Tax
Business Tax
Transient Occupancy Tax
Property Transfer Tax
Dwelling Development Tax
Total Taxes
Grants and Contributions not Restricted to Specific Programs
Investment Earnings
Lease and Rental Income
Labor Abatement
Other Income
Extraordinary Item - Corona Redevelopment Agency Dissolution
Transfers
Total General Revenues, Extraordinary Item and Transfers
Changes in Net Position
Net Position - Beginning of Year, Restated
Net Position - End of Year
The accompanying notes are an integral part of these financial statements.
24
Net (Expense) Revenue
and Changes in Net Position
Governmental
Activities
$
Business-Type
Activities
(13,219,675)
(16,585,716)
(34,967,764)
(2,231,100)
(10,526,150)
(2,889,133)
(2,043,623)
(3,648,700)
$
(86,111,861)
-
(86,111,861)
45,754,306
31,190,815
4,435,972
1,886,320
1,306,458
466,547
451,200
85,491,618
$
(13,219,675)
(16,585,716)
(34,967,764)
(2,231,100)
(10,526,150)
(2,889,133)
(2,043,623)
(3,648,700)
(86,111,861)
2,096,323
3,248,924
1,962,246
54,785
(41,700)
2,096,323
3,248,924
1,962,246
54,785
(41,700)
7,320,578
7,320,578
7,320,578
(78,791,283)
-
76,014
4,047,070
12,088,330
252,202
3,385,339
57,030,346
(163,000)
162,207,919
$
-
Total
4,019,878
163,000
4,182,878
45,754,306
31,190,815
4,435,972
1,886,320
1,306,458
466,547
451,200
85,491,618
76,014
8,066,948
12,088,330
252,202
3,385,339
57,030,346
166,390,797
76,096,058
11,503,456
87,599,514
855,299,124
167,695,966
1,022,995,090
179,199,422
$ 1,110,594,604
931,395,182
$
The accompanying notes are an integral part of these financial statements.
25
26
Governmental Fund Financial Statements
MAJOR FUNDS:
General Fund – The General Fund is the general operating fund of the City. It is
used to account for all financial resources not required to be accounted for in
another fund, and for certain general programs and activities including equipment
capital outlay and City facilities.
Special Revenue Funds
Development Fund – This fund is used to account for park dedication fees, dwelling
development fees and other development fees received. The fees collected are
used to offset the burden resulting from new developments.
Redevelopment Fund – With the dissolution of the Corona Redevelopment Agency
as of February 1, 2012, all Redevelopment funds reported zero balances in the
governmental balance sheet as of June 30, 2012. All assets, liabilities and fund
balances were transferred to the Successor Agency Trust fund during this reporting
period.
Debt Service Fund
Redevelopment Debt Service Fund – With the dissolution of the Corona
Redevelopment Agency as of February 1, 2012, all Redevelopment funds reported
zero balances in the governmental balance sheet as of June 30, 2012. All assets,
liabilities and fund balances were transferred to the Successor Agency Trust fund
during this reporting period.
Capital Project Funds
Redevelopment Capital Project Fund – With the dissolution of the Corona
Redevelopment Agency as of February 1, 2012, all Redevelopment funds reported
zero balances in the governmental balance sheet as of June 30, 2012. All assets,
liabilities and fund balances were transferred to the Successor Agency Trust fund
during this reporting period.
Corona Housing Authority Fund – This fund is used to account for transactions
related to affordable housing activities as prescribed in the Housing Element of the
City’s General Plan.
NON-MAJOR GOVERNMENTAL FUNDS:
Other Governmental Funds – These funds represent the non-major governmental
funds, which include special revenue, debt service and capital project funds.
27
CITY OF CORONA
Balance Sheet
Governmental Funds
June 30, 2012
General
Fund
Development
Special Revenue
63,569,985
1,363,666
493,883
13,047,155
1,489,965
479,776
13,769,360
172,628,344
$
Redevelopment
Special Revenue
Assets
Cash and Investments
Accounts Receivable, Net
Interest Receivable
Due from Other Governments, Net
Due from Other Funds
Long-term Receivable
Interfund Advances Receivable
Long-term Capital Lease Receivable
Loans Receivable
Inventories and Prepayments
Land Held for Resale
Restricted Assets:
Cash and Investments
Total Assets
$
18,437,020
70,148
188,024
1,517,715
333,851
$
-
41,280
415,791
16,246
5,138
$
267,274,171
$
20,593,176
$
-
$
7,421,976
7,383,791
$
100,726
-
$
-
Liabilities, Deferred Inflow of Resources, and Fund Balances
Liabilities
Accounts Payable and Accrued Liabilities
Deposits
Due to Other Funds
Unearned Revenue
Interfund Advances Payable
Liabilities Payable from Restricted Assets
112,157
Total Liabilities
Deferred Inflows of Resources
Deferred Amount from Loans and Long-Term Receivable
Deferred Amount from Capital Lease
Deferred Amount from Assessment Receivable
Unavailable Revenues - Due From Other Governments
Unavailable Revenues - Taxes and Other
12,164,728
5,138
-
14,934,170
12,270,592
-
172,628,344
1,558,995
3,155,552
Total Deferred Inflows of Resources
Fund Balances
Nonspendable
Restricted
Committed
Assigned
Total Fund Balances
Total Liabilities, Deferred Inflows of
Resources and Fund Balances
16,246
$
175,783,896
1,558,995
15,070,684
-
18,279,947
43,205,474
6,763,589
76,556,105
6,763,589
267,274,171
The accompanying notes are an integral part of these financial statements.
28
$
20,593,176
-
$
-
Redevelopment
Debt Service
-
$
Corona
Housing
Authority
Redevelopment
Capital Projects
$
-
$
Other
Governmental
Funds
8,544,915
33,681
5,308,281
$
16,584,473
Total
Governmental
Funds
28,949,667
5,893
109,720
4,562,805
660,000
$
2,294,214
61,220,936
-
2,888,320
119,501,587
1,369,559
707,432
23,106,265
1,489,965
2,657,491
14,103,211
172,628,344
18,919,967
415,791
61,220,936
2,909,704
$
-
$
-
$
91,692,286
$
39,470,619
$
419,030,252
$
-
$
-
$
-
$
$
9,607,287
7,383,853
1,489,965
3,591,307
12,498,579
145,042
-
2,084,585
62
1,489,965
3,479,150
333,851
123,658
-
-
7,511,271
34,716,033
-
-
16,584,473
-
-
-
5,308,281
-
660,000
-
18,143,468
172,628,344
660,000
5,308,281
3,155,552
-
21,892,754
660,000
199,895,645
-
61,220,936
8,578,596
18,847,139
-
-
$
-
$
-
69,799,532
$
91,692,286
$
12,452,209
76,291,620
27,425,735
18,279,947
62,421,272
31,299,348
184,418,574
39,470,619
$
The accompanying notes are an integral part of these financial statements.
29
419,030,252
CITY OF CORONA
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position
June 30, 2012
Total Fund Balances - Total Governmental Funds
$ 184,418,574
Amounts reported for governmental activities in the statement of net position are different
because:
Capital assets used in governmental activities are not current financial resources and
therefore are not reported in the governmental funds balance sheet.
607,957,349
Deferred outflows of resources from refunding of debt resulted in the difference between
the reacquisition price and the net carrying amount of the old debt. The refunding
transaction is recorded in the government-wide statements but not on the governmental
fund balance sheet.
628,588
Difference between deferred inflows reported on government-wide statement of net
position and governmental fund balance sheet. This amount represents long-term
receivables, capital leases and assessment receivables that are not resources that are
currently available for this reporting period, and therefore deferred in the governmental
fund statement.
194,494,106
Grants and other sources not available to pay current period expenditures. Eligibility other
than timing has not been met for theses receipts, therefore they are reported as
unavailable revenues on the governmental fund statement.
3,254,751
Interest payable on long-term debt does not require current financial resources.
Therefore, interest payable is not reported as a liability in the governmental funds balance
sheet.
(508,915)
Internal service funds are used by management to charge the costs of certain activities,
such as insurance and fleet management, to individual funds. The assets and liabilities of
the internal service funds are included in governmental activities in the government-wide
statement of net position.
15,477,062
Long-term liabilities are not due and payable in the current period and therefore are not
reported in the governmental funds balance sheet includes:
Compensated Absences
Pension Related Debt
Long-term Debt
(7,842,460)
(5,325,439)
(61,158,434)
Net Position of Governmental Activities
The accompanying notes are an integral part of these financial statements.
30
$ 931,395,182
31
CITY OF CORONA
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
Year Ended June 30, 2012
General
Fund
Development
Special Revenue
Redevelopment
Special Revenue
Revenues
Property Taxes
Other Taxes
Licenses, Fees and Permits
Fines and Penalties
Special Assessments
Investment Earnings
Intergovernmental Revenues
Current Services
Payments in Lieu of Services
Other Revenues
$
Total Revenues
Expenditures
Current:
General Government
Community Development
Public Safety - Fire
Public Safety - Police
Public Works
Parks and Community Services
Administrative Services
Library
Capital Outlay
Debt Service:
Principal Retirement
Interest and Fiscal Charges
Total Expenditures
Excess of Revenues Over (Under) Expenditures
Other Financing Sources (Uses)
Transfers In
Transfers Out
2,466,401
888,212
14,133,523
9,093,325
16,197,531
3,695,931
363,050
257,787
451,200
2,554
118,781,764
4,770,522
2,560,199
23,605,276
22,838,646
40,487,713
15,912,608
7,346,263
141
206,286
170,070
76,714
2,536,685
1,220,738
9,610
534,448
699,014
-
2,149,378
2,531,999
850,000
149,968
385,000
155,798
118,629,306
1,997,237
1,239,812
152,458
2,773,285
1,320,387
33,569,570
38,964,006
1,695,006
1,774,190
$
2,148,048
(2,110,661)
Total Other Financing Sources (Uses)
37,387
$
2,436,947
34,993
88,259
(477,832)
-
(477,832)
-
Extraordinary Items
Corona Redevelopment Agency Dissolution
(2,130,276)
-
(2,679,625)
Net Change in Fund Balances
(1,940,431)
2,295,453
(1,359,238)
78,496,536
Fund Balances - Beginning of year, Restated
Fund Balances - End of Year
$
76,556,105
4,468,136
$
The accompanying notes are an integral part of these financial statements.
32
6,763,589
1,359,238
$
-
Redevelopment
Debt Service
$
9,747,789
-
Other
Governmental
Funds
-
-
216,928
105,750
-
274,633
-
-
262,407
270,342
892,958
9,964,717
368,157
544,975
26,112,333
163,102,667
-
2,341
2,595,263
-
-
12,174
63,502
82,376
1,057,357
9,717,403
5,090,920
2,235,952
174,446
2,594,539
23,619,791
63,502
22,921,163
41,751,356
25,800,081
12,513,897
9,483,791
2,720,741
4,349,725
2,795,000
1,937,190
537,692
62,308
-
365,000
2,710,191
7,082,070
7,547,454
$
-
Total
Governmental
Funds
45,754,306
38,964,006
5,817,125
1,841,074
9,296,683
4,047,070
15,731,101
14,392,726
9,544,525
17,714,051
$
3,953,562
$
-
$
426,188
66,884
9,296,683
585,315
14,585,102
259,203
8,685,752
3,197,604
-
24,103,860
157,853,571
1,278,965
(2,829,447)
544,975
2,008,473
5,249,096
39
-
581,693
(39)
-
1,803,978
(2,994,114)
4,533,758
(5,582,646)
39
581,654
-
(1,190,136)
(1,048,888)
(6,562,571)
(8,480,231)
(5,283,567)
(10,728,024)
5,283,567
$
Corona
Housing
Authority
Redevelopment
Capital Projects
-
(19,852,703)
544,975
10,728,024
$
-
818,337
69,254,557
$
69,799,532
(15,652,495)
30,481,011
$
31,299,348
200,071,069
$
The accompanying notes are an integral part of these financial statements.
33
184,418,574
CITY OF CORONA
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in
Fund Balances to the Government-Wide Statement of Activities
Year Ended June 30, 2012
Net Change in Fund Balances - Total Governmental Funds
$ (15,652,495)
Amounts reported for governmental activities in the statement of activities are different
because:
Governmental funds report capital outlay as expenditures. However, in the government-wide
statement of activities, the cost of those assets is allocated over their estimated useful lives
as depreciation expense. Additions and adjustments to capital assets amounted to
$11,693,888, less deletions of $640,699, resulted in the net amount of capital assets of
$11,053,189 in the current period.
11,053,189
Depreciation expense on capital assets is reported in the government-wide statement of
activities, but does not require the use of current financial resources. Therefore, depreciation
expense is not reported as expenditures in governmental funds.
(11,442,552)
Net change in deferred outflows due to debt refunding that are not reported in governmental
funds.
628,588
Amount previously reported as unavailable that became available in the current fiscal year.
572,491
Long-term compensated absences are reported in the government-wide statement of
activities, but do not require the use of current financial resources. Therefore, long-term
compensated absences are not reported as expenditures in governmental funds. This amount
represents the change from the prior year.
1,007,592
Proceeds from long-term liabilities provide current financial resources to governmental funds,
but incurring debt increases long-term liabilities in the government-wide statement of net
position. Repayment of debt principal is an expenditure in governmental funds, but the
repayment reduces long-term liabilities in the government-wide statement of net position.
Proceeds from debt issuance
Bond defeasance
Repayment of pension related debt
Repayment of long-term obligations
Capital assets transferred from governmental funds to Successor Agency Trust fund
Debt transferred from governmental funds to Successor Agency Trust fund
(25,265,511)
26,805,000
990,064
7,082,071
(4,725,470)
81,608,519
Interest expense on long-term debt is reported in the government-wide statement of activities,
but do not require the use of current financial resources. Therefore, interest expense is not
reported as expenditures in governmental funds. This amount represents the change in
accrued interest from the prior year.
1,730,677
Internal service funds are used by management to charge the costs of certain activities, such
as insurance and fleet operations, to individual funds. The net revenue of the internal service
funds is reported with governmental activities.
1,703,895
Change in Net Position of Governmental Activities
The accompanying notes are an integral part of these financial statements.
34
$ 76,096,058
Proprietary Fund Financial Statements
MAJOR FUNDS:
Water Fund – This fund is used to account for the operation of the City’s water
utility, a self supporting activity which renders services on a user charge basis to
residents and businesses located in the City.
Water Reclamation Fund – This fund is used to account for the operation of the
City’s water reclamation utility, a self supporting activity which renders services on a
user charge basis to residents and businesses located in the City.
Electric Fund – This fund is used to account for the operation of the City’s electric
utility, a self supporting activity which renders services on a user charge basis to
businesses located in the City.
NON-MAJOR PROPRIETARY FUNDS:
Other Funds – These funds represent the non-major proprietary funds, which
include Public Financing Authority Fund and Public Improvement Corporation Fund.
GOVERNMENTAL ACTIVITIES – INTERNAL SERVICE FUNDS:
These funds are used to account for goods and services provided to other City
departments or agencies on a cost reimbursement basis.
35
CITY OF CORONA
Statement of Net Position
Proprietary Funds
June 30, 2012
Corona Utility Authority
Water
Water Reclamation
Assets
Current Assets
Cash and Investments
Accounts Receivable, Net
Interest Receivable
Due from Other Governmental Agencies
Inventories and Prepayments
Restricted Assets:
Cash and Investments
Total Current Assets
$
41,343,934
8,731,126
163,126
2,119,686
2,964,501
$
31,016,644
1,966,246
123,277
2,710
-
40,247
55,362,620
257,919
33,366,796
Noncurrent Assets
Interfund Advances Receivable
Long-term Receivable
Capital Assets:
Land and Construction in Progress
Other Capital Assets, Net of Depreciation
Total Capital Assets
Total Noncurrent Assets
473,875
15,366
14,552
15,502,743
202,398,673
217,901,416
218,390,657
8,957,712
110,158,842
119,116,554
119,131,106
Total Assets
273,753,277
152,497,902
7,186,905
1,852,037
340,479
2,797,995
40,247
12,217,663
2,872,541
269,944
1,669,059
257,919
5,069,463
250,000
106,819,662
54,082,902
12,869,768
26,235
65,808,682
10,511,392
Liabilities
Current Liabilities
Accounts Payable and Accrued Liabilities
Claims and Judgments Payable
Deposits
Unearned Revenue
Compensated Absences Payable
Long-term Debt - Due Within One Year
Liabilities Payable from Restricted Assets
Total Current Liabilities
Noncurrent Liabilities
Interfund Advances Payable
Compensated Absences Payable
Long-term Capital Lease Payable
Long-term Debt - Due in More than One Year
Claims and Judgments Payable
Total Noncurrent Liabilities
161,152,564
89,216,077
Total Liabilities
173,370,227
94,285,540
161,020,519
106,936,103
-
-
Net Position
Net Investment in Capital Assets
Restricted for:
Debt Service
Transportation
Unrestricted
Total Net Position
(60,637,469)
$
100,383,050
(48,723,741)
$
The accompanying notes are an integral part of these financial statements.
36
58,212,362
Non-major
Funds
Electric
$
11,043,961
1,260,736
48,927
25,000
$
Totals
719,327
19,920
11,954
1,938
-
$
84,123,866
11,978,028
347,284
2,124,334
2,989,501
$
36,779,689
13,091
217,630
8,618,457
20,997,081
9,647,575
10,400,714
18,564,198
120,127,211
18,982,243
44,110,701
-
19,456,118
44,140,619
1,145,044
13,699,221
14,844,265
77,937,209
35,423
1,260,801
1,296,224
1,296,224
25,640,922
327,517,537
353,158,459
416,755,196
-
98,934,290
11,696,938
536,882,407
37,010,410
2,002,086
126,695
2,320,000
78,900
4,527,681
271,752
1,185
280,330
9,707
35,423
598,397
12,333,284
597,566
3,618,000
52,782
4,268,348
1,149,632
63,444
76,895,000
6,791,350
1,714
-
21,060,750
91,393
172,628,344
141,489,294
78,108,076
6,793,064
335,269,781
17,265,000
17,265,000
82,635,757
7,391,461
357,682,985
21,533,348
5,508,507
1,296,224
274,761,353
8,539,557
2,430,006
637,926
(58,679)
10,969,563
637,926
(107,169,420)
2,250,469
$
Governmental
Activities
Internal
Service Funds
16,298,533
$
4,305,477
37,010,410
1,185
2,132,367
746,825
6,787,054
412,489
22,413,204
$
179,199,422
15,477,062
$
15,477,062
The accompanying notes are an integral part of these financial statements.
37
CITY OF CORONA
Statement of Revenues, Expenses and Changes in Fund Net Position
Proprietary Funds
Year Ended June 30, 2012
Corona Utility Authority
Water
Water
Reclamation
Operating Revenues
Utility Service Charges
Intergovernmental Revenues
Fees and Permits
Fines and Penalties
Other Revenues
$
46,944,763
1,407,787
616,427
1,274,788
$
28,055,728
405,721
540,066
470,606
Total Operating Revenues
50,243,765
29,472,121
Operating Expenses
Personnel Services
Contractual
Materials and Supplies
Utilities
Depreciation and Amortization
Claims Expense
6,940,524
3,028,575
25,374,563
4,930,505
6,378,292
-
4,803,750
1,642,243
11,838,218
2,779,347
4,332,178
-
Total Operating Expenses
46,652,459
25,395,736
Operating Income (Loss)
3,591,306
4,076,385
755,528
(9,185,486)
3,514
565,823
(4,806,266)
-
Total Non-Operating Revenues
(8,426,444)
(4,240,443)
Income (Loss) before Contributions and Transfers
(4,835,138)
(164,058)
Non-Operating Revenues (Expenses)
Investment Earnings
Interest Expense
Operating Grants and Contributions
Capital Grants and Contributions
Transfers In
Transfers Out
7,686,989
(460,780)
4,001,501
-
Changes in Net Position
2,391,071
3,837,443
97,991,979
54,374,919
Total Net Position - Beginning of Year, Restated
Total Net Position - End of Year
$
100,383,050
The accompanying notes are an integral part of these financial statements.
38
$
58,212,362
Non-major
Funds
Electric
$
15,385,184
720,954
130,593
294,944
$
Totals
$
90,385,675
998,500
1,862,998
1,287,086
2,612,495
$
-
12,020,249
16,531,675
899,193
97,146,754
12,020,249
1,560,539
371,503
1,177,916
7,415,013
847,081
-
487,967
1,316,761
143,063
246,892
261,712
-
13,792,780
6,359,082
38,533,760
15,371,757
11,819,263
-
1,373,568
596,255
2,060,424
1,076,454
6,095,541
11,372,052
2,456,395
85,876,642
11,202,242
5,159,623
(1,557,202)
11,270,112
818,007
2,642,755
(3,197,377)
-
55,772
(22,696)
1,528,277
4,019,878
(17,211,825)
1,531,791
1,561,353
(11,660,156)
-
4,151
(390,044)
818,007
42,010
460,780
-
11,730,500
663,780
(500,780)
1,500,000
(614,112)
4,768,001
506,941
11,503,456
1,703,895
11,530,532
3,798,536
167,695,966
13,773,167
(554,622)
4,605,001
203,000
(40,000)
$
277,546
49,490
572,157
Governmental
Activities
Internal
Service Funds
16,298,533
$
4,305,477
$
179,199,422
The accompanying notes are an integral part of these financial statements.
39
-
$
15,477,062
CITY OF CORONA
Statement of Cash Flows
Proprietary Funds
Year Ended June 30, 2012
Corona Utility Authority
Water
Water
Reclamation
Cash Flow from Operating Activities:
Receipts from Customers/Other Funds
Payment to Suppliers of Goods and Services
Payment to Employees for Services
Payment on Current Claims
Decrease in Long-term Claims
Other Receipts
$
49,453,420
(31,519,318)
(6,967,939)
Net Cash Provided by (Used for) Operating Activities
$
29,415,445
(15,384,592)
(4,753,217)
10,966,163
9,277,636
3,514
-
Cash Flows from Noncapital Financing Activities:
Operating Grants and Contributions
Compensated Absences
Transfers Received
Transfers Paid
(460,780)
-
Net Cash Provided by (Used for) Noncapital Financing Activities
(457,266)
-
Cash Flows from Capital and Related Financing Activities:
Receipts from Long-Term Receivables
Capital Grants and Contributions
Acquisition and Construction of Capital Assets
Retirement of Long-term Installments Payable
Proceeds from Disposal of Capital Assets
Proceeds (Payments) on Capital Debt and Interfund Loan
Interest payments of Long-term debt
Net Cash (Used in) Capital and Related Financing Activities
3,575,636
(4,096,598)
(3,306,771)
64,054
(9,185,486)
3,096,354
(7,649,481)
(1,998,222)
13,348
(4,806,266)
(12,949,165)
(11,344,267)
Cash Flows from Investing Activities:
Interest on Investments
819,677
615,497
Net Cash Provided by Investing Activities
819,677
615,497
Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalent
Beginning of the Year, Restated
Ending (including $18,564,198 in restricted accounts)
(1,620,591)
$
43,004,772
41,384,181
(1,451,134)
$
32,725,697
31,274,563
Reconciliation of Operating Income to Net Cash Provided by (Used for) Operating Activities:
Operating Income (Loss)
$
Adjustments to Reconcile Operating Income (Loss) to
Net Cash from Operating Activities:
Depreciation and Amortization
Gain/(Loss) on Disposal of Capital Assets
Changes in Assets and Liabilities:
Accounts Receivable
Due from Other Governmental Agencies
Inventories and Prepayments
Accounts Payable and Accrued Liabilities
Claims and Judgments Payable
Advances
Compensated Absences Payable
3,591,306
$
6,378,292
(38,047)
4,076,385
4,332,178
-
(790,345)
(443,540)
2,295,912
(56,676)
875,216
(27,415)
50,533
Net Cash Provided by (Used for) Operating Activities
$
10,966,163
$
9,277,636
Noncash Investing, Capital and Financing Activities:
Capital Assets Contributed by Developers
$
4,030,322
$
905,148
The accompanying notes are an integral part of these financial statements.
40
Non-major
Funds
Electric
$
15,640,772
(9,043,929)
(1,562,409)
$
1,153,988
352,599
(1,536,357)
(492,297)
Totals
$
582,157
6,188,422
(1,093,898)
-
94,862,236
(57,484,196)
(13,775,862)
1,736,145
11,412,651
(3,167,757)
(1,401,159)
730,754
(4,045,295)
410,088
25,338,323
3,939,282
203,000
(40,000)
1,454,110
1,714
460,780
-
1,457,624
1,714
663,780
(500,780)
163,000
1,916,604
1,622,338
1,428,297
(1,066,258)
(2,240,000)
364,054
(3,197,377)
Governmental
Activities
Internal
Service Funds
$
2,280,825
(1,394,937)
885,888
(1,475)
(22,696)
1,428,297
6,714,000
(12,889,770)
(7,544,993)
77,402
362,579
(17,211,825)
-
(4,711,284)
(59,594)
(29,064,310)
-
2,636,796
57,955
4,129,925
-
2,636,796
57,955
4,129,925
-
4,276,934
821,067
2,026,276
4,825,170
42,010
(77,433)
-
$
15,385,484
19,662,418
$
9,545,835
10,366,902
$
100,661,788
102,688,064
$
31,954,519
36,779,689
$
5,159,623
$
(1,557,202)
$
11,270,112
$
818,007
847,081
7,497
261,712
-
11,819,263
(30,550)
249,443
6,145
(79,497)
34,704
859
(562,874)
7,004
(443,540)
3,261,990
170,359
(1,870)
$
6,188,422
(4,330)
$
(1,093,898)
-
(197,510)
282,458
254,972
2,781,000
(4,330)
21,248
$
25,338,323
$
4,935,470
355
$
3,939,282
The accompanying notes are an integral part of these financial statements.
41
42
Fiduciary Fund Financial Statements
FIDUCIARY FUNDS:
Successor Agency Trust Fund – This fund is a private-purpose trust fund, used to
account for activities of the Successor Agency of the former Corona Redevelopment
Agency. The Corona Redevelopment Agency dissolved with the passage of
Assembly Bill 1X 26. The City serves as a custodian for the assets of the dissolved
agency.
Pass-Through Agency Fund – This fund is an agency fund, and is custodial in
nature and used to account for receipts of special assessments and taxes that will
be used to pay principal and interest on the bonds that have no direct City obligation.
43
CITY OF CORONA
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2012
Successor
Agency
Trust Fund
Pass Through
Agency Fund
Assets
Cash and Investments
Interest Receivable
Due from Other Governmental Agencies
Loans Receivable
Restricted Assets:
Cash and Investments
Capital Assets, Net of Depreciation
$
22,908,385
1,887
500,000
$
1,213,946
138,842
411,981
-
7,873,539
4,615,678
28,801,974
Total Assets
35,899,489
30,566,743
Liabilities
Accounts Payable and Accrued Liabilities
Deposits
Due to Other Governmental Agencies
Long-Term Debt Due within One Year
Liabilities Payable from Restricted Assets
Long-Term Debt Due in More Than One Year
Due to Bondholders
1,673,248
294,529
7,844,314
4,430,019
5,254
76,444,221
-
32,336
-
Total Liabilities
90,691,585
Net Position (Deficit)
Held in Trust for Successor Agency Activities
$
(54,792,096)
The accompanying notes are an integral part of these financial statements.
44
30,534,407
$
30,566,743
CITY OF CORONA
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
June 30, 2012
Successor
Agency
Trust Fund
Additions
Property Taxes
Rental and Lease Payment Received
Other Payment Received
Extraordinary Items:
Fund Balance Received from the Former Redevelopment Agency
Capital Assets Received from the Former Redevelopment Agency
Removing Unavailable Amounts From Long-Term Receivables
$
8,870,285
174,994
34,224
17,722,427
4,725,470
500,000
Total Additions
32,027,400
Deductions
Administrative Expenses
Debt Service Payments
Extraordinary Items:
Long-Term Debt Acquired from the Former Redevelopment Agency
81,608,519
Total Deductions
86,819,496
3,129,763
2,081,214
Change in Net Position
(54,792,096)
Net Position - Beginning of Year
Net Position (Deficit) - End of Year
The accompanying notes are an integral part of these financial statements.
45
$
(54,792,096)
46
CITY OF CORONA
Index to Notes to the Basic Financial Statements
Year Ended June 30, 2012
1.
Summary of Significant Accounting Policies ..................................................................................49
2.
Cash and Investments ...................................................................................................................58
3.
Interfund Transactions ...................................................................................................................63
4.
Long-Term Receivables .................................................................................................................69
5.
Land Held for Resale ....................................................................................................................69
6.
Capital Assets ................................................................................................................................70
7.
Compensated Absences Payable ..................................................................................................73
8.
Long-Term Obligations ..................................................................................................................74
9.
Pledged Revenues ........................................................................................................................84
10.
Credit Agreements .........................................................................................................................84
11.
Non-City Obligations ......................................................................................................................84
12.
Bond Requirements .......................................................................................................................86
13.
Pension Related Debt ...................................................................................................................87
14.
Pension Plan .................................................................................................................................87
15.
Other Post-Employment Benefits Other Than Pensions (OPEB) ..................................................90
16.
Classification of Net Assets and Fund Balances ..........................................................................92
17.
Risk Management ..........................................................................................................................94
18.
Commitments and Contingencies ..................................................................................................96
19.
Restatements .................................................................................................................................97
20.
Extraordinary Items – Corona Redevelopment Agency Dissolution .............................................98
21.
Successor Agency Trust for Former Corona Redevelopment Agency ..........................................99
22.
Subsequent Event........................................................................................................................106
47
48
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
1.
Summary of Significant Accounting Policies
A. Description of the Reporting Entity
The City of Corona was incorporated in 1896 under the general laws of the State of California.
The City operates under a Council-Manager form of government and provides the following
services: Public Safety (Police and Fire), Streets and Highways, Water, Water Reclamation,
Electric, Public Library, Parks, Public Improvements, Planning and Zoning, Public Transportation
(Transit Services), Housing, and Economic Development.
The accompanying comprehensive annual financial report includes the financial activities of the
City of Corona, the primary government, and its component units, which are the former Corona
Redevelopment Agency (Agency), the Corona Public Financing Authority (CPFA), the Corona
Public Improvement Corporation (CPIC), the Corona Utility Authority (Authority), and the Corona
Housing Authority (CHA). Financial information for the City and these component units is
accounted for in the accompanying financial statements in accordance with principles defining the
governmental reporting entity adopted by the Governmental Accounting Standards Board. The
City Council members, in separate session, serve as the governing board of the Agency, CPFA,
the CPIC, the Authority, and the CHA, as such, these entities are presented on a blended basis.
Separate financial statements are produced for the Authority component unit of the City and may
be obtained from the City's Finance Administration office.
Blended Component Units
The Redevelopment Agency of the City of Corona was established August 5, 1964, pursuant
to the State of California Health and Safety Code, Section 33000, entitled "Community
Redevelopment Law" and on November 11, 1975, the City Council became the governing board.
The Agency was formed for the purpose of preparing and carrying out plans for improvement,
rehabilitation and redevelopment of blighted areas within the territorial limits of the City. City staff
provides management assistance to the Agency. The funds of the Agency have been included in
the governmental activities in the financial statements. The Agency was dissolved as of January
31, 2012 through the Supreme Court decision on Assembly Bill 1X26. See Notes 20 and 21 for
additional information on the dissolution.
The Corona Public Financing Authority is a joint powers authority organized under Section
6500 et seq. of the California Government Code on June 21, 1989, between the City and the
Agency for the purpose of acting as a vehicle for various financing activities of the City and the
Agency. The CPFA’s Board of Directors is the Corona City Council. The funds of the CPFA have
been included in the governmental activities in the financial statements. Funds related to debt
issued for proprietary activities are included in the business-type activities.
The Corona Public Improvement Corporation was organized pursuant to the Nonprofit Public
Benefit Corporation Law of the State of California (Title 1, Division 2, Part 2 of the California
Corporations Code) on April 7, 1986 for the purpose of providing financial assistance to the City
by acquiring, constructing, improving, developing and installing certain real and personal property
together with appurtenances and appurtenant work for the use, benefit and enjoyment of the
public. The CPIC’s Board of Trustees is the Corona City Council. The funds of the CPIC have
been included in the governmental activities in the financial statements. Funds related to debt
issued for proprietary activities are included in the business-type activities.
49
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
The Corona Utility Authority is a joint powers authority which was established on February 6,
2002 pursuant to a Joint Exercise of Powers Agreement between the City and the Agency in
accordance with the Joint Powers Law (Articles 1 through 4 of Chapter 5, Division 7, Title 1 of the
California Government Code) for the purpose of assisting the City in the leasing of the water and
water reclamation utility systems. The Authority's Officers are the Corona City Council and the
City’s executive management. The funds of the Authority have been included in the businesstype activities in the financial statements.
The Corona Housing Authority was established on February 16, 2011, pursuant to the
California Housing Authority Law codified under State of California Health and Safety Code,
Section 34200 et seq. The City Council became the commissioners of governing board of the
CHA. The CHA was formed for purposes of providing sanitary and safe housing for people of
very low, low or moderate income within the City’s territorial jurisdiction. This is achieved by
building, acquiring, managing and maintaining residential rental units and providing financial
assistance for rentals or ownership in the private real estate market. City staff provides
management assistance to the CHA. The funds of the CHA have been included in the
governmental activities in the financial statements.
B. Basis of Accounting/Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a
separate accounting entity. The operations of each fund are accounted for with a separate set of
self-balancing accounts that comprise its assets, deferred outflow of resources, liabilities, deferred
inflow of resources, fund equity, revenues, and expenditures or expenses, as appropriate.
Governmental resources are allocated to and accounted for in individual funds based upon the
purposes for which they are to be spent and the means by which spending activities are
controlled.
Government-Wide Financial Statements
The City’s government-wide financial statements include a statement of net position and a
statement of activities. These statements present summaries of governmental and business-type
activities for the City accompanied by a total column. Fiduciary activities of the City are not
included in these statements.
The government-wide financial statements are presented on an economic resources
measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets
including capital assets, as well as infrastructure assets, liabilities including long-term obligations,
and deferred outflow and inflow of resources are included in the accompanying statement of net
position. The statement of activities presents changes in net position. Revenues are recognized
in the period in which they are earned while expenses are recognized in the period in which the
liability is incurred under the accrual basis of accounting. The types of transactions reported as
program revenues for the City are reported in three categories: 1) charges for services, 2)
operating grants and contributions, and 3) capital grants and contributions.
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to
interfund activities, payables and receivables. All internal balances in the statement of net
position have been eliminated except those representing balances between the governmental
activities and the business-type activities, which are presented as internal balances and
eliminated in the total primary government column. In the statement of activities, internal service
50
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
fund transactions have been eliminated except for those between the governmental and
business-type activities.
Governmental Fund Financial Statements
Governmental fund financial statements include a balance sheet and a statement of revenues,
expenditures and changes in fund balances for all major governmental funds and non-major funds
in aggregate. An accompanying schedule is presented to reconcile and explain the differences in
fund balances as presented in these statements to the net position presented in the governmentwide financial statements.
The City reports the following major governmental funds:
The General Fund is the City’s primary operating fund. It accounts for all financial resources
of the general government, except those required to be accounted for in another fund.
The Development special revenue fund is used to account for park dedication fees, dwelling
development taxes and other development impact fees received. The money is used to
offset the burden resulting from new developments.
The Redevelopment special revenue fund was used to account for the Redevelopment
Agency’s low-mod housing activities. The accompanying financial statements accounted for
financial transactions of the Redevelopment special revenue fund for the period from July 1,
2011 to January 31, 2012, the date the Redevelopment Agency was dissolved. The former
Redevelopment Agency’s assets, liabilities and fund balances were transferred to the
Successor Agency Trust Fund as required by the legislature.
The Redevelopment debt service fund accounted for tax increment and other miscellaneous
revenues as well as payments of principal and interest on former Redevelopment Agency’s
debts. The accompanying financial statements accounted for financial transactions of the
Redevelopment debt service fund for the period from July 1, 2011 to January 31, 2012, the
date the Redevelopment Agency was dissolved. The former Redevelopment Agency’s
assets, liabilities and fund balances were transferred to the Successor Agency Trust Fund as
required by the legislature.
The Redevelopment capital projects fund accounted for transactions related to proceeds
from bonds and other resources and their use to perform redevelopment related activities
within specific redevelopment project areas. The accompanying financial statements
accounted for financial transactions of the Redevelopment capital projects fund for the period
from July 1, 2011 to January 31, 2012, the date the Redevelopment Agency was dissolved.
The former Redevelopment Agency’s assets, liabilities and fund balances were transferred to
the Successor Agency Trust Fund as required by the legislature.
The Corona Housing Authority capital projects fund accounts for transactions related to
affordable housing activities as prescribed in the Housing Element of the City’s General Plan.
All governmental funds are accounted for on a spending or current financial resources
measurement focus and the modified accrual basis of accounting. Accordingly, only current
assets and current liabilities are included on the balance sheets. The statement of revenues,
expenditures and changes in fund balances presents increases (revenues and other financing
51
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
sources) and decreases (expenditures and other financing uses) in net current assets. Under the
modified accrual basis of accounting, revenues are recognized in the accounting period in which
they become both measurable and available to finance expenditures of the current period.
Accordingly, revenues are recorded when received in cash, except that revenues subject to
accrual (generally 60 days after year-end) are recognized when due, however; the City has
adopted a 12-month recognition period for sales tax and grant revenues. Also, the City accrued
highway users tax and AQMD funds received after the 60-day accrual period according to AB 7
and AB5 x8. The primary revenue sources, which have been treated as susceptible to accrual by
the City, are property tax, intergovernmental revenues and other taxes. Expenditures are
recorded in the accounting period in which the related fund liability is incurred.
Proprietary Fund Financial Statements
Proprietary fund financial statements include a statement of net position, a statement of revenues,
expenses and changes in fund net position, and a statement of cash flows for each major
proprietary fund and non-major funds in aggregate. A column representing internal service fund is
also presented in these statements. However, internal service balances and activities have been
combined with the governmental activities in the government-wide financial statements.
The City reports the following major proprietary funds:
The Corona Utility Authority funds account for the operation of the Water and Water
Reclamation utility systems. The two utilities are owned by the Authority, a blended
component unit of the City. The City operates both the Water and Water Reclamation
systems pursuant to separate management agreements.
The Electric Fund is used to account for the operation of the City’s electric utility distribution
system, a self supporting activity which renders services on a user charge basis to
businesses located in the City.
Proprietary funds are accounted for using the economic resources measurement focus and the
accrual basis of accounting. Accordingly, all assets and liabilities (whether current or non-current),
and deferred outflow and inflow of resources are included on the statement of net position. The
statement of revenues, expenses and changes in fund net position presents increases (revenues)
and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues
are recognized in the period in which they are earned while expenses are recognized in the
period in which the liability is incurred.
Operating revenues in the proprietary funds are those revenues that are generated from the
primary operations of the fund. All other revenues are reported as non-operating revenues.
Operating expenses are those expenses that are essential to the primary operations of the fund.
All other expenses are reported as non-operating expenses.
Fiduciary Fund Financial Statements
Fiduciary fund financial statements include a statement of fiduciary net position, statement of
changes in fiduciary net position, and a combining statement of changes in assets and liabilities.
The City's fiduciary funds include two types, a private-purpose trust fund and an agency fund.
The private-purpose trust fund accounts for the assets and liabilities of the former Redevelopment
Agency and its allocated revenue to pay estimated installment payments of the enforceable
obligations until the obligations of the former Redevelopment Agency are paid in full and assets
52
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
have been liquidated. The agency fund accounts for receipt of special taxes and assessments
used to pay principal and interest on related bonds with no direct City liability, as well as receipt
and disbursement of capital project bond proceeds related to bonds that the City has no direct
liability. Both the private-purpose trust fund and the agency fund are accounted for on the accrual
basis of accounting.
Additionally, the City reports the internal service funds that account for the City’s fleet operations,
risk management and warehouse services. These funds provide services to other City
departments on a cost reimbursement basis.
Reconciliation of the fund financial statements to the government-wide financial statements is
provided to explain the differences created by the integrated approach of GASB Statement No. 34
and 62.
C. Cash, Cash Equivalents and Investments
Cash Management
The City pools cash resources of its various funds, including the Successor Agency Trust Fund to
facilitate cash management. Cash in excess of current requirements is invested and reported as
investments. It is the City’s intent to hold investments until maturity. However, the City may, in
response to market conditions, sell investments prior to maturity in order to improve the quality,
liquidity or yield of the portfolio. Interest earnings are apportioned among funds based on ending
accounting period cash and investment balances.
Investments Valuation
In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain
Investments and for External Investment Pools, highly liquid market investments with maturities of
one year or less at time of purchase are stated at amortized cost. All other investments are stated
at fair value. Market value is used as fair value for those securities for which market quotations
are readily available.
State Investment Pool
The City participates in the Local Agency Investment Fund (LAIF), an investment pool managed
by the State of California. LAIF has invested a portion of the pool funds in structured notes and
asset-backed securities. LAIF’s investments are subject to credit risk with the full faith and credit
of the State of California collateralizing these investments. In addition, these structured notes and
asset-backed securities are subject to market risk as a result of changes in interest rates.
For purposes of the statement of cash flows, the City considered all highly liquid investments with
a maturity of three months or less when purchased to be cash equivalents. All cash and
investments of the proprietary fund types are pooled with the City's pooled cash and investments.
D. Use of Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America (GAAP) requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
53
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
E. Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at
the end of the fiscal year are referred to as either “due to/from other funds” (i.e. the current portion
of interfund loans) or “interfund advances receivable/payable” (i.e. the non-current portion of
interfund loans). All other outstanding balances between funds are reported as “due to/from
other funds.”
Advances between funds, as reported in the fund financial statements, are presented as
nonspendable in fund balances to indicate that they are not in a spendable form.
Proprietary fund receivables are shown net of an allowance for uncollectible accounts.
Allowances of uncollectibles were $ 371,813 for Water and Water Reclamation utility charges and
$ 76,925 for Electric utility charges as of June 30, 2012. Utility customers are billed monthly. The
estimated value of services provided, but unbilled at year end has been included in the
accompanying financial statements.
Property taxes are assessed, collected and allocated by Riverside County throughout the fiscal
year according to the following property tax calendar.
Lien Date
Levy Date
Due Dates
Delinquent Dates
January 1
July 1 to June 30
November 1, 1st installment, February 1, 2nd installment
December 11, 1st installment, April 11, 2nd installment
The City accrues as receivable all property taxes received during the first 90 days of the new
fiscal year. Taxes are considered past due on the above delinquent dates, at which time the
applicable property is subject to lien, and penalties and interest are assessed.
The County of Riverside collects an administration fee from the City and the former
Redevelopment Agency for its services. The City receives a percentage of the basic 1% ad
valorem tax rate allowed on property within the City of Corona. Property tax rates for the City’s
general obligation debt are set by the City Council based on assessed valuations and debt
service requirements. The assessed valuation is at "full cash value."
F. Inventories, Prepaid Items and Land Held for Resale
Inventory is valued at cost using the first in, first out (FIFO) method. Inventory in the proprietary
funds consists of expendable supplies held for future consumption or capitalization. The cost is
recorded as an expense as inventory items are consumed. Certain payments to vendors reflect
costs applicable to future accounting periods and are recorded as prepaid items.
Land held for resale is valued at the lower of cost or estimated net realizable value and is
recorded in the capital project fund.
54
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
G. Interfund Activity
Interfund activity is reported as either loans, services provided, reimbursements or transfers.
Loans are reported as interfund receivables and payables as appropriate and are subject to
elimination upon consolidation. Any residual balances outstanding between the governmental
activities and business-type activities are reported in the government-wide financial statements as
“internal balances.” Services provided are treated as revenues and expenses. Administrative
overhead charges included with centralized expenses charged by the General Fund are included
in the direct expenses of enterprise activities. Reimbursements occur when one fund incurs a
cost, charges the appropriate benefiting fund and reduces its related cost as a reimbursement.
All other interfund transactions are treated as transfers. Transfers between governmental or
between proprietary funds are eliminated as part of the reconciliation to the government-wide
financial statements. Refer to Note 3 for additional information.
H. Use of Restricted/Unrestricted Net Position
When an expense is incurred for purposes for which both restricted and unrestricted net position
are available, the City’s policy is to apply restricted net position first.
I.
Capital Assets
The City’s assets are capitalized at historical cost or estimated historical cost. City policy has set
the capitalization threshold for reporting capital assets at $25,000 for non-infrastructure items and
$100,000 for infrastructure. The City has chosen the “modified approach” for reporting the streets
subsystem of infrastructure capital assets. Gifts or contributions of capital assets are recorded at
fair market value when received. Depreciation is recorded on a straight-line basis over the useful
lives of the assets as follows:
Buildings --------------------20-50 years
Computer Software-------------5 years
Equipment ------------------- 3-20 years
Improvements------------------ 20 years
Infrastructure ---------------25-65 years
The City implemented GASB Statement No. 51, Accounting and Financial Reporting for Intangible
Assets as of June 30, 2010. The City has elected not to retroactively report its internally
generated intangible assets.
The City defines infrastructure as the basic physical assets that allow the City to function. The
assets include the street system, water purification and distribution system, sewer collection and
treatment system; park and recreation lands and improvement system, storm water conveyance
system, and buildings combined with the site amenities such as parking and landscaped areas
used by the City in the conduct of its business. Each major infrastructure system can be divided
into subsystems. For example, the street system can be subdivided into pavement, curb and
gutters, sidewalks, medians, streetlights, traffic control devices (signs, signals and pavement
markings), landscaping and land. These subsystems were not delineated in the Basic Financial
Statements.
The appropriate operating department maintains information regarding the
subsystems.
55
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
The City elected to use the “modified approach” as defined by GASB Statement No. 34 for
infrastructure reporting of its streets, concrete and asphalt pavements. The City commissioned a
physical assessment of the streets condition in October 2011 and a final report was completed in
August 2012. The condition assessments are performed every two years. Each homogeneous
segment of City owned street was assigned a physical condition based on 17 potential defects. A
Pavement Condition Index (PCI) was assigned to each street segment. The index is expressed in
a continuous scale from 0 to 100, where 0 is assigned to the least acceptable physical condition
and 100 is assigned to segments of street that have the physical characteristics of a new street.
The City's policy relative to maintaining the street assets is to achieve an average rating of 70 for
all street segments. This acceptable rating allows minor cracking and raveling of the pavement
along with minor roughness that could be noticeable to drivers traveling at the posted speeds.
Please refer to the Required Supplementary Information section of this report for additional
information on the modified approach.
For all other infrastructure systems, the City elected to use the “basic approach” as defined by
GASB Statement No. 34 for infrastructure reporting. The City commissioned an appraisal of City
owned infrastructure and property as of June 30, 1999 and has completed an internal update for
June 30, 2012. This appraisal determined the original cost, which is defined as the actual cost to
acquire new property in accordance with market prices at the time of first construction/acquisition.
Original costs were developed in one of three ways: 1) historical records; 2) standard unit costs
appropriate for the construction/acquisition date; or 3) present cost indexed by a reciprocal factor
of the price increase from the construction/acquisition date to the current date. The accumulated
depreciation, defined as the total depreciation from the date of construction/acquisition to the
current date on a straight line, unrecovered cost method was computed using industry accepted
life expectancies for each infrastructure subsystem. The book value was then computed by
deducting the accumulated depreciation from the original cost.
J. Risk Management
The City administers self-insurance programs for workers' compensation and liability losses.
These self-funding activities are accounted for in internal service funds. Excess insurance is
purchased to protect the City from losses above the self-insured retention. An independent firm
performs biannual actuarial valuation study for the Workers' Compensation and the Liability Risk
Insurance funds. The latest study was done in May 2012 for periods ending June 30, 2012 and
2013. At no time during the past five years have insurance claims exceeded insurance coverage.
Refer to Note 17 for additional information.
K. Compensated Absences Payable
Under certain circumstances and according to the negotiated labor agreements, employees of the
City are allowed to accumulate annual leave. This amount is accrued in the government-wide and
proprietary fund statements. Please refer to Note 7 for additional information.
L. Long-Term Obligations
In the government-wide financial statements, and proprietary fund types in the fund financial
statements, long-term debt and other long-term obligations are reported as liabilities in the
applicable governmental activities, business-type activities, or proprietary fund type statement of
net position.
56
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as costs of issuance, during the current period. The face amount of debt
issued is reported as other financing sources. Issuance costs, whether or not withheld from the
actual debt proceeds received, are reported as debt service expenditures.
M. Fund Equity
The City implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund
Type Definitions as of June 30, 2010. Fund balance in governmental funds are reported in
classifications that comprise a hierarchy based primarily on the extent to which the City is bound
to honor constraints on the specific purposes for which amounts in those funds can be spent. The
City considers restricted fund balance to have been spent first when an expenditure is incurred for
purposes for which both restricted and unrestricted fund balance is available. Similarly, when an
expenditure is incurred for purposes for which amounts in any of the unrestricted classifications of
fund balance could be used, the City considers committed amounts to be reduced first, followed
by assigned amounts and then unassigned amounts. The City established an administrative
policy on reporting and classifying fund balance in the General Fund in June 2010 that complies
with GASB Statement No. 54. Please refer to Note 16 for additional information.
N. Effect of New Governmental Accounting Standards Board (GASB) Pronouncements
The following new GASB statements are relevant to the City of Corona’s comprehensive annual
financial statements:
GASB Statement No. 61 – In December 2010, GASB issued Statement No. 61, The Financial
Reporting Entity: Omnibus. This statement is to result in financial reporting entity’s financial
statements being more relevant by improving guidance for including, presenting, and disclosing
information about component units and equity interest transactions of a financial reporting entity.
This statement is effective on June 30, 2013. The City evaluated the accompanying financial
statements and determined that they are in compliance with GASB Statement No. 61.
GASB Statement No. 62 – In June 2011, GASB issued Statement No. 62, Codification of
Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 GASB and
AICPA Pronouncements. The objective of this statement is to incorporate into the GASB’s
authoritative literature certain accounting and financial reporting guidance that is included in
Financial Accounting Standards Board (FASB) and American Institute of Certified Public
Accountants (AICPA) pronouncements issued on or before November 30, 1989 which does not
conflict or contradict with GASB pronouncements. This statement is effective on June 30, 2013.
The City evaluated the accompanying financial statements and determined that they are in
compliance with GASB Statement No. 62.
GASB Statement No. 63 – In June 2011, GASB issued Statement No. 62, Financial Reporting of
Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Positions. This
statement provides financial reporting guidance for deferred outflows of resources and deferred
inflow of resources and the resulting net position. This statement is effective on June 30, 2013.
The City implemented this statement in the accompanying financial statements as of June 30,
2012.
57
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
GASB Statement No. 65 – In March 2012, GASB issued Statement No. 65, Items Previously
Reported as Assets and Liabilities. This statement amends the financial statement element
classification of certain items previously reported as assets and liabilities to be consistent with the
definitions in Concepts Statement 4. The statement also provides other financial reporting
guidance related to the impact of the financial statement elements deferred outflows of resources
and deferred inflow of resources. This statement is effective on June 30, 2014. The City
implemented this statement in the accompanying financial statements as of June 30, 2012.
GASB Statement No. 66 – In March 2012, GASB issued Statement No. 66, Technical Correction
– 2012, an Amendment of GASB Statements No. 10 and No. 62. The objective of this statement
is to improve accounting and financial reporting for a governmental financial reporting entity by
resolving conflicting guidance that resulted from the issuances of two pronouncements,
Statements No. 54 and No. 62. This statement is effective on June 30, 2014. The City evaluated
the accompanying financial statements and determined that they are in compliance with GASB
Statement No. 66.
GASB Statement No. 68 – In June 2012, GASB issued Statement No. 68, Accounting and
Financial Reporting for Pensions, an Amendment of GASB Statement No. 27. The primary
objective of this statement is to improve accounting and financial reporting by state and local
governments for pensions. This statement is effective on June 30, 2015. The City has not
determined the effect of this statement as of the issuance date of this year’s financial statements.
2.
Cash and Investments
The City of Corona maintains a cash and investment pool that is available for all City activities,
covering governmental, business-type and fiduciary. Each activity balance in the pool is reflected
on the government-wide statement of net position as well as the statement of fiduciary net
position as cash and investments. The City apportions interest earnings to all activities based on
their monthly cash balances reported in each fund.
A. Cash Deposits
The carrying amounts of the City’s cash deposits were $31,505 at June 30, 2012. Bank balances
before reconciling items were $3,985,858 at that date. All City’s cash and investments as of June
30, 2012 were collateralized or insured with securities held by pledging financial institutions in the
City’s name. The California Government Code requires California banks and savings and loan
associations to secure the City’s cash deposits by pledging securities as collateral. This Code
states that collateral pledged in this manner shall have the effect of perfecting a security interest
in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is
considered to be held in the City’s name.
A provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act provides
temporary unlimited deposit insurance coverage for noninterest bearing transaction accounts at
all FDIC-insured institutions. This provision was effective from December 31, 2010 and will
remain effective until December 31, 2012. Noninterest-bearing transaction accounts is defined as
an account (1) with respect to which interest is neither accrued nor paid; (2) on which the
depositor or account holder is permitted to make withdrawals by negotiable or transferable
instrument, payment orders of withdrawal, telephone or other electronic media transfers, or other
similar items for the purpose of making payments or transfers to third parties or others; and (3) on
58
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
which the FDIC-insured depository institutions does not reserve the right to require advance
notice of an intended withdrawal. As of June 30, 2012, the City maintains cash deposits that are
covered by this temporary provision. California law also allows financial institutions to secure City
deposits by pledging first trust deed mortgage notes having a value of 150% of a City's total
deposits. The City may waive collateral requirements for cash deposits, which are fully insured up
to $250,000 by the FDIC.
The City follows the practice of pooling cash and investments of all funds, except for funds
required to be held by fiscal agents under provisions of bond indentures. Interest income earned
on pooled cash and investments is allocated on an accounting period basis to the various funds
based on the period-end cash and investment balances. Interest income from cash and
investments with fiscal agents is credited directly to the related funds.
B. Investments
Under the provisions of the City’s investment policy, and in accordance with California
Government Code, the following investments were authorized:
x
x
x
x
x
x
x
x
x
Securities issued by the U.S. Treasury
Notes or discount notes issued by agencies of the federal government, not to exceed 75% of
the portfolio
Banker’s acceptances, not to exceed 20% of the portfolio
Negotiable certificates of deposit issued by institutions insured by the federal government, not
to exceed 20% of the portfolio
Repurchase agreements, not to exceed 10% of the portfolio
California Local Agency Investment Fund (State Pool)
Corporate medium-term notes, not to exceed 30% of the portfolio
Commercial paper, not to exceed 25% of the portfolio, may not represent more than 10% of
issuer’s outstanding paper
Diversified management companies, as defined by Section 53601(l) of the Government Code,
not to exceed 10% of the portfolio
In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain
Investments and for External Investment Pools, investments were stated at fair value.
Accordingly, fund balances reflected the portfolio’s change in value, which are unrealized unless
sold. The following investment income in all funds and component units are presented using an
aggregated method under GASB No. 31:
Realized gain/(loss) on matured investments
Unrealized loss in changes in fair value of investments
Interest Income
Total investment income
2012
$
(55,161)
(11,195)
8,133,304
$ 8,066,948
2011
$ 1,988,722
(3,834,223)
8,404,185
$ 6,558,684
The calculation of realized gains and losses on investments is independent of the calculation of
the change of the fair market value, and realized gains and losses are the accumulation of prior
years.
59
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
C. Summary of Cash and Investments
The following is a summary of pooled cash and investments at June 30, 2012:
Government-Wide Statement of Net Position
Governmental
Business-Type
Activities
Activities
Total
Fiduciary Fund
Statement of
Net Position
Cash and
Investments
$ 156,281,276
$
84,123,866
$ 240,405,142
$
24,122,331
$ 264,527,473
Restricted Cash
and Investments
$
$
18,564,198
$
$
36,675,513
58,149,415
2,909,704
21,473,902
Total Cash and Investments
Total
$ 322,676,888
As of June 30, 2012, the City had the following deposits and investments:
Credit Rating
City Treasury:
Deposits
Not Rated
Investments:
Medium Term Notes
Medium Term Notes
Medium Term Notes
Medium Term Notes
Medium Term Notes
Medium Term Notes
Medium Term Notes
Medium Term Notes
Medium Term Notes
U.S. Government Agency Securities
FFCB
FHLB
FHLMC
FNMA
U.S. Treasury
Fair Value
$
31,505
Total
$
31,505
AAA
AA+
AA
AAA+
A
A-1+
A-1
A-
1,882,395
18,104,709
6,483,172
2,684,576
9,448,591
20,058,268
12,065,920
6,247,992
2906865
79,882,488
AA+
AA+
AA+
AA+
Not Rated
18,796,295
22,076,686
18,123,166
26,277,235
33,921,559
119,194,941
Federated
AAA
Local Agency Investment Funds
Not Rated
Restricted Cash and Investments:
Cash & Investments with Fiscal Agents
PUC Public Purpose
Electric Restricted Cash
Transit Restricted Cash
Retention & Escrow Accounts
Not Rated
Not Rated
Not Rated
Not Rated
Not Rated
Total cash and investments
157,766
65,260,773
55,711,625
172,503
1,100,000
637,926
527,361
58,149,415
$ 322,676,888
60
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
D. Risk Disclosures
Interest Rate Risk. As a means of limiting its exposure to fair value losses arising from rising
interest rates, the City’s investment policy limits the City’s investment portfolio to maturities not to
exceed five years at time of purchase. The investment maturities of the City’s portfolio as of June
30, 2012 are presented on the next page.
Credit Risk. State law limits investments in commercial paper and corporate bonds to the top two
ratings issued by nationally recognized statistical rating organizations (NRSROs). It is the City’s
policy to limit its investments in these investment types to the top rating issued by NRSROs,
including raters Standard & Poor’s, Fitch Ratings, and Moody’s Investors Service. The City’s
credit risk, expressed on a percentage basis as of June 30, 2012 is presented below:
Investment
US T-Notes
LAIF
Federated
FFCB
FHLB
FHLMC
FNMA
Wells Fargo Bank
JP Morgan Chase & Co
General Electric Capital
US Bancorp
Wal-Mart Stores
Pfizer Inc
Tennesee Valley Authority
IBM Corp
Chevron Texaco Corp
Northern Trust Company
Bank of New York Mellon
Blackrock Inc
Pepsico Inc
Berkshire Hathaway
Praxair
Ebay
Walt Disney Company
John Deere Capital Company
American Honda Corp
Paccar Financial
HSBC USA Inc
Bank of Nova Scotia
Toronto Dominion Bank
Toyota Motor Credit
GE Capital Corp
Coca Cola Company
United Tech Corp
Total
Moody's
Rating
Not Rated
Not Rated
Aaa
Aaa
Aaa
Aaa
Aaa
A1
A2
A1
Aa3
Aa2
Aaa
Aaa
Aa3
Aa1
A1
A1
A1
Aa3
Aa2
A2
A2
A2
A2
P-1
P-1
P-1
P-1
P-1
P-1
Aaa
Aa3
A2
61
S&P
Rating
Not Rated
Not Rated
AAA
AA+
AA+
AA+
AA+
A+
A
AA+
A
AA
AAA
AA+
AAAA
A+
A
A+
AAA+
A
A
A
A
A-1
A-1
A-1
A-1+
A-1+
A-1+
AA+
A+
A
% of
Investment
12.82%
24.68%
0.06%
7.11%
8.35%
6.85%
9.93%
1.11%
2.56%
1.43%
1.10%
1.39%
0.71%
2.74%
1.01%
1.06%
0.82%
1.06%
0.73%
1.10%
1.13%
0.73%
1.13%
0.75%
0.18%
0.38%
1.13%
0.85%
1.61%
1.45%
1.51%
1.54%
0.91%
0.08%
100.00%
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
As of June 30, 2012, the City’s portfolio had the following investment maturities:
Investment
Cash and Investments:
FFCB
FHLB
FHLMC
FNMA
US T-Notes
LAIF
Federated
Wells Fargo Bank
JP Morgan Chase & Co
General Electric Capital
US Bancorp
Wal- Mart Stores
Pfizer Inc
Tennesee Valley Authority
IBM Corp
Chevron Texaco Corp
Northern Trust Company
Bank of New York Mellon
Blackrock Inc
Pepsico Inc
Berkshire Hathaway
Praxair
Ebay
Walt Disney Company
John Deere Capital Company
American Honda Corp
Paccar Financial
HSBC USA Inc
Bank of Nova Scotia
Toronto Dominion Bank
Toyota Motor Credit
GE Capital Corp
Coca Cola Company
United Tech Corp
Deposits
Total
Investment Maturities (In Years)
Less than 1
1 to 3
3 to 5
Fair Value
$
18,796,295
22,076,686
18,123,166
26,277,235
33,921,559
65,260,773
157,766
2,920,366
6,760,835
3,790,995
2,909,517
3,671,576
1,882,395
7,250,488
2,684,576
2,811,596
2,172,234
2,798,861
1,941,123
2,906,865
2,978,315
1,939,529
2,987,832
1,985,158
477,395
999,903
2,999,720
2,248,369
4,245,744
3,825,000
3,995,176
4,084,911
2,414,868
199,141
31,505
$ 264,527,473
$
2,881,305
$ 16,457,303
2,084,980
1,297,082
4,475,969
10,390,527
$
2,338,992
17,110,401
16,826,084
21,801,266
23,531,032
31,505
$ 102,831,971
$ 76,900,754
$ 84,794,748
$
$
$
$
65,260,773
157,766
2,920,366
2,925,845
3,790,995
2,909,517
3,834,990
3,671,576
1,882,395
4,545,022
794,809
2,811,596
2,172,234
2,798,861
1,941,123
2,906,865
2,978,315
1,939,529
2,705,466
1,889,767
2,987,832
1,985,158
477,395
999,903
2,999,720
2,248,369
4,245,744
3,825,000
3,995,176
4,084,911
2,414,868
199,141
Restricted Cash and Investments:
Cash and Cash in Escrow
Local Agency Investment Funds
Aim Government & Agency
Aim S-T Investement Treasury
Dreyfus Treasury Cash Mgmt
Federated Treasury Obligation
Natixis Funding Corp
Bayerische Landesbank
Total
$
2,431,536
10,233,684
3,612,657
22,442,697
3,096,423
9,682,333
4,300,695
2,349,390
58,149,415
62
2,431,536
10,233,684
3,612,657
22,442,697
3,096,423
9,682,333
$ 51,499,330
$
-
-
$
-
4,300,695
2,349,390
6,650,085
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
The City portfolio value fluctuates in an inverse relationship to any change in interest rates.
Accordingly, if interest rates have risen, the portfolio value would have declined. If interest rates
have fallen, the portfolio value would have risen.
E. Investments in Local Agency Investment Funds
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by
California Government Code Section 16429 under the oversight to the Treasurer of the State of
California. LAIF is overseen by the Local Agency Investment Advisory Board, which consists of
five members, in accordance with State statute. The State Treasurer’s Office audits the fund
annually. The City’s investments with LAIF at June 30, 2012 included a portion of the pool funds
invested in Structured Notes and Asset-Backed Securities. These investments included the
following:
Structured notes are debt securities (other than asset-backed securities) whose cash flow
characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more
indices and/or that have embedded forwards or options.
Asset-backed securities, the bulk of which are mortgaged-backed securities, entitle their
purchasers to receive a share of the cash flows from a pool of assets such as principal and
interest repayments from a pool of mortgages (such as Collateralized Mortgage Obligations) or
credit card receivables.
As of June 30, 2012, the City had $65,181,275 invested in LAIF. Fair value of the City’s LAIF
investments was $65,260,773 as of June 30, 2012. This is arrived at by multiplying the City’s
LAIF account balance by a fair value factor determined by LAIF. The fair value factor was
determined by dividing all LAIF participants’ total aggregate fair value by total aggregate
amortized cost, resulting in a factor of 1.001219643.
3.
Interfund Transactions
A. Current Interfund Receivables/Payables
Current interfund balances arise in the normal course of business and are expected to be repaid
shortly after the end of the fiscal year. The following is a summary of current interfund balances
as of June 30, 2012:
Receivable Fund
Major Funds:
General Fund
Amount
$
Payable Fund
Non-Major Funds:
Special Revenue Fund:
Other Grants & Endowments
1,489,965
Amount
$
Capital Projects Funds:
Public Facility Project
HUD Grants
Other Grants
Total
$
1,489,965
Total
63
40,868
214,137
21,562
1,213,398
$
1,489,965
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
B. Long-Term Interfund Receivables/Payables
At June 30, 2012, the funds below have made advances that were not expected to be repaid in
one year or less.
Receivable Fund
Major Funds:
General Fund
Special Revenue Funds:
Development
Enterprise Funds:
Water
Electric
Amount
Payable Fund
Major Funds:
Special Revenue Fund:
Development
Debt Service Fund:
Enterprise Funds:
Water
Water Reclamation
Electric
$ 13,769,360
333,851
473,875
18,982,243
Non-Major Funds:
Special Revenue Fund:
Special Tax Districts
Enterprise Funds:
Public Financing Authority
Airport
Total
$ 33,559,329
Total
Amount
$ 12,164,728
250,000
12,869,768
1,149,632
333,851
6,586,350
205,000
$ 33,559,329
The Development special revenue fund advance of $333,851 is being repaid by special
assessments collected in a landscape maintenance district over a 10-year period with annual
payments of $56,035.
The Development special revenue fund payable of $12,164,728 is repaying the General Fund
dependent upon development related activities.
The Water enterprise fund payable of $250,000 represents amount due to the General Fund in
relation to a funding agreement on El Cerritos Park reclaimed water line construction project.
The Water Reclamation enterprise fund payable of $12,869,768 represents the amount due to the
Electric Fund in relation to the transfer of certain biosolids drying facility.
The Electric enterprise fund payable of $1,149,632 represents a reimbursement to the General
Fund for certain Corporation Yard Expansion project costs.
The Public Financing Authority Payable represents the reserves from the Electric Fund and Water
Fund related to the 2003 and 2005 Certificates of Participation. These reserves will be paid
during the final years of the bond’s term.
The Airport enterprise fund advance is being repaid to the General Fund over a 27-year period
with annual payments of $15,000, expected to be repaid by 2025.
64
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
C. Internal Balances – Capital Lease
Related Parties
In 2002, the City established the Corona Utility Authority (Authority) as a joint powers authority
pursuant to a Joint Exercise of Powers Agreement between the City and the former
Redevelopment Agency of the City of Corona in accordance with the Joint Powers Law (Articles 1
through 4 of Chapter 5, Division 7, title 1 of the California Government Code) for the purpose of
assisting the City in the leasing of the water and water reclamation utility systems. The
Authority’s Officers are the Corona City Council and the City’s executive management.
Capital Lease Obligations
In February 2002, the Authority entered into capital leases with the City to lease the City’s Water
and Water Reclamation facilities. The terms of the leases are 55 years. The leases will terminate
on February 6, 2056, at which time the Authority could renew the capital leases of the Water and
Water Reclamation facilities. The capital assets of the Water and Water Reclamation facilities
were recorded at the City’s historical cost, net of accumulated depreciation. The related debt has
been recorded accordingly resulting in a lease payable for an amount equal to the net capital
assets recorded on the City’s financial statements. Per the Lease Agreements, maximum lease
payments are calculated with a discount rate of 6.0%. The original lease payments since Fiscal
Year 2001-02 through Fiscal Year 2007-08 were established as 5.0% to 8.0% of the
corresponding utility sales revenues of that year, equivalent to discounting the lease principal
amounts by a range from 1.2% to 3.0%. Starting Fiscal Year 2008-09 and continued to the next
fiscal year, the lease payment is calculated with a 3.5% to 4.0% growth factor over the previous
fiscal year, equivalent to discounting the lease principal amounts by 3.2% for Water Utilities and
2.8% for Water Reclamation Utilities. For the fiscal year ended June 30, 2012, the annual lease
payment for Water Utility was calculated with a discount rate at 6.0% with a catch-up payment for
the prior years in the amount of $311,015. The Water Reclamation Utility’s lease payment for
Fiscal Year 2011-12 was discounted at 5.7% of the lease principal amount.
The following Internal Balances – Capital Leases were outstanding at June 30, 2012:
Leasee
Capital Lease - Water Utility
Balance
$ 106,819,662
Capital Lease - Water Reclamation Utility
Total Internal Balances - Capital Leases
65
65,808,682
$ 172,628,344
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
Current Year Transactions
During Fiscal Year 2011-12, the following related party transactions were recorded by the City
and the Authority:
Leasee
Amount
$
6,991,192
Water Utility
Water Reclamation Utility
3,761,879
Total Payment from the Authority to the City
$ 10,753,071
Capital Lease Payments
At June 30, 2012, the future minimum lease payments required under the capital leases and the
net present value of the future lease payments for the Water utilities are presented below:
Corona Utility Authority
Future Lease Payments - Water Utility
Fiscal Year
2013
2014
2015
2016
2017
2018-2022
2023-2027
2028-2032
2033-2037
2038-2042
2043-2047
2048-2052
2053-2056
Principal
$
Total Future Lease Payments
Discharge of Obligations
Present Value of Total Lease Payment
$
66
-
106,819,662
106,819,662
$
$
Interest
5,840,840
5,346,473
5,346,473
3,590,150
3,397,942
14,426,639
10,875,760
8,128,158
6,002,115
4,357,024
3,084,084
1,779,440
464,538
72,639,636
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
At June 30, 2012, the future minimum lease payments required under the capital leases and the
net present value of the future lease payments for the Water Reclamation utilities are presented
below:
Corona Utility Authority
Future Lease Payments - Water Reclamation Utility
Fiscal Year
2013
2014
2015
2016
2017
2018-2022
2023-2027
2028-2032
2033-2037
2038-2042
2043-2047
2048-2052
2053-2056
Principal
$
Total Future Lease Payments
Discharge of Obligations
Present Value of Total Lease Payment
$
-
65,808,682
65,808,682
$
$
Interest
3,142,354
2,876,048
2,876,048
2,041,048
2,041,048
9,573,915
7,344,035
5,529,977
4,126,293
3,040,149
2,199,711
1,614,844
1,159,387
47,564,857
All lease payments are considered as interest payments toward the lease obligation. The
Authority’s obligations under the Lease Agreements shall be forgiven, discharged and excused
upon the date the aggregate amount of payments made by the Authority to the City equals the
amount of the principal amount of the lease obligation.
D. Transfers Between Funds
With Council approval, resources may be transferred from one City fund to another. The purpose
of the majority of transfers is to reimburse a fund that has incurred expenditures on behalf of
another fund. Significant one-time transfers were:
x
$477,832 from the various developer impact fee funds to the General Fund to reimburse
project costs and administrative fees.
x
$1,056,104 from the Gas Tax special revenue funds to the General Fund for the
reimbursement of street maintenance costs.
x
$614,112 from various internal service funds to the General Fund for the reimbursements of
Mobile Digital Communicator (MDC) replacement costs and administrative fees.
x
$541,693 from the General Fund to the former Redevelopment capital projects funds to fund
for certain developer agreement.
67
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
x
$1,735,010 from the Transportation Uniform Mitigation Fees (TUMF) and Public Works
Transportation Grant capital project funds and Gas Tax special revenue fund to the Traffic
Congestion Relief and Measure A special revenue funds for reimbursement of various capital
project costs.
x
$1,500,000 from the General Fund to the Worker’s Comp internal service fund to increase
liability coverage.
x
$460,780 from Water Utility Fund to CPFA to fund for the additional reserve requirement of
the 1998 Water Revenue Bonds.
Total transfers of $6,697,538 are presented below:
Transfer In
General
Fund
Transfer Out
General Fund
Development
Special Revenue
$
-
Redevelopment
Debt
Capital
Service
Projects
$
$ 541,693
$
68,968
Electric
$
-
-
Total
Transfers
Out
$ 1,500,000
$ 2,110,661
39
39
1,056,104
1,735,010
203,000
2,994,114
460,780
Electric
Total Transfers In
$
Internal
Service
477,832
Water
Internal Service
Non-Major
Enterprise
477,832
Redevelopment
Capital Projects
Non-major
Governmental
-
Non-Major
Governmental
460,780
40,000
40,000
614,112
$ 2,148,048
614,112
$
39
$ 581,693
$ 1,803,978
68
$ 203,000
$ 460,780
$ 1,500,000
$ 6,697,538
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
4.
Long-Term Receivables
Long-term receivables on the governmental fund financial statement as of June 30, 2012 are
presented by specific description so as not to be aggregated. The major receivable balances in
the governmental funds which are not expected to be collected within one year are:
Loans
Receivable
Major Funds:
General Fund
Development Special Revenue
Corona Housing Authority Capital Project
$
Non-Major Funds:
Assessment Districts
HUD Grants
41,280
16,584,473
Long-Term
Receivable
$
479,776
1,517,715
660,000
2,294,214
Total
$
18,919,967
$
2,657,491
The General Fund long-term receivable represents reimbursement fees to be paid by developers
for the Temescal Canyon Communications Tower in the amount of $287,932 and reimbursement
fees to be paid by developers for community facilities plan for the South Corona area in the
amount of $191,844.
The Development special revenue fund reports a loans receivable of $41,280 for the sale of real
property to a developer; the fund also reports a long-term receivable for future developer impact
fees for the Temescal Canyon Public Safety Facility.
The Corona Housing Authority capital projects fund reports loan receivable for various
agreements with developers with long-term repayment provisions.
The Assessments Districts fund’s long-term receivable represents future assessments to be
received for the payment of Assessment District debt which is considered to be a possible liability
of the City in the case of default. This is not reported in the government-wide statements.
The HUD Grants fund reports loans receivable for home improvement programs that have varying
terms and repayment provisions.
5.
Land Held For Resale
Land held for resale consists of real property acquired by the City and held for resale to private
developers. The amount recorded as land held for resale and the corresponding fund balance
classified as nonspendable as of June 30, 2012 was $61,220,936.
69
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
6.
Capital Assets
In accordance with GASB Statement No. 34, the City has reported all capital assets including
infrastructure in the government-wide statement of net position.
The City elected to use the “modified approach” as defined by GASB Statement No. 34 for
infrastructure reporting for its pavement system. As a result, no accumulated depreciation or
depreciation expense has been recorded for this system. A more detailed discussion of the
“modified approach” is presented in the Required Supplementary Information section of this
report.
All other capital assets including other infrastructure systems were reported using the basic
approach whereby accumulated depreciation and depreciation expense have been recorded.
The following table presents summary information on the City’s infrastructure assets as of June
30, 2012.
Historical
Cost
Accumulated
Depreciation
Description
Governmental Activities:
Modified Approach
Street Pavement System
$ 177,154,784
Basic Approach
Curbing
Sidewalks
Signs and Lights
Storm Drains
Fiberoptics
Subtotal Basic Approach
Total Governmental Activities
78,004,747
84,813,115
38,755,363
99,802,719
5,899,800
307,275,744
$ 484,430,528
$
$
235,951
4,444,941
249,370
206,879,057
86,944,362
$ 298,753,681
Business-Type Activities:
Basic Approach
Fiberoptics
Electric
Signs and Lights
Water
Water Reclamation
Total Business-Type Activities
70
$
-
Net
Cost
$
177,154,784
(30,355,057)
(32,650,545)
(10,692,047)
(24,880,672)
(521,056)
(99,099,377)
(99,099,377)
47,649,690
52,162,570
28,063,316
74,922,047
5,378,744
208,176,367
$ 385,331,151
$
(102,690)
(487,675)
(9,975)
(47,468,018)
(17,929,562)
$
$
(65,997,920)
$ 232,755,761
133,261
3,957,266
239,395
159,411,039
69,014,800
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
Capital Assets of the City for the year ended June 30, 2012 consisted of the following:
Restated
Balance
June 30, 2011
Governmental Activities:
Capital assets not being depreciated:
Land
Streets
Construction in Progress
Total capital assets not being depreciated
$
Capital assets being depreciated:
Buildings and Improvements
Machinery and Equipment
Computer Software
Infrastructure
Total capital assets being depreciated
Less accumulated depreciation for:
Buildings and Improvements
Machinery and Equipment
Computer Software
Infrastructure
Total accumulated depreciation
Total capital assets being depreciated, net
Governmental activity capital assets, net
Business-Type Activities:
Capital assets not being depreciated:
Land
Water Reclamation Rights
Construction in Progress
Total capital assets not being depreciated
Total Capital Assets
$
206,813,390
27,789,144
150,435
296,241,427
530,994,396
$
$
Capital assets being depreciated:
Buildings and Improvements
Machinery and Equipment
Computer Software
Infrastructure
Emission Reduction Credits
Total capital assets being depreciated
Less accumulated depreciation for:
Buildings and Improvements
Machinery and Equipment
Computer Software
Infrastructure
Emission Reduction Credits
Total accumulated depreciation
Total capital assets being depreciated, net
Business-type activity capital assets, net
63,704,240
174,812,662
36,402,358
274,919,260
Increases
(81,291,868)
(17,241,380)
(32,594)
(94,271,814)
(192,837,656)
338,156,740
613,076,000
2,984,996
9,180,000
7,399,259
19,564,255
92,406,277
75,112,243
38,204
286,913,553
454,470,277
(31,423,302)
(34,547,596)
311,155
2,342,122
3,088,087
5,741,364
Balance
June 30, 2012
Decreases
$
(1,307,335)
$
(6,635,465)
(7,942,800)
320,155
1,233,517
(6,597,071)
(882,520)
11,034,317
12,587,989
(7,479,591)
200,536,474
28,140,141
150,435
307,275,744
536,102,794
(4,780,428)
(1,804,474)
(30,087)
(4,827,563)
(11,442,552)
1,145,437
$ 6,886,801
3,416,939
(4,062,652)
$ (12,005,452)
$
$
$
$
-
2,601,056
815,883
-
10,050,285
10,050,285
(3,973,618)
(3,973,618)
821,046
(785,635)
(655,052)
11,879,300
230,000
12,930,346
62,708,060
177,154,784
32,854,980
272,717,824
(83,471,240)
(18,229,971)
(62,681)
(99,099,377)
(200,863,269)
335,239,525
607,957,349
2,984,996
9,180,000
13,475,926
25,640,922
91,620,642
75,278,237
38,204
298,753,681
230,000
465,920,764
(39,172)
(1,479,859)
$
(60,864,299)
(126,835,197)
327,635,080
347,199,335
(1,998,470)
(4,616,817)
(7,640)
(5,160,641)
(35,695)
(11,819,263)
1,111,083
$ 11,161,368
$
251,233
(1,228,626)
(5,202,244)
$
(33,301,725)
(39,060,247)
(7,640)
(65,997,920)
(35,695)
(138,403,227)
327,517,537
353,158,459
$
960,275,335
$ 18,048,169
$ (17,207,696)
$
961,115,808
71
120,047
104,166
27,020
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
Beginning balances of governmental activity capital assets, net of accumulated depreciation was
restated by $6,222,564. This is primarily due to a restatement to the infrastructure assets that
was contributed to the City by developer in the prior years that were not recorded by the City. The
amount of unrecorded developer contribution of infrastructure totaled $6,483,144.
Beginning balance of business-type activity capital assets, net of accumulated depreciation was
restated by $9,709,056 as the result of recording infrastructure assets contributed to the City by
developer in the past years. Refer to Note 19 for additional information on the restatement of
beginning balances.
Decreases in capital assets and accumulated depreciation presented in the current year include
the assets transferred to the Successor Agency as of February 1, 2012 in the amount of
$7,065,259 and $2,339,789 respectively.
Amount
Transferred to
Successor Agency
Capital assets not being depreciated:
Land
Total Capital Assets Not Being Depreciated
$
Capital assets being depreciated:
Buildings and Improvements
Machinery and Equipment
Total Capital Assets Being Depreciated
1,275,529
1,275,529
5,751,555
38,175
5,789,730
Less accumulated depreciation for:
Buildings and Improvements
Machinery and Equipment
Total Accumulated Depreciation
Total Net Depreciable Capital Assets
Net Capital Assets Transferred to Successor Agency
$
(2,310,691)
(29,098)
(2,339,789)
3,449,941
4,725,470
For the year ended June 30, 2012, accumulated depreciation on governmental activity capital
assets and depreciation expense charged to each governmental function are presented as
follows:
Restated
Balance
June 30, 2011
General Government
Public Safety - Fire
Public Safety - Police
Public Works
Redevelopment
Parks and Recreation
Library
Total Depreciation
Expense
$
Current Year
Depreciation
21,954,884
6,401,049
5,279,203
97,859,615
2,196,696
58,880,750
265,459
$
2,768,993
602,200
671,226
5,164,293
153,708
2,069,869
12,263
$ 192,837,656
$
11,442,552
72
Adjustments to
Depreciation
Accumulated
Depreciation
June 30, 2012
24,723,877
7,003,249
5,950,429
103,023,908
2,350,404
60,950,619
277,722
$
(102,524)
(15,102)
(335,104)
(287,104)
(2,350,404)
(326,701)
$
$ 204,280,208
$
(3,416,939)
$ 200,863,269
Accumulated
Depreciation
$
24,621,353
6,988,147
5,615,325
102,736,804
60,623,918
277,722
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
Construction in Progress and Capital Project Commitments
The City has active construction projects as of June 30, 2012. These projects include street
construction in areas of newly developed housing, pavement rehabilitation, and various water and
water reclamation upgrades and replacements. At year end, the City’s construction in progress
totaled $46,330,906.
The following material construction commitments existed at June 30, 2012:
Project Name
Governmental Activities:
Major Street Pavement Rehabilitation
I-15 Freeway and Cajalco Intersection Construction
Toal Governmental Projects
Contract
Amount
$
Enterprise Activities:
Recycled Water Line
Remaining
Commitments
$
$
449,539
2,292,542
$ 7,644,329
Total Construction Commitments
7.
1,538,395
3,813,392
5,351,787
Expenditures to
date as of
June 30, 2012
$
449,539
1,088,856
3,813,392
4,902,248
139,050
2,153,492
588,589
$
7,055,740
Compensated Absences Payable
As described in Note 1, under certain circumstances and accordingly to the negotiated labor
agreements, City employees are allowed to accumulate annual leave. The annual leave amount
is accrued and accounted as compensated absences in the government-wide and proprietary
fund statements.
As shown in the table below, the long-term portion of this debt amounts to $1,008,534 for
governmental activities and $91,393 for business-type activities at June 30, 2012. These
amounts are expected to be paid in future years from future resources. In prior years,
compensated absences have been liquidated primarily by the General Fund and the proprietary
funds. The total amount outstanding at June 30, 2012 was $7,895,242 for governmental activities
and $838,218 for business-type activities.
Satisfied
Balance
June 30, 2012
Amounts
Due Within
One Year
Amounts Due
in More than
One Year
$ 5,906,531
$ 6,941,714
$ 7,895,242
$ 6,886,708
$ 1,008,534
$
$
$
$
$
Balance
July 1, 2011
Incurred
Governmental
Activities
$ 8,930,425
Business-Type
Activities
$
819,586
792,993
774,361
73
838,218
746,825
91,393
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
8.
Long-Term Obligations
The following is a summary of long-term obligation transactions of the City for the year ended
June 30, 2012:
Balance
June 30, 2011
Governmental Activities:
Long-Term Agreements Payable*
Lease Payable
Redevelopment Bonds Payable*
Lease Revenue Bonds Payable
Special Assessment District Bonds
Total Governmental Activities
Business-Type Activities:
Installment Agreement Payable
Contracts Payable
Term Loan Payable
Water Revenue Bonds
Certificates of Participation
Total Business-Type Activities
$
Incurred or
Issued
3,301,211
22,468
82,025,000
65,015,000
1,025,000
$
$ 151,388,679
$
Satisfied or
Matured
25,265,511
$
Balance
June 30, 2012
Amounts
Due Within
One Year
Amounts
Due in More
than One Year
$
25,283,434
35,215,000
660,000
$
1,564,332
1,945,000
145,000
$
-
3,301,211
4,545
82,025,000
29,800,000
365,000
23,719,102
33,270,000
515,000
$
25,265,511
$ 115,495,756
$
61,158,434
$ 3,654,332
$
57,504,102
1,764,066
690,390
34,723,974
27,435,000
90,320,000
$
-
$
278,820
2,548,262
1,005,000
2,825,000
$
1,485,246
690,390
32,175,712
26,430,000
87,495,000
$
$
1,298,777
690,390
29,560,127
25,380,000
84,560,000
$ 154,933,430
$
-
$
6,657,082
$ 148,276,348
186,469
2,615,585
1,050,000
2,935,000
$ 6,787,054
$ 141,489,294
* Satisfied or Matured amounts in the long-term agreements payable and Redevelopment bonds
payable include debts transferred to the Successor Agency as of February 1, 2012 in the
amounts of $2,763,519 and $78,845,000 respectively.
Long-Term Agreements Payable
Redevelopment Bonds Payable
Total
Balance
July 1, 2011
$
3,301,211
82,025,000
$
85,326,211
Incurred or
Issued
$
$
-
Satisfied or
Matured
$
537,692
3,180,000
$ 3,717,692
Transferred
To Successor
Agency
$
2,763,519
78,845,000
$ 81,608,519
Balance
February 1, 2012
$
$
-
A. Lease Payable
The following lease payables were outstanding as of June 30, 2012:
Lease Payables
Pitney Bowes Mailing System
2012 Refunding Lease
Total Lease Payables
Balance
17,923
25,265,511
$ 25,283,434
$
Mailing System Lease
The City entered into an agreement with Pitney Bowes Global Financial Services, LLC to lease
purchase a mailing system in the amount of $27,335 with a deferred interest in the amount of
$3,817. The mailing system has been recorded in the machinery and equipment category of the
City’s capital assets at its purchase price. The lease purchase is payable over a five-year period.
74
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
As of June 30, 2012, the future minimum lease payments required under the capital lease and the
net present value of the future lease payments are as follows:
Mailing System Lease Payables
Fiscal Year
Lease Payment
2013
$
5,618
2014
5,618
2015
5,618
2016
4,214
Total Minimum Lease Payments
21,068
Less: Amount Representing Interest
3,145
Present Value of Future Minimum Lease Payments
$
17,923
2012 Refunding Lease
On June 1, 2012, the City entered into the 2012 Refunding Lease agreement with Compass
Mortgage Corporation, a private lender, in the amount of $25,265,511 to refund the CPFA Lease
Revenue 2002 Series B bonds originally issued in the amount of $35,000,000 to pay the costs of
the design, construction and acquisition of the City Hall facility. The 2002 Series B bonds were
refunded in its entirety in September 2012. The 2012 Refunding Lease is payable over a fifteenyear period. As of June 30, 2012, the future minimum lease payments required under the capital
lease and the net present value of the future lease payments are presented below:
2012 Refunding Lease Payables
Fiscal Year
Lease Payment
2013
$
2,135,122
2014
2,135,122
2015
2,135,122
2016
2,135,122
2017
2,135,122
2018-2022
10,675,612
2023-2027
10,675,612
Total Minimum Lease Payments
32,026,834
Less: Amount Representing Interest
6,761,323
Present Value of Future Minimum Lease Payments
$ 25,265,511
B. Lease Revenue Bonds
These bonds are special obligations of the CPFA secured by revenues primarily consisting of
lease payments to be made by the City pursuant to various lease agreements. These bonds are
reported as a liability of the City.
75
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
The following lease revenue bonds were outstanding at June 30, 2012:
Issuance
$ 9,810,000 Corona Public Financing Authority 2001 Lease
Revenue Bonds, Series A
$
$35,000,000 Corona Public Financing Authority 2002 Lease
Revenue Bonds, Series B
-
$36,060,000 Corona Public Financing Authority 2006 Lease
Revenue Bonds, Series C
Total Lease Revenue Bonds
Balance
2,780,000
32,435,000
$
35,215,000
2001 Lease Revenue Bonds, Series A
The CPFA 2001 Refunding Lease Revenue Bonds, Series A were issued on May 10, 2001 in the
amount of $9,810,000 to refund the CPFA 1993 Public Improvement Refunding Bonds originally
issued in the amount of $21,295,000 to finance the acquisition of land to be developed as City park
sites. The outstanding bonds bear interest from 4.30% to 4.75% and are due in annual principal
installments ranging from $815,000 to $970,000 through September 1, 2014. The bonds are
payable pursuant to a lease agreement with the City. The annual debt service requirements for the
2001 Lease Revenue Bonds Series A are presented below:
Fiscal Year
2013
2014
2015
Totals
2001 Refunding Lease Revenue Bonds
Principal
Interest
Total
$
885,000
$
109,000
$
994,000
925,000
67,581
992,581
970,000
23,037
993,037
$
2,780,000
$
199,618
$
2,979,618
2002 Lease Revenue Bonds, Series B
The CPFA 2002 Lease Revenue Bonds, Series B were issued on September 1, 2002 in the
amount of $35,000,000 to pay the costs of the design, construction and acquisition of the City Hall
facility, with interest rates from 3.30% to 5.38%. Scheduled annual principal installments ranging
from $1,095,000 to $1,930,000 through September 1, 2023 with term bonds in the amount of
$8,675,000 due on September 1, 2027.
In June 2012, the City advance refunded the CPFA 2002 Lease Revenue Bonds by placing the
proceeds of new debt in an irrevocable trust to provide for the defeasance on the 2002 Bonds.
Accordingly, the escrow trust account assets and the liability for the refunded bonds were not
included in the City’s financial statements as of June 30, 2012. On September 1, 2012,
$26,805,000 of the 2002 Bonds outstanding was fully defeased. The advance refunding resulted
in a difference between the reacquisition price and the net carrying amount of the 2002 Bonds in
the amount of $628,588 which was presented as deferred outflows of resources in the statement
of net position.
76
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
2006 Lease Revenue Bonds, Series C
The CPFA 2006 Lease Revenue Bonds Series C were issued on December 6, 2006 in the
amount of $37,180,000 to pay the costs of the Corporate Yard Expansion project and to redeem
the outstanding 2000 Lease Revenue Bonds, Series A of the CPFA. The outstanding 2000 Lease
Revenue Bonds were defeased in September 2008. The 2006 Lease Revenue Bonds bear
interest from 4.50% to 5.00% and are due in annual installments ranging from $980,000 to
$1,770,000 through September 1, 2036. The bonds are payable from the revenues expected to
be received by the CPFA from the City as lease payments for the acquired improvements. The
annual debt service requirements for the 2006 Lease Revenue Bonds Series C are presented
below:
Fiscal Year
2013
2014
2015
2016
2017
2018-2022
2023-2027
2028-2032
2033-2037
Totals
2006 Lease Revenue Bonds
Principal
Interest
$
1,060,000
$
1,335,331
$
1,095,000
1,297,619
1,135,000
1,257,884
1,170,000
1,216,106
1,220,000
1,172,940
6,830,000
5,058,588
7,645,000
3,367,863
5,505,000
2,044,144
6,775,000
743,856
$ 32,435,000
$ 17,494,331
$
Total
2,395,331
2,392,619
2,392,884
2,386,106
2,392,940
11,888,588
11,012,863
7,549,144
7,518,856
49,929,331
C. Special Assessment District Bonds (Indirect City Liability)
The payment of the special assessment district bonds is secured by valid assessment liens upon
certain property in each district and is not a direct liability of the City. Reserves have been
established from the bond proceeds to meet delinquencies should they occur and the City may,
from time to time, when due and delinquent, advance available funds to pay the amount of any
succeeding installment of the principal and the interest on the bonds. Therefore, the bonds are
recorded as liabilities in the City’s financial statements pursuant to GASB Statement No. 6.
Assessment District No. 89-1 Improvement Bonds
The $3,630,086 Assessment District No. 89-1 Improvement Bonds were issued to finance
construction and acquisition of improvements in the Railroad Street Industrial Area. The bonds
were paid in full as of June 30, 2012.
Assessment District No. 90-1 Improvement Bonds
The $3,000,000 Assessment District No. 90-1 Improvement Bonds were issued to finance
construction and acquisition of improvements within Tract 22909. The outstanding bonds bear
interest of 8.00% and mature in remaining annual installments of $145,000 to $215,000 through
September 2, 2015. The outstanding balance at June 30, 2012 was $660,000.
77
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
Annual debt service requirements for the bonds are as follows:
Fiscal Year
2013
2014
2015
2016
Totals
Assessment District No. 90-1 Improvement Bonds
Principal
Interest
Total
$
145,000
$
47,000
$
192,000
160,000
34,800
194,800
170,000
21,600
191,600
185,000
7,400
192,400
$
660,000
$
110,800
$
770,800
D. Installment Agreement Payable
Elsinore Valley Municipal Water District Agreement
On December 1, 2008, the City and Elsinore Valley Municipal Water District entered into an
agreement for a total of $2,500,000 for the purpose of acquiring certain assets. The loan is
payable over a period of 10 years at the rate of 4.277% interest in equal annual installments of
$250,000 through June 2019. The amount outstanding at June 30, 2012 was $1,485,246. The
future annual debt service requirements per the agreement are presented below:
Fiscal Year
2013
2014
2015
2016
2017
2018-2019
Totals
Elsinore Valley Municipal Water District Agreement
Principal
Interest
Total
$
186,469
$
63,531
$
250,000
194,445
55,555
250,000
202,762
47,238
250,000
211,435
38,565
250,000
220,479
29,521
250,000
469,656
30,344
500,000
$
1,485,246
$
264,754
$
1,750,000
Joy Water Company Purchase Agreement
On April 7, 2010, the City of Corona entered into an agreement with Joy Water Company to
purchase wells, pipeline and related fixtures and equipment for a total of $500,000, which
included a loan for $200,000. The City made two equal payments in the amount of $100,000 in
fiscal years 2010-11 and 2011-12. As of June 30, 2012, this purchase agreement was paid in full.
E. Contracts Payable
Contracts Payable arise from the acquisition of certain water and water reclamation facilities and
represent amounts due to Western Municipal Water District payable from future water and water
reclamation connection fees associated with the acquired facilities. Future connections are
provided as needed in the area and as such cannot be scheduled. When connection fees are
received the amounts attributable to the cost of physical connection are recognized as revenue
and any additional amounts are credited to the contributed capital account. The amount
outstanding at June 30, 2012 was $690,390.
78
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
F. Term Loans Payable
The following term loans were outstanding at June 30, 2012:
Term Loans
State Revolving Fund Loan Contract No. 6-807-5850-0
$
State Revolving Fund Loan Contract No. C-06-4802-110
Total Term Loans Payable
Balance
9,436,944
22,738,768
$
32,175,712
State Revolving Fund Loan Contract No. 6-807-5850-0
On September 17, 1996, and February 20, 1997, the City and the State Water Resources Control
Board of the State of California entered into a State Revolving Fund Loan Contract No. 6-8075850-0 for a total of $22,244,222 for purposes of expansion of the Water Reclamation Facility No.
1. The loan is payable over a period of 20 years at the rate of 2.8% interest in equal installments
of $1,503,293 through October 2018. The amount outstanding at June 30, 2012 was $9,436,944.
Annual debt service requirements for the State Revolving Fund Loan Contract No. 6-807-5850-0
are presented below:
Fiscal Year
2013
2014
2015
2016
2017
2018-2019
Totals
State Revolving Fund Loan 6-807-5850-0
Principal
Interest
Total
$
1,239,059
$
264,234
$
1,503,293
1,273,752
229,541
1,503,293
1,309,417
193,876
1,503,293
1,346,081
157,212
1,503,293
1,383,771
119,522
1,503,293
2,884,864
121,722
3,006,586
$
9,436,944
$
1,086,107
$ 10,523,051
State Revolving Fund Loan Contract No. C-06-4802-110
On June 10, 2003, the City and the State Water Resources Control Board of the State of
California entered into a State Revolving Fund Loan Contract No. C-06-4802-110 for a maximum
amount of $30,228,817, for construction of facilities at the Water Reclamation Facility No. 1.
These facilities will provide recycled water to existing and potential users within the City. The loan
is payable over a period of 20 years at the rate of 2.5% interest in equal annual installments of
$1,944,995 through the year 2026. The amount outstanding at June 30, 2012 was $22,738,768.
Annual debt service requirements for the State Revolving Fund Loan Contract No. C-06-4802-110
are presented on the following page.
79
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
Fiscal Year
2013
2014
2015
2016
2017
2018-2022
2023-2026
Totals
State Revolving Fund Loan C-06-4802-110
Principal
Interest
Total
$
1,376,526
$
568,469
$
1,944,995
1,410,939
534,056
1,944,995
1,446,213
498,782
1,944,995
1,482,368
462,627
1,944,995
1,519,427
425,568
1,944,995
8,186,273
1,538,703
9,724,976
7,317,022
462,959
7,779,981
$ 22,738,768
$
4,491,164
$ 27,229,932
G. Water Revenue Bonds
The $36,690,000 CPFA 1998 Water Revenue Bonds were issued to finance the cost of certain
improvements to the City’s water system, consisting of the construction of a ground water
desalting system and to refinance the outstanding 1994 Water System Improvement Project
Certificates of Participation. The outstanding bonds bear interest from 4.25% to 4.75% and are
due in annual installments ranging from $965,000 to $1,100,000 through 2013 with term bonds in
the amount of $6,305,000, $7,950,000 and $10,025,000 due on September 1, 2018, 2023 and
2028, respectively. The bonds are considered a liability of the water enterprise fund.
Corresponding long-term receivable and deferred revenue for the CPFA has been eliminated in
the financial statements.
As of June 30, 2012, outstanding balance of the CPFA 1998 Water Revenue Bonds was
$26,430,000. On September 1, 2012, these bonds were fully defeased with the proceeds of the
Corona Utility Authority 2012 Water Revenue Bonds. Refer to Note 22 for additional information.
H. Certificates of Participation
The certificates of participation are special obligations of the issuer and are payable from specific
pledged revenues of the issuer. The certificates are not payable from any other revenues or
assets of the City. Neither the faith and credit nor the taxing power of the City, the State of
California or any political subdivision thereof is pledged to the payment of the principal and
interest on these certificates.
80
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
The following Certificates of Participation were outstanding as of June 30, 2012:
Certificates of Participation
$7,010,000 Corona Public Improvement Corporation
1997 Sunkist Wastewater Treatment Facilities Refunding Bonds
Balance
$ 2,395,000
$68,030,000 Corona Public Financing Authority
2003 Clearwater Cogeneration / Recycled Water Projects
59,300,000
$29,020,000 Corona Public Financing Authority
2005 Clearwater Cogeneration Projects
25,800,000
Total Certificates of Participation
$ 87,495,000
1997 Sunkist Wastewater Treatment Facilities Refunding Bonds
On January 21, 1997, the CPIC issued $7,010,000 in 1997 Refunding Certificates of Participation
for the purposes of refunding the remaining $6,425,000 of the 1986 Sunkist Wastewater
Treatment Facilities Certificates of Participation and to pay the costs incurred in connection with
the issuance, sale, and delivery of the bonds as well as to establish a reserve fund. The original
certificates were issued to finance the acquisition, construction and installation of certain
improvements to the City’s Wastewater (currently referred to as Water Reclamation) Treatment
Facility No. 2 (Sunkist Plant). The outstanding bonds bear interest rates from 5.20% to 5.50%
and are due in annual installments ranging from $385,000 to $530,000 through August 1, 2016.
The certificates are payable pursuant to a lease agreement between the CPIC and the City from
revenues of the Water Reclamation Utility and as such have been shown as long-term obligations
(Long-Term Installments Payable) of the Water Reclamation Utility and eliminated from the
General Long-Term Debt of the City. A corresponding long-term obligation and deferred revenue
has been eliminated for the CPIC. The annual debt service requirements for the 1997 Sunkist
Wastewater Treatment Facilities Refunding Bonds are as follows:
Fiscal Year
2013
2014
2015
2016
2017
Totals
1997 Refunding Certificates of Participation
Principal
Interest
Total
$
430,000
$
119,220
$
549,220
450,000
95,348
545,348
480,000
70,005
550,005
505,000
43,037
548,037
530,000
14,575
544,575
$
2,395,000
$
342,185
$
2,737,185
2003 Clearwater Cogeneration/Recycled Water Projects Certificates of Participation
On May 20, 2003, the CPFA issued $68,030,000 in 2003 Certificates of Participation for the
purpose of financing the acquisition, construction and installation of the Clearwater Cogeneration
(the Cogeneration Project), Biosolids Project, the Recycled Water Project, and to pay the costs
incurred in connection with the issuance, sale and delivery of the bonds as well as to establish a
capitalized interest fund and a reserve fund. The outstanding bonds bear interest from 3.50% to
5.00% due in installments of $1,720,000 to $3,065,000 through September 1, 2023 with term
bonds of $17,760,000 due September 1, 2028 and $12,930,000 due September 1, 2031.
81
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
The City purchased the Cogeneration Project (the Facility) from the CPFA pursuant to an
Installment Purchase agreement for a principal amount of $60,875,000 which is recorded in the
City’s Electric enterprise fund. The City pays the Purchase Payments to the CPFA from revenues
pursuant to two separate Power Sales Agreements between the City and the Corona Utility
Authority (the Authority), and as such have been shown as long-term obligations (Certificates of
Participation) of the City’s Electric enterprise fund and eliminated from the general long-term debt
account group of the City. A corresponding long-term obligation and deferred revenue has also
been eliminated from the CPFA.
The City purchased the Recycled Water Project from the CPFA pursuant to an Installment
Purchase agreement for a principal amount of $7,155,000. The City pays purchase payments to
the CPFA pursuant to a Recycled Water Project Lease Agreement between the City and the
Authority. The Authority will make payments to the City from net revenues of its water utility and
as such have been shown as long-term obligations (Certificates of Participation) of the Water
enterprise fund and eliminated from the general long-term debt account group of the City. A
corresponding long-term obligation and deferred revenue has been eliminated from the CPFA.
On September 1, 2010, the City sold the Facility to the City of Riverside for a total consideration of
$53,405,600 through the Clearwater Purchase and Sale Agreement (the Agreement). The terms
of the Agreement provide a lease purchase financing with semi-annual payments equivalent to
the City’s debt service requirements pertain to the Facility. The present value of the total
purchase price was $45,568,916, this amount was recorded as long-term receivables in the City’s
enterprise funds. A balloon payment of $34,718,939 is due on September 1, 2013 to call the
portion of 2003 COPs that financed the construction of the Facility.
On August 1, 2012, the City advance refunded the Recycled Water portion of the 2003
Certificates of Participation by placing the proceeds on new bonds in an irrevocable trust to
provide for all future debt service payments on the Recycled Water portion of the 2003 bonds. On
September 1, 2013, $5,885,000, the amount outstanding pertains to the Recycled Water Project
will be redeemed.
The annual debt service requirements for the 2003 Clearwater Cogeneration/Recycled Water
Projects Certificates of Participation with the refundings scheduled on September 1, 2013 are
presented below:
Fiscal Year
2013
2014
2015
2016
2017
2018-2022
2023-2027
2028-2032
Totals
2003 Certificates of Participation
Principal
Interest
Total
$
1,855,000
$
2,865,612
$
4,720,612
45,390,000
1,715,800
47,105,800
430,000
589,850
1,019,850
450,000
570,000
1,020,000
470,000
547,000
1,017,000
2,735,000
2,347,625
5,082,625
3,505,000
1,571,375
5,076,375
4,465,000
579,375
5,044,375
$ 59,300,000
$ 10,786,637
$ 70,086,637
82
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
2005 Clearwater Cogeneration Projects Certificates of Participation
The CPFA issued $29,020,000 in 2005 Certificates of Participation for the purpose of financing
the remaining costs associated with the acquisition, construction and installation of the
Cogeneration Project and the Electric Distribution Facilities Project. The outstanding bonds bear
interest from 3.00% to 5.00% due in installments of $610,000 to $905,000 through September 1,
2021 with term bonds of $2,945,000 due September 1, 2024, $5,910,000 due September 1, 2029
and $9,280,000 due September 1, 2035.
Approximately $8.9 million of the proceeds of the Certificates financed the completion of the City’s
Cogeneration Project (the Facility). The City purchased the Facility from the CPFA and pays the
Purchase Payments pursuant to an Installment Purchase Agreement. On September 1, 2010, the
City sold the Facility to the City of Riverside for a total consideration of $53,405,600 through the
Clearwater Purchase and Sale Agreement (the Agreement). The terms of the Agreement provide
a lease purchase financing with semi-annual payments equivalent to the City’s debt service
requirements pertain to the Facility. The present value of the total purchase price was
$45,568,916, this amount was recorded as long-term receivables in the City’s enterprise funds. A
balloon payment of $6,951,099 is due on September 1, 2015 to call the portion of the 2005 COPs
that financed the remaining construction of the Facility.
Approximately $15.0 million of the proceeds of the Certificates financed the acquisition,
construction and installation of the electric distribution facilities necessary to supply power to all
Greenfield developments within the City. The City purchased such electric distribution facilities
from the CPFA pursuant to an Installment Purchase Agreement. On May 7, 2003, the City
announced that it would no longer pursue its plan to acquire Southern California Edison’s
distribution facilities within the City and terminated the eminent domain proceedings.
Approximately $3.1 million of the proceeds of the Certificates reimbursed the City for certain costs
incurred in connection with such terminated eminent domain proceedings.
The annual debt service requirements for the 2005 Clearwater Cogeneration Projects Certificates
of Participation with the refundings scheduled on September 1, 2015 are presented below:
Fiscal Year
2013
2014
2015
2016
2017
2018-2022
2023-2027
2028-2032
2033-2036
Totals
2005 Certificates of Participation
Principal
Interest
Total
$
650,000
$
1,169,372
$
1,819,372
670,000
1,147,085
1,817,085
695,000
1,123,197
1,818,197
8,265,000
920,507
9,185,507
500,000
719,979
1,219,979
2,815,000
3,274,516
6,089,516
3,465,000
2,610,075
6,075,075
4,380,000
1,658,750
6,038,750
4,360,000
463,500
4,823,500
$ 25,800,000
$ 13,086,981
$ 38,886,981
83
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
9.
Pledged Revenues
The City has pledged, as security for its water revenue bonds and certificates of participation it
has issued, through the CPFA or the CPIC, a portion of the utility customer revenues, net of
specified operating expenses, to repay $113.9 million outstanding bonds. These bonds were to
provide financing for various capital projects of the City, including the construction of certain water
system, water treatment facilities, electric generation and distribution system, and biosolid drying
facility. The bonds are payable solely from the City’s utility customer net revenues and are
payable through certain installment purchase agreements. Annual principal and interest
payments on these bonds are expected to require less than 38.9 % of net revenues. The total
debt service remaining to be paid on the bonds is $178,032,697. Principal and interest paid for
the current year and total customer net revenues were $9,289,605 and $23,894,264, respectively.
10.
Credit Agreements
The City has entered into letter of credit agreements with Bank of America. The Irrevocable
Letters of Credit have been issued for the benefits of Southern California Edison to comply with
various Interconnection Facilities Agreements that the Corona Utility Authority has entered into in
order to provide electric distribution. The Irrevocable Letters of Credit have expiration dates;
however they are automatically extended without amendment annually. The Irrevocable Letters
of Credit are to remain in effect until all payment obligations under the terms of the
Interconnection Facilities Agreements have been satisfied.
The following Irrevocable Letters of Credit are outstanding as of June 30, 2012:
Payee
Issue Date
Southern California Edison
9/1/2011
Southern California Edison
9/1/2011
Southern California Edison
9/1/2011
Southern California Edison
4/6/2012
Total Irrevocable Letters of Credit
11.
Renewal Date
8/31/2012
8/31/2012
8/31/2012
4/5/2013
Amount
$
$
21,225
176,593
106,433
121,850
426,101
Non-City Obligations
A. Special Assessment District Bonds (Non-City Obligation)
The payment of these bonds is secured by valid assessment liens upon certain lands in each
district and is not a direct liability of the City. Reserves have been established from the bond
proceeds to meet delinquencies should they occur. Neither the faith and credit nor taxing power
of the City of Corona is pledged to the payment of the bonds. If delinquencies occur beyond the
amounts held in those reserves, the City has no duty to pay those delinquencies out of any other
available funds. The City acts solely as an agent for those paying the assessments and the
bondholders.
84
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
As of June 30, 2012 the balances outstanding were:
$
Assessment District Bonds (Non-City Debt)
855,000 A.D. No. 95-1 Improvement Bonds
$
Balance
435,000
$ 1,624,200
A.D. No. 96-1 1996 A Improvement Bonds
855,000
$
685,000
A.D. No. 96-1 1997 A Improvement Bonds
390,000
$ 1,605,000
A.D. No. 96-1 1997 B Improvement Bonds
960,000
$ 2,657,100
A.D. No. 96-1 1999 A Improvement Bonds
1,735,000
Total Special Assessment District Bonds
$
4,375,000
B. Marks Roos Bonds (Non-City Obligation)
These bonds are authorized pursuant to the Marks-Roos Local Bond Pooling Act of 1985. It was
created as a way for local governmental agencies to fund needed working capital, public capital
improvements, or other projects that would provide significant benefits to the public. The act
allows local agencies, through joint powers authorities, to issue bonds to reduce borrowing costs
through the use of bond pools. The authority bonds are secured by the revenue obtained from
the principal of and interest payments on the local obligation bonds which are payable from the
special taxes levied and collected from the taxable property within the district. Neither the faith
and credit nor taxing power of the City is pledged to the payment of the bonds. Reserves have
been established from the bond proceeds to meet delinquencies should they occur. If
delinquencies occur beyond the amounts held in those reserves, the City has no obligation to pay
the delinquency out of any available funds of the City. The City acts solely as an agent for the
special taxes levied on the properties and the debt service payments to the bondholders. The
following is a list of the Marks-Roos Bonds that were active as of June 30, 2012:
Marks Roos District Bonds (Non-City Debt)
$ 25,755,000 1999 Revenue Bonds, Series A (Superior Lien)
$ 10,255,000
$
1999 Revenue Bonds, Series B (Subordinate Lien)
Total Marks Roos District Bonds
Balance
14,110,000
5,405,000
$
19,515,000
C. Community Facilities District Bonds (Non-City Obligation)
These bonds are authorized pursuant to the Mello-Roos Community Facilities Act of 1982 as
amended, and are payable from special taxes levied on property within the Community Facilities
Districts according to a methodology approved by the voters within the District and by the City
Council. Neither the faith and credit nor taxing power of the City is pledged to the payment of the
bonds. Reserves have been established from the bond proceeds to meet delinquencies should
they occur. If delinquencies occur beyond the amounts held in those reserves, the City has no
duty to pay the delinquency out of any available funds of the City. The City acts solely as an
agent for those paying taxes levied and the bondholders.
85
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
The following is a list of the Community Facilities District Bonds currently active:
Community Facility District Bonds (Non-City Debt)
$ 22,580,000 CFD 86-2 Refunding and Improvement Bonds
$
Balance
11,630,000
$ 62,845,000
CFD 90-1 Refunding Bonds
28,395,000
$ 19,505,000
CFD 97-2 Special Tax Bonds
12,575,000
$
6,485,000
CFD 2000-1, Series A Special Tax Bonds
5,250,000
$
1,610,000
CFD 2000-1, Series B Special Tax Bonds
1,340,000
$ 20,295,000
Ref CFD 89-1, Series A District-Wide Local Bonds
11,120,000
$ 15,715,000
Ref CFD 89-1, Series B Imp Area Local Bonds
8,395,000
$
3,675,000
CFD 2001-2 Special Tax Bonds
3,130,000
$
9,415,000
CFD 2002-4 Special Tax Bonds
8,420,000
$
6,135,000
CFD 2003-2 Special Tax Bonds
7,590,000
$ 22,475,000
CFD 2002-1 Special Tax Bonds & Escrow Term Bonds
$
CFD 2004-1 Special Tax Bonds
3,365,000
CFD 2002-1 Improvement Area Special Tax Bonds
7,850,000
3,805,000
$ 10,280,000
Total Community Facilities District Bonds
17,305,000
$
126,365,000
D. Conduit Debt Obligations
Not included in the accompanying financial statements are various conduit debt obligations issued
under the name of the City and/or the Agency. The Bonds are not secured by or payable from
revenues or assets of the City or Agency. Neither the faith and credit nor the taxing power of the
City, the Agency, the State of California or any political subdivision thereof is pledged to the
payment of the principal of and interest on the Bonds nor is the City or the Agency in any manner
obligated to make any appropriations for payments on these bonds. At June 30, 2012, the
aggregate principal amount of Conduit Debt Obligations outstanding totaled $24,054,047.
12.
Bond Requirements
The City adopted an administrative policy on bond compliances in July 2012. The purpose of the
policy is to ensure all City bonds comply with applicable federal and state laws and regulations.
The policy covers the investment and expenditure of bond proceeds, the use of bond-financed
facilities and other administrative requirements including continuing disclosure, arbitrage
calculation and records retention.
At June 30, 2012, management believes the City and its component units are in compliance with
all covenants of the various debt indentures.
86
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
13.
Pension Related Debt
In Fiscal Year 2005-06, California Public Employees Retirement System (CalPERS) required
participation in risk pools for all plans with less than 100 active members, as of June 30, 2003.
Risk pooling consists of combining assets and liabilities across employers to produce large
groups where the impact of a catastrophic demographic event is shared among all employers of
the same risk pool. Pooling will reduce the volatility of future employer rates. The Safety Fire
Plan is part of the CalPERS cost-sharing multiple-employer defined benefit pension plan; known
as the “Safety 3.0% at 50 Risk Pool.” At the time of joining the pool, a side fund was created to
account for the differences between the funded status of the pool and the funded status of the
plan. The side fund for the City at that time carried a negative balance of $10,159,328,
representing a pension related obligation for the City. CalPERS determined this obligation should
be amortized over an 11-year period. As of June 30, 2012, the City’s pension related obligation
had a balance of $5,325,439 with an assumed interest rate of 7.75%. Due to the fact that this
obligation is program specific, the annual debt service payment is recorded as the Public Safety –
Fire expenses together with the employer contribution to the risk pool. The interest on this debt of
$435,251 is also included in the Public Safety – Fire function expenses and not in the Interest and
Fiscal Charges expenses in the statement of activities. The following presents principal and
interest due in the future fiscal years using the assumed interest rate:
Pension Related Debt (Fire Plan Side Fund)
Principal
Interest
Total
Fiscal Year
14.
2013
2014
2015
2016
$
1,114,878
1,250,929
1,399,136
1,560,496
$
356,760
268,538
169,713
59,341
$
1,471,638
1,519,467
1,568,849
1,619,837
Totals
$
5,325,439
$
854,352
$
6,179,791
Pension Plan
A. Defined Benefit Pension Plan
Plan Description
The City’s defined benefit pension plan (Miscellaneous Plan, Safety Police Plan and the Safety
Fire Plan), provides retirement and disability benefits, annual cost-of-living adjustments (COLAs),
and death benefits to plan members and beneficiaries. The Miscellaneous and the Safety Police
Plans are part of the Public Agency portion of the CalPERS agent multiple-employer defined
benefit pension plan. The Safety Fire Plan is part of the Public Agency portion of the CalPERS
cost-sharing multiple-employer defined benefit pension plan. CalPERS acts as a common
investment and administrative agent for participating public entities within the State of California.
Benefit provisions and all other requirements are established by State statutes within the Public
Employees’ Retirement Law. The City adopts its benefit provisions through contract with
CalPERS and approves them through Council Resolutions and specific agreements with City
labor groups. Copies of CalPERS' annual financial report may be obtained from their Executive
Office located at Lincoln Plaza North, 400 Q Street, Sacramento, California 95814.
87
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
Funding Policy
Active plan members in CalPERS are required to contribute 8.0% (non-safety) or 9.0% (safety) of
their annual covered salary. The City pays the 9% member contribution required of all police
safety employees and the 8% member contribution required of miscellaneous employees hired
before January 1, 1999. Miscellaneous employees hired on or after January 1, 1999 pay 3% of
the required member contribution, while the City pays the remaining 5%. For fire safety
employees, the entire 9% required member contribution is paid by the employee.
In addition, the City is required to contribute amounts necessary to fund the benefit for its
members, at an actuarially determined rate applied to annual covered payroll. The required
employer contribution rate for Fiscal Year 2011-12 was 24.130% for miscellaneous employees,
30.647% for the police safety group and 38.125% for the fire safety group. The contribution
requirements of plan members and the City are established and may be amended by CalPERS.
Annual Pension Cost
For Fiscal Year 2011-12, the City’s annual pension cost for the Miscellaneous and Safety Police
Plan was $11,996,104 and was equal to the City’s required and actual contributions. The
required contribution for Fiscal Year 2011-12 was determined as part of the June 30, 2009
actuarial valuation, using the entry age actuarial cost method. The actuarial assumptions
included: (a) an investment rate of return of 7.75% (net of administrative expenses); (b) projected
salary increases of 3.55% to 14.45% for Miscellaneous Plan and 3.55% to 13.15% for the Safety
Police Plan depending on age, service and type of employment; and (c) a payroll growth of 3.25%
per year. An inflation factor of 3.00% is compounded annually and used for both plans. The
actuarial funding method used is the Entry Age Normal Cost Method. The actuarial value of
CalPERS assets was determined using techniques that smooth the effects of short-term volatility
in the market value of investments over a 15-year period (smoothed market value). Gains and
losses that occur in the operation of the plan are amortized over a 30-year rolling period, which
resulted in an amortization of about 6% of unamortized gains and losses each year. In addition,
in June 2009, the CalPERS Board adopted changes to the asset smoothing method in order to
phase in over a three-year period the impact of the -24% investment loss experienced by
CalPERS in fiscal year 2008-09. The City’s unfunded actuarial accrued liability is being amortized
as a level percentage of projected payroll on a closed basis. The remaining amortization period
at June 30, 2009 actuarial valuation date was 20 years for Miscellaneous Plan and 25 years for
Safety Police Plan.
For Fiscal Year 2011-12, the City’s annual pension cost for the Safety Fire Plan was $3,864,474
and was equal to the City’s required and actual contributions. The Safety Fire Plan is part of the
Safety 3.0% at 50 Risk Pool, a cost-sharing multiple-employer defined benefit plan. The Risk
Pool uses the same actuarial methods and assumptions as described above. The remaining
amortization period for the City’s share of the unfunded actuarial accrued liability at the June 30,
2009 actuarial valuation date was 18 years.
The City’s contributions to CalPERS for the Miscellaneous Plan, Safety Police Plan and Safety
Fire Plan for the three years ending June 30, 2012, 2011 and 2010 are presented on the following
page.
88
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
Three-Year Trend Information for Cal PERS Defined Benefit Pension Plans
Annual
Fiscal Year
Pension Cost
Percentage of APC
Net Pension
Ending
(APC)
Contributed
Obligation
Miscellaneous
06/30/2010
$
6,345,360
100%
$
Employees
06/30/2011
6,398,576
100%
Group
06/30/2012
6,880,355
100%
Police Safety
Employees
Group
06/30/2010
06/30/2011
06/30/2012
$
4,814,824
4,463,950
5,115,749
100%
100%
100%
$
-
Fire Safety
Employees
Group
06/30/2010
06/30/2011
06/30/2012
$
3,307,623
3,438,225
3,864,474
100%
100%
100%
$
-
Funded Status and Funding Progress
As of June 30, 2011, the most recent actuarial valuation date, the Miscellaneous Plan was 69.7%
funded and the Safety Police Plan was 74.7% funded. The actuarial accrued liability for benefits
was $252,000,728 for Miscellaneous and $150,077,438 for Police Safety. The actuarial value of
assets was $175,764,654 for Miscellaneous and $112,138,994 for Police Safety, resulting in an
unfunded actuarial accrued liability (UAAL) of $76,236,074 and $37,938,444 respectively. The
covered payroll (annual payroll of active employees covered by the plan) was $29,739,813 for
Miscellaneous and $16,104,315 for Police Safety, and the ratio of the UAAL to the covered payroll
was 256.3% and 235.6% respectively.
The schedule of funding progress, presented as required supplementary information following the
notes to the financial statements, presents multi-year trend information about whether the
actuarial value of plan assets is increasing or decreasing over time relative to the actuarial
accrued liability for benefits.
B. Defined Contribution Pension Plan
The City provides pension benefits for all of its Part-time, Seasonal and Temporary (PST)
employees through the City’s PST Deferred Compensation Plan, which is a defined contribution
plan. The plan is administered by Nationwide Retirement Solutions. The purpose of the plan is to
provide PST employees with a retirement plan as mandated by and in compliance with the
Federal Omnibus Reconciliation Act of 1990. The plan provisions including contribution
requirements were established by the City Council according to Department of Treasury
regulations under Section 457 of the Internal Revenue Code of 1986, as amended. Plan benefits
and contribution requirements may be amended by the City Council.
In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus
investment earnings. Employees are required to participate from the date of employment. The
City requires the employee to contribute 6.2% of the 7.5% required by the Federal Government.
The City's contribution for each employee and interest allocated to the employee's account are
fully vested immediately. During Fiscal Year 2011-12, the City contributed $17,792 on hourly
salaries of $1,678,687 with the employees contributing $84,755.
89
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
15.
Other Post-Employment Benefits Other Than Pensions (OPEB)
The City implemented GASB Statement No. 45, Accounting and Financial Reporting by
Employers for Post-Employment Benefits Other Than Pensions (OPEB), for certain
postemployment healthcare benefits and life insurance benefits provided by the City in Fiscal
Year 2007-08.
Plan Description
The City’s defined benefit post-employment healthcare plan, California Employers’ Retiree Benefit
Trust Program (CERBT), is an agent multiple-employer post-employment healthcare plan
administered by the California Public Employees’ Retirement System (CalPERS) Board of
Administration. The plan provides retiree healthcare benefits for employees who retire with
CalPERS pension benefits immediately upon termination of employment from the City. Eligible
retirees may elect coverage through the City’s contract with CalPERS healthcare benefits. The
plan benefits are established and may be amended by the City Council.
Under the plan, employees are classified into two tiers, which are based on hire date. Tier I
participants were hired prior to a specific date based on bargaining group and are eligible to
receive reimbursement of medical premiums at 100% or capped at the 2nd highest family premium
rate available, determined by the employee’s separation date. Tier II employees receive the
minimum Public Employees Medical and Hospital Care Act (PEMHCA) benefits paid by the City.
In addition, all eligible retirees are provided life insurance coverage of $50,000 until age 70.
The CalPERS issues a publicly available financial report that includes financial statements and
required supplementary information for CERBT in accordance with GASB Statement No. 43. That
report maybe obtained by contacting CalPERS at FCSD-CERBT@CalPERS.ca.gov or 888CalPERS.
Funding Policy
The contribution requirements of plan members and the City are established and may be
amended by the City Council. The CERBT program’s funding policy provides for the contributions
by the City at actuarially determined rates described as the Annual Required Contribution (ARC)
of the employer. The required contribution is based on projected pay-as-you-go financing
requirements, with an additional amount to prefund benefits as approved by the City Council. For
Fiscal Year 2011-12, the City contributed $6.5 million to the plan, including $5.2 million for current
premiums and an additional $1.3 million to prefund the plan. The plan members pay the portion of
premiums not paid by the City (e.g., in excess of capped amounts).
Annual OPEB Cost
The City’s annual OPEB cost (expense) is calculated based on the ARC, an amount actuarially
determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a
level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year
and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed
thirty years.
90
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
For Fiscal Year 2011-12, the City’s annual OPEB cost (expense) of $6,466,717 for CERBT was
equal to the ARC. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed
to the plan, and the net OPEB obligation for the past three fiscal years are presented below:
Three-Year Trend Information for OPEB Plan
Fiscal Year
Ending
06/30/2010
06/30/2011
06/30/2012
Annual Required
Contribution
(ARC)
$
7,043,000
7,295,000
6,466,717
Percentage of ARC
Contributed
100%
100%
100%
Net OPEB
Obligation
-
Funded Status and Funding Progress
The most recent actuarial valuation for the City’s OPEB plan was obtained as of June 30, 2011.
Per this valuation, the funded status of the City’s OPEB plan for fiscal year ended June 30, 2012
was:
Actuarial accrued liability (AAL)
Actuarial value of plan assets
Unfunded actuarial accrued liability (UAAL)
$
$
Funded ratio (actuarial value of plan assets/UAAL)
Covered payroll (active plan members)
UAAL as a percentage of covered payroll
96,530,244
16,182,147
80,348,097
16.8%
$
50,192,076
160.1%
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of the occurrence of events far into the future. Amounts
determined regarding the funded status of the plan and the annual required contributions of the
employer are subject to continual revision as actual results are compared with past expectations
and new estimates are made about the future.
The schedule of funding progress, presented as required supplementary information following the
notes to the financial statements, presents multi-year trend information about whether the
actuarial value of plan assets is increasing or decreasing over time relative to the actuarial
accrued liability for benefits.
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan
as understood by the employer and plan members) and include the types of benefits provided at
the time of each valuation and the historical pattern of sharing of benefit costs between the
employer and plan members to that point. The actuarial methods and assumptions used include
techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the
actuarial value of assets, consistent with the long-term perspective of the calculations.
91
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
In the June 30, 2011 actuarial valuation, the Entry Age Normal Cost Method was used. The
actuarial assumptions included a 7.50% percent discount rate and an increase in medical plan
premium from 4.5% to 9.0% over the prior year’s level for the next 10 years. The actuarial
assumptions also included a salary increase of 3.25% per year, and assumed increase for
amortization payment of 3.25% per year where determined on a percent of pay basis. The plan’s
unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll
on a closed basis over thirty years. The remaining amortization period at June 30, 2012 was 25
years.
16.
Classification of Net Position and Fund Balances
A. Government-Wide Financial Statements
In the Government-Wide Financial Statements, net position are classified in the following
categories:
Net Investment in Capital Assets
This category groups all capital assets, including infrastructure, into one component of net
position. Accumulated depreciation and the outstanding balances of debt that are attributable to
the acquisition, construction or improvement of the City’s capital assets reduce the amount in this
category.
Restricted
This category presents external restrictions imposed by creditors, grantors, contributors or laws or
regulations of other governments and restrictions imposed by law through constitutional
provisions or enabling legislation. Additionally, this category presents restrictions placed on the
categories of capital projects, debt service, and specific projects and programs as established by
the City Council.
Unrestricted
This category represents the net position of the City, which are not restricted for any project or
other purpose.
B. Fund Financial Statements
The City divides fund balances into five classifications base primarily on the extent to which the
City is bound to observe constraints imposed upon the use of the resources in the governmental
funds. The classifications are as follows:
Nonspendable Fund Balance
Amounts that cannot be spent either because they are in nonspendable form or are required to be
maintained intact.
92
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
Restricted Fund Balance
Amounts that are constrained to specific purposes by state or federal laws, or externally imposed
conditions by grantors or creditors.
Committed Fund Balance
Amounts that can only be used for specific purposes pursuant to constraints imposed by City
Council, the City’s highest level of decision-making authority, through an ordinance or resolution.
These committed amounts cannot be used for any other purpose unless the City Council removes
or changes the specified uses through the same type of formal action taken to establish the
commitment. The City’s committed fund balance includes:
x
General Fund Emergency Contingency
The City’s General Fund balance committed for emergency contingencies has been set by
resolution and is for specific uses listed as the declaration of a state or federal state of
emergency or a local emergency as defined in Corona Municipal Code Section 2.52.020.
x
Expenditure Control Budget Savings
The calculation of Expenditure Control Budget (ECB) Savings is established in the annual
budget resolution adopted by City Council. The same budget resolution provides for the
appropriation and use of these committed amounts by the request of the individual
departments with Finance Director recommendation and City Manager approval.
x
Designated Revenues
Designated Revenues are committed by minute action of the City Council. Upon receipt of the
revenues and at the request of the specific department, funds may be appropriated for
departmental use with the recommendation of the Finance Director, or with approval of City
Council, depending on the amount of request.
Assigned Fund Balance
Amounts that are constrained by the City’s intent to be used for specific purposes, but are neither
restricted nor committed. The City Council delegates the authority to assign amounts to be used
for specific purposes to the Finance Director.
Unassigned Fund Balance
These are either residual positive net resources of the General Fund in excess of what can
properly be classified in one of the other four categories, or negative balances in all other funds.
As noted in Note 1, restricted funds are used first as appropriate. Assigned fund balance is
reduced to the extent that expenditure has been appropriated by City Council. Decrease in fund
balance first reduce committed fund balance, in the event that committed fund balance becomes
zero, then assigned and unassigned fund balances are used in that order.
93
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
The fund balances of the City’s governmental funds as of June 30, 2012 are presented below:
General
Fund
Fund Balances:
Nonspendable:
Inventories and Prepayments
Due from Other Governments
Long-term Receivable
Interfund Advances Receivable
Interfund Advances Receivable
$
Restricted for:
Street Maintenance
Trip Reduction
Asset Forfeiture
Debt Service
Housing & Community Development
Other Grants
-
$
$
-
-
Other
Governmental
Funds
$
-
T o ta l
Governmental
Funds
$
61,220,936
13,611,196
326,614
666,460
3,107,763
404,558
730,548
8,578,596
2,220,357
14,300,000
1,759,590
6,763,589
322,069
3,017,264
24,339,310
2,609,592
1,478,962
1,252,357
6,692,642
76,556,105
6,763,589
322,069
14,323,230
24,339,310
2,609,592
1,478,962
2,393,177
6,692,642
5,423
3,493,278
11,305,966
1,140,820
5,423
-
3,493,278
$
415,791
405,757
479,776
13,769,360
61,220,936
13,611,196
326,614
666,460
3,107,763
8,983,154
730,548
2,220,357
14,300,000
1,759,590
Assigned to:
Development
Developer Agreements
Debt Service
Budget Balancing Measures
Continuing Appropriations
City Equipments
City Facility Projects
Successor Agency Loan
Other Capital Projects
Other Purposes
17.
415,791
405,757
479,776
13,769,360
-
Corona Housing
Authority
Capital Project
-
Committed to:
ECB Savings
Emergency Contingency
Designated Revenues
Total Fund Balance
Development
Special Revenue
$
6,763,589
$
69,799,532
$
31,299,348
$
184,418,574
-
Risk Management
A. Workers' Compensation Insurance
The City’s self-insured retention is $1,000,000 with purchased excess insurance for claims over
that amount up to policy limits. Departments are charged a percentage of the total estimated
insurance, claims expense and premiums based on payroll cost. The actuarial estimated liability
for pending and incurred but not reported claims at June 30, 2012 has been included in the
Claims Payable amount for the same reporting period. These liabilities are recognized on
government-wide statements.
94
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
The following table presents claims and judgments payable for the City’s workers' compensation
self-insurance program for fiscal year ended June 30, 2012 and its four preceding years:
Fiscal Year
Ended
June 30,
2008
2009
2010
2011
2012
Claims Payable
July 1,
$
7,399,089
10,126,896
11,475,272
14,405,000
15,676,000
Claims and
Changes in
Estimates
$
4,336,670
2,241,834
4,636,793
3,125,476
4,233,206
Claims Paid
$
(1,608,863)
(893,458)
(1,707,065)
(1,854,476)
(2,062,206)
Claims Payable
June 30,
$
10,126,896
11,475,272
14,405,000
15,676,000
17,847,000
Of the total liabilities, $2,772,000 is due within one year or less. Claims are paid by the internal
service funds.
B. Liability Insurance
The City’s self-insured retention is $750,000 with an excess policy insuring claims over $750,000
up to a limit of $10,000,000. A third party administrator administers claims. The actuarial
estimated liability for pending and incurred but not reported claims at June 30, 2012 has been
included in the Claims Payable amount for the same reporting period. These liabilities are
recognized on government-wide statements.
The following table presents claims and judgments payable for the general liability self-insurance
program, including property losses, for fiscal year ended June 30, 2012 and its four preceding
years.
Fiscal Year
Ended
June 30,
2008
2009
2010
2011
2012
Claims Payable
July 1,
$
1,784,450
2,169,395
2,433,715
2,305,000
2,426,000
Claims and
Changes in
Estimates
$
1,108,873
842,623
444,759
496,231
1,626,939
Claims Paid
$
(723,928)
(578,303)
(573,474)
(375,231)
(1,016,939)
Claims Payable
June 30,
$
2,169,395
2,433,715
2,305,000
2,426,000
3,036,000
Of the total liabilities, $846,000 is due within one year or less. Claims are paid by the internal
service funds.
C. Property Losses (excluding earthquake)
The City's property losses are covered by insurance policies for covered value of $100,000,000
with deductibles of $50,000. The estimated liability for pending and incurred but not reported
claims at June 30, 2012 has been incorporated in the financial statements as Claims and
Judgments Payable in the Liability Risk internal service fund and are based on history only.
95
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
18.
Commitments and Contingencies
The City has entered into several operating lease agreements in the conduct of its day-to-day
operations to provide for facilities and/or services. None of these operating leases are considered
to be significant commitments.
The City is a defendant in a number of lawsuits that have arisen in the normal course of business.
While substantial damages are alleged in some of these actions, their outcome cannot be
predicted with certainty. In the opinion of the City Attorney, these actions when finally adjudicated
will not have material adverse effect on the financial position of the City.
Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), the City
is restricted as to the amount of annual appropriations, and if certain proceeds of taxes exceed
allowed appropriations, the excess must either be refunded to the State Controller or refunded to
the taxpayers through revised tax rates or revised fee schedules. For the fiscal year ended June
30, 2012, the City’s appropriations limit totaled $381,296,027 and the City’s appropriations subject
to limitation were $72,717,813.
On November 5, 1996, California voters passed Proposition 218 which requires, in general, that
any new implementation, increase or extension of taxes, fees, and charges be put to a vote of the
public. The City has held special elections for property owners in special districts when
appropriate asking for a proportional increase in the annual assessment for landscape
maintenance on publicly owned medians and easements. Regardless if the elections were
passed or defeated, services in those districts continue to be provided at a level equal to the
assessments.
On September 28, 1995, the California Supreme Court reversed a Court of Appeals decision
which reinstated provisions of Proposition 62 which was a 1986 voter initiative that required all
general taxes to be approved by simple majority vote of the electorate. The Supreme Court
provided very little detail on a number of issues surrounding their decision but the only possible
exposure, if any, to the decision for the City would be its transient occupancy tax which was
increased by 2% in 1989. It remains unclear what, if any, liability the City may have.
On September 19, 2012, an independent auditor’s report was issued to the Successor Agency of
the former Corona Redevelopment Agency for a due diligence review conducted pursuant to
Assembly Bill No. 1484. Upon approval of this report by the State Controller’s Office, the City will
be liable to reverse certain transactions recorded in Fiscal Year 2010-11 in regards to the former
Redevelopment Agency’s repayments of various loans between the City and the former Agency.
Total amount reported in the due diligence review subject to reversal was $9,608,889. Refer to
Note 21 for additional information.
As of June 30, 2012, in the opinion of City Administration, there were no additional outstanding
matters that would have a significant effect on the financial position of City.
96
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
19.
Restatements
A. Restatement on Government-Wide Statements
Restatements to net position made on the government-wide statements for Fiscal Year 2011-12
are summarized below:
Governmental
Activities
Business-Type
Activities
Beginning Net Position, as reported
Restatements
$
849,500,012
5,799,112
$
157,986,910
9,709,056
Beginning Net Position, as restated
$
855,299,124
$
167,695,966
Restatement to Governmental Activities
a) The City restated its beginning balance of capital assets net of depreciation by $6,222,564 in
its governmental activities. This was primarily due to the recording of the infrastructure
contributed by developers in the prior years.
b) The City adjusted $(347,936) of its beginning balance of net position in relation to a note
receivable that was incorrectly recorded in the prior year.
c) The City adjusted its prior year’s program revenues by $(75,516) as the result of disallowed
grant reimbursement.
Restatement to Business-Type Activities
The City restated its beginning balance of capital assets net of depreciation by $9,709,056 in its
business-type activities. This was also due to the recording of the infrastructure contributed by
developers in the prior years.
B. Restatement on Fund Statements
Restatements to fund balance and net position on the fund financial statements for Fiscal Year
2011-12 are summarized as follows:
Major Governmental Funds
Redevelopment
General Fund Special Revenue
Beginning Fund Balance
as reported
Restatements
Beginning Fund Balance
as restated
Water
Proprietary Funds
Water
Reclamation
Internal
Service
$ 83,518,581
(5,022,045)
$ 1,707,174
(347,936)
$ 92,100,808
5,891,171
$ 50,557,034
3,817,885
$
$ 78,496,536
$ 1,359,238
$ 97,991,979
$ 54,374,919
$ 13,773,167
97
8,827,170
4,945,997
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
a) When the City implemented GASB Statement No. 54, Fund Balance Reporting and
Governmental Fund Type Definitions in Fiscal Year 2009-10, the Equipment Capital Outlay
fund was consolidated into the General Fund. After analyzing the activities within this fund, it
was determined that this fund should be consolidate with the Fleet Operations internal service
fund. The change of the fund type resulted in an adjustment of $4,946,529 to both the
General Fund and the Fleet Operations internal service fund beginning fund balance.
b) The City adjusted its prior year’s General Fund revenues by $(75,516) as the result of
disallowed grant reimbursement.
c) In addition to the reclassification of Equipment Capital Outlay fund from the General Fund to
the internal service fund type as described above, the City also reclassified certain capital
assets recorded in the internal service fund to the general fixed assets and its associated
notes payable during the current year, resulted in a decrease of beginning fund balance in the
amount of $532. The net impact to internal service fund was $4,945,997.
d) The City adjusted $(347,936) of its beginning fund balance of its former Redevelopment
special revenue fund in relation to a note receivable that was incorrectly recorded in the prior
year.
e) The City restated its beginning balances of net position of its Water and Water Reclamation
enterprise funds by $5,891,171 and $3,817,885 respectively as the result of recording
infrastructure contributed by developers in the prior years.
20.
Extraordinary Items – Corona Redevelopment Agency Dissolution
In July 2011, the City entered into an inter-agency loan with its former Redevelopment Agency in
the amount of $4,260,552 that would be disbursed to the Agency in four quarterly installments.
As of June 30, 2012, a total amount of $2,130,276 was loaned to the former Redevelopment
Agency. In February 2012, California Health and Safety Code Section 34178 invalidated interagency loans between the City and its former Redevelopment Agency. Subsequently, Assembly
Bill No. 1484 provided “Safe Harbor” language allowing certain inter-agency loans to be repaid if
approved by the oversight board. The repayment may not begin prior to Fiscal Year 2013-14, and
the repayment amount may not exceed the maximum amount described in related statutes. As
the result, the City set up an allowance for uncollectible amounts to offset the loan recorded in
Due from Other Governmental Agencies in the amount of $2,130,276, and reflected it as an
extraordinary item in the General Fund.
With the dissolution of the former Redevelopment Agency, the assets, liabilities and fund
balances of the dissolved agency were transferred to the Successor Agency Trust, a fiduciary
fund. The transfer of these assets, liabilities and fund balances of the former Redevelopment
Agency as of February 1, 2012 from governmental funds of the City to a fiduciary fund was
reported as extraordinary loss with the total amount of $17,722,427 in the governmental fund
financial statements. Refer to Note 21 for additional information on Successor Agency Trust
extraordinary gain/(loss).
98
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
Total extraordinary gain/(loss) recorded in the government-wide statement of activities and
governmental fund statement of revenues, expenditures and changes on fund balances were
$57,030,347 and $(19,852,703) respectively. The difference between the extraordinary item
recognized in the government-wide and the governmental fund financial statements is reconciled
below:
Reconciliation of the Extraordinary Gain/(Loss) Reported in the Governmental Funds
Statements to the Government-wide Statement of Activities
Extraordinary Loss Reported in the Governmental Funds Statements
$
(19,852,703)
Amounts reported in the statement of activities are different because:
Capital assets net of depreciation transferred to the Successor Agency as an
extraordinary gain was not reported in the governmental fund statements.
(4,725,470)
Long-term debt assumed by Successor Agency as an extraordinary loss was not
reported in the governmental fund statements.
81,608,519
Extraordinary Gain Reported in the Government-wide Statement of Activities
21.
$
57,030,346
Successor Agency Trust for Former Corona Redevelopment Agency
On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (“the Bill”) that
provides for the dissolution of all redevelopment agencies in the State of California. This action
impacted the reporting entity of the City of Corona that previously had reported the City’s
Redevelopment Agency within the reporting entity as a blended component unit.
The Bill provides that upon dissolution of a redevelopment agency, either the City or another unit
of local government will agree to serve as the “successor agency” to hold the assets until they are
distributed to other units of state and local government. On January 11, 2012, the City Council
elected to become the Successor Agency for the former Redevelopment agency in accordance
with the Bill as part of City Resolution No. 2012-004.
After enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the
State of California cannot enter into new projects, obligations or commitments. Subject to the
control of a newly established oversight board, remaining assets can only be used to pay
enforceable obligations in existence at the date of dissolution (including the completion of any
unfinished projects that were subject to legally enforceable contractual commitments).
In future fiscal years, successor agencies will only be allocated revenue in the amount that is
necessary to pay the estimated annual installment payments on enforceable obligations of the
former redevelopment agency until all enforceable obligations of the prior redevelopment agency
have been paid in full and all assets have been liquidated.
The Bill directs the State Controller of the State of California to review the propriety of any
transfers of assets between redevelopment agencies and other public bodies that occurred after
January 1, 2011. If the public body that received such transfers is not contractually committed to
a third party for the expenditure or encumbrance of those assets, the State Controller is required
to order the available assets to be transferred to the public body designated as the Successor
Agency by the Bill.
99
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
Management believes, in consultation with legal counsel, that the obligations of the former
Redevelopment Agency due to the City are valid enforceable obligations payable by the
successor agency trust under the requirements of the Bill. The City’s position on this issue is not
a position of settled law and there is considerable legal uncertainty regarding this issue. It is
reasonably possible that a legal determination may be made at a later date by an appropriate
judicial authority that would resolve this issue unfavorably to the City.
In accordance with the timeline set forth in the Bill (as modified by the California Supreme Court
on December 29, 2011) all redevelopment agencies in the State of California were dissolved and
ceased to operate as a legal entity as of February 1, 2012. Prior to that date, the final seven
months of the activity of the Redevelopment Agency continued to be reported in the governmental
funds of the City. After the date of dissolution, the assets and activities of the dissolved
redevelopment agency are reported in a fiduciary fund (private-purpose trust fund) in the financial
statements of the City.
The transfer of the assets and liabilities of the former Redevelopment Agency as of February 1,
2012 (effectively the same date as January 31, 2012) from governmental funds to fiduciary fund
was reported as an extraordinary gain/(loss) in the governmental fund financial statements. The
receipt of these assets and liabilities as of February 1, 2012 was reported in the private-purpose
trust fund as an extraordinary gain/(loss).
Because of the different measurement focus of the governmental funds
resources measurement focus) and the measurement focus of the trust
resources measurement focus), the extraordinary gain/(loss) recognized in
funds was not the same amount as the extraordinary gain/(loss) that was
fiduciary fund financial statements.
(current financial
funds (economic
the governmental
recognized in the
Total extraordinary gain/(losses) recorded in the former Redevelopment Agency governmental
funds and the statement of changes in fiduciary net position were $17,722,427 and $(58,660,622)
respectively. The difference between the extraordinary loss recognized in the governmental fund
financial statement and the fiduciary fund financial statement is reconciled as follows:
Reconciliation of the Extraordinary Losses Reported in the Governmental Funds Statements
to the Fiduciary Fund Statement of Changes in Net Position
Extraordinary Loss Reported in the Governmental Funds Statements
(Considered as extraordinary gain for the fiduciary fund)
$
17,722,427
Amounts reported in the statement of change in fiduciary net position are different
because:
Capital assets net of depreciation received by the Successor Agency as an
extraordinary gain was not reported in the governmental fund statements.
4,725,470
Removing unavailable amounts from long-term receivable
500,000
Long-term debt acquired from the former Redevelopment Agency as an
extraordinary loss was not reported in the governmental fund statements.
Extraordinary Loss Reported in the Fiduciary Fund Financial Statement
100
(81,608,519)
$
(58,660,622)
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
A. Cash and Investment
The City of Corona maintains a cash and investment pool that is available for all City activities,
including the Successor Agency Trust fund. Cash and investments reported in the Statement of
Fiduciary Net Position consisted of the following:
Amount
Cash and Investments Pooled with the City
Cash and Investments with Fiscal Agent
Total Cash and Investments
$
$
22,908,385
7,873,539
30,781,924
The Successor Agency to the former Redevelopment Agency of the City adopted all applicable
City’s rules, regulations, policies and guidelines by a resolution approved by the City Council on
March 21, 2012, and later approved by the Oversight Board. The City manages the Successor
Agency’s cash and investment in a consistent manner as the rest of its cash and investment pool.
Refer to Note 2 for additional information regarding the type of investments and risks.
B. Loans Receivable
Loans/Notes
Fender Museum of Arts Foundation Note Receivable
Total Loans/Notes Receivable
Amount
$
$
500,000
500,000
The Fender Museum of the Arts Foundation note receivable was entered in July 2002 for
$500,000 with a 4.0% of interest rate. First payment is due in July 2014, and full payment is due
in 2019.
C. Capital Assets
The capital assets reported in the Successor Agency Trust fund was accounted for under the
governmental activities prior to February 1, 2012.
With the dissolution of the former
Redevelopment Agency, they are transferred to the Successor Agency Trust. Capital assets of
the Successor Agency Trust at June 30, 2012 are presented on the following page.
101
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
Balance
February 1, 2012
Fiduciary Activities:
Capital assets not being depreciated:
Land
Total Capital Assets Not Being Depreciated
$
Increases
1,275,529
1,275,529
Capital assets being depreciated:
Buildings and Improvements
Machinery and Equipment
Total Capital Assets Being Depreciated
$
-
5,751,555
38,175
5,789,730
Less accumulated depreciation for:
Buildings and Improvements
Machinery and Equipment
Total Accumulated Depreciation
Total Net Depreciable Capital Assets
Fiduciary Capital Assets, Net of Depreciation
Balance
June 30, 2012
$
$
-
-
-
(108,670)
(1,122)
(109,792)
(109,792)
(109,792)
$
-
-
-
(2,310,691)
(29,098)
(2,339,789)
3,449,941
4,725,470
$
Decreases
5,751,555
38,175
5,789,730
-
-
$
-
1,275,529
1,275,529
(2,419,361)
(30,220)
(2,449,581)
3,340,149
$ 4,615,678
D. Long-Term Obligations
The following long-term obligations were transferred from the former Redevelopment Agency of
the City to the Successor Agency Trust as of February 1, 2012 as a result of the dissolution. As
of June 30, 2012, the balances of the Successor Agency long-term debts are presented below:
1996 Project Area "A" Housing SetAside Tax Allocation Bonds
Balance
February 1, 2012
Incurred or
Issued
$
$
5,220,000
2004 Project Area "A" Tax Allocation
and Refunding Bonds
26,260,000
2007 Temescal Canyon Project Area
Tax Allocation Bonds
19,870,000
2007 Merged and Amended Project
Area "A" Tax Allocation Bonds
27,495,000
$
-
Amounts
Due Within
One Year
Balance
June 30, 2012
$
5,220,000
$
405,000
Amounts
Due in More
than One Year
$
4,815,000
26,260,000
1,715,000
24,545,000
19,870,000
680,000
19,190,000
27,495,000
500,000
26,995,000
2,029,240
1,130,019
899,221
-
-
-
Long Term Agreement Payable
Total
-
Satisfied or
Matured
2,763,519
$
81,608,519
734,279
$
-
102
$
734,279
$
80,874,240
$
4,430,019
$
76,444,221
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
1996 Project Area “A” Set-Aside Tax Allocation Bonds
On October 15, 1996, the former Redevelopment Agency of the City of Corona issued $9,355,000
of Redevelopment Project Area “A” Housing Set-Aside Tax Allocation Bonds to provide funds for
a portion of the costs of reconstruction and rehabilitation of an apartment complex of
approximately 160 units by the Southern California Housing Development Corporation and certain
other activities for the provision of low and moderate income housing within the Project Area. The
bonds were issued for sale to the Corona Public Financing Authority (CPFA) pursuant to the
Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 of Chapter 5 of Division 2 of
Title 1 (commencing with Section 6584) of the California Government Code (the “JPA Law”). The
bonds purchased by the CPFA were resold concurrently to the underwriter. The outstanding
bonds bear interest from 5.40% to 5.63% and are due in annual installments ranging from
$365,000 to $385,000 through September 1, 2011, with term bonds of $2,255,000 due September
1, 2016 and $2,965,000 due September 1, 2021. The bonds are payable from pledged revenues
of the former Housing Set-Aside fund of the Agency. With the dissolution of the Redevelopment
Agency, the pledge is on the overall property tax distributed by the State. The annual debt
service requirements for the 1996 Redevelopment Tax Allocation Bonds are presented below:
Fiscal Year
2013
2014
2015
2016
2017
2018-2022
Totals
1996 Set-Aside Tax Allocation Bonds
Principal
Interest
Total
$
405,000
$
279,669
$
684,669
425,000
256,844
681,844
450,000
232,781
682,781
475,000
207,344
682,344
500,000
180,531
680,531
2,965,000
435,234
3,400,234
$ 5,220,000
$ 1,592,403
$ 6,812,403
2004 Project Area “A” Tax Allocation and Refunding Bonds
The $36,910,000 of Redevelopment Project Area “A” 2004 Tax Allocation and Refunding Bonds
were issued to refund the former Redevelopment Agency’s 1994 Tax Allocation Refunding Bonds,
which were issued to refinance the cost of public capital improvements benefitting the Agency’s
Merged Project Area “A”. The bond issue will reduce debt service payments for the Agency by
$7,015,420 with an economic gain of $3,226,023 or 8.233% as a percent of refunded bonds. The
bonds bear interest from 4.50% to 5.35% and are due in annual installments ranging from
$1,610,000 to $2,795,000. The bonds are payable from pledged tax increment revenues of the
former Redevelopment Agency under the indenture. With the dissolution of the Redevelopment
Agency, the pledge is on the overall property tax distributed by the State. The annual debt
service requirements for the 2004 Redevelopment Tax Allocation Bonds are presented on the
following page.
103
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
Fiscal Year
2013
2014
2015
2016
2017
2018-2022
2023-2024
Totals
2004 Tax Allocation Bonds
Principal
Interest
$
1,715,000
$
1,183,631
$
1,785,000
1,118,006
1,850,000
1,047,537
1,925,000
972,038
2,000,000
883,538
11,530,000
2,852,644
5,455,000
276,125
$ 26,260,000
$
8,333,519
$
Total
2,898,631
2,903,006
2,897,537
2,897,038
2,883,538
14,382,644
5,731,125
34,593,519
2007 Temescal Canyon Project Area Tax Allocation Bonds
The $22,155,000 of Temescal Canyon Project Area 2007 Tax Allocation Bonds were issued to
facilitate the transformation of a former mining facility and blighted area into developed backbone
infrastructure improvements within the project area. The bonds bear interest from 4.00% to
4.50% and are due in annual installments ranging from $535,000 to $735,000, with term bonds of
$1,475,000 due November 1, 2022, $1,515,000 due November 1, 2024, $1,650,000 due
November 1, 2026, $2,760,000 due November 1, 2029 and $3,155,000 due November 1, 2032.
The escrow term bonds in the amount of $3,465,000 bear interest at 4.50% and are due
November 1, 2032. The bonds are payable from pledged tax increment revenues of the former
Redevelopment Agency under the indenture. With the dissolution of the Redevelopment Agency,
the pledge is on the overall property tax distributed by the State. The annual debt service
requirements for the 2007 Redevelopment Tax Allocation Bonds are presented below:
Fiscal Year
2013
2014
2015
2016
2017
2018-2022
2023-2027
2028-2032
2033
Totals
2007 Temescal Canyon Tax Allocation Bonds
Principal
Interest
Total
$
680,000
$
850,696
$
1,530,696
700,000
822,596
1,522,596
730,000
793,484
1,523,484
760,000
763,146
1,523,146
795,000
731,484
1,526,484
4,295,000
3,125,933
7,420,933
4,730,000
2,150,603
6,880,603
5,845,000
981,338
6,826,338
1,335,000
30,038
1,365,038
$ 19,870,000
$ 10,249,318
$ 30,119,318
104
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
2007 Project Area “A” Taxable Tax Allocation Bonds
The $29,550,000 of Project Area “A” 2007 Taxable Tax Allocation Bonds were issued on a parity
basis with the 2004 Tax Allocation Bonds to further facilitate the rehabilitation of a retail center
and the development of mixed used commercial, hotel, office and light industrial projects within
the Merged Downtown project area. The bonds bear interest from 4.84% to 6.25% and are due in
annual installments ranging from $450,000 to $1,140,000, with term bonds of $23,850,000 due
September 1, 2027. The bonds are payable from tax increment revenues of the Agency received
from the project area. The annual debt service requirements for the 2007 Project Area “A” Tax
Allocation Bonds are presented below:
Fiscal Year
2013
2014
2015
2016
2017
2018-2022
2023-2027
2028
Totals
2007 Project Area "A" Tax Allocation Bonds
Principal
Interest
Total
$
500,000
$
1,673,018
$
2,173,018
1,140,000
1,630,702
2,770,702
460,000
1,588,944
2,048,944
485,000
1,563,629
2,048,629
515,000
1,536,267
2,051,267
3,055,000
7,170,750
10,225,750
14,870,000
5,148,606
20,018,606
6,470,000
202,317
6,672,317
$ 27,495,000
$ 20,514,233
$ 48,009,233
Long-Term Developer Agreement Payable
Pursuant to a Promissory Note set forth in the Purchase and Sale Agreement dated June 17,
2009 between the former Redevelopment Agency and Sherborn, LLC, the former Redevelopment
Agency recorded an obligation in the amount of $5,167,326 in exchange of land from Sherborn,
LLC for potential redevelopment activities. The terms of this developer agreement provides semiannual payments of $600,000, including 4.0% accrued interest, to the developer. The maturity
date of the Note is July 15, 2020. As of June 30, 2012, the balance of the Note was $2,029,240.
Pledged Revenue for Tax Allocation Bonds
The City pledged, as security for bonds issued, either directly or through the Financing Authority,
a portion of tax increment revenue (including Low and Moderate Income Housing set-aside and
pass through allocations) that it receives. The bonds issued were to provide financing for various
capital projects, accomplish Low and Moderate Income Housing projects and to defease
previously issued bonds.
Assembly Bill 1X 26 provided that upon dissolution of the
Redevelopment Agency, property taxes allocated to former redevelopment agencies no longer
are deemed tax increment but rather property tax revenues and will be allocated first to successor
agencies to make payments on the indebtedness incurred by the dissolved redevelopment
agency. Total principal and interest remaining on the debt is $119,534,473 with annual debt
service requirements as indicated below. For the current year, the total property tax revenue
recognized by the City and the Successor Agency for the payment of indebtedness incurred by
the dissolved redevelopment agency was $21,055,021 and the debt service obligation on the
bonds was $7,301,432.
105
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
Successor Agency Tax Allocation Bonds Rating
On July 5, 2012 Standard & Poor’s Rating Services (S&P) placed all investment-grade Tax
Allocation Bonds (TABs) on CreditWatch with negative implications after the passage of
Assembly Bill (AB) 1484. On September 24, 2012, S&P removed the TABs originally issued by
the City of Corona from its negative credit watch, and reaffirmed their A- underlying rating with a
stable outlook.
E. Commitments and Contingencies
The Successor Agency is covered under the City of Corona's insurance policies. Therefore, the
limitation and self-insured retentions applicable to the City also apply to the Successor Agency.
Additional information as to coverage and self-insured retentions can be found in Note 17.
On April 20, 2012, pursuant to Health and Safety Code Section 34167.5, the California State
Controller issued an order to cities, counties, and agencies, directly or indirectly receiving assets
from a redevelopment agency after January 1, 2011, to reverse the transfer and return assets to
successor agency. In August 2012, the California State Controller has started to specifically
review and audit cities, counties, and public agencies to ensure that all applicable asset transfers
have been reversed. Any reversals of transfers are not reflected in the City’s financial statements
as of June 30, 2012.
At June 30, 2012, the Successor Agency was involved as a defendant in several lawsuits arising
out of the ordinary conduct of its affairs. It is the opinion of management that settlements of these
lawsuits, including losses for claims that are incurred but not reported, if any, will not have a
material effect on the financial position of the Successor Agency.
F. Subsequent Events – Successor Agency
Assembly Bill 1484 established a requirement for the successor agency to remit to the County
auditor-controller three payments as determined by the auditor-controller which consist of a
payment to be made in July 2012 for taxing entities’ share of December 2011 property tax
distribution to redevelopment agency/successor agency, a payment to be made in November
2012 related to Low-Moderate Income Housing Fund Due Diligence Review for unencumbered
cash, and a payment to be made in April 2013 related to the other Redevelopment Funds Due
Diligence Review for unencumbered cash. As of the date of the report, there was no payment
required in July 2012, the Low-Moderate Income Housing Due Diligence Review currently
resulted in an amount due of $9,608,889 which has not been confirmed by the Department of
Finance, and the other Redevelopment Funds Due Diligence Review is currently in progress and
has not been determined.
22.
Subsequent Events
Subsequent events have been evaluated through November 28, 2012, which is the date of the
independent auditors’ report.
106
CITY OF CORONA
Notes to the Basic Financial Statements
Year Ended June 30, 2012
Bond Issuance
On August 1, 2012, the Corona Utility Authority closed on $35,880,000 Water Revenue Bonds for
the advanced refunding of the CPFA 1998 Water Revenue Bonds, portion of the CPFA 2003
Certificates of Participation, and the construction of certain reservoir and blending facility.
Bond Defeasances
On September 1, 2012, the City fully defeased its CPFA 2002 Lease Revenue Bonds, Series B,
with the proceeds from the 2012 Refunding Lease Agreement with Compass Mortgage
Corporation, a private lending institution. The 2012 Refunding Lease Agreement was entered on
June 1, 2012. Total lease payment amount was $32,026,834, including present value of
$25,265,511, and $6,761,323 representing interest.
On August 1, 2012, the City advance refunded its CPFA 1998 Water Revenue Bonds and the
Recycled Water portion of its 2003 Certificates of Participation by placing the proceeds of the
Corona Utility Authority 2012 Water Revenue Bonds into two separate irrevocable trusts. On
September 1, 2012, the CPFA 1998 Water Revenue Bonds were fully defeased. The 2003
Recycled Water COPs will be called on September 1, 2013.
107
108
Required Supplementary Information
Required Supplementary Information consists of the following:
x
Budgetary Information
x
Budgetary Comparison Schedule – General Fund
x
Budgetary Comparison Schedules – Major Special Revenue Funds
x
General Fund Expenditure Control Budget (ECB) Reserves
x
Modified Approach for City Streets Infrastructure Capital Assets
x
Other Post-Employment Benefits (OPEB) Plan Funding Progress
x
Pension Plan Funding Progress
109
110
CITY OF CORONA
Required Supplementary Information
June 30, 2012
BUDGETARY INFORMATION
Through the budget, the City Council sets the direction of the City, allocates its resources and
establishes its priorities. The Annual Budget assures the efficient and effective uses of the City's
economic resources, as well as establishing that the highest priority objectives are
accomplished.
An annual budget serves a fiscal period from July 1 to June 30, and is a vehicle that accurately
and openly communicates these priorities to the community, businesses, vendors, employees
and other public agencies. Additionally, it establishes the foundation of effective financial
planning by providing resource planning, performance measures and controls that permit the
evaluation and adjustment of the City's performance.
The City’s annual budget is prepared and based on four expenditure categories; personnel,
supplies and services, minor capital outlay and capital improvement programs. The first three
listed are considered operational in nature and known as recurring costs. Capital improvement
projects are asset acquisitions, facilities, systems, and infrastructure improvements typically over
$50,000, and/or items “outside” of the normal operational budget. These are known as one-time
costs.
The City collects and records revenue and expenditures within the following categories:
x
Governmental activities
x
Business-type activities
The governmental funds include the General Fund, special revenue, debt service and capital
projects funds. All funding sources are kept separate for both reporting and use of the money.
The General Fund is where most City services are funded that are not required to be
segregated. Corona follows the General Fund Expenditure Control Budget, or ECB, guidelines
as outlined in the budget resolution.
The budget process begins as a team effort in January of each year, starting with an annual
strategic planning meeting.
Then the individual departments use projected revenue
assumptions to prioritize and recommend the next fiscal year’s objectives. The City Manager’s
Office and the Finance Department review all budget proposals and revenue assumptions, as
well as all current financial obligations before preparing the document that is proposed to the
City Council. The City Council reviews the Proposed Budget through a series of committees
and workshops and the final adoption of the budget is scheduled for the second City Council
meeting in June.
Budgets and Budgetary Accounting
The City uses the following procedures in establishing the budgetary data reflected in the
financial statements:
1. Before the beginning of the fiscal year the City Manager submits to the City Council a
proposed budget for the year commencing July 1.
111
CITY OF CORONA
Required Supplementary Information
June 30, 2012
2. A public meeting is conducted to obtain taxpayer comments.
3. The budget is subsequently adopted through passage of a resolution and is not included
herein but is published separately.
4. All appropriations are as originally adopted or as amended by the City Council and all
unencumbered budgeted amounts lapse at year-end, except in the General Fund where an
expenditure control budget policy may allow departments to carryover a portion of the
unexpended amounts into the next fiscal year.
5. Continuing appropriations are re-budgeted by the City Council as part of the adoption of
subsequent year’s budgets.
6. Legally adopted budget appropriations are set for the General Fund, special revenue, debt
service and capital projects funds.
7. The legal level of budgetary control is at the department level. A Department Director may
transfer appropriations within the department. Expenditures may exceed appropriations at
this level in the General Fund to the extent provided for in the annual budget resolution
adopted by the City Council. The City Council, by the affirmative vote of three members,
may amend the budget to add or delete appropriations, transfer between appropriations
within a fund or change appropriation transfers between funds.
8. Budgets for General Fund, special revenue, debt service and capital projects funds are
adopted on a basis consistent with generally accepted accounting principles.
For Fiscal Year 2011-12, total ECB savings amount including carryover was $2,220,357. This
amount was included in the committed fund balance in the General Fund as of June 30, 2012.
A list of ECB savings by department is presented on the following page.
Department
City Council
Management Services
Human Resources
Information Technology
General Government
Finance
Community Development
Police
Public Works
Library
Parks and Community Services
Total
Total
ECB Savings
$
3,575
50,783
33,327
179,721
22,429
67,389
145,024
971,295
353,881
114,301
278,632
$
112
2,220,357
CITY OF CORONA
Required Supplementary Information
June 30, 2012
The budget for Fiscal Year 2011-12 was the eighteenth year that the budget was prepared in
accordance with the ECB policies adopted by the City Council for the General Fund.
Departments are given increased flexibility and incentives for meeting their goals as well as
being assigned greater accountability for their performance in carrying out their mission.
Major discrepancies between original budget and final budget are explained as follows:
General Fund
Starting from the original budget and adding the prior year continuing appropriations of $2.2
million for capital projects and grants, and another $0.6 million in committed purchase orders
that were carried forward, there was a net budgetary increase of $1.6 million in the General
Fund. In December 2011, a retirement incentive program was offered to eligible employees. As
a result, a total of 49 positions were eliminated and removed from the budget. The net budget
reduction was $0.5 million, as there were additional costs to fund the program and the cost to
pay retirees’ leave balances. There were budget increases of $2.0 million for ECB budget
savings approved for various departments, an increase of $0.5 million for funds received as
donations, and another $0.5 million approved to account for ongoing activities being shifted due
to the dissolution of the former Redevelopment Agency of the City of Corona.
Development Special Revenue Fund
Continuing appropriations of $9.0 million and $0.2 million in committed purchase orders were
carried forward from the prior fiscal year for various capital projects resulting in a final budget of
$11.9 million.
Major discrepancies between final budget and actual expenditures are explained as follows:
General Fund
Total revenues for the General Fund were $5.6 million higher than the final budget. Sales and
use taxes were higher by $3.3 million due to the economy showing quarterly percent growth rate
increases. The other revenue category had a favorable variance of $1.7 million for the current
fiscal year due to unexpected miscellaneous income, donations, and developer paid
improvements. The current services revenue category also had a favorable variance of $1.1
million, due to additional revenues received for reimbursed expenditures, plan check fees, and
emergency medical services.
Actual expenditures had a favorable variance of $5.0 million, partially due to the $2.8 million in
unspent capital outlay budget that will be carried over to the next fiscal year. Savings in other
functional categories contributed to the other $2.2 million favorable variance.
Development Special Revenue Funds
Actual revenue received for the fiscal year ended June 30, 2012 was $3.6 million more than the
final budgeted amount, primarily due to development impact revenues received from a large
scale development project taking place in the City.
Total expenditures ended with a favorable budgetary variance of $9.9 million in capital outlay
funds represents projects not completed within the current fiscal year. These amounts will be
carried over to the next fiscal year.
113
CITY OF CORONA
Required Supplementary Information
June 30, 2012
Budgetary Comparison Schedule – General Fund
For Fiscal Year Ended June 30, 2012
Actual
Amounts
Budgeted Amounts
Original
Final
Revenues:
Property Taxes
Other Taxes
Licenses, Fees, and Permits
Fines and Penalties
Investment Earnings
Intergovernmental Revenue
Current Services
Other Revenue
Payments in Lieu of Services
$
Total Revenues
Expenditures:
General Government:
City Council
Management Services
City Treasurer
Human Resources
Information Technology
Finance
Administrative Services
Community Development
Public Safety:
Fire
Police
Public Works
Culture and Recreation:
Library
Parks and Community Services
Non-Departmental:
General Government
Debt Service - Principal and Interest
Capital Outlay
Total Expenditures
Deficiency of Revenues Under Expenditures
Other Financing Sources (Uses):
Transfers from Other Funds
Transfers to Other funds
Total other financing sources
34,179,147
35,395,177
1,095,586
1,887,500
2,634,412
641,869
12,391,479
15,125,372
9,820,574
$
34,179,147
35,395,177
1,095,586
1,887,500
2,634,412
641,869
12,391,479
15,125,372
9,820,574
$
$
(609,577)
3,568,829
599,420
(113,310)
(168,011)
246,343
1,742,044
1,072,159
(727,249)
113,171,116
113,171,116
118,781,764
5,610,648
151,535
1,227,344
15,468
1,983,618
1,903,581
3,502,442
3,139,353
152,656
1,352,389
15,468
1,995,768
1,875,763
3,406,914
1,435,477
3,127,361
145,985
1,322,754
12,771
1,553,951
1,874,499
3,287,569
1,375,895
2,913,658
6,671
29,635
2,697
441,817
1,264
119,345
59,582
213,703
21,795,237
43,197,742
16,813,668
22,853,662
41,177,951
17,181,914
22,838,646
40,487,713
15,912,608
15,016
690,238
1,269,306
2,210,959
6,961,429
2,536,685
7,450,240
2,536,685
7,346,263
103,977
10,505,487
4,809,121
3,100,990
12,336,222
4,809,691
4,047,109
11,118,194
4,681,377
1,220,738
1,218,028
128,314
2,826,371
121,317,974
125,755,270
118,629,306
7,125,964
12,736,612
(8,146,858)
(12,584,154)
152,458
4,423,987
4,235,822
188,165
5,593,987
6,610,822
(1,016,835)
2,148,048
2,110,661
37,387
Extraordinary Items:
Corona Redevelopment Agency Dissolution
Net Change in Fund Balances
33,569,570
38,964,006
1,695,006
1,774,190
2,466,401
888,212
14,133,523
16,197,531
9,093,325
Variance with
Final Budget
(3,445,939)
4,500,161
1,054,222
(2,130,276)
$
(7,958,693)
Fund Balance - Beginning of Year, Restated
Fund Balance - Ending
$
(13,600,989)
(1,940,431)
$
114
78,496,536
76,556,105
$ 13,790,834
CITY OF CORONA
Required Supplementary Information
June 30, 2012
Budgetary Comparison Schedule – Development Special Revenue Fund
For Fiscal Year Ended June 30, 2012
Budgeted Amounts
Original
Final
Revenues:
Licenses, Fees and Permits
Investment Earnings
Intergovernmental Revenue
Other Revenues
Payments in Lieu of Services
$
Total Revenues
Expenditures:
Public Safety:
Fire
Police
Public Works
Culture and Recreation:
Library
Parks
Non-Departmental:
Debt Service - Principal and Interest
Capital Outlay
Total Expenditures
Excess (deficit) revenue over
expenditures
Other Financing Sources (Uses):
Transfers from other Funds
Transfers to other funds
Total other financing sources (uses)
Net Change in Fund Balances
$
549,200
452,662
549,200
452,662
$
Variance with
Final Budget
174,720
174,720
3,695,931
363,050
257,787
2,554
451,200
1,176,582
1,176,582
4,770,522
141
206,427
47,996
170,070
141
206,286
170,070
206,286
(206,286)
-
9,609
76,714
9,610
76,714
(1)
-
2,324,113
999,968
10,430,180
999,968
534,448
9,895,732
2,372,250
11,892,968
1,997,237
9,895,731
(1,195,668)
(10,716,386)
2,773,285
13,489,671
184,209
(184,209)
32,216
511,425
(479,209)
(1,379,877)
$ (11,195,595)
Fund Balance - Beginning of Year
Fund Balance - End of Year
$
Actual
Amounts
477,832
(477,832)
2,295,453
$
115
4,468,136
6,763,589
$
3,146,731
(89,612)
257,787
2,554
276,480
3,593,940
(32,216)
33,593
1,377
$ 13,491,048
CITY OF CORONA
Required Supplementary Information
June 30, 2012
Budgetary Comparison Schedule – Redevelopment Special Revenue Fund
For Fiscal Year Ended June 30, 2012
Actual
Amounts
Budgeted Amounts
Original
Final
Revenues:
Property Taxes
Fines and Penalties
Investment Earnings
Other Revenues
$ 24,800,004
2,400
788,134
714,244
$ 24,800,004
$
2,400
788,134
714,244
Total Revenues
26,304,782
Expenditures:
Management Services
Human Resources
Finance
Community Development
Police
Public Works
Administrative Services
Non-Departmental:
Debt Service - Principal and Interest
Capital Outlay
Total Expenditures
Excess (deficit) revenue over
expenditures
Other Financing Sources (Uses):
Transfers from other Funds
Transfers to other funds
Total other financing sources (uses)
$
2,436,947
$
(22,363,057)
34,993
88,259
(753,141)
(625,985)
26,304,782
2,560,199
(23,742,183)
415,529
56,970
231,154
129,503
78,545
136,324
4,513,396
264,182
34,948
139,969
79,993
48,111
86,553
4,475,239
264,182
34,948
139,969
79,993
48,111
86,553
45,258
14,845,069
4,981,061
14,846,919
4,101,722
540,798
14,306,121
4,101,722
25,387,551
24,077,636
1,239,812
22,837,824
917,231
2,227,146
1,320,387
5,505,552
4,260,552
1,245,000
5,505,552
4,260,552
1,245,000
-
4,429,981
(906,759)
(5,505,552)
4,260,552
(1,245,000)
-
Extraordinary Items:
Corona Redevelopment Agency Dissolution
Net Change in Fund Balances
Variance with
Final Budget
(2,679,625)
$
2,162,231
$
3,472,146
(1,359,238)
Fund Balance - Beginning of Year, Restated
$
(4,831,384)
1,359,238
Fund Balance - End of Year
$
-
Major discrepancies between budget and actual expenditures in the Redevelopment Special
Revenue fund were due to the dissolution of the former Corona Redevelopment Agency with the
passage of Assembly Bill No. 26. The special revenue fund contains only 7 months of activities.
Effective February 1, 2012, the activities of the former Corona Redevelopment Agency were
reported in the Successor Agency Trust fund. For additional information, please refer to Note
21.
116
CITY OF CORONA
Required Supplementary Information
June 30, 2012
MODIFIED APPROACH FOR CITY STREETS INFRASTRUCTURE CAPITAL ASSETS
In accordance with GASB Statement No. 34, the City is required to account for and report
infrastructure capital assets. The City defines infrastructure as the basic physical assets
including the street system; water purification and distribution system; water reclamation
collection and treatment system; park and recreation lands and improvement system; storm
water conveyance system; and buildings combined with site amenities such as parking and
landscaped areas used by the City in the conduct of its business. Each major infrastructure
system can be divided into subsystems. For example, the street system can be divided into
concrete and asphalt pavements, concrete curb and gutters, sidewalks, medians, streetlights,
traffic control devices (signs, signals and pavement markings), landscaping and land.
Subsystem detail is not presented in these basic financial statements; however, the City
maintains detailed information on these subsystems.
The City has elected to use the “modified approach” as defined by GASB Statement No. 34 for
infrastructure reporting for its Streets Pavement System. Under GASB Statement No. 34,
eligible infrastructure capital assets are not required to be depreciated under the following
requirements:
x
The City manages the eligible infrastructure capital assets using an asset management
system with characteristics of (1) an up-to-date inventory; (2) condition assessments and
summary of results using a measurement scale; and (3) estimation of annual amount
needed to maintain and preserve the assets at the established condition assessment level.
x
The City documents that the eligible infrastructure capital assets are being preserved
approximately at or above the established and disclosed condition assessment level.
The City commissioned a study to update the physical condition assessment of the streets in
October 2011 and a final report was completed in August 2012. The prior assessment study
was completed in November 2009. The streets, primarily concrete and asphalt pavements were
defined as all physical features associated with the operation of motorized vehicles that exist
within the limits of right of way. City owned streets are classified based on land use, access and
traffic utilization into the following four classifications: arterial/major, secondary, collector and
local. This condition assessment will be performed every three years. Each street was assigned
a physical condition based on 17 potential defects. A Pavement Condition Index (PCI), a
nationally recognized index, was assigned to each street and expressed in a continuous scale
from 0 to 100, where 0 is assigned to the least acceptable physical condition and 100 is
assigned the physical characteristics of a new street. The following conditions were defined:
Condition
Rating
Excellent
Very Good
Good
Fair
Poor
Very Poor
Distressed
86-100
71-85
56-70
41-55
26-40
11-25
0-10
117
CITY OF CORONA
Required Supplementary Information
June 30, 2012
The City Policy is to achieve an average rating of 70 for all streets, which is a good rating. This
rating allows minor cracking and raveling of the pavement along with minor roughness that
could be noticeable to drivers traveling at the posted speeds. As of June 30, 2012, the City’s
street system was rated at a PCI index of 74 on the average with the detail condition as follows:
Condition
% of Streets
Excellent to Good
Fair
Poor to Distressed
72%
16%
12%
The City’s streets are constantly deteriorating resulting from the following four factors: (1) traffic
using the streets; (2) the sun’s ultra-violet rays drying out and breaking down the top layer of
pavement; (3) utility company/private development interests trenching operations; and (4) water
damage from natural precipitation and other urban runoff. The City is continuously taking
actions to arrest the deterioration through short-term maintenance activities such as pothole
patching, street sweeping, and sidewalk repair. The City expended $4,711,673 on street
maintenance for the fiscal year ended June 30, 2012.
These expenditures delayed
deterioration, however, it did not seem sufficient to maintain the street condition from the
previous assessment. The condition of the streets fell from the average rating of 81 in the prior
year to 74 in the current year. The City has estimated that the amount of annual expenditures
required to maintain the current average PCI rating of 74 through the year 2021 is a minimum of
$8,600,000. A schedule of the estimated annual amount required to maintain and preserve its
streets at the current level compared to actual expenditures for street maintenance for the last
five years is presented below:
Fiscal Year
2007-08
2008-09
2009-10
2010-11
2011-12
Maintenance
Requirement
$
9,500,000
6,800,000
6,800,000
6,800,000
8,600,000
Actual
Expenditures
9,498,837
5,794,148
5,224,027
4,675,239
4,711,673
PCI
Rating
75
79
79
81
74
The City also has an on-going street rehabilitation program funded in the Capital Improvement
Program that is intended to improve the condition rating of City streets. The rehabilitation
program is formulated based on deficiencies identified as a part of its Pavement Management
System (PMS). As of June 30, 2012, approximately 28% of the City's streets were rated below
the average standard of 70. This represents an increase of 14% over the 2009 assessment
when the City had 14% of its streets rated below 70. The City will continue to rehabilitate these
segments of the streets. Total deficiencies identified in the PMS amounted to approximately
$95.0 million for all streets over the next ten years, with $21.0 million in deficiencies on street
segments rated below the PCI of 70.
118
CITY OF CORONA
Required Supplementary Information
June 30, 2012
OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN FUNDING PROGRESS
A schedule of funding progress including the past two actuarial valuations is presented below:
Schedule of Funding Progress - Other Post-Employment Benefit Plan
Actuarial
Valuation
Date
Actuarial
Accrued
Liability
(A)
Actuarial
Value of
Assets
(B)
Unfunded
Actuarial
Accrued
Liability (UAAL)
(A) - (B)
Funded
Ratio
(B) / (A)
Annual
Covered
Payroll
(C)
UAAL as a
Percentage of
Covered
Payroll
((A - B) / C)
07/01/2009
101,811,000
6,796,000
95,015,000
6.7%
49,298,000
192.7%
07/01/2010
106,454,000
9,840,000
96,614,000
9.2%
50,900,185
189.8%
07/01/2011
96,530,244
16,182,147
80,348,097
16.8%
50,192,076
160.1%
The City implemented GASB 57, OPEB Measurements by Agent Employers and Agent MultipleEmployer Plans on July 1, 2011. The most recent actuarial valuation for the City’s OPEB plan
was obtained as of June 30, 2011 for the two years ending June 30, 2012 and 2013.
Please refer to Note 14 for information regarding actuarial assumptions and amortization
methods.
PENSION BENEFITS PLAN FUNDING PROGRESS
A schedule of funding progress including the past three actuarial valuations is presented below:
Schedule of Fund Progress - Pension Benefits Plan
Unfunded
Actuarial
Accrued
Funded
Liability (UAAL) Ratio
(A) - (B)
(B) / (A)
Actuarial
Valuation
Date
Actuarial
Accrued
Liability (AAL)
(A)
Actuarial
Value of
Assets
(B)
Miscellaneous
Employees
Group
06/30/09
06/30/10
06/30/11
$ 217,616,331
239,840,884
252,000,728
$ 156,236,949
165,107,463
175,764,654
$
61,379,382
74,733,421
76,236,074
71.8% $ 30,576,507
68.8%
30,614,756
69.7%
29,739,813
200.7%
244.1%
256.3%
Police Safety
Employees
Group
06/30/09
06/30/10
06/30/10
$ 127,759,493
138,322,555
150,077,438
$ 95,340,649
103,602,154
112,138,994
$
32,418,844
34,720,401
37,938,444
74.6% $ 16,432,919
74.9%
17,236,508
74.7%
16,104,315
197.3%
201.4%
235.6%
119
Annual
Covered
Payroll
(C)
UAAL as a
Percentage of
Covered
Payroll
((A - B) / C)
120
Supplementary Information
Supplementary Information consists of the following:
x
Combining Balance Sheet – Nonmajor Governmental Funds
x
Combining Statement of Revenues, Expenditures, and Changes in Fund
Balances – Nonmajor Governmental Funds
x
Combining Schedule of Revenues, Expenditures, and Changes in Fund
Balances – Budget and Actual
x
Combining Statement of Net Position – Nonmajor Enterprise Funds
x
Combining Statement of Revenue, Expenses, and Changes in Net Position –
Nonmajor Enterprise Funds
x
Combining Statement of Cash Flows – Nonmajor Enterprise Funds
x
Combining Statement of Net Position – Internal Service Funds
x
Combining Statement of Revenue, Expenses, and Changes in Net Position –
Internal Service Funds
x
Combining Statement of Cash Flows – Internal Service Funds
x
Fiduciary Funds Combining Statement of Changes in Assets and Liabilities
121
122
Nonmajor Governmental Funds
Special Revenue Funds
Gas Tax Fund – This fund is used to account for receipts and expenditures of
money apportioned under Street and Highway Code Section 2105, 2106, 2107 and
2107.5 of the State of California.
Measure A Fund – This fund is used to account for money generated by a half
percent sales tax approved by the voters in 1989. This money is used to maintain
and construct local streets and roads.
Trip Reduction Fund – This fund is used to account for allocations made by
AB2766 known as the Clean Air Act. The money is used to provide means and
incentives for ridesharing in order to reduce traffic and air pollution.
Asset Forfeiture Fund – This fund is used to account for asset seizures and
forfeitures resulting from police investigations and court decisions.
Special Tax District Fund – This fund is used to account for revenues derived from
annual assessments which are used to pay the cost incurred by the City for
landscape maintenance, street light maintenance, and the City's Business
Improvement District.
Other Grants and Endowments Fund – This fund is used to account for receipts
and expenditures of money received from various governmental grants and various
library endowments.
Debt Service Funds
Assessment Districts Fund – This fund is used to account for assessment
collections and payments for principal and interest and providing reserves related to
Assessment District Bonds.
Public Financing Authority Fund – This fund is used to account for debt service
transactions including revenue collections and payments of principal and interest on
long-term obligations of the component unit.
123
Combining Financial Statements
Nonmajor Governmental Funds
Capital Project Funds
Public Facility Project Fund – This fund is used to account for transactions related
to proceeds from debt and other resources and their use to acquire and construct
certain capital facilities.
HUD Grants Fund – This fund is used to account for grants from the Department of
Housing and Urban Development (HUD) and expenditures for the block grant
programs as approved by the City Council.
Planned Local Drainage Fund – This fund is used to account for storm water
drainage fees from developers as a result of City ordinance 1279. The money is
used to construct water drainage facilities within a drainage area.
Other Grants Fund – This fund is used to account for receipts and expenditures of
money received from various governmental grants.
124
125
CITY OF CORONA
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2012
Special Revenue
Gas
Tax
Measure
A
Cash and Investments
Accounts Receivable, Net
Interest Receivable
Due from Other Governmental Agencies
Long-term Receivable
Loans Receivable
Restricted Assets:
Cash and Investments
$ 2,872,422
11,358
421,647
-
$ 10,673,615
3,433
42,268
501,120
-
9,100
49,411
Total Assets
$ 3,314,527
$ 11,269,847
Trip
Reduction
Asset
Forfeiture
Special Tax
Districts
Other
Grants &
Endowments
Assets
$
277,959
1,096
47,570
-
$
-
673,266
2,645
-
$ 11,762,877
46,359
256,303
-
-
349,659
$ 12,415,198
$
899,615
425,722
333,851
-
$
66,741
40,868
235,284
-
$
326,625
$
675,911
$
11
-
$
1,587
7,864
-
$
633,432
2,460
2,470
261,253
-
Liabilities, Deferred Inflow of Resources, and Fund Balances
Liabilities
Accounts Payable and Accrued Liabilities
Deposits
Due to Other Funds
Advances
Interfund Advances Payable
Liabilities Payable from Restricted Assets
Total Liabilities
$
254,746
9,100
$
659,921
49,411
$
263,846
709,332
11
9,451
759,573
342,893
Fund Balances
Restricted
Assigned
3,050,681
10,560,515
326,614
666,460
349,659
11,305,966
556,722
Total Fund Balances
3,050,681
10,560,515
326,614
666,460
11,655,625
556,722
$ 3,314,527
$ 11,269,847
675,911
$ 12,415,198
Deferred Inflow of Resources
Deferred Amount from
Assessment Receivable
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances
126
$
326,625
$
$
899,615
Debt Service
Public
Assessment
Financing
Districts
Authority
$
340,018
$
Capital Projects
Planned
HUD
Local
Grants
Drainage
Public
Facility
Project
-
1,340
2,143
660,000
-
20
-
-
2,415,003
$
1,138,900
224,855
$
-
326,958
210,509
Total
Other
Governmental
Funds
Other
Grants
2,294,214
-
-
$ 28,949,667
5,893
109,720
4,562,805
660,000
2,294,214
14,047
-
51,100
2,888,320
$
31,061
-
$
219,159
2,164
2,637,405
$
1,003,501
$
2,415,023
$
1,363,755
$
2,845,728
$
31,061
$
2,909,828
$ 39,470,619
$
420
$
-
$
$
81,513
21,562
2,324,048
$
25,638
-
$
559,550
1,213,398
911,954
$
-
-
8,736
62
214,137
-
-
-
-
14,047
-
51,100
2,084,585
62
1,489,965
3,479,150
333,851
123,658
420
-
222,935
2,441,170
25,638
2,736,002
7,511,271
660,000
660,000
343,081
343,081
$
1,003,501
$
2,415,023
-
1,140,820
404,558
2,415,023
1,140,820
404,558
2,415,023
$
1,363,755
173,826
18,847,139
12,452,209
173,826
31,299,348
2,909,828
$ 39,470,619
5,423
$
2,845,728
5,423
$
127
31,061
$
CITY OF CORONA
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Nonmajor Governmental Funds
Year Ended June 30, 2012
Special Revenue
Gas
Tax
Measure
A
Trip
Reduction
Asset
Forfeiture
Special Tax
Districts
Other
Grants &
Endowments
Revenues
Licenses, Fees and Permits
Fines, Penalties and Forfeitures
Special Assessments
Investment Earnings
Intergovernmental Revenues
Current Services
Other Revenues
$
56,649
4,215,882
119,636
$
190,723
3,033,285
800
$
4,994
192,704
6,347
$
66,884
11,639
-
$
9,084,615
180,619
9,774
333,354
$
12,790
712,426
249,429
1,630
Total Revenues
4,392,167
3,224,808
204,045
78,523
9,608,362
976,275
Expenditures
Current:
General Government
Community Development
Fire
Police
Public Works
Parks and Community Services
Administrative Services
Library
Capital Outlay
Debt Service:
Principal Retirement
Interest and Fiscal Charges
6,093
1,801,706
492,626
-
2,370
1,065,026
350,820
168,981
-
63,045
-
3,711
3,055,488
4,802,882
64,067
283,520
994,312
-
-
-
7,677
-
Total Expenditures
2,300,425
1,418,216
168,981
63,045
8,217,345
995,568
Excess of Revenues Over (Under)
Expenditures
2,091,742
1,806,592
35,064
15,478
1,391,017
(19,293)
Other Financing Sources (Uses):
Transfers In
Transfers Out
(1,079,018)
1,712,096
-
-
-
68,968
22,914
-
Total Other Financing Sources (Uses)
(1,079,018)
1,712,096
-
-
68,968
22,914
1,012,724
3,518,688
35,064
15,478
1,459,985
3,621
Net Change in Fund Balances
Fund Balances - Beginning of Year
Fund Balances - End of Year
2,037,957
7,041,827
$ 3,050,681
$ 10,560,515
128
291,550
$
326,614
$
650,982
10,195,640
666,460
$ 11,655,625
1,256
-
553,101
$
556,722
Debt Service
Public
Assessment
Financing
Districts
Authority
$
$
-
$
Capital Projects
Planned
HUD
Local
Grants
Drainage
Public
Facility
Project
-
-
1,820,504
686
2,203,864
5,572
150
358,968
4,629
2,406,437
65,965
121,768
1,821,190
2,209,436
785,306
2,477,031
26,112,333
63,502
306,711
4,518
1,738,648
72,244
23,813
883,909
-
82,376
2,435,582
283,520
433,237
100,946
1,352,989
12,174
63,502
82,376
1,057,357
9,717,403
5,090,920
2,235,952
174,446
2,594,539
212,068
1,354
121,768
213,422
-
Other
Grants
426,188
66,884
9,296,683
585,315
14,585,102
259,203
892,958
$
-
Total
Other
Governmental
Funds
$
$
426,188
$
-
$
-
-
-
-
90,771
365,000
100,814
2,601,700
-
-
-
-
365,000
2,710,191
465,814
2,601,700
90,771
2,209,436
883,909
4,688,650
24,103,860
(252,392)
(2,479,932)
1,730,419
-
(98,603)
(2,211,619)
2,008,473
-
-
(1,747,251)
-
-
(167,845)
1,803,978
(2,994,114)
-
-
(1,747,251)
-
-
(167,845)
(1,190,136)
(252,392)
(2,479,932)
595,473
4,894,955
1,157,652
(16,832)
343,081
$ 2,415,023
$ 1,140,820
404,558
$
404,558
129
$
(98,603)
(2,379,464)
104,026
2,553,290
30,481,011
173,826
$ 31,299,348
5,423
$
818,337
130
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actuals
The Combining Schedule of Revenues, Expenditures and Changes in Fund
Balances – Budget and Actual consists of the following:
x
Nonmajor Special Revenue Funds
x
Debt Service Funds
x
Capital Project Funds
131
CITY OF CORONA
Combining Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Nonmajor Special Revenue Funds
Year Ended June 30, 2012
Gas Tax
Revenues
Fines, Penalties and Forfeitures
Special Assessments
Investment Earnings
Intergovernmental Revenues
Current Services
Other Revenues
Total Revenues
Budget
$
Measure A
Variance
Actual
-
$
-
$
Actual
-
$
35,205
204,243
105,889
251,601
2,643,000
190,723
3,033,285
800
Variance
13,747
56,649
4,215,882
119,636
4,046,830
4,392,167
345,337
2,894,601
3,224,808
330,207
6,093
1,820,270
6,093
1,801,706
492,626
18,564
2,325,214
2,370
1,065,026
2,370
1,065,026
350,820
7,379,745
-
-
2,300,425
2,343,778
8,797,961
1,418,216
7,379,745
2,091,742
2,689,115
(5,903,360)
1,806,592
7,709,952
21,444
4,011,639
$
Budget
$
(60,878)
390,285
800
Expenditures
Current:
General Government
Public Works
Parks and Community Services
Police
Administrative Services
Library
Capital Outlay
Debt Service:
Interest and Fiscal Charges
Total Expenditures
2,817,840
4,644,203
Excess of Revenues Over
(Under) Expenditures
(597,373)
7,730,565
-
Other Financing Sources (Uses)
Transfers In
Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
(1,065,403)
(1,079,018)
(13,615)
167,845
-
1,712,096
-
1,544,251
-
(1,065,403)
(1,079,018)
(13,615)
167,845
1,712,096
1,544,251
$ (1,662,776)
Fund Balances - Beginning of Year, Restated
Fund Balances - End of Year
1,012,724
$ 2,675,500
$ (5,735,515)
3,518,688
2,037,957
7,041,827
$ 3,050,681
$ 10,560,515
132
$
9,254,203
Trip Reduction
Budget
$
Actual
-
12,779
170,000
$
Asset Forfeiture
Variance
4,994
192,704
6,347
$
-
Budget
$
-
Actual
$
Variance
66,884
11,639
-
8,476,807
9,608,362
1,131,555
63,045
-
104,572
-
3,711
3,369,034
5,090,474
1,513,323
3,711
3,055,488
4,802,882
64,067
283,520
313,546
287,592
1
1,229,803
-
-
7,677
7,677
-
167,617
63,045
104,572
10,048,287
8,217,345
1,830,942
(148,587)
15,478
164,065
(1,571,480)
1,391,017
2,962,497
21,266
19,030
78,523
168,981
-
38,159
100,200
167,617
-
-
307,340
168,981
138,359
(124,561)
35,064
159,625
207,140
100,200
-
-
-
-
-
35,064
$ 159,625
$ (124,561)
$ (148,587)
-
-
15,478
$ 164,065
$
8,246,579
187,910
64,068
$
Variance
59,493
204,045
66,884
(7,391)
-
Actual
8,810
33,508
19,030
$
Budget
9,084,615
180,619
9,774
333,354
(7,785)
22,704
6,347
182,779
Special Tax Districts
$
838,036
(7,291)
964
299,846
470,559
68,968
-
(401,591)
-
470,559
68,968
(401,591)
$ (1,100,921)
1,459,985
291,550
650,982
10,195,640
$ 326,614
$ 666,460
$ 11,655,625
$ 2,560,906
Continued Page 1 of 2
133
CITY OF CORONA
Combining Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Nonmajor Special Revenue Funds
Year Ended June 30, 2012
Other Grants & Endowments
Revenues:
Fines, Penalties and Forfeitures
Special Assessments
Investment Earnings
Intergovernmental Revenues
Current Services
Other Revenues
Budget
$
Actual
-
$
20,049
932,359
265,000
Total Revenues
Totals
Variance
12,790
712,426
249,429
1,630
$
Budget
(7,259)
(219,933)
(15,571)
1,630
$
8,246,579
512,813
7,756,998
273,810
47,255
Actual
$
Variance
66,884
9,084,615
457,414
8,154,297
259,203
461,767
$
66,884
838,036
(55,399)
397,299
(14,607)
414,512
1,217,408
976,275
(241,133)
16,837,455
18,484,180
1,646,725
1,207,612
994,312
1,256
-
213,300
368,777
12,174
6,461,470
5,090,474
1,375,229
64,068
1,256
12,530,705
12,174
6,091,201
4,802,882
1,057,357
64,067
1,256
1,126,966
370,269
287,592
317,872
1
11,403,739
-
-
7,677
7,677
-
995,568
582,077
25,543,053
13,163,580
12,379,473
(19,293)
340,944
(8,705,598)
5,320,600
14,026,198
-
22,914
-
22,914
-
638,404
(1,065,403)
1,803,978
(1,079,018)
-
22,914
22,914
(426,999)
724,960
(9,132,597)
6,045,560
Expenditures:
Current:
General Government
Public Works
Parks and Community Services
Police
Administrative Services
Library
Capital Outlay
Debt Service:
Interest and Fiscal Charges
1,256
368,777
Total Expenditures
1,577,645
Excess of Revenues Over
(Under) Expenditures
(360,237)
Other Financing Sources (Uses):
Transfers In
Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
$
(360,237)
3,621
Fund Balances - Beginning of Year, Restated
Fund Balances-Ending
$
363,858
$
553,101
$
556,722
1,165,574
(13,615)
1,151,959
$
15,178,157
20,771,057
$
26,816,617
Concluded Page 2 of 2
134
135
CITY OF CORONA
Combining Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Debt Service Funds
Year Ended June 30, 2012
Redevelopment
Revenues
Property Taxes
Special Assessments
Investment Earnings
Other Revenues
Budget
Assessment Districts
Actual
$ 19,840,003
Budget
$
Actual
214,602
5,527
$
Variance
315,106
9,747,789
216,928
$ (10,092,214)
(98,178)
-
20,155,109
9,964,717
(10,190,392)
7,445,871
-
3,953,562
-
4,689,098
4,212,109
2,795,000
1,937,190
3,492,309
1,894,098
2,274,919
365,000
100,814
365,000
100,814
-
16,347,078
8,685,752
7,661,326
465,814
465,814
-
3,808,031
1,278,965
(2,529,066)
(245,685)
(252,392)
Other Financing Sources (Uses):
Transfers In
-
39
39
Total Other Financing Sources (Uses)
-
39
39
Extraordinary Items
Corona Redevelopment Agency Dissolution
-
(6,562,571)
3,808,031
(5,283,567)
Total Revenues
$
Variance
220,129
212,068
1,354
-
$
213,422
(2,534)
(4,173)
(6,707)
Expenditures
Current:
Administrative Services
Capital Outlay
Debt Service:
Principal Retirement
Interest and Fiscal Charges
Total Expenditures
Excess of Revenues Over
(Under) Expenditures
Net Change in Fund Balances
$
Fund Balances - Beginning
of Year, Restated
Fund Balances-End of Year
-
-
-
-
136
-
(6,562,571)
$
(9,091,598)
$
(245,685)
(252,392)
5,283,567
$
(6,707)
595,473
$
343,081
$
(6,707)
Public Financing
Authority
Budget
$
Totals
Actual
-
$
Variance
$
Budget
(4,148)
-
$
Actual
19,840,003
214,602
446,549
-
$
Variance
125,916
-
121,768
-
12,184,736
212,068
340,050
-
$
(7,655,267)
(2,534)
(106,499)
-
125,916
121,768
(4,148)
20,501,154
12,736,854
(7,764,300)
-
7,445,871
5,054,098
6,913,237
3,953,562
3,160,000
4,639,704
3,492,309
1,894,098
2,273,533
7,659,940
2,600,314
2,601,700
(1,386)
2,600,314
2,601,700
(1,386)
19,413,206
11,753,266
(2,474,398)
(2,479,932)
(5,534)
1,087,948
983,588
-
39
39
39
39
-
$ (2,474,398)
-
-
-
-
-
-
(8,999,518)
1,087,948
(8,015,891)
(2,479,932)
$
(5,534)
$
4,894,955
$
10,773,995
2,415,023
$
137
2,758,104
(104,360)
(8,999,518)
$
(9,103,839)
CITY OF CORONA
Combining Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Capital Projects Funds
Year Ended June 30, 2012
Redevelopment
Revenues
Licenses, Fees & Permits
Investment Earnings
Intergovernmental Revenues
Other Revenues
Budget
$
Actual
261,901
Total Revenues
Corona Housing Authority
$
Variance
422,500
105,750
262,407
684,401
368,157
2,825,132
2,341
-
2,595,263
2,341
-
-
$
Budget
(156,151)
(160,093)
$
Actual
-
(316,244)
-
$
Variance
274,633
270,342
$
274,633
270,342
544,975
544,975
229,869
-
-
-
-
-
-
-
-
1,086,139
113,861
537,692
62,308
548,447
51,553
4,027,473
3,197,604
829,869
-
-
-
(3,343,072)
(2,829,447)
513,625
-
544,975
544,975
Expenditures
Current:
Administrative Services
General Government
Community Development
Fire
Police
Public Works
Library
Parks and Community Services
Capital Outlay
Debt Service:
Principal Retirement
Interest and Fiscal Charges
Total Expenditures
Excess of Revenues Over
(Under) Expenditures
-
-
Other Financing Sources (Uses)
Transfers In
Transfers Out
-
581,693
(39)
581,693
(39)
-
-
-
Total Other Financing Sources (Uses)
-
581,654
581,654
-
-
-
Extraordinary Items
Redevelopment Agency Dissolution
-
Net Change in Fund Balances
$ (3,343,072)
Fund Balance - Beginning of Year, Restated
Fund Balances-End of Year
$
(8,480,231)
(8,480,231)
(10,728,024)
$ (7,384,952)
$
-
544,975
10,728,024
69,254,557
-
$ 69,799,532
138
$
544,975
HUD
Grants
Public Facility Project
Budget
$
Variance
Actual
6,100,000
1,820,504
686
$
1,802,238
63,502
1,738,648
63,502
63,590
-
(15,663,657)
306,711
72,244
4,518
1,667,354
306,711
72,244
4,518
23,813
1,643,541
(15,663,657)
3,916,567
2,209,436
1,707,131
1,730,419
11,384,847
(2,223,600)
-
2,223,600
-
(1,747,251)
(1,747,251)
-
-
-
-
-
-
(1,747,251)
(1,747,251)
-
-
-
-
-
-
$ 2,223,600
15,754,428
90,771
$
513,833
2,636
$
482,000
$
Variance
516,469
-
$
Actual
2,209,436
-
-
Budget
1,692,967
(4,278,810)
$
Variance
2,203,864
5,572
1,821,190
(4,279,496)
686
Actual
1,690,031
2,936
6,100,000
$
Budget
Planned Local Drainage
485,301
426,188
150
358,968
967,301
785,306
968,384
$
(55,812)
150
(126,333)
(181,995)
-
-
883,909
-
84,475
-
883,909
84,475
(98,603)
(97,520)
15,754,428
(9,654,428)
$ (9,654,428)
90,771
(16,832)
$
9,637,596
-
$ (2,223,600)
1,157,652
$ 1,140,820
968,384
(1,083)
-
$
(1,083)
(98,603)
404,558
$
404,558
-
$
(97,520)
104,026
$
5,423
Continued Page 1 of 2
139
CITY OF CORONA
Combining Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Capital Projects Funds
Year Ended June 30, 2012
Other Grants
Revenues:
Licenses, Fees & Permits
Investment Earnings
Intergovernmental Revenues
Miscellaneous Revenues
Total Revenues
Budget
$
327
5,983,931
900,000
Totals
Variance
Actual
$
4,629
2,406,437
65,965
$
Budget
4,302
(3,577,494)
(834,035)
$
Actual
482,000
262,228
13,773,962
1,810,737
$
426,188
385,162
6,430,805
963,940
Variance
$
(55,812)
122,934
(7,343,157)
(846,797)
6,884,258
2,477,031
(4,407,227)
16,328,927
8,206,095
(8,122,832)
433,237
433,237
82,376
2,435,582
100,946
283,520
1,352,989
21,727
19,192,185
5,060,607
2,341
63,502
82,376
3,710,677
194,917
288,038
37,966,956
4,767,148
2,341
63,502
82,376
3,626,202
173,190
288,038
1,467,573
(293,459)
(84,475)
(21,727)
(36,499,383)
1,086,139
113,861
537,692
62,308
(548,447)
(51,553)
Expenditures:
Current:
Administrative Services
General Government
Community Development
Fire
Police
Public Works
Library
Parks and Community Services
Capital Outlay
Debt Service:
Principal Retirement
Interest and Fiscal Charges
Total Expenditures
Excess of Revenues Over
(Under) Expenditures
82,376
2,435,582
122,673
283,520
20,545,174
23,902,562
4,688,650
19,213,912
48,569,414
11,070,370
(37,499,044)
(17,018,304)
(2,211,619)
14,806,685
(32,240,487)
(2,864,275)
29,376,212
(167,845)
(167,845)
-
(167,845)
581,693
(1,915,135)
581,693
(1,747,290)
(167,845)
(167,845)
-
(167,845)
(1,333,442)
(1,165,597)
$ (17,186,149)
(2,379,464)
$ 14,806,685
$ (32,408,332)
Other Financing Sources (Uses):
Transfers In
Transfers Out
Total Other Financing Sources (Uses)
Extraordinary Items
Redevelopment Agency Dissolution
Net Change in Fund Balances
-
Fund Balance - Beginning of Year, Restated
Fund Balances-End of Year
$
(8,480,231)
(12,677,948)
2,553,290
84,202,107
173,826
$ 71,524,159
(8,480,231)
$ 19,730,384
Concluded Page 2 of 2
140
Combining Financial Statements
Nonmajor Enterprise Funds
Public Financing Authority Fund – This fund is used to account for debt service
transactions including revenue collections and payments of principal and interest on
long-term obligations of the component unit.
Public Improvement Corporation Fund – This fund is used to account for debt
service transactions including revenue collections and payments of principal and
interest on long-term obligations.
Transit Services Fund – This fund is used to account for the operations of the
City’s transportation system for a fixed route and demand response service (Corona
Cruiser and Dial-A-Ride) which, along with farebox revenues, receives grants from
the Transportation Development Act (TDA).
Airport Fund – This fund is used to account for the operations of the City’s
municipal airport. The airport provides services to general aviation aircraft for
recreation purposes only. It is a self supporting activity base on rental charges and
state grants.
141
142
CITY OF CORONA
Combining Statement of Net Position
Nonmajor Enterprise Funds
June 30, 2012
Nonmajor Enterprise Funds
Public
Improvement
Transit
Corporation
Services
Airport
Public
Financing
Authority
Totals
Assets
Current Assets
Cash and Investments
Accounts Receivable, Net
Interest Receivable
Due from Other Governments
Restricted Assets:
Cash and Investments
Total Current Assets
Noncurrent Assets
Construction in Progress
Capital Assets Net of Depreciation
Total Noncurrent Assets
Total Assets
$
6,698
-
$
563,173
563,182
637,926
1,341,720
42,638
719,327
19,920
11,954
1,938
9,647,575
10,400,714
-
-
35,423
957,685
993,108
303,116
303,116
35,423
1,260,801
1,296,224
8,453,174
563,182
2,334,828
345,754
11,696,938
263,649
8,103
1,185
9,288
271,752
1,185
280,330
9,707
35,423
598,397
205,000
205,000
6,791,350
1,714
6,793,064
8,446,476
8,453,174
9
-
$
694,798
1,907
5,151
1,938
$
24,529
18,013
96
-
$
Liabilities
Current Liabilities
Accounts Payable and Accrued Liabilities
Deposits
Advances
Compensated Absences Payable
Liabilities Payable from Restricted Assets
Total Current Liabilities
-
-
280,330
9,707
35,423
589,109
Noncurrent Liabilities
Interfund Advances Payable
Compensated Absences Payable
Total Noncurrent Liabilities
6,586,350
-
6,586,350
-
1,714
1,714
Total Liabilities
6,586,350
-
590,823
214,288
7,391,461
993,108
303,116
1,296,224
(171,650)
2,430,006
637,926
(58,679)
Net Position
Net Investment in Capital Assets
Restricted for:
Debt Service
Transportation
Unrestricted
Total Net Position
1,866,824
$ 1,866,824
$
143
563,182
-
637,926
112,971
563,182
$ 1,744,005
$
131,466
$ 4,305,477
CITY OF CORONA
Combining Statement of Revenues, Expenses, and Changes in Fund Net Position
Nonmajor Enterprise Funds
Year Ended June 30, 2012
Nonmajor Enterprise Funds
Public
Improvement
Transit
Corporation
Services
Airport
Public
Financing
Authority
Operating Revenues
Intergovernmental Revenues
Fees and Permits
Other Revenues
-
-
365,809
10,000
49,490
206,348
Total Operating Revenues
-
-
633,355
265,838
899,193
Operating Expenses
Personnel Services
Contractual
Material and Supplies
Utilities
Depreciation
-
-
333,275
1,313,246
46,836
233,396
222,104
154,692
3,515
96,227
13,496
39,608
487,967
1,316,761
143,063
246,892
261,712
Total Operating Expenses
-
-
2,148,857
307,538
2,456,395
Operating Income (Loss)
-
-
(1,515,502)
(41,700)
(1,557,202)
Non-Operating Revenues
Operating Grants and Contributions
Investment Earnings
Interest Expense
$
-
$
-
$
267,546
$
Totals
$
277,546
49,490
572,157
28,428
(22,572)
151
(124)
1,528,277
26,725
-
468
-
1,528,277
55,772
(22,696)
Total Non-Operating Revenues
5,856
27
1,555,002
468
1,561,353
Income (Loss) Before Transfers
5,856
27
39,500
Capital Grants and Contributions
Transfers In
460,780
-
42,010
-
Change in Net Position
466,636
27
81,510
1,400,188
563,155
1,662,495
563,182
$ 1,744,005
Net Position - Beginning of Year
Net Position - End of Year
$ 1,866,824
$
144
(41,232)
(41,232)
$
4,151
42,010
460,780
506,941
172,698
3,798,536
131,466
$ 4,305,477
CITY OF CORONA
Combining Statement of Cash Flows
Nonmajor Enterprise Funds
Year Ended June 30, 2012
Nonmajor Enterprise Funds
Cash Flows from Operating Activities
Receipts from Customers/Other Funds
Payments to Suppliers of Goods and Services
Payments to Employees for Services
Other Receipts
Public
Public
Financing
Improvement
Transit
Authority
Corporation
Services
$
-
Net Cash Provided by (Used for) Operating Activities
$
-
-
$
320,892
(1,418,263)
(337,605)
365,809
$
Totals
31,707
(118,094)
(154,692)
216,348
-
1,454,110
1,714
460,780
-
1,916,604
460,780
-
Net Cash Provided by Noncapital Financing Activities
460,780
-
1,455,824
Cash Flows from Capital and Related Financing Activities
Proceeds from Capital Grants and Contributions
Acquisition and Construction of Capital Assets
Payments on Interfund Loans
Interest payments of Long-term debt
(1,475)
(22,572)
(124)
-
Net Cash Used for Capital and Related Financing Activities
(24,047)
(124)
(35,423)
42,010
(77,433)
Cash Flows from Investing Activities:
Interest on Investments
Net Cash Provided by Investing Activities
Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents
Beginning of Year
352,599
(1,536,357)
(492,297)
582,157
(1,069,167)
1,454,110
1,714
-
(24,731)
$
-
Cash Flows from Noncapital Financing Activities
Operating Grants and Contributions
Compensated Absences
Transfers Received
End of Year (including $9,647,575 in restricted accounts)
Airport
(1,093,898)
42,010
(77,433)
(1,475)
(22,696)
-
(59,594)
30,660
151
26,515
629
57,955
30,660
151
26,515
629
57,955
467,393
27
377,749
7,979,083
$ 8,446,476
563,146
$
563,173
(24,102)
954,975
$
1,332,724
821,067
48,631
9,545,835
$
24,529
$ 10,366,902
$
(41,700)
$ (1,557,202)
Reconciliation of Operating Income to Net Cash Provided by Operating Activities
Operating Income (Loss)
$
Adjustments to Reconcile Operating Income to
Net Cash from Operating Activities:
Depreciation and Amortization
Changes in Assets and Liabilities:
Accounts Receivable
Due from Other Governments
Accounts Payable and Accrued Liabilities
Advances
Net Cash Provided by (Used for) Operating Activities
-
$
-
$
-
-
145
-
$
-
$ (1,515,502)
222,104
39,608
261,712
52,487
859
175,215
(4,330)
(17,783)
34,704
859
170,359
(4,330)
$ (1,069,167)
(4,856)
$
(24,731)
$ (1,093,898)
146
Combining Financial Statements
Internal Service Funds
Fleet Operations Fund – This fund is used to account for Motor Pool rental as the
equipment is used. Surplus rental charges are accumulated in the fund to pay for
equipment replacements as needed.
Workers’ Compensation Self-Insurance Fund – This fund was established on
December 1, 1974 at which time the City became self-insured. Claims and
administrative expenses are charged to this fund. Reserves are held by this fund to
buffer the impact of unknown but potential losses.
Liability Risk Self-Insurance Fund – This fund is used to account for expenditures
in payment of claims, administrator's expense (including legal fees) and to establish
reserves against future claims.
Warehouse Fund – This fund is used to account for expenditures regarding
distribution of inventory.
147
148
CITY OF CORONA
Combining Statement of Net Position
Internal Service Funds
June 30, 2012
Self-Insurance
Fleet
Workers'
Liability
Operations
Compensation
Risk
Warehouse
Totals
Assets
Current Assets
Cash and Investments
$
20,084,993
$ 4,651,321
612
-
12,479
-
13,091
217,630
-
-
-
217,630
Total Current Assets
12,176,383
20,084,993
4,663,800
85,234
37,010,410
Total Assets
12,176,383
20,084,993
4,663,800
85,234
37,010,410
Accounts Receivable, Net
Inventories and Prepayments
11,958,141
$
$
85,234
$
36,779,689
Liabilities
Current Liabilities
Accounts Payable and Accrued Liabilities
Claims and Judgments Payable
Compensated Absences Payable
Total Current Liabilities
489,239
5,105
89,417
13,805
597,566
-
2,772,000
846,000
-
3,618,000
43,011
-
-
9,771
52,782
532,250
2,777,105
935,417
23,576
4,268,348
Noncurrent Liabilities
Claims and Judgments Payable
Total Noncurrent Liabilities
Total Liabilities
-
15,075,000
2,190,000
-
17,265,000
-
15,075,000
2,190,000
-
17,265,000
532,250
17,852,105
3,125,417
23,576
21,533,348
11,644,133
2,232,888
1,538,383
61,658
15,477,062
2,232,888
$ 1,538,383
Net Position
Unrestricted
Total Net Position
$
11,644,133
$
149
$
61,658
$
15,477,062
CITY OF CORONA
Combining Statement of Revenues, Expenses, and Changes in Fund Net Position
Internal Service Funds
Year Ended June 30, 2012
Self-Insurance
Fleet
Workers'
Liability
Operations
Compensation
Risk
Warehouse
Totals
Operating Revenues
Internal Service Charges
$
Other Revenues
Total Operating Revenues
5,793,930
3,176,535
$ 1,800,000
390,850
$
439
18,799
$
839,696
-
$
11,610,161
410,088
6,184,780
3,176,974
1,818,799
839,696
12,020,249
1,373,568
Operating Expenses
Personnel Services
992,572
-
380,996
Contractual
596,255
-
-
596,255
Material and Supplies
904,266
588,972
18,846
2,060,424
Utilities
548,340
1,073,506
-
-
4,425,206
1,670,335
Total Operating Expenses
3,566,599
4,973,546
2,259,307
Operating Income (Loss)
2,618,181
(1,796,572)
Income (Loss) Before Transfers
2,618,181
(1,796,572)
Claims Expense
Transfers In
-
Transfers Out
Change in Net Position
2,430,391
Net Position - Beginning of Year, Restated
9,213,742
Net Position - End of Year
1,500,000
(187,790)
$
11,644,133
2,948
402,790
11,202,242
(440,508)
436,906
818,007
(440,508)
436,906
818,007
-
1,500,000
-
(296,572)
$
150
1,076,454
6,095,541
(426,322)
(440,508)
2,529,460
1,978,891
2,232,888
$ 1,538,383
$
(614,112)
10,584
1,703,895
51,074
13,773,167
61,658
$
15,477,062
CITY OF CORONA
Combining Statement of Cash Flows
Internal Service Funds
Year Ended June 30, 2012
Self-Insurance
Fleet
Workers'
Liability
Warehouse
Operations
Compensation
Risk
Services
Totals
Cash Flows from Operating Activities
Receipts from Customers/Other Funds
$
5,592,190
Payments to Suppliers of Goods or Services
(1,993,631)
Payments to Employees for Services
(1,020,518)
Payments of Current Claims
-
Decrease in Long-Term Claims
-
Other Receipts
Net Cash Provided by Operating Activities
$
3,176,535
$ 1,804,230
(543,257)
$
(604,708)
-
430,109
300,645
(2,684,315)
839,696
$ 11,412,651
(26,161)
(3,167,757)
(380,641)
(1,401,159)
-
(1,360,980)
730,754
-
(4,045,295)
390,850
439
18,799
-
410,088
2,968,891
379,511
157,986
432,894
3,939,282
780,825
Cash Flows from Noncapital Financing Activities
Transfers Received
Transfers Paid
Net Cash Used for Noncapital Financing Activities
1,500,000
-
(968,615)
-
-
(187,790)
1,500,000
2,781,101
Increase (Decrease) in Cash and Cash Equivalents
-
-
1,879,511
2,280,825
(426,322)
(1,394,937)
(426,322)
157,986
885,888
6,572
4,825,170
Cash and Cash Equivalents
Beginning of Year, Restated
End of Year
$
9,177,040
18,205,482
4,493,335
78,662
31,954,519
11,958,141
$ 20,084,993
$ 4,651,321
$
85,234
$ 36,779,689
$
$
436,906
Reconciliation of Operating Income to Net Cash Provided by Operating Activities:
Operating Income (Loss)
Adjustments to Reconcile Operating Income to
Net Cash from Operating Activities:
$
2,618,181
$ (1,796,572)
(440,508)
$
818,007
Changes in Assets and Liabilities:
(201,740)
-
4,230
-
(197,510)
Inventories and Prepayments
Accounts Receivable
282,458
-
-
-
282,458
Accounts Payable and Accrued Liabilities
269,992
5,083
Claims and Judgments Payable
-
2,171,000
610,000
-
2,781,000
Compensated Absences Payable
-
-
-
355
355
(15,736)
(4,367)
254,972
Net Cash Provided by (Used for)
Operating Activities
$
2,968,891
151
$
379,511
$
157,986
$
432,894
$
3,939,282
152
Combining Financial Statements in Assets and
Liabilities – Agency Funds
Agency Funds are custodial in nature and do not involve measurement of results
and operations.
153
154
CITY OF CORONA
Combining Statement of Changes in Assets and Liabilities
Agency Fund
Year Ended June 30, 2012
Pass Through Agency Fund
Balance
June 30, 2011
Balance
June 30, 2012
Additions
Deductions
1,154,589
145,304
693,800
$ 31,938,484
371,087
455,471
$ 31,879,127
377,549
737,290
28,536,034
42,306,110
42,040,170
$ 75,034,136
$
30,566,743
312,626
29,854,933
$
32,336
30,534,407
$ 30,167,559
$
30,566,743
Assets
Cash and Investments
Interest Receivable
Due from other Governmental Agencies
Restricted Assets:
Cash and Investments
$
Total Assets
$
30,529,727
$ 75,071,152
Accounts Payable and Accrued Liabilities
Due to Bondholders
$
30,978
30,498,749
$
Total Liabilities
$
30,529,727
$ 30,204,575
$
1,213,946
138,842
411,981
28,801,974
Liabilities
155
313,984
29,890,591
$
156
Statistical Section
This part of the City of Corona's comprehensive annual financial report presents detailed information
as a context for understanding what the information in the financial statements, note disclosures, and
required supplementary information says about the City's overall financial health.
Page
Contents
Financial Trends – These schedules contain information to help readers to understand how
the City's financial performance and well-being have changed over time.
1
Net Assets by Component
160
2
Changes in Net Assets
162
3
Fund Balances – Governmental Funds
166
4
Changes in Fund Balances – Governmental Funds
168
Revenue Capacity – These schedules contain information to help readers to assess the City’s
most significant own-source revenues.
5a Water Sales by User Type
170
5b Assessed Value and Actual Value of Taxable Property
171
6a Potable Water Rates
172
6b Reclaimed Water Rates
173
6c Direct and Overlapping Property Tax Rates
174
7a Principal Water Customers
175
7b Principal Property Tax Payers
176
8
177
Property Tax Levies and Collections
Debt Capacity – These schedules contain information to help readers to assess the
affordability of the City’s current levels of outstanding debt and the City’s ability to issue
additional debt in the future.
9
Ratios of Outstanding Debt by Type
178
10 Ratios of General Bonded Debt Outstanding
180
11 Direct and Overlapping Governmental Activities Debt
181
12 Legal Debt Margin Information
183
13 Pledged Revenue Coverage
184
157
Statistical Section
Demographic and Economic Information – These schedules offer demographic and
economic indicators to help readers to understand the environment within which the City’s
financial activities take place.
14 Demographic and Economic Statistics
186
15 Principal Employers
187
Operating Information – These schedules contain service and infrastructure data to help
readers to understand how the information in the City’s financial report relates to the services
the City provides and the activities it performs.
16 Full-time Equivalent City Government Employees by Function/Program
188
17 Operating Indicators by Function/Program
189
18 Capital Assets Statistics by Function/Program
190
Sources: Unless otherwise noted, the information in these schedules was derived from the
City’s Comprehensive Financial Reports (CAFR) for the relevant year.
158
159
CITY OF CORONA
Schedule 1
Net Position by Component
Last Ten Fiscal Years (accrual basis of accounting)
Fiscal Year
2012
Governmental Activities
Net investment in capital assets
Restricted for:
Capital Projects
Debt Service
Transportation & Public Works
Special Assessment District
Development Projects
Other Purposes
Total Restricted
Unrestricted
2011
$ 547,427,503
2009
512,867,317
$ 457,625,412
$ 451,393,337
26,795,896
10,773,995
80,695,897
7,079,903
85,200,711
11,968,561
50,908,926
88,478,817
248,153,878
60,915,014
148,690,814
243,443,770
43,585,727
140,754,999
245,794,117
$
849,500,012
$ 849,759,996
$ 837,942,453
$
66,109,520
$ 219,780,082
$ 228,912,014
$
95,362,651
3,418,104
14,494,532
11,655,625
6,763,589
708,280
132,402,781
251,564,898
Total governmental activities net position $ 931,395,182
Business-type Activities
Net investment in capital assets
Restricted for:
Debt Service
Transportation & Public Works
Total Restricted
Unrestricted
2010
$ 274,761,353
10,969,563
637,926
11,607,489
(107,169,420)
18,065,870
18,065,870
73,811,520
10,779,222
10,779,222
(82,129,735)
18,188,735
18,188,735
(110,940,686)
Total business-type activities net assets
$ 179,199,422
$
157,986,910
$ 148,429,569
$ 136,160,063
Primary Government
Net investment in capital assets
Restricted
Unrestricted
$ 822,188,856
144,010,270
144,395,478
$
578,976,837
106,544,687
321,965,398
$ 677,405,494
159,470,036
161,314,035
$ 680,305,351
158,943,734
134,853,431
Total Primary Government Net Assets
$ 1,110,594,604
$ 1,007,486,922
$ 998,189,565
$ 974,102,516
160
Fiscal Year
2008
2007
2006
2005
$ 456,849,781
$ 458,250,349
$ 422,767,976
$ 456,222,213
73,254,682
25,251,084
20,417,055
28,838,799
-
6,898,327
386,036
7,982,213
9,976,958
13,178,815
13,310,313
19,091,733
38,816,368
137,322,134
215,990,032
9,483,004
58,738,858
269,852,046
8,386,210
15,284,537
306,059,386
7,729,386
16,097,635
239,481,478
-
23,155,773
265,838,106
34,135,270
66,537,316
42,904,348
$ 810,161,947
$ 786,841,253
$ 744,111,899
$ 711,801,326
$
684,835,588
$
501,553,417
$ 225,030,195
$ 211,186,996
$ 193,178,999
$ 194,465,301
$
187,392,588
$
141,335,905
17,031,575
17,031,575
(119,578,075)
17,317,361
17,317,361
(122,594,604)
7,548,512
7,548,512
(129,904,898)
2004
$
673,256
673,256
(133,104,413)
2003
395,841,709
$
26,387,128
26,387,128
(162,665,721)
392,111,753
1,709,856
1,709,856
78,188,671
$ 122,483,695
$ 105,909,753
$ 70,822,613
$ 62,034,144
$
51,113,995
$
221,234,432
$ 681,879,976
154,353,709
96,411,957
$ 669,437,345
76,056,219
147,257,442
$ 443,318,631
22,833,049
348,782,832
$ 650,687,514
16,770,891
106,377,065
$
583,234,297
49,542,901
103,172,385
$
533,447,658
68,247,172
121,093,019
$ 932,645,642
$ 892,751,006
$ 814,934,512
$ 773,835,470
$
735,949,583
$
722,787,849
161
CITY OF CORONA
Schedule 2
Changes in Net Position
Last Ten Fiscal Years (accrual basis of accounting)
Fiscal Year
Expenses
Governmental activities:
General government
Fire
Police
Public Works
Redevelopment
Parks and Community Services
Library
Interest and fiscal charges
Total governmental activities expenses
Business-type activities:
Water
Wastewater
Electric
Transit
Airport
Total business-type activities expenses
Total primary government expenses
Program Revenues
Charges for services:
Governmental activities:
General government
Fire
Police
Public Works
Redevelopment
Parks and Community Services
Library
Operating Grants and Contributions
Capital Grants and Contributions
Total governmental activities program
revenues
Business-type activities:
Charges for services:
Water
Wastewater
Electric
Transit
Airport
Operating Grants and Contributions
Capital Grants and Contributions
Total business-type activities program
revenues
Total primary government
program revenues
2012
2011
2010
2009
$ 20,551,027
21,506,851
39,791,147
27,925,122
12,860,222
13,161,044
2,640,592
3,648,700
$ 142,084,705
$ 21,771,013
23,066,539
40,465,516
29,415,423
15,368,206
13,621,128
2,745,336
14,655,640
$ 161,108,801
$ 23,778,004
23,849,351
44,573,946
30,006,518
18,283,224
14,321,581
3,108,194
13,471,571
$ 171,392,389
$ 23,387,380
23,118,471
40,723,499
29,252,056
19,061,398
15,431,862
3,142,627
16,447,756
$ 170,565,049
55,837,945
30,224,698
14,569,429
2,148,857
307,538
103,088,467
$ 245,173,172
46,791,524
25,940,578
17,638,508
2,078,197
328,658
92,777,465
$ 253,886,266
48,080,241
27,212,393
21,951,228
2,309,727
316,270
99,869,859
$ 271,262,248
46,284,613
27,164,627
21,962,931
2,256,556
97,668,727
$ 268,233,776
7,331,352
3,926,888
3,079,224
12,716,140
7,466,080
3,092,311
3,295,825
12,699,434
7,616,409
3,204,585
3,551,199
12,291,030
678,554
4,506,740
2,817,511
12,354,323
7,327,626
264,464
12,350,047
8,977,103
7,512,286
280,729
18,683,384
3,743,333
7,184,440
333,015
11,711,125
9,480,514
7,261,946
341,989
9,404,577
19,967,971
55,972,844
56,773,382
55,372,317
57,333,611
50,243,765
29,472,121
16,531,675
633,355
265,838
1,531,791
11,730,500
48,103,987
27,361,203
17,247,983
364,830
297,638
1,600,444
3,261,322
50,979,766
26,779,144
23,891,958
412,928
286,546
1,724,206
4,728,651
49,629,071
26,569,560
23,896,507
371,714
110,409,045
98,237,407
108,803,199
108,736,982
$ 166,381,889
$ 155,010,789
$ 164,175,516
$ 166,070,593
162
1,567,193
6,702,937
2008
2007
2006
Fiscal Year
2005
2004
2003
$ 22,014,630
22,465,104
38,811,288
28,165,830
17,679,157
13,529,315
3,539,703
14,913,380
$ 161,118,407
$ 17,944,188
19,824,613
35,418,464
32,887,632
31,450,231
12,504,767
3,156,248
12,348,977
$ 165,535,120
$ 17,000,514
19,372,402
35,290,552
28,293,319
18,317,214
12,863,536
3,233,627
9,164,552
$ 143,535,716
$ 11,199,340
17,247,894
32,105,270
25,450,529
13,825,131
12,091,432
3,111,361
10,170,977
$ 125,201,934
$ 16,972,222
16,102,014
30,248,573
26,768,539
14,878,105
12,272,328
3,040,136
4,844,242
$ 125,126,160
$ 14,266,453
15,074,400
30,267,856
24,348,477
16,941,126
12,508,067
3,410,263
18,141,782
$ 134,958,424
48,772,948
27,937,584
23,590,548
2,128,258
42,980,979
25,431,501
24,688,495
1,773,529
39,968,554
23,411,865
20,279,523
1,663,358
36,073,601
16,876,237
12,855,676
1,615,000
34,644,300
15,833,862
20,053,738
1,496,799
36,292,376
16,941,850
18,880,894
1,280,630
102,429,338
$ 263,547,745
94,874,504
$ 260,409,624
85,323,300
$ 228,859,016
67,420,514
$ 192,622,448
72,028,699
$ 197,154,859
73,395,750
$ 208,354,174
1,301,569
4,726,300
3,023,714
13,909,188
1,713
6,373,504
495,603
8,165,995
17,140,582
1,513,639
4,181,914
3,246,509
14,830,576
1,168
6,064,402
541,166
8,270,729
22,362,669
8,645,359
3,229,032
3,017,477
16,795,580
5,986,229
402,660
7,794,735
23,044,293
1,129,140
3,197,076
2,687,347
16,124,597
157
5,805,482
324,561
12,113,704
9,705,129
953,897
1,726,756
2,689,863
15,175,883
1,385
5,159,390
293,248
12,211,236
11,271,231
743,077
1,549,395
2,740,805
14,074,917
4,796,231
237,379
11,549,543
14,898,908
55,138,168
61,012,772
68,915,365
51,087,193
49,482,889
50,590,255
44,795,972
23,379,820
24,824,172
363,101
43,261,136
21,824,979
24,466,921
316,671
36,548,936
20,211,966
20,962,161
270,679
29,061,220
13,897,603
13,067,845
234,693
30,633,776
13,245,884
18,287,523
256,821
27,999,085
13,382,760
16,420,890
131,570
1,454,320
19,829,148
1,284,236
31,702,614
1,233,282
12,696,552
1,250,281
17,754,362
1,234,330
15,814,606
1,259,614
21,081,267
114,646,533
122,856,557
91,923,576
75,266,004
79,472,940
80,275,186
$ 169,784,701
$ 183,869,329
$ 160,838,941
$ 126,353,197
$ 128,955,829
$ 130,865,441
Continued Page 1 of 2
163
CITY OF CORONA
Schedule 2
Changes in Net Position
Last Ten Fiscal Years (accrual basis of accounting)
Fiscal Year
Net (Expense)/Revenue
Governmental activities
Business-type activities
Total primary government net expense
General Revenues and
Other Changes in Net Assets
Governmental activities:
Taxes
Property taxes
Sales and Use Tax
Other Taxes
Total taxes
Unrestricted grants and contributions
Payments in lieu of taxes
Gain (Loss) on Sale of Capital Asset
Investment earnings
Lease and Rental Income
Miscellaneous
Extraordinary Items
Transfers
Special Items
Total Governmental activities
Business-type activities:
Investment earnings
Gain on Sale of Capital Asset
Transfers
Total business-type activities
Total primary government
Change in Net Position
Governmental activities
Business-type activities
Total primary government
2012
2011
2010
2009
$ (86,111,861)
7,320,578
$ (78,791,283)
$ (104,335,419)
5,459,942
$ (98,875,477)
$ (116,020,072)
8,933,340
$ (107,086,732)
$ (113,231,438)
11,068,255
$ (102,163,183)
$
$
$
$
45,754,306
31,190,815
8,546,497
85,491,618
76,014
4,047,070
12,088,330
3,637,541
57,030,346
(163,000)
162,207,919
59,090,960
28,505,050
7,802,237
95,398,247
686,338
3,380,168
11,646,814
658,664
40,000
111,810,231
62,049,578
26,543,193
7,660,365
96,253,136
481,295
1,776,536
7,204,417
7,347,933
1,311,650
57,000
114,431,967
66,704,669
29,791,137
8,570,003
105,065,809
674,076
10,177,941
6,955,049
8,873,210
(201,503)
9,653,196
141,197,778
4,019,878
163,000
4,182,878
$ 166,390,797
3,178,516
2,350,130
(40,000)
5,488,646
$ 117,298,877
3,169,884
(57,000)
3,112,884
$ 117,544,851
4,144,071
201,503
4,345,574
$ 145,543,352
$
$
$
$
$
76,096,058
11,503,456
87,599,514
$
7,474,812
10,948,588
18,423,400
$
10,096,548
8,572,826
18,669,374
$
25,177,706
13,278,914
38,456,620
Note: The City implemented GASB Statements No. 54 and 63 in fiscal years ended June 30, 2010 and 2012
respectively.
164
Fiscal Year
2008
2007
2006
2005
2004
2003
$ (105,980,239)
12,217,195
$ (93,763,044)
$ (104,522,348)
27,982,053
$ (76,540,295)
$ (74,620,351)
6,600,276
$ (68,020,075)
$ (74,114,741)
7,845,490
$ (66,269,251)
$ (75,643,271)
7,444,241
$ (68,199,030)
$ (84,368,169)
6,879,436
$ (77,488,733)
$
67,566,221
35,894,694
8,496,030
111,956,945
720,480
12,225,922
13,536,181
$ 63,121,766
39,684,799
9,396,886
112,203,451
1,977,907
6,438,368
9,602,364
9,936,382
$ 50,973,502
39,915,335
9,556,368
100,445,205
3,710,301
4,875,430
6,691,463
$ 42,349,908
34,502,809
4,866,205
81,718,922
1,112,066
8,998,347
2,222,270
$ 33,105,038
29,471,424
4,200,484
66,776,946
6,547,602
8,238,819
(201,083)
3,678,428
$ 30,333,440
25,219,925
6,700,169
62,253,534
7,718,551
9,753,104
3,634,423
28,400
138,467,928
170,294
7,996,099
148,324,865
(1,458,852)
114,263,547
8,464,284
511,074
(29,223)
102,486,666
2,966,100
24,778
85,576,564
(4,451,266)
81,874,446
4,385,148
(28,400)
4,356,748
$ 142,824,676
3,647,928
(170,294)
3,477,634
$ 151,802,499
2,491,501
1,458,852
3,950,353
$ 118,213,900
1,288,738
482,495
29,223
1,800,456
$ 104,287,122
1,281,949
(24,778)
1,257,171
$ 86,833,735
2,499,040
2,744,024
4,365,931
9,608,995
$ 91,483,441
$
$ 43,802,517
31,459,687
$ 75,262,204
$ 39,643,196
10,550,629
$ 50,193,825
$ 28,371,925
9,645,946
$ 38,017,871
$
$ (2,493,723)
16,488,431
$ 13,994,708
$
32,487,689
16,573,943
49,061,632
9,933,293
8,701,412
$ 18,634,705
Concluded Page 2 of 2
165
CITY OF CORONA
Schedule 3
Fund Balances, Governmental Funds
Last Ten Fiscal Years (modified accrual basis of accounting)
Fiscal Year
2012
General Fund
Reserved
Unreserved
Nonspendable
Committed
Assigned
Total General Fund
All Other Governmental Funds
Reserved
Unreserved, reported in:
Special Revenue
Capital Projects
Nonspendable
Restricted
Assigned
Unassigned
Total all other Govermental Funds
$
2011
-
$
2010
-
$
2009
-
$ 20,156,768
54,773,799
15,070,684
18,279,947
43,205,474
$ 76,556,105
15,112,080
18,072,691
50,333,810
$ 83,518,581
19,708,805
17,597,806
40,338,627
$ 77,645,238
$ 74,930,567
$
$
$
$ 81,668,685
-
-
-
39,029,410
18,110,464
61,220,936
27,425,735
19,215,798
61,568,872
35,292,020
25,061,577
$ 107,862,469
$ 121,922,469
166
58,835,683
41,491,338
26,635,398
(769,101)
$ 126,193,318
$ 138,808,559
Fiscal Year
2008
2007
2006
2005
2004
2003
$ 20,672,134
58,818,482
$ 24,121,757
70,716,157
$ 75,249,936
$ 13,535,692
31,748,096
$ 11,896,398
30,390,874
$ 13,451,103
29,359,950
$ 79,490,616
$ 94,837,914
$ 75,249,936
$ 45,283,788
$ 42,287,272
$ 42,811,053
$ 83,897,261
$ 59,739,936
$ 23,685,432
$ 71,680,887
$ 75,451,071
$ 95,977,110
34,241,391
16,909,462
34,462,913
15,510,428
$ 135,048,114
$ 109,713,277
40,645,962
8347703
$ 72,679,097
(619,485)
$ 71,061,402
167
(414,006)
$ 75,037,065
(379,278)
$ 95,597,832
CITY OF CORONA
Schedule 4
Changes in Fund Balances, Governmental Funds
Last Ten Fiscal Years (modified accrual basis of accounting)
Fiscal Year
2012
Revenues:
Property Taxes
Other Taxes
Licenses, fees and permits
Fines and Penalties
Special Assessments
Investment Earnings
Intergovernmental Revenues
Current Services
Payments in Lieu of Services
Other Revenues
Total Revenues
$
2011
45,754,306
38,964,006
5,817,125
1,841,074
9,296,683
4,047,070
15,731,101
14,392,726
9,544,525
17,714,051
$
59,090,960
35,900,324
2,187,466
2,168,820
9,645,684
3,380,168
17,140,177
13,724,789
9,681,893
16,833,436
2010
$
62,049,578
33,859,090
2,244,379
2,625,345
9,230,699
7,205,344
16,982,358
13,469,450
10,524,934
11,586,690
2009
$
66,704,668
37,687,694
3,986,271
1,643,556
9,186,822
8,221,715
23,725,540
15,015,541
11,992,502
11,854,846
163,102,667
169,753,717
169,777,867
190,019,155
Expenditures:
General Government
Community Development
Fire
Police
Public Works
Parks and Community Services
Administrative Services
Library
Capital Outlay
Debt Service
Principal
Interest and Fiscal Charges
Total Expenditures
23,619,791
63,502
22,921,163
41,751,356
25,800,081
12,437,183
9,560,505
2,720,741
4,349,725
23,594,460
24,032,875
28,370,429
23,068,351
39,523,177
25,443,417
12,128,803
10,942,983
2,694,192
11,089,418
22,886,210
43,154,254
26,055,330
12,628,055
18,776,318
2,925,121
21,562,741
23,826,368
41,009,396
26,098,884
14,516,592
14,337,175
3,228,510
24,337,661
7,082,070
7,547,454
157,853,571
7,578,502
14,756,645
170,819,948
8,139,799
14,041,809
194,202,512
13,837,430
16,730,459
206,292,904
Excess of Revenues over (under)
expenditures
5,249,096
(1,066,231)
(24,424,645)
(16,273,749)
Other Financing Sources (Uses)
Loss from sale of land held for resale
Issuance of Debt
Principal Retirement
Proceeds from Sale of Capital Asset
Bond Premium
Transfers in
Transfers out
Total other financing sources (uses)
Extraordinary Items
(472,252)
5,167,326
2,400,000
4,533,758
(5,582,646)
(1,048,888)
79,529,457
(76,674,137)
2,855,320
17,440,737
(10,398,334)
9,442,403
21,302,803
(20,176,928)
5,820,949
(19,852,703)
Special Items
Net change in fund balances
Debt service as a percentage of
noncapital expenditures
9,653,196
$ (15,652,495)
10.7%
168
$
1,789,089
16.1%
$ (14,982,242)
14.7%
$
(799,604)
20.2%
Fiscal Year
2008
$
67,566,222
44,025,594
3,939,938
1,602,034
7,363,443
10,324,740
18,579,692
16,746,141
13,249,357
11,337,159
2007
$
63,121,767
47,968,446
7,565,595
1,678,525
7,472,089
8,337,386
21,122,793
16,547,413
9,801,798
11,567,679
2006
$
2005
50,973,502
47,243,504
12,052,807
1,778,880
7,325,244
4,093,836
20,878,547
16,156,862
11,540,850
10,514,261
$
42,349,910
40,815,213
10,871,748
1,508,004
6,923,091
2,776,118
11,927,288
15,518,676
9,165,515
8,626,151
2004
$
2003
32,265,783
34,923,016
11,984,841
1,700,005
6,581,157
3,907,468
18,489,977
13,470,119
8,238,819
3,313,914
$
28,924,050
29,994,105
12,949,501
1,713,495
6,482,026
4,781,225
19,285,666
12,901,807
9,753,105
9,015,827
194,734,320
195,183,491
182,558,293
150,481,714
134,875,099
135,800,807
29,223,727
25,343,635
21,080,414
18,497,239
25,270,857
20,615,021
24,986,115
42,602,945
27,600,538
14,082,791
13,347,887
3,910,240
35,001,560
22,129,775
39,637,054
32,346,827
12,371,034
28,636,781
3,609,419
22,935,456
19,689,290
36,165,060
25,345,564
11,736,757
12,533,710
3,432,052
9,338,399
17,947,422
35,815,820
21,272,214
10,443,414
8,112,135
3,268,099
19,846,407
16,848,544
32,023,189
24,809,152
9,888,299
7,742,841
3,215,633
28,640,837
14,609,632
29,667,758
20,726,962
9,122,985
9,433,505
3,350,674
14,613,566
5,984,493
14,389,659
211,129,955
5,466,814
11,710,584
204,187,379
6,824,654
9,263,096
155,408,996
4,723,597
10,498,967
150,425,314
4,812,429
4,958,286
158,210,067
8,144,624
17,823,737
148,108,464
(16,395,635)
(9,003,888)
27,149,297
(23,334,968)
(12,307,657)
35,874,600
51,338,901
56,400
(201,083)
38,210,834
(38,215,000)
36,065,000
6,739,350
30,601,167
(28,843,505)
37,438,933
(36,814,074)
58,703,110
37,632,262
799,695
16,343,861
(16,141,034)
998,356
26,507,505
(22,504,515)
4,002,990
21,865,917
(20,134,948)
1,529,886
50,142,916
(54,899,336)
31,308,580
7,996,099
$
21,236,627
12.7%
$
57,695,321
10.5%
$
31,152,287
$
11.4%
169
1,054,756
12.5%
$ (21,805,082)
8.1%
$
19,000,923
19.1%
CITY OF CORONA
Schedule 5a
1
Water Sales By User Type
Last Ten Fiscal Years
Fiscal
Year
Ended
June 30
Residential
Commercial
Acre
Feet
Acre
Feet
% of
Total
% of
Total
Industrial
Acre
Feet
Public Agency
% of
Total
Acre
Feet
% of
Total
Agricultural,
Irrigation
and Other
Acre
Feet
Total
% of Acre Feet %
Total
Total Total
2003
25,896
65.1
6,723
16.9
557
1.4
2,904
7.3
3,699
9.3
39,779
100
2004
27,678
64.0
6,750
15.6
1,738
4.0
3,493
8.1
3,563
8.2
43,222
100
2005
24,905
67.0
3,463
9.0
1,450
4.0
3,271
9.0
3,391
11.0
36,480
100
2006
26,630
66.2
3,848
9.6
1,573
3.9
3,546
8.8
4,607
11.5
40,204
100
2007
29,866
66.0
4,230
9.5
1,751
3.5
3,898
9.0
5,754
12.0
45,499
100
2008
27,598
67.5
3,803
9.3
1,557
3.8
3,039
7.4
4,870
11.9
40,867
100
2009
26,761
61.5
4,916
11.3
1,592
3.8
2,973
6.8
7,280
16.7
43,522
100
2010
23,752
64.5
4,404
12.0
1,216
3.3
4,278
11.6
3,165
8.6
36,815
100
2011
22,121
65.4
3,812
11.3
1,158
3.4
3,058
9.0
3,700
10.9
33,849
100
2012
22,735
65.5
3,662
10.6
1,184
3.4
3,355
9.7
3,768
10.9
34,704
100
Note: 1) Amounts include reclaimed water sales.
Source: Corona Department of Water and Power.
170
CITY OF CORONA
Schedule 5b
Assessed Value and Actual Value of Taxable Property
Last Ten Fiscal Years (in thousands of dollars)
Fiscal
Year
Ended
June 30
Residential
Property
Commercial
Property
Industrial
Property
Other
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
$ 6,389,708
7,013,653
8,010,907
9,128,473
10,821,087
12,074,893
11,825,460
10,338,756
10,340,114
10,406,831
$ 812,953
863,630
1,016,443
1,166,793
1,398,608
1,638,755
1,810,186
2,392,421
2,177,188
2,101,432
$ 1,318,860
1,415,667
1,540,064
1,688,866
1,927,206
2,068,380
2,111,604
2,175,301
2,159,963
2,108,882
$ 1,366,953
1,489,990
1,614,156
1,747,079
1,956,392
2,153,807
2,179,903
1,628,324
1,679,857
1,602,344
Less:
Total Taxable
Tax Exempt
Assessed
Property
Value
$ 117,192
171,882
119,068
190,746
200,971
243,155
233,038
251,763
271,357
293,954
$ 9,771,282
10,611,058
12,062,502
13,540,465
15,902,322
17,692,680
17,694,115
16,283,039
16,085,765
15,925,535
Total
Direct Tax
Rate
1.0079
1.0061
1.0053
1.0043
1.0025
1.0018
1.0012
1.0006
1.0000
1.0000
Source: HdL Coren & Cone, Riverside County Assessor Combined tax rolls.
Note: Property in the City is reassessed each year. Property is assessed at actual value; therefore, the assessed
values are equal to the actual value. Tax rates are per $1,000 of assessed value.
171
CITY OF CORONA
Schedule 6a
Potable Water Rates
Last Ten Fiscal Years
Monthly Base Rates
172
Fiscal
1
Year
2003
2004
2005
2005
2006
2007
2008
2009
2010
2011
2012
Quantity
Rate per
100 C.F.
$
1.08
1.08
1.08
1.21
1.33
1.44
1.61
1.77
1.81
1.85
1.92
Ready-To-Serve Charge
2
$
3
4
5
5/8"
11.05
11.05
11.05
12.38
13.62
14.71
16.40
18.04
18.04
18.04
18.44
$
3/4"
14.50
14.50
14.50
16.24
17.86
19.29
21.51
23.66
23.66
23.66
24.18
$
1"
20.75
20.75
20.75
23.24
25.56
27.60
30.77
33.85
33.85
33.85
34.59
$
1 1/2"
36.15
36.15
36.15
40.49
44.54
48.10
53.63
58.99
58.99
58.99
60.29
$
2"
52.75
52.75
52.75
59.08
64.99
70.19
78.26
86.09
86.09
86.09
87.98
$
3"
90.15
90.15
90.15
100.97
111.07
119.96
133.76
147.13
147.13
147.13
150.37
$
4"
138.50
138.50
138.50
155.12
170.63
184.28
205.47
226.02
226.02
226.02
230.99
$
6"
254.35
254.35
254.35
284.87
313.36
338.43
377.35
415.08
415.08
415.08
424.21
$
8"
374.10
374.10
374.10
418.99
460.89
497.76
555.00
610.50
610.50
610.50
623.93
1) There are instances where the rates were changed during the fiscal year.
2) For Fiscal Year 2009-10 and forward, the stated rate per 100 C.F. is for Residential Tier 1 of the Budget Based Water Rate Structure adopted with Ordinance
3) For Fiscal Year 2009-10 rate includes a pass-through charge from Western Municipal Water District (WMWD) of $.29 per 100 C.F. adopted with Ordinance
No. 3005, effective September 4, 2009.
4) For Fiscal Year 2010-11, the quantity rate included a pass-through charge form WMWD of $0.04 per 100 C.F. for Tier 1 rates.
5) For Fiscal Year 2011-12, the quantity rate includes a pass-through charge from WMWD of $0.04 per 100 C.F. for Tier 2 rates.
Source: City of Corona Department of Water and Power.
CITY OF CORONA
Schedule 6b
Reclaimed Water Rates
2
Last Six Fiscal Years
Monthly Base Rates
173
Fiscal
1
Year
2007
2008
2009
2010
2011
2012
Quantity
Rate per
100 C.F.
2
0.99
1.26
1.39
1.39
1.39
1.44
Ready-To-Serve Charge
3
5/8"
N/A
N/A
N/A
18.04
18.04
18.04
3/4"
19.29
21.51
23.66
23.66
23.66
23.66
1"
27.60
30.77
33.85
33.85
33.85
33.85
1 1/2"
48.10
53.63
58.99
58.99
58.99
58.99
2"
70.19
78.26
86.09
86.09
86.09
86.09
3"
119.96
133.76
147.13
147.13
147.13
147.13
4"
184.28
205.47
226.02
226.02
226.02
226.02
6"
338.43
377.35
415.08
415.08
415.08
415.08
8"
497.76
555.00
610.50
610.50
610.50
610.50
1) There are instances where the rates were changed during the fiscal year.
2) Rates for Reclaimed Water were established July 2, 2006 by Ordinance 2854.
3) For Fiscal Year 2009-10 and forward, the stated rate per 100 C.F. is for Tier 1 of the Budget Based Water Rate Structure adopted with Ordinance No. 3025,
effective March 19, 2010.
Source: City of Corona Department of Water and Power.
CITY OF CORONA
Schedule 6c
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years (rate per $100 of assessed value)
City Direct Rates
Overlapping Rates
2
Year
Basic
1
Rate
General
Obligation
Debt Service
Total
Direct
Corona/Norco
School
District
Alvord
School
District
Metropolitan
Water
District
Riverside City
Community
College
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
0.0079
0.0061
0.0053
0.0043
0.0025
0.0018
0.0012
0.0006
0.0000
0.0000
1.0079
1.0061
1.0053
1.0043
1.0025
1.0018
1.0012
1.0006
1.0000
1.0000
0.0237
0.0237
0.0237
0.0146
0.0107
0.0379
0.0411
0.0403
0.0452
0.0661
0.1164
0.0765
0.0755
0.0731
0.0580
0.0526
0.1064
0.1255
0.1195
0.1185
0.0067
0.0061
0.0058
0.0052
0.0047
0.0045
0.0043
0.0043
0.0037
0.0037
0.0000
0.0000
0.0180
0.0180
0.0180
0.0126
0.0125
0.0124
0.0150
0.0170
Notes:
1) The City's basic property tax rate may only be increased by a majority vote of the City's residents. Rates for
debt service are set based on each year's requirements.
2) Overlapping rates are those of local and county governments that apply to property owners within the City of
Corona. Not all overlapping rates apply to all Corona property owners.
Source: Riverside County Auditor-Controller.
174
CITY OF CORONA
Schedule 7a
Principal Water Customers
Current Year and Nine Years Ago
2012
Water Customer
City of Corona
Corona-Norco USD
MG Properties
Eagle Glen Master HOA
EWR, Inc
Waterstone at Corona Pointe
Integrated Protein Tech
Brookwood Villa Apartments
Aseptic Solutions
Avalonbay Communities, Inc.
Hi-Country-Corona Inc
GTS Property Hollywood Inc.
Matt Construction Corp
Archstone Communities
Westdale Asset Management
Water
Charges
$ 2,973,379
890,421
454,110
217,478
180,665
167,221
155,941
149,767
148,459
146,969
2003
Percent of
Total Water
Rank Revenues
1
2
3
4
5
6
7
8
9
10
6.12%
1.83%
0.94%
0.45%
0.37%
0.34%
0.32%
0.31%
0.31%
0.30%
$ 5,484,410
11.29%
Source: Corona Department of Water and Power.
175
Water
Charges
Percent of
Total Water
Rank Revenues
$ 1,359,951
491,678
1
2
5.16%
1.87%
232,557
87,055
3
10
0.88%
0.33%
105,664
5
0.40%
156,709
98,758
91,584
90,729
87,150
4
6
7
8
9
0.59%
0.37%
0.35%
0.34%
0.33%
$ 2,801,834
10.63%
CITY OF CORONA
Schedule 7b
Principal Property Tax Payers
Current Year and Nine Years Ago
2012
Taxable
Assessed
Value
Taxpayer
Watson Laboratories Inc.
Castle and Cooke Corona Inc.
Kaiser Foundation Health Plan Inc
Waterstone Apartments NF
Price Reit Inc.
Dart Container Corporation of Calif
223 1 DL Holdings
Dix Leasing Corporation
IBM Credit LLC
Rexco Magnolia
Dairy Farmers of America Inc.
Vista Hospital Systems Inc
ERP Operating LP
CTF 16 Baywood
Corona Investment Inc.
Evans Withycombe Residential
$
Total
$
182,465,420
168,970,180
124,973,107
119,710,626
76,271,792
72,180,895
71,926,584
60,120,374
53,195,439
48,108,163
2003
Rank
Percentage of
Total City
Taxable
Assessed
Value
1
2
3
4
5
6
7
8
9
10
1.15%
1.06%
0.78%
0.75%
0.48%
0.45%
0.45%
0.38%
0.33%
0.30%
977,922,580
6.13%
Source: HdL Coren & Cone, Riverside County Assessor combined tax rolls.
176
Rank
Percentage of
Total City
Taxable
Assessed
Value
90,682,408
2
0.93%
75,014,030
4
0.77%
64,628,680
77,468,765
5
3
0.66%
0.79%
96,172,377
52,805,400
44,553,598
28,603,754
26,680,129
25,000,000
1
6
7
8
9
10
0.98%
0.54%
0.46%
0.29%
0.27%
0.26%
Taxable
Assessed
Value
$
$ 581,609,141
5.95%
CITY OF CORONA
Schedule 8
Property Tax Levies and Collections
Last Ten Fiscal Years
Collected within the
Fiscal Year of the Levy
Fiscal Year
Ended
June 30,
Taxes Levied
for the
1
Fiscal Year
Amount
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
$ 14,732,029
15,932,786
17,960,358
18,409,599
23,054,281
25,254,270
25,036,199
22,628,536
22,451,824
22,448,815
$ 13,947,475
14,583,817
16,344,312
16,237,649
19,690,971
20,898,139
21,120,483
19,921,737
19,619,070
20,689,087
Total Collections to Date
Percentage
of Levy
Delinquent
Tax
2
Collections
Amount
Percentage
of Levy
94.67%
91.53%
91.00%
88.20%
85.41%
82.75%
84.36%
88.04%
87.38%
92.16%
$ 707,460
596,595
639,412
827,438
1,439,660
2,427,904
2,092,540
1,424,373
1,155,344
-
$ 14,654,935
15,180,412
16,983,724
17,065,087
21,130,631
23,326,043
23,213,023
21,346,110
20,774,414
20,689,087
99.48%
95.28%
94.56%
92.70%
91.66%
92.36%
92.72%
94.33%
92.53%
92.16%
Note: 1) Amounts excluded debt service levies and Redevelopment property tax increment.
2) Amounts excluded interest and penalties.
Source: City of Corona Finance Department;
Riverside County Auditor-Controller’s Office.
177
CITY OF CORONA
Schedule 9
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years (dollars in thousands, except per capita)
Governmental Activities
Fiscal
Year
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
General
Obligation
Bonds
Redevelopment
Bonds
Lease
Revenue
Bonds
$
$
$ 56,770
55,840
53,940
51,975
87,130
73,390
70,695
67,905
65,015
35,215
5,065
3,955
3,635
2,535
1,925
1,445
950
-
49,205
48,030
45,485
42,755
63,175
90,940
87,805
85,075
82,025
-
1
Loans
Payable
$
2,711
2,308
1,907
1,485
1,039
569
-
Lease
Payable
$
1,100
976
883
787
686
583
475
26
25,283
Long-Term
Agreement
Payable
Special
Assessment
Bonds
$
$
1,301
1,115
929
6,882
5,725
4,530
3,301
-
1
Note: 1) No longer reported under governmental activities as the result of the dissolution of the Corona
Redevelopment Agency as of February 1, 2012.
Details regarding the City’s outstanding debt can be found in the notes to the financial statements.
178
5,095
4,025
3,255
2,930
2,565
2,225
1,900
1,435
1,025
660
Business-Type Activities
Installment
Agreement
Payable
Long-Term
Installment
Payable
$
$
432
296
173
37
2,000
2,036
1,764
1,485
34,190
33,455
32,690
31,895
31,070
30,215
29,325
28,400
27,435
26,430
Term
Loan
Payable
Capital
Leases
$ 19,233
18,194
35,171
43,429
43,322
41,990
39,625
37,207
34,724
32,176
$ 172,628
172,628
172,628
172,628
172,628
172,628
172,628
172,628
172,628
172,628
Certificates
of
Participation
Contracts
Payable
Total
Primary
Government
$
$
$
73,450
73,175
101,760
101,310
100,590
98,145
95,645
93,035
90,320
87,495
179
717
717
717
717
717
690
690
690
690
690
420,164
413,303
453,804
453,857
505,949
519,739
507,463
492,941
478,953
382,062
Percent
of
Personal
Income
13.4%
12.6%
13.0%
12.1%
12.8%
12.9%
12.9%
12.2%
11.6%
9.1%
Per
Capita
$
$
$
$
$
$
$
$
$
$
3,067
2,914
3,150
3,137
3,462
3,525
3,415
3,277
3,117
2,489
CITY OF CORONA
Schedule 10
Ratios of Net General Bonded Debt Outstanding
Last Ten Fiscal Years (dollars in thousands, except per capita)
General Bonded Debt Outstanding
Fiscal
Year
180
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Note:
General
Obligation
Bonds
$
5,065
3,955
3,635
2,535
1,925
1,445
950
-
RedevelopSpecial
ment
Assessment
3
Bonds
Bonds
$ 49,205
48,030
45,485
42,755
63,175
90,940
87,805
85,075
82,025
-
$
5,095
4,025
3,255
2,930
2,565
2,225
1,900
1,435
1,025
660
Lease
Revenue
Bonds
$
56,770
55,840
53,940
51,975
87,130
73,390
70,695
67,905
65,015
62,020
Total
General
Bonded
Debt
Less Net
Position
Restricted
for Debt
Repayment
Net
General
Bonded
Debt
$ 116,135
111,850
106,315
100,195
154,795
168,000
161,350
154,415
148,065
62,680
$ 19,092
13,179
7,982
6,898
28,839
25,251
11,969
7,080
10,774
3,418
$ 97,043
98,671
98,333
93,297
125,956
142,749
149,381
147,335
137,291
59,262
Percentage
of Actual
1
Value of
Property
0.99%
0.93%
0.82%
0.69%
0.79%
0.81%
0.84%
0.90%
0.85%
0.37%
1) See Schedule 5b for property value data.
2) Population data can be found in Schedule 14.
3) No longer considered general bonded debt as the result of the dissolution of the Corona Redevelopment
Agency as of February 1, 2012.
Details regarding the City's outstanding debt can be found in the notes to the financial statement.
Per
2
Capita
$
708
696
683
645
862
968
1,005
980
894
408
CITY OF CORONA
Schedule 11
1
Direct and Overlapping Governmental Activities Debt
As of June 30, 2012 (dollars in thousands)
Direct and Overlapping Tax and Assessment Debt:
Metropolitan Water District
Riverside City Community College District
Alvord Unified School District
Corona-Norco Unified School District
Alvord Unified School District CFD No. 2006-1
Corona-Norco Unified School District CFD No. 6
Corona-Norco Unified School District CFD No. 88-1
Corona-Norco Unified School District CFD No. 97-1
Corona-Norco Unified School District CFD No. 99-1
Corona-Norco Unified School District CFD No. 99-2, Imp Areas A, B, C
Corona-Norco Unified School District CFD No. 00-1
Corona-Norco Unified School District CFD No. 01-1, Imp Areas A & B
Corona-Norco Unified School District CFD No. 01-2, Imp Areas A, B, C
Corona-Norco Unified School District CFD No. 03-3, Imp Area A
Corona-Norco Unified School District CFD No. 03-5
Corona-Norco Unified School District CFD No. 04-2, Imp Areas 1 & 3
City of Corona CFD No. 86-2
City of Corona CFD No. 89-1
City of Corona CFD No. 90-1
City of Corona CFD No. 97-2
City of Corona CFD No. 2000-1
City of Corona CFD No. 2001-2
City of Corona CFD No. 2002-1
City of Corona CFD No. 2002-4
City of Corona CFD No. 2003-2
City of Corona CFD No. 2004-1
California Statewide Communities Development Authority CFD No. 2002-1
City of Corona 1915 Act Bonds
Total Overlapping Tax and Assessment Debt
Total Direct Tax and Assessment Debt
Total Direct and Overlapping Tax and Assessment Debt
Direct and Overlapping General Fund Debt:
Overlapping General Fund Obligations
Riverside County General Fund Obligations
Riverside County Pension Obligations
Riverside County Board of Education COPs
Corona-Norco Unified School District General Fund Obligations
Alvord Unified School District General Fund Obligation Debt
Total Overlapping General Fund Obligations
Direct General Fund Obligations:
City of Corona General Fund Obligations
Total Direct General Fund Obligations
Debt
Outstanding
$ 196,545
230,858
205,161
274,073
8,340
410
1,515
1,288
3,177
6,654
2,335
9,595
14,760
5,250
2,560
4,510
11,630
19,325
28,895
12,575
6,590
3,130
25,185
8,420
7,590
3,365
4,230
5,035
$
655,042
357,540
5,055
30,035
2,027
87,963
Total Direct and Overlapping General Fund Obligations
Less:
Riverside County self-supporting obligations
City-obligated debt supported by special assessment payments
Total Net Direct and Overlapping General Fund Obligations
Total Gross Direct Debt
Total Net Direct Debt
Total Gross Overlapping Debt
Total Net Overlapping Debt
Gross Combined Total Direct and Overlapping Debt3
Net Combined Total Direct and Overlapping Debt
181
Est. Percentage
2
Applicable
0.740%
22.812%
16.980%
57.044%
16.860%
100.000%
90.618%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
9.107%
9.107%
9.107%
57.044%
16.980%
Share of
Overlapping Debt
$
1,454
52,663
34,836
156,342
1,406
410
1,373
1,288
3,177
6,654
2,335
9,595
14,760
5,250
2,560
4,510
11,630
19,325
28,895
12,575
6,590
3,130
25,185
8,420
7,590
3,365
4,230
5,035
434,584
$
434,584
$
$
59,655
32,561
460
17,133
344
110,154
$
87,963
87,963
100.000%
$
$
198,117
1,129
660
196,328
$
$
$
$
$
$
87,963
87,303
544,738
543,609
632,701
630,912
CITY OF CORONA
Schedule 11
Direct and Overlapping Governmental Activities Debt
As of June 30, 2012 (dollars in thousands)
Notes to Schedule 11
1) Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. The schedule
estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and
businesses of Corona. This process recognizes that, when considering the City's ability to issue and repay long-term debt,
the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply
that every taxpayer is a resident, and therefore responsible for the repaying the debt, of each overlapping government.
2) For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated using assessed property
values. Applicable percentages were estimated by determining the portion of another governmental unit’s assessed value
that is within the City’s boundaries and dividing it by each unit’s total assessed value.
3) Amount excluded tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and
non-bonded capital lease obligations.
182
CITY OF CORONA
Schedule 12
Legal Debt Margin Information
Last Ten Fiscal Years (dollars in thousands)
Legal Debt Margin Calculation for Fiscal Year 2012
Assessed Value
Debt Limit (15% of assessed value)
Debt Applicable to limit:
General obligation bonds
Less: Amount set aside for repayment of general obligation debt
Total net debt applicable to limit
Legal Debt Margin
183
Debt Limit
$
2003
2004
2005
2006
$ 1,465,692
$ 1,591,659
$ 1,809,375
$ 2,031,070
3,505
2,871
2,298
1,719
$ 1,462,187
$ 1,588,788
$ 1,807,077
$ 2,029,351
Total net debt
applicable to limit
Legal debt margin
$ 15,925,535
2,388,830
Total debt applicable
to the limit as a percentage
of debt limit
0.239%
0.180%
0.127%
0.085%
25,283
25,283
2,363,547
Fiscal Year
2007
2008
$
$
2,385,348
$ 2,653,302
1,158
600
2,384,190
$ 2,652,702
0.049%
0.023%
01
2009
2010
$ 2,654,117
$ 2,442,456
(43)
$ 2,654,160
$ 2,442,456
-0.002%
Note: Under State Finance Law, the City's outstanding general obligation debt should not exceed 15 percent of total assessed property value.
By law, the general obligation debt subject to the limitation may be offset by amounts set aside for repaying general obligation bonds.
0.000%
2011
2012
$ 2,412,865
$ 2,388,830
$
$
25,283
$ 2,387,582
1.048%
25,283
$ 2,363,547
1.058%
CITY OF CORONA
Schedule 13
Pledged-Revenue Coverage
Last Ten Fiscal Years (dollars in thousands)
Lease Revenue Bonds
Fiscal
Year
Lease
Payments
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
$
1,827
1,931
3,306
4,184
4,501
5,673
5,663
5,686
5,677
5,669
Current
Account
Balance
$ 2,209
1,511
1,068
177
272
152
150
125
126
166
Special Assessment Bonds
Debt Service
Principal
Interest
$
790
930
1,900
1,965
2,025
2,620
2,695
2,790
2,890
2,995
$ 1,749
2,499
2,450
2,390
2,626
3,212
3,118
3,021
2,915
2,801
Special
Assessment
Collections
Coverage
4
1.59
1.00
1.01
1.00
1.03
1.00
1.00
1.00
1.00
1.01
1
$
1,410
822
582
560
543
487
571
525
376
212
Current
Account
Balance
Debt Service
Principal
Interest
$ 5,579
1,411
1,020
448
77
38
28
79
152
238
$ 5,460
1,070
770
325
365
340
325
465
410
365
Notes: 1) 2002 Lease Revenue bonds issued; capitalized interest used to make debt payments.
2) 2003 COPs issued with capitalized interest.
3) 2005 COPs issued with capitalized interest.
4) 2006 Lease Revenue bonds issued; escrow used to make 2000 LRB payment.
Details regarding the City's outstanding debt can be found in the notes to the financial statements.
184
$
617
355
283
241
214
187
162
131
97
67
Coverage
1.15
1.57
1.52
1.78
1.07
1.00
1.23
1.01
1.04
1.04
Schedule 13
Pledged-Revenue Coverage
Last Ten Fiscal Years (dollars in thousands)
Water Revenue Bonds
Fiscal
Year
Lease
Payments
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
$ 2,286
2,284
2,286
2,285
2,286
2,288
2,281
2,281
2,281
2,278
Certificates of Participation
Debt Service
Principal Interest Coverage
Current
Debt Service
Lease
Account
Payments Balance Principal Interest Coverage
$
$
710
735
765
795
825
855
890
925
965
1,005
$ 1,577
1,550
1,522
1,493
1,462
1,429
1,393
1,356
1,316
1,273
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
185
504
771
1,223
4,520
5,077
6,764
6,761
6,861
6,859
7,063
$
47
4,689
2,686
335
343
346
323
220
224
24
$
265
275
435
450
720
2,445
2,500
2,610
2,715
2,825
$ 286
2,779
3,469
4,390
4,710
4,665
4,582
4,476
4,367
4,261
1.00
1.79
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
2
3
CITY OF CORONA
Schedule 14
Demographic and Economic Statistics
Last Ten Calendar Years
(1)
Year
Population
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
137,006
141,822
144,070
144,661
146,164
147,428
148,597
150,416
153,649
153,484
(2)
Personal
Income
(thousands of
dollars)
$
3,142,951
3,274,812
3,492,689
3,754,532
3,959,729
4,032,746
3,942,278
4,031,149
4,114,259
4,206,843
Per
Capita
Personal
Income
$
22,940
23,091
24,243
25,954
27,091
27,354
26,530
26,800
26,777
27,409
(3)
(4)
(5)
Median
Age
School
Enrollment
Unemployment
Rate
n/a
n/a
n/a
n/a
n/a
n/a
30.5
31.5
32.5
32.6
Sources: 1) Population – California Department of Finance;
2) Personal Income –Economics & Politics, Inc.
3) Median Age – U.S. Census Bureau;
4) School Enrollment – Corona-Norco Unified School District;
5) Unemployment Rate – California Labor Market.
186
41,977
43,998
44,240
47,731
49,865
51,334
52,138
52,914
53,153
53,467
5.0%
4.8%
3.7%
3.5%
4.1%
6.1%
10.4%
10.3%
10.7%
9.3%
CITY OF CORONA
Schedule 15
Principal Employers
Current Year and Nine Years Ago
2012
Employer
Corona-Norco Unified School District
Corona Regional Medical Center
Watson Laboratories, Inc.
Fender USA Corona
City of Corona
Arizona Pipeline
Kaiser Permanente
Monster Engergy
TWR Framing Enterprises
Dart Container Corporation
All American Asphalt
Golden Cheese Co. of California
Doorway Manufacturing
Total
Employees
4,686
1,260
907
850
797
600
575
410
400
384
2003
Rank
Percentage
of Total City
Employment
1
2
3
4
5
6
7
8
9
10
5.42%
1.46%
1.05%
0.98%
0.92%
0.69%
0.66%
0.47%
0.46%
0.44%
12.55%
12,126
10,869
Source: City of Corona’s Economic Development Division;
California Labor Market.
187
Rank
Percentage
of Total City
Employment
4,335
1,101
1,231
700
1,058
1
3
2
8
5
5.95%
1.51%
1.69%
0.96%
1.45%
1,100
4
1.51%
701
950
400
550
7
6
10
9
0.96%
1.30%
0.55%
0.75%
Employees
16.63%
CITY OF CORONA
Schedule 16
Full-time Equivalent City Government Employees by Function/Program
Last Eight Fiscal Years
Full-time Equivalent Employees
2012
2011
2010
2009
2008
2007
2006
2005
Function/Program
General Government
Management Services
Human Resources
Information Technology
Finance
Community Development
1
Building
Police
Officers
Civilians
Fire
Firefighters and officers
Civilians
Public Works
Redevelopment
Administrative Services
Parks and Community Services
Library
Department of Water and Power
Transit Services
Total
8
8.5
13
27
17
0
9
10
14
32
21
0
9
10
14
32
21
0
12
11
15
36
27
0
19
15
18
41
24
24
19
15
17
42
26
24
12
13
17
41
21
23
13
12
17
41
20
22
152
60
176
72
177
67
179
72
191
91
191
91
175
87
167
90
112
5
74
0
5.5
22
15
112
1
121
7
77
16
121
7
76
17
121
10
84
17
124
23
102
16
124
22
102
15
111
22
93
17
106
26
94
17
28
17
107
1
28
17
112
1
35
18
113
1
48
20
111
1
49
19
130
1
50
18
146
1
50
19
137
1
632
708
709
751
868
887
847
832
Source: City of Corona Finance Department.
Note: 1) Building Department merged into Community Development Department during Fiscal Year 2008-09.
2) Data from nine years ago was not available.
188
CITY OF CORONA
Schedule 17
Operating Indicators by Function/Program
Last Eight Fiscal Years
Fiscal Year
2012
2011
2010
2009
2008
2007
2006
2005
Function/Program
Police
Physical Arrests
Parking Violations
Traffic Violations
Fire
Emergency Responses
Fires Extinguished
Inspections
Public Works
Street Resurfacing (miles)
Street Lights Repaired
Potholes Filled (sq. ft)
Parks and Community Services
Sportsfields Participation
Comm. Centers/Gym/Pool
Other Activity Participation
Library
Volumes in Collection
Total Volumes Borrowed
Water
New Connections
Water Main Repairs
Average Daily Consumption
(millions of gallons)
Wastewater
Average Daily Sewage Treatment
(millions of gallons)
Transit Services
Total Route Miles (round-trip)
Passengers
Fixed Route
Dial-A-Ride
4,472
4,976
8,691
5,701
6,541
9,456
5,337
3,241
10,087
5,693
6,768
13,357
5,026
8,165
11,389
5,298
9,806
11,931
4,696
8,147
13,923
4,259
8,657
16,885
9,843
326
1,929
9,606
318
1,478
9,683
378
2,560
9,480
387
2,124
10,139
439
2,072
10,238
515
1,039
9,997
499
865
9,644
503
1,529
1
1,093
13,316
8
1,811
25,557
85
1,775
38,187
70
1,991
51,223
6
1,721
33,936
172.51
1,307
42,000
9.80
1,336
37,389
11.75
1,158
36,294
2,325,101 1,832,892 1,746,257 1,307,866
216,729
239,464
249,295
279,548
232,701
211,533
259,179
249,407
828,717
309,814
217,500
486,114
310,604
153,301
459,002
307,888
126,542
462,852
303,460
128,991
170,435
169,188
166,163
177,028
1,991,581 2,034,932 1,262,964 1,191,239
175,648
956,152
165,102
540,612
165,474
673,450
161,495
722,032
80
37
133
46
217
45
269
6
158
6
504
10
801
9
656
38
31.0
30.2
32.9
39.0
36.5
35.0
35.2
38.1
13.0
13.7
13.0
13.0
13.0
13.0
12.2
12.2
39.0
39.0
39.0
39.0
39.0
44.4
44.7
44.7
150,815
57,577
146,983
58,892
162,423
66,481
153,783
61,285
152,568
58,153
165,104
64,689
Source: Various City departments.
Note: Data from nine years ago was not available.
189
166,744
63,122
163,062
64,079
CITY OF CORONA
Schedule 18
Capital Asset Statistics by Function/Program
Last Eight Fiscal Years
Fiscal Year
2012
2011
2010
2009
2008
2007
2006
2005
Function/Program
Police
Stations
Zone Offices
Patrol Units
Fire Stations
Streets
Streets and Alleys (miles)
1
Streetlights
Traffic Signals
Parks and Community Services
Total Park Acreage
Playgrounds
Baseball/softball diamonds
Soccer/football fields
Community Centers
Civic Center Auditorium Seating Cap
Fiesta Bandshell Seating Capacity
Water
Water Main (miles)
Fire Hydrants
Storage Capacity
(millions of gallons)
Wastewater
Sanitary Sewers (miles)
Storm Sewers (miles)
Treatment Capacity
(millions of gallons)
Transit Services
Minibuses
Fixed Route
Dial-A-Ride
1
2
53
7
1
2
60
7
1
2
65
7
1
3
65
7
1
3
74
7
1
3
74
7
1
3
66
7
1
3
58
7
403
11,353
169
398
11,237
170
398
11,733
168
398
11,682
166
383
11,711
161
380
11,688
163
376
11,300
157
371
10,540
153
376
27
36
18
7
380
500
376
27
37
18
7
380
500
376
27
39
17
7
380
500
376
26
35
15
7
380
500
364
30
35
15
7
380
500
364
30
33
14
7
380
500
342
29
33
14
7
250
500
347
30
32
11
7
250
500
677
8,996
676
8,788
684
8,692
670
8,496
670
8,421
622
8,300
606
7,904
566
7,611
51
51
53
53
44
44
46
41
444
166
16
442
168
16
447
168
16
445
165
16
436
161
14
394
154
14
382
148
19
376
145
16
4
10
5
10
5
9
5
9
5
9
5
9
5
9
5
9
Source: Various City departments.
Note: 1) Number of streetlights includes only the City-owned ones.
Data from nine years ago was not available.
190
APPENDIX B
DEFINITIONS AND SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
The following is a summary of certain provisions of the Indenture that are not described elsewhere.
This summary does not purport to be comprehensive and reference should be made to the respective
agreement for a full and complete statement of the provisions thereof.
DEFINITIONS
Unless the context otherwise requires, the terms defined in the Indenture shall, for all purposes of the
Indenture and of any indenture supplemental hereto and of any certificate, opinion or other document herein
mentioned, have the meanings herein specified, to be equally applicable to both the singular and plural forms of any
of the terms herein defined. In addition, all capitalized terms used herein and not otherwise defined in the Indenture
shall have the respective meanings given such terms in the Agency Agreement.
“1997 Certificates” means the $7,010,000 1997 Refunding Certificates of Participation (Wastewater
Treatment Facilities Project).
“1997 Escrow Account” means the account by that name established under the 1997 Escrow Agreement.
“1997 Escrow Agreement” means the Escrow Deposit and Trust Agreement dated as of June 1, 2013, by
and among the City, Corona Public Improvement Corporation, the Authority and the Escrow Bank.
“1997 Lease” means the Amended and Restated Lease Agreement, dated as of January 1, 1997, by and
between the City and the Corona Public Improvement Corporation.
“1997 Project” means the wastewater facilities so described in the Indenture.
“1997 SRF Loan” means State Revolving Fund Loan Contract No. 6-807-550-0, dated September 12, 1996,
as amended by Amendment No. 1 on June 25, 1997.
“1997 SRF Project” means the wastewater facilities so described in the Indenture.
“1997 Trust Agreement” means the Trust Agreement, dated as of January 1, 1997, by and among the City,
the Corona Public Improvement Corporation and the 1997 Trustee.
“1997 Trustee” and “2003 Trustee” mean BNY Western Trust Company as succeeded by The Bank of New
York Mellon Trust Company, N.A.
“2002 Lease Payments” mean those payments of the Authority to the City due under the Wastewater
Enterprise Lease Agreement.
“2003 Certificates” means the $68,030,000 City of Corona Certificates of Participation (Clearwater
Cogeneration Project and Recycled Water Project).
“2003 Escrow Account” means the account by that name established under the Escrow Agreement.
“2003 Escrow Agreement” means the Escrow Deposit and Trust Agreement dated as of June 1, 2013, by
and among the City, the Financing Authority, the Authority and the Escrow Bank.
“2003 Project” means the wastewater facilities so described in the Indenture.
B-1
“2003 Trust Agreement” means the Trust Agreement, dated as of May 1, 2003, by and among the City, the
Authority and the 2003 Certificates.
“2013 Project” means improvements to the Wastewater Enterprise, including equipment, all as more fully
described in the Indenture or such improvements or betterments to the Wastewater Enterprise as may be permitted
under the Indenture.
“Additional Payments” means the amounts payable by the Authority in the Indenture.
“Agency” means the Corona Redevelopment Agency, as succeeded in interest by the City of Corona as
successor agency thereto.
“Agency Agreement” means that certain Agency Agreement dated as of June 1, 2013, between the City and
Authority for the construction of the 2013 Project.
“Aggregate Maximum Annual Debt Service” means the maximum amount of Debt Service payable in any
Fiscal year on all Bonds Outstanding and any Parity Obligations outstanding or to be issued during the period from
the date of such calculation through the final maturity date of the Bonds and Parity Obligations, calculated using the
assumptions set forth in the definition of Debt Service.
“Agreement” means that certain Amended and Restated Joint Exercise of Powers Agreement, dated
February 6, 2013, by and among the City, the Agency and the Housing Authority, together with any amendments
thereof and supplements thereto.
“Allocated Costs” means an amount payable to the City based on an allocation of City overhead to the
Wastewater Enterprise (Allocated Costs do not include the 2002 Lease Payments).
“Authority” means the Corona Utility Authority, a joint powers authority duly organized and existing under
the laws of the State.
“Authorized Representative” means: (a) with respect to the Authority, its President, Vice President,
Executive Director, Treasurer, Secretary or any other person designated as an Authorized Representative of the
Authority by a Written Certificate of the Authority signed by its President and filed with the Trustee; and (b) with
respect to the City, its Mayor, City Manager, City Clerk, Deputy City Clerk, Treasurer, Finance Director or any
other person designated as an Authorized Representative of the City by a Written Certificate of the City signed by its
Mayor, City Manager and filed with the Trustee.
“Board” means the Board of Directors of the Authority.
“Bond Counsel” means (a) Best Best & Krieger LLP, or (b) any other attorney or firm of attorneys
appointed by or acceptable to the Authority of nationally-recognized experience in the issuance of obligations the
interest on which is excludable from gross income for federal income tax purposes under the Code.
“Bond Fund” means the fund by that name established and held by the Trustee pursuant to the Indenture.
“Bond Law” means the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 (commencing
with section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State, as in existence on the
Closing Date or as thereafter amended from time to time.
“Bond Register” means the books for registration maintained by Trustee pursuant to the Indenture.
“Bond Year” means each twelve-month period extending from September 2 in one calendar year to
September 1 of the succeeding calendar year, both dates inclusive, the first such Bond Year commencing on the
Closing Date and ending September 1, 2014.
B-2
“Bonds” means the $20,890,000 aggregate principal amount of Corona Public Financing Authority 2013
Wastewater Revenue Bonds (Wastewater Projects) authorized by and at any time Outstanding pursuant to the Bond
Law and the Indenture.
“Book-Entry Depository” shall mean DTC or any successor as Book-Entry Depository for the Bonds,
appointed pursuant to the Indenture.
“Business Day” means a day (other than a Saturday or a Sunday) on which banks are not required or
authorized to remain closed in the city in which the Trust Office is located.
“City” means the City of Corona.
“Closing Date” means June 26, 2013, being the date of delivery of the Bonds to the Original Purchaser.
“Code” means the Internal Revenue Code of 1986, as amended.
“Completion Date” means the date of completion of the acquisition, development and construction of the
2013 Project.
“Contracts” means all contracts, lease agreements, installment purchase agreements or loan agreements
with the State of California (including State Revolving Fund Loan Contract No. 7834-110 and 7838-110 as applied
to the State Water Board) or other parties, of the Authority previously or hereafter authorized and executed by the
Authority, the payments under which are payable from Net Revenues as described in the Indenture; and excluding
contracts entered into for operation and maintenance of the Wastewater Enterprise.
“Costs of Issuance” means all expenses incurred in connection with the authorization, issuance, sale and
delivery of the Bonds and the application of the proceeds of the Bonds, including but not limited to all
compensation, fees and expenses (including but not limited to fees and expenses for legal counsel) of the Authority
and the costs of the City for administration and supervision of the 2013 Project, initial fees and expenses of the
Trustee, title insurance premiums, municipal bond insurance premiums, appraisal fees, compensation to any
financial consultants or underwriters, legal fees and expenses, filing and recording costs, rating agency fees, costs of
preparation and reproduction of documents and costs of printing.
“Costs of Issuance Fund” means the fund by that name established and held by the Trustee pursuant to the
Indenture.
“Date of Delivery” means the date on which the Bonds are delivered to the Original Purchaser.
“Debt Service” means, for any period of calculation, the sum of:
(1)
the interest payable during such period on all outstanding Obligations, assuming that all
outstanding serial Obligations are retired as scheduled and that all outstanding term Obligations are redeemed or
paid from sinking fund payments as scheduled (except to the extent that such interest is capitalized or is reasonably
anticipated to be reimbursed to the Authority by the United States of America pursuant to Section 54AA of the Code
(Section 1531 of Title I of Division B of the American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5,
23 Stat. 115 (2009), enacted February 17, 2009)), or any future similar program);
(2)
those portions of the principal amount or accreted value of all outstanding serial
Obligations maturing in such period;
(3)
those portions of the principal amount of all outstanding term Obligations required to be
redeemed or paid in such period; and
(4)
those portions of the Contracts required to be made during such period, (except to the
extent the interest that evidenced and represented thereby is capitalized or is reasonably anticipated to be reimbursed
to the Authority by the United States of America pursuant to Section 54AA of the Code (Section 1531 of Title I of
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Division B of the American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5, 23 Stat. 115 (2009),
enacted February 17, 2009)), or any future similar program);
but less the earnings to be derived from the investment of moneys on deposit in debt service reserve funds
established for Obligations or Contracts;
provided that, as to any such Obligations or Contracts bearing or comprising interest at other than a fixed rate, the
rate of interest used to calculate Debt Service shall, for all purposes, be assumed to bear interest at a fixed rate equal
to the higher of:
(i)
the then current variable interest rate borne by such Obligations or Contracts plus 1%;
and
(ii)
the highest variable rate borne over the preceding 24 months by outstanding variable rate
debt issued by the Authority or, if no such variable rate debt is at the time outstanding, by variable rate debt of
which the interest rate is computed by reference to an index comparable to that to be utilized in determining the
interest rate for the debt then proposed to be issued; and
provided further that if any series or issue of such Obligations or Contracts have twenty-five percent (25%) or more
of the aggregate principal amount of such series or issue due in any one year, Debt Service shall be determined for
the period of determination as if the principal of and interest on such series or issue of such Obligations or Contracts
were being paid from the date of incurrence thereof in substantially equal annual amounts over a period of twentyfive (25) years from the date of calculation; and
provided further that the amount on deposit in a debt service reserve fund on any date of calculation of Debt Service
shall be deducted from the amount of principal due at the final maturity of the Obligations and Contracts for which
such debt service reserve fund was established and to the extent the amount in such debt service reserve fund is in
excess of such amount of principal, such excess shall be applied to the full amount of principal due, in each
preceding year, in descending order, until such amount is exhausted.
“Direct Costs” means the reasonable and necessary costs, expenses and purchases paid for maintaining and
operating the Wastewater Enterprise, including but not limited to (a) cost of electricity and other forms of energy
supplied to the Wastewater Enterprise, which includes Power Sales Payments, (b) the reasonable expenses of
management and repair and other costs and expenses necessary to maintain and preserve the Wastewater Enterprise
in good repair and working order and (c) the reasonable administrative costs of the Authority attributable to the
operation and maintenance of the Wastewater Enterprise, but in all cases excluding (i) debt service payable on
obligations incurred by the Authority with respect to the Wastewater Enterprise, (ii) depreciation replacement and
obsolescence charges or reserves therefor, and (iii) amortization of intangibles or other bookkeeping entries of a
similar nature.
“DTC” shall meant The Depository Trust Company, New York, New York, and its successors and assigns.
“Escrow Bank” means The Bank of New York Mellon Trust Company, N.A., as Escrow Bank under the
1997 Escrow Agreement and the 2003 Escrow Agreement.
“Event of Default” means any of the events specified in the Indenture.
“Federal Securities” means bills, certificates of indebtedness, notes, bonds, or other similar securities which
are direct, non-callable obligations of the United States of America, CATS, TIGERS, STRPS, or defeased municipal
bonds rated “AAA” by S&P and “Aaa” by Moody’s.
“Financing Authority” means the Corona Public Financing Authority.
“Fiscal Year” means any twelve-month period extending from July 1 in one calendar year to June 30 of the
succeeding calendar year, both dates inclusive, or any other twelve-month period selected and designated by the
Authority as its official fiscal year period.
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“Gross Revenues” means, for any Fiscal Year, the sum of all gross charges received for, and all other gross
income and receipts derived by the Authority from the lease and operation of the Wastewater Enterprise or
otherwise arising from the Wastewater Enterprise, including but not limited to investment earnings thereon,
including Wastewater Capital Impact Fees (including any fees levied with respect to reclaimed water) to the extent
such fees are allocable to the Wastewater Projects, and any operational participation revenues received. Gross
Revenues shall not include reimbursements from the United States of America pursuant to Section 54AA of the
Code (Section 1531 of Title I of Division B of the American Recovery and Reinvestment Act of 2009 (Pub. L. No.
111-5, 23 Stat. 115 (2009), enacted February 17, 2009)), or any future similar program).
“Indenture” means the Indenture of Trust, as originally executed or as it may from time to time be
supplemented, modified or amended by any Supplemental Indenture pursuant to the provisions of the Indenture.
“Independent Financial Consultant,” or “Independent Certified Public Accountant” means any individual or
firm engaged in the profession involved, appointed by Authority, and who, or each of whom, has a favorable
reputation in the field in which his/her opinion or certificate will be given, and:
(1)
is in fact independent and not under domination of Authority;
(2)
does not have any substantial interest, direct or indirect, with Authority; and
(3)
is not connected with Authority as an officer or employee of Authority, but who may be
regularly retained to make reports to Authority.
“Information Services” means the Electronic Municipal Market Access System of the Municipal Securities
Rulemaking Board at www.emma.msrb.org; and, in accordance with then current guidelines of the Securities and
Exchange Commission, such other services providing information with respect to called bonds as designated in a
certificate of an Authorized Representative delivered to the Trustee.
“Interest Account” means the account by that name established in the Bond Fund pursuant to the Indenture.
“Interest Payment Date” means each March 1 and September 1 commencing March 1, 2014.
“Minimum Rating” means a rating of “A” or better by Moody’s and S&P if S&P is then rating the Bonds.
In the event the rating system of Moody’s and S&P with respect to any particular Permitted Investment does not
include a rating category of “A,” the term “A” or better as used in the preceding sentence shall mean the highest
general rating category applicable to such Permitted Investment (determined without regard to any refinement or
gradation of such rating category by a numerical modifier, a plus or a minus sign, or otherwise).
“Moody’s” means Moody’s Investors Service, its successors and assigns.
“Net Revenues” means, for any Fiscal Year, an amount equal to all of the Gross Revenues received with
respect to such Fiscal Year, minus the amount required to pay all Direct Costs and Allocated Costs becoming
payable with respect to such Fiscal Year.
“Obligations” means all revenue bonds, certificates of participation, or notes authorized, executed, issued
and delivered by the Authority, the payments of which are payable from Net Revenues on a parity with the Bonds
and which are secured by a pledge of and lien on Net Revenues as described in the Indenture.
“Original Purchaser” means Stifel, Nicolaus & Company, Incorporated as the original purchaser of the
Bonds upon their delivery by the Trustee on the Closing Date.
“Outstanding” when used as of any particular time with reference to Bonds, means, subject to the
provisions of the Indenture, all Bonds except:
(a)
Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation;
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(b)
Bonds paid or deemed to have been paid pursuant to the Indenture; and
(c)
Bonds in lieu of or in substitution for which other Bonds shall have been authorized,
executed, issued and delivered by Authority pursuant to the Indenture.
“Owner” whenever used herein with respect to a Bond, means the person in whose name the ownership of
such Bond is registered on the Registration Books.
“Parity Obligations” means Obligations issued pursuant to the Indenture.
“Participant” means a member of, or participant in, DTC.
“Permitted Investments” The term “Permitted Investments” means:
1.
(a) Cash (fully insured by the Federal Deposit Insurance Corporation), (b) Direct obligations (other
than an obligation subject to variation in principal repayment) of the United States of America (“U.S. Treasury
Obligations”), (b) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by
the United States of America, (c) obligations fully and unconditionally guaranteed as to timely payment of principal
and interest by any agency or instrumentality of the United States of America when such obligations are backed by
the full faith and credit of the United States of America, or (d) evidences of ownership of proportionate interests in
future interest and principal payments on obligations described above held by a bank or trust company as custodian,
under which the owner of the investment is the real party in interest and has the right to proceed directly and
individually against the obligor and the underlying government obligations are not available to any person claiming
through the custodian or to whom the custodian may be obligated. THE ABOVE REFERENCED OBLIGATIONS
MAY CONSTITUTE DEFEASANCE OBLIGATIONS.
Any security used for defeasance must provide for the timely payment of principal and interest and cannot
be callable or prepayable prior to maturity or earlier redemption of the rated debt (excluding securities that do not have
a fixed par value and/or whose terms do not promise a fixed dollar amount at maturity or call date).
2.
Federal Housing Administration debentures.
3.
The listed obligations of government-sponsored agencies which are not backed by the full
faith and credit of the United States of America:
a)
Federal Home Loan Mortgage Corporation (FHLMC) senior debt obligations and
Participation certificates (excluded are stripped mortgage securities which are purchased at prices exceeding their
principal amounts)
b)
Farm Credit System (formerly Federal Land Banks, Federal Intermediate Credit Banks
and Banks for Cooperatives) consolidated system-wide bonds and notes
c)
Federal Home Loan Banks (FHL Banks) consolidated debt obligations
d)
Federal National Mortgage Association (FNMA) senior debt obligations and
mortgage-backed securities (excluded are stripped mortgage securities which are purchased at prices exceeding
their principal amounts)
4.
Unsecured certificates of deposit, time deposits, and banker acceptances (having maturities of
not more than 365days) of any bank, which may include the Trustee and its affiliates, the short-term obligations of
which are rated “A-1 +” or better by S&P and “Prime-1” by Moody’s.
5.
Deposits the aggregate amount of which are fully insured by the Federal Deposit Insurance
Corporation, in banks which may include the Trustee and its affiliates which have capital and surplus of at least $15
million.
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6.
Commercial paper (having original maturities of not more than 270 days) rated at the time of
purchase “A-1+” by S&P and “Prime-1” by Moody’s.
7.
Money market funds rated “Aam” or “AAm-G” by S&P, or better and if rated by Moody’s rated
“Aa2” or better, including such funds for which the Trustee, its affiliates or subsidiaries provide investment advisory
or other management services or for which the Trustee or an affiliate of the Trustee serves as investment
administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (i) the Trustee or
an affiliate of the Trustee receives fees from funds for services rendered, (ii) the Trustee collects fees for services
rendered pursuant to the Indenture, which fees are separate from the fees received from such funds, and (iii) services
performed for such funds and pursuant to the Indenture may at times duplicate those provided to such funds by the
Trustee or an affiliate of the Trustee.
8.
“State Obligations,” which means:
a)
Direct general obligations of any state of the United States of America or any
subdivision or agency thereof to which is pledged the full faith and credit of a state or any subdivision or
agency thereof, the unsecured general obligation debt of which is rated at least “A3” by Moody’s and/or at
least “A-” by S&P, or any obligation fully and unconditionally guaranteed by 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 described in (a) above and rated ‘A-1+” by S&P and/or ‘MIG-1” by Moody’s.
c)
Special Revenue Bonds (as defined in the United States Bankruptcy Code) of any state or
any subdivision or agency described in (a) above and rated “AA-” or better by S&P and/or “Aa3” or better by
Moody’s.
9.
Pre-refunded municipal obligations rated “AAA” by S&P and “Aaa” by Moody’s which are (1) not
subject to redemption prior to maturity or (2) the trustee for the municipal obligations has been given irrevocable
instructions concerning their call and redemption and the issuer of the municipal obligations has covenanted not to
redeem such municipal obligations other than as set forth in such instructions.
10.
Repurchase agreements: with (1) any domestic bank, or domestic branch of a foreign bank,
the long term debt of which is rated at least ‘A-” by S&P and ‘A3” Moody’s; or (2) any broker-dealer with ‘retail
customers” or a related affiliate thereof which broker-dealer has, or the parent company (which guarantees the
provider) of which has, long-term debt rated at least ‘A-” by S&P and ‘A3” by Moody’s, which broker-dealer
falls under the jurisdiction of the Securities Investors Protection Corporation; or (3) any other entity rated at least
‘A-” by S&P and ‘A3” Moody’s (each an ‘Eligible Provider”), provided that:
a)
(i) permitted collateral shall include U.S. Treasury Obligations, or senior debt
obligations of GNMA, FNMA or FHLMC (no collateralized mortgage obligations shall be permitted for these
providers), and (ii) collateral levels must be at least 102% of the total principal when the collateral type is
U.S. Treasury Obligations, 103% of the total principal when the collateral type is GNMA’s 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 therefore or for the issuer (the
‘Custodian") has possession of the collateral or the collateral has been transferred to the Custodian in accordance
with applicable state and federal laws (other than by means of entries on the transferor’s books) and such collateral
shall be marked to market;
c)
the collateral shall be marked to market on a daily basis and the provider or
Custodian shall send monthly reports to the trustee, the issuer setting forth the type of collateral, the collateral
percentage required for that collateral type, the market value of the collateral on the valuation date and the name of
the Custodian holding the collateral;
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d)
the repurchase agreement shall state and an opinion 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 all proceeds thereof;
e)
the repurchase agreement shall provide that if during its term the provider’s rating
by either Moody’s or S&P is withdrawn or suspended or falls below ‘A-” by S&P or ‘A3” by Moody’s, as
appropriate, the provider must, notify the issuer and the trustee within five (5) days of receipt of such notice.
Within ten (10) days of receipt of such notice, the provider shall either: (i) post Eligible Collateral, or (ii) assign the
agreement to an Eligible Provider. If the provider does not perform a remedy within ten (10) business days, the
provider shall, at the direction of the trustee repurchase all collateral and terminate the repurchase agreement, with
no penalty or premium to the issuer or the trustee.
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-” by S&P and “Aa3”
by Moody’s (each an “Eligible Provider”); provided that:
a)
interest payments are to be made to the trustee at times and in amounts as necessary to
pay debt service (or, if the investment agreement is for the construction fund, construction draws) on the Bonds;
b)
the invested funds are available for withdrawal without penalty or premium, to pay
debt service (or, if the investment agreement is for the construction fund, to pay construction costs) at any time
upon not more than seven (7) days’ prior notice; the issuer and the trustee hereby 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, the issuer setting forth the balance
the issuer or trustee has invested with the provider and the amounts and dates of interest accrued and paid by the
provider;
d)
the investment agreement shall state that is an unconditional and general obligation of the
provider, and is not subordinated to any other obligation of, the provider thereof or, if the provider is a bank, the
agreement or the opinion of counsel shall state that the obligation of the provider to make payments thereunder ranks
pari passu with the obligations of the provider to its other depositors and its other unsecured and unsubordinated
creditors;
e)
the issuer, the trustee shall receive an opinion of domestic counsel to the provider that
such investment agreement is legal, valid, binding and enforceable against the provider in accordance with its terms;
f)
the issuer, the trustee shall receive an opinion of foreign counsel to the provider (if
applicable) that (i) the investment agreement has been duly authorized, executed and delivered by the provider and
constitutes the legal, valid and binding obligation of the provider, enforceable against the provider in accordance
with its terms, (b) the choice of law of the state set forth in the investment agreement is valid under that
country’s laws and a court in such country would uphold such choice of law, and (c) any judgment rendered by 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 provider’s (or guarantor’s) rating by either S&P or Moody’s falls below
“AA-” or “Aa3,” the provider shall, at its option, within ten (10) days of receipt of publication of such
downgrade, either (i) post Eligible Collateral with the Authority, the Trustee or a third party acting solely as agent
therefore (the “Custodian”) free and clear of any third party liens or claims, or (ii) assign the agreement to an
Eligible Provider, or (iii) repay the principal of and accrued but unpaid interest on the investment;
(ii)
the provider’s rating by either S&P or Moody’s is withdrawn or
suspended or falls below “A-” or “A3,” the provider must, at the direction of the Authority or the Trustee, within
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ten (10) days of receipt of such direction, repay the principal of and accrued but unpaid interest on the investment,
in either case with no penalty or premium to the issuer or trustee.
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 FHLMC (no collateralized mortgage
obligations shall be permitted for these providers) and collateral levels must be 102% of the total principal when the
collateral type is U.S. Treasury Obligations, 103% of the total principal when the collateral type is GNMA’s and
104% of the total principal 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 provider or Custodian shall send monthly reports to
the trustee and the issuer setting forth the type of collateral, the collateral percentage required for that collateral
type, the market value of the collateral on the valuation date and the name of the Custodian holding the
collateral;
i)
the investment agreement shall state and an opinion of counsel shall be rendered, in the
event collateral is required to be pledged by the provider under the terms of the investment agreement, at the time
such collateral is delivered, that the Custodian has a perfected first priority security interest in the collateral, any
substituted collateral and all proceeds thereof;
j)
the investment agreement must provide that if during its term: (i) the provider shall
default in its payment obligations, the provider’s obligations and fails to cure such default within one (1) Business
Day, under the investment agreement shall, at the direction of the issuer or the trustee, be accelerated amounts
invested and accrued but unpaid interest thereon shall be repaid to the issuer or trustee, as appropriate, and (ii) the
provider shall become insolvent, not pay its debts as they become due, be declared or petition to be declared
bankrupt, etc. (“event of insolvency”), and such proceeding is not dismissed, vacated, stayed, or bonded pending
appeal within ninety (90) days, the provider’s obligations shall automatically be accelerated and amounts invested
and accrued but unpaid interest thereon shall be repaid to the issuer or trustee, as appropriate.
12.
Certificates of deposit, savings accounts, deposit accounts or money market deposits which are
fully insured by FDIC or FSLIC. In addition to the authority to invest funds in certificates of deposit, an investment
in non negotiable certificates of deposit made in accordance with the following conditions is an authorized
investment: (1) the financial institution selected by the Authority arranges for the deposit of the funds in certificates
of deposit in one or more federally insured depository institutions, wherever located, for the account of the investing
entity; (2) the full amount of the principal and accrued interest of each of the certificates of deposit is insured by the
United States or an instrumentality of the United States; (3) the financial institution selected by the Authority acts as
custodian for the Authority with respect to the certificates of deposit issued for the account of the Authority; and (4)
the financial institution acting as custodian (i) must agree in writing to hold the certificates of deposit in a segregated
trust for the benefit of the Authority and not as an asset on its general ledger or otherwise available to satisfy
obligations of creditors of such financial institution and (ii) must be rated at least "A" by S&P and "A2" by Moody’s
for deposits which exceed the amount insured by the FDIC or FSLIC.
13.
State of California Local Agency Investment Fund (LAIF).
14.
Forward Delivery or Forward Purchase Agreements and with underlying securities outlined in (1),
(2) and (3) above.
“Power Sales Payments” means the payments to be made by the Authority to the City pursuant to the
Power Sales Agreement (Wastewater Enterprise) dated as of May 1, 2003, by and between the City and the
Authority, as amended on June 1, 2005, by that Amendment No. 1 to Power Sales Agreement (Wastewater
Enterprise), and as further amended by that Amendment No. 2 to Power Sales Agreement, and which payments have
not been otherwise offset by other income or credits to the Wastewater Enterprise with respect to such payments.
“Principal Account” means the account by that name established in the Bond Fund pursuant to the
Indenture.
“Project Fund” means the fund by that name established pursuant to the Indenture.
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“Rebate Regulations” means the Proposed and Temporary Treasury Regulations issued under Section
148(f) of the Code.
“Record Date” means, with respect to any Interest Payment Date, the fifteenth (15th) calendar day of the
month preceding such Interest Payment Date whether or not such day is a business day.
“Redemption Fund” means the fund by that name established pursuant to the Indenture.
“Registration Books” means the records maintained by the Trustee pursuant the Indenture for the
registration and transfer of ownership of the Bonds.
“Representation Letter” means the letter of representations from the Authority to, or other instrument or
agreement of the Authority with, a Book-Entry Depository in which the Authority, among other things, makes
certain representations to such Book-Entry Depository with respect to the Bonds, the payment thereof and delivery
of notices with respect thereto.
“S&P” means Standard & Poor’s Ratings Group, its successors and assigns.
“Securities Depositories” means The Depository Trust Company, 55 Water Street, 50th Floor, New York,
New York 10041-0099 Attn. Call Notification Department, Fax (212) 855-7232; and, in accordance with then
current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities
depositories as the Authority may designate in a Written Certificate of the Authority delivered to the Trustee.
“Serial Bonds” means all of the Bonds excluding Term Bonds.
“Sinking Account” means the account by that name established in the Indenture.
“State” means the State of California.
“Supplemental Indenture” means any indenture hereafter duly authorized and entered into between the
Authority and the Trustee, supplementing, modifying or amending the Indenture; but only if and to the extent that
such Supplemental Indenture is specifically authorized hereunder.
“Tax Certificate” means that No Arbitrage and Tax Compliance Certificate executed on the Closing Date
by the Authority and the City with respect to the Bonds .
“Tax Regulations” means temporary and permanent regulations promulgated under or with respect to
sections 103 and 141 through 150, inclusive, of the Code.
“Term Bonds” means the Bonds maturing on September 1, 2031.
“Trustee” means The Bank of New York Mellon Trust Company, N.A., a national banking association
organized and existing under the laws of the United States, or its successor, as Trustee hereunder as provided in the
Indenture.
“Trust Office” means the corporate trust office of the Trustee at 400 South Hope Street, Suite 400, Los
Angeles, CA 90071, or at such other or additional offices as may be specified in writing to the Authority except that
with respect to presentation of Bonds for payment or for registration of transfer and exchange such term shall mean
the office or agency of the Trustee at which, at any particular time, its corporate agency business shall be conducted.
“Wastewater Capital Impact Fees” means any fee or fees collected by the City on behalf of the Authority
from Property Owners as a condition to the Authority providing wastewater service from the Wastewater Enterprise
to residential, commercial or industrial property, but shall not include any non-cash contributions to the Wastewater
Enterprise.
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“Wastewater Enterprise” means the City’s wastewater system, consisting of the property and assets
described in Exhibit A to the Wastewater Enterprise Lease Agreement.
“Wastewater Enterprise Fund” means the fund by that name held by the City on behalf of the Authority.
“Wastewater Enterprise Lease Agreement” means the Wastewater Enterprise Lease Agreement. dated as of
February 6, 2002, by and between the City and the Authority.
“Wastewater Enterprise Management Agreement” means the agreement of that name, dated as of February
6, 2002, by and between the Authority and the City.
“Wastewater Projects” means, collectively, the 2013 Project, the 2003 Project, the 1997 Project and the
1997 SRF Project.
“Written Certificate,” “Written Request” and “Written Requisition” of the Authority or the City mean,
respectively, a written certificate, request or requisition signed in the name of the Authority or the City by their
Authorized Representative. Any such instrument and supporting opinions or representations, if any, may, but need
not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so
combined shall be read and
ISSUANCE OF BONDS AND APPLICATION OF PROCEEDS; PARITY OBLIGATIONS
Establishment and Application of Costs of Issuance Fund. The Trustee shall establish, maintain and
hold in trust a separate fund designated as the “Costs of Issuance Fund.” The moneys in the Costs of Issuance Fund
shall be used and withdrawn by the Trustee to pay the Costs of Issuance upon submission of Written Requisitions of
the Authority stating the person to whom payment is to be made, the amount to be paid, the purpose for which the
obligation was incurred and that such payment is a proper charge against said fund. Each such written request of the
Authority shall be sufficient evidence to the Trustee of such facts stated therein and the Trustee shall have no duty to
confirm the accuracy of such facts. On November 1, 2013 or upon the earlier Written Request of the Authority, all
amounts remaining in the Costs of Issuance Fund shall be transferred by the Trustee to the Project Fund.
Project Fund. The Trustee shall establish, maintain and hold in trust a separate fund to be known as the
“Project Fund.” Except as otherwise provided herein, moneys in the Project Fund shall be used solely for the
acquisition and construction by the Authority of the 2013 Project. The Trustee shall disburse moneys in the Project
Fund from time to time to pay Project Costs (or to reimburse the Authority or the City, respectively, for payment of
2013 Project Costs) upon receipt by the Trustee of a Written Requisition of the Authority or the City which:
(a) states with respect to each disbursement to be made (i) the requisition number, (ii) the name and address of the
person, firm or corporation to whom payment will be made, (iii) the amount to be disbursed, (iv) that each
obligation mentioned therein is a proper charge against the Project Fund and has not previously been disbursed by
the Trustee from amounts in the Project Fund, (v) that all conditions precedent set forth herein and in the Agency
Agreement with respect to such disbursement have been satisfied, and (vi) that the amount of such disbursement is
for a Project Cost and (b) specifies in reasonable detail the nature of the obligation. The Trustee shall not be
responsible for the representations made in such Written Requisitions and may conclusively rely thereon and shall
be under no duty to investigate or verify any statements made therein. The description of the 2013 Project, and
Exhibit B hereto, may be amended, upon the direction of the Authority. Upon the filing with the Trustee of a
Completion Certificate with respect to the 2013 Project, the Trustee shall withdraw all amounts then on deposit in
the Project Fund and transfer such amounts to the Bond Fund.
Notwithstanding the foregoing provisions of the Indenture, upon the occurrence and continuation of an
Event of Default under and as defined in the Indenture the Trustee shall immediately withdraw all amounts then on
deposit in the Project Fund and apply such amounts in accordance with the provisions of the Indenture.
Validity of Bonds. The recital contained in the Bonds that the same are issued pursuant to the Constitution
and laws of the State shall be conclusive evidence of their validity and of compliance with the provisions of law in
their issuance and shall not be affected in any way with respect to or in connection with any other agreement.
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Senior Obligations; Parity Obligations. After the Closing Date, as long as any Bonds are outstanding and
payable, the Authority shall not issue or incur any bond, note, warrant, evidence of indebtedness, contract,
instrument or other agreement payable from Net Revenues the payment of which is prior and senior to the payment
of the Bonds.
The Authority may issue or incur any bond, note, warrant, evidence of indebtedness, contract, instrument or
other agreement secured by a pledge of and lien on Net Revenues equally and ratably with the Bonds (referred to
herein as “Parity Obligations”) subject to the following provisions:
(a)
The Authority is not in default under the term of the Indenture.
(b)
(i) Net Revenues, as certified by the Authority, for the most recent audited Fiscal Year
preceding the date of execution of the Parity Obligations, plus (ii) projected Net Revenues (as described below) are
at least equal to 125% of Aggregate Maximum Annual Debt Service.
The projections described in (b)(ii) above may take into account (1) increases in the charges made
for service from the Wastewater Enterprise which have been adopted by the Authority prior to the date of issuance
or incurrence of such Parity Obligations, but which were not in effect for all or part of such preceding Fiscal Year,
and which are scheduled to be effective in the period of Debt Service shown for such Parity Obligations, and (2) an
allowance for estimated additional average annual Net Revenues from any additions or connections to or
improvements or extensions of the Wastewater Enterprise which have occurred from the end of Fiscal Year
preceding the date of execution of the Parity Obligations.
(c)
Notwithstanding the requirements described above, Parity Obligations may be issued or
incurred to refund outstanding Parity Obligations if, after giving effect to the application of the proceeds thereof,
total Debt Service will not be increased in any Fiscal Year in which Parity Obligations (outstanding on the date of
issuance or incurrence of such refunding Parity Obligations, but excluding such refunding Parity Obligations) not
being refunded are outstanding.
(d)
The Authority may but shall not be required to fund a reserve fund or obtain a reserve
fund surety or instrument with respect to any Parity Obligations. If a reserve fund is funded for any Parity
Obligations or a qualified reserve fund surety or instrument is obtained with respect to any Parity Obligations, such
funded reserve fund or qualified reserve fund surety or instrument shall secure only the related Parity Obligations
and shall not support the Bonds or any other Parity Obligations.
(e)
Subordinate Obligations. The Authority further covenants that the Authority shall not
issue or incur any Subordinate Obligations unless Net Revenues or projected Net Revenues, calculated in the same
manner as described in paragraph (b) above, are equal to at least 100% of the sum of Debt Service on all Parity
Obligations and Subordinate Obligations outstanding immediately subsequent to the incurring of such additional
obligations.
PLEDGE OF NET REVENUES; FUNDS AND ACCOUNTS; PAYMENT OF PRINCIPAL AND INTEREST
Pledge and Assignment; Bond Fund.
(a)
Subject only to the provisions of the Indenture permitting the application thereof for the purposes
and on the terms and conditions set forth in the Indenture, all of the Net Revenues and any other amounts (including
proceeds of the sale of the Bonds) held in any fund or account established pursuant to the Indenture are hereby
pledged to secure the payment of the principal of and interest on the Bonds in accordance with their terms and the
provisions of the Indenture. Said pledge, charge and assignment shall constitute a first lien on and security interest
on the Net Revenues and shall attach, be perfected and be valid and binding from and after the Closing Date,
without any physical delivery thereof or further act.
(b)
The Wastewater Enterprise Fund shall be held by the City on behalf of the Authority. Authority
shall cause the City to deposit all of the Gross Revenues immediately upon receipt in the Wastewater Enterprise
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Fund. On or after the first day of each month, amounts deposited in the Wastewater Enterprise Fund shall be
disbursed in the following order of priority:
i.
payment of Direct Costs and Allocated Costs for the preceding month; and
ii.
payment of debt service coming due on any bonds, notes or obligations of the Authority
relating to the Wastewater Enterprise.
Amounts remaining in the Wastewater Enterprise Fund immediately after making the transfers required to
be made pursuant to this Section shall be used by the Authority for any lawful purpose of the Authority.
(c)
The Authority hereby transfers in trust, grants a security interest in and assigns to the Trustee, for
the benefit of the Owners from time to time of the Bonds, all of the Net Revenues and all of the rights of the
Authority hereunder (but none of its duties or obligations hereunder). The Trustee shall be entitled to and shall
collect and receive all of the Net Revenues, and any Net Revenues collected or received by the Authority shall be
deemed to be held, and to have been collected or received, by the Authority as the agent of the Trustee and shall
forthwith be paid by the Authority to the Trustee. The Trustee also shall be entitled to and shall, subject to the
provisions of the Indenture, take all steps, actions and proceedings which the Trustee determines to be reasonably
necessary in its judgment to enforce all of the rights of the Trustee under the Indenture.
(d)
All Net Revenues shall be promptly deposited by the Trustee upon receipt thereof in a special fund
designated as the “Bond Fund” which the Trustee shall establish, maintain and hold in trust; except that all moneys
received by the Trustee and required hereunder to be deposited in the Redemption Fund shall be promptly deposited
in such Fund. All Net Revenues deposited with the Trustee shall be held, disbursed, allocated and applied by the
Trustee only as provided in the Indenture.
Net Revenues. Not later than the first Business Day preceding each date on which principal of or interest
on the Bonds becomes due and payable, the Trustee shall transfer from the Bond Fund and deposit into the
following respective accounts (each of which the Trustee shall establish and maintain within the Bond Fund), the
following amounts in the following order of priority, the requirements of each such account at the time of deposit to
be satisfied before any transfer is made to any account subsequent in priority:
(a)
The Trustee shall deposit in the Interest Account an amount required to cause the
aggregate amount on deposit in the Interest Account to be at least equal to the amount of interest becoming due and
payable on such date on all Bonds then Outstanding.
(b)
The Trustee shall deposit in the Principal Account an amount required to cause the
aggregate amount on deposit in the Principal Account to equal the principal amount of the Bonds coming due and
payable on such date.
(c)
The Trustee shall deposit in the Sinking Account an amount equal to the aggregate
principal amount of the Term Bonds required to be redeemed on such date, if any, pursuant to the Indenture.
Application of Interest Account. All amounts in the Interest Account shall be used and withdrawn by the
Trustee solely for the purpose of paying interest on the Bonds as it shall become due and payable (including accrued
interest on any Bonds purchased or redeemed prior to maturity pursuant to the Indenture).
Application of Principal Account. All amounts in the Principal Account shall be used and withdrawn by
the Trustee solely to pay the principal amount of the Bonds at their respective maturity dates.
Application of Sinking Account. All moneys on deposit in the Sinking Account shall be used and
withdrawn by the Trustee for the sole purpose of redeeming or purchasing (in lieu of redemption) Term Bonds
pursuant to the Indenture.
Application of Redemption Fund. The Trustee shall establish and maintain the Redemption Fund,
amounts in which shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the
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Bonds to be redeemed pursuant to the Indenture; provided, however, that at any time prior to selection for
redemption of any such Bonds, the Trustee may apply such amounts to the purchase of Bonds at public or private
sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is
payable from the Interest Account) as shall be directed pursuant to a Written Request of the Authority, except that
the purchase price (exclusive of accrued interest) may not exceed the redemption price then applicable to the Bonds.
Investments. (a) All moneys in any of the funds or accounts established with the Trustee pursuant to the
Indenture shall be invested by the Trustee solely in Permitted Investments. Such investments shall be directed by
the Authority pursuant to a Written Request of the Authority filed with the Trustee at least two (2) Business Days in
advance of the making of such investments. In the absence of any such directions from the Authority, the Trustee
shall invest any such moneys in Permitted Investments described in clause (7) of the definition thereof, provided that
as long as the Trustee is The Bank of New York Mellon Trust Company, N.A., the Trustee shall invest such money
in the money market fund set forth in the letter of authorization and direction executed by the Authority and
delivered to the Trustee. If no specific money market fund has been specified by the Authority, the Trustee shall
make a request to the Authority for investment directions. Such moneys shall be held in cash, uninvested, until
specific investment directions are provided by the Authority to the Trustee. Permitted Investments purchased as an
investment of moneys in any fund shall be deemed to be part of such fund or account.
Prior to the Completion Date, all interest or gain derived from the investment of amounts in any of the
funds or accounts established hereunder shall be deposited in the Project Fund. Following the Completion Date, all
interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall
be deposited in the Bond Fund from time to time on or before each Interest Payment Date. For purposes of
acquiring any investments hereunder, the Trustee may commingle funds held by it hereunder. The Trustee may act
as principal or agent in the acquisition or disposition of any investment and may impose its customary charges
therefor. The Trustee shall incur no liability for losses arising from any investments made pursuant to the Indenture.
The Authority acknowledges that to the extent regulations of the Comptroller of the Currency or other
applicable regulatory entity grant the Authority the right to receive brokerage confirmations of security transactions
as they occur, the Authority specifically waives receipt of such confirmations to the extent permitted by law. The
Trustee will furnish the Authority periodic cash transaction statements which shall include detail for all investment
transactions made by the Trustee under the Indenture.
Valuation of Investments. For the purpose of determining the amount in any fund or account, the value of
Permitted Investments credited to such fund shall be valued quarterly by the Trustee at the market value thereof
(excluding any accrued interest). The Trustee may utilize computer pricing services as are available to it in making
such valuations. Any deficiency in a fund or account resulting from a decline in market value shall be restored by
the Authority no later than the next scheduled quarterly valuation date.
PARTICULAR COVENANTS
Punctual Payment. The Authority shall punctually pay or cause to be paid the principal of and interest
and premium (if any) on all the Bonds in strict conformity with the terms of the Bonds and of the Indenture,
according to the true intent and meaning thereof, but only out of Net Revenues and other assets pledged for such
payment as provided in the Indenture.
Extension of Payment of Bonds. The Authority shall not directly or indirectly extend or assent to the
extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase of
such Bonds or by any other arrangement, and in case the maturity of any of the Bonds or the time of payment of any
such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any
default hereunder, to the benefits of the Indenture, except subject to the prior payment in full of the principal of all
of the Bonds then Outstanding and of all claims for interest thereon which shall not have been so extended. Nothing
in the Indenture shall be deemed to limit the right of the Authority to issue Bonds for the purpose of refunding any
Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity of the Bonds.
Against Encumbrances. The Authority shall not create, or permit the creation of, any pledge, lien, charge
or other encumbrance upon the Net Revenues and other assets pledged or assigned under the Indenture while any of
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the Bonds are Outstanding, except as permitted by the Indenture. Subject to this limitation, the Authority expressly
reserves the right to enter into one or more other indentures for any of its corporate purposes, and reserves the right
to issue other obligations for such purposes.
Power to Issue Bonds and Make Pledge and Assignment. The Authority is duly authorized pursuant to
law to issue the Bonds and to enter into the Indenture and to pledge and assign the Net Revenues and other assets
purported to be pledged and assigned, respectively, under the Indenture in the manner and to the extent provided in
the Indenture. The Bonds and the provisions of the Indenture are and will be the legal, valid and binding special
obligations of the Authority in accordance with their terms, and the Authority and the Trustee shall at all times,
subject to the provisions of the Indenture and to the extent permitted by law, defend, preserve and protect said
pledge and assignment of Net Revenues and other assets and all the rights of the Bond Owners under the Indenture
against all claims and demands of all persons whomsoever.
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 corporate trust industry standards, in which
complete and accurate entries shall be made of all transactions made by it relating to the proceeds of Bonds, the
Gross Revenues, the Net Revenues and all funds and accounts established pursuant to the Indenture. Such books of
record and account shall be available for inspection by the Authority and the City, during business hours and under
reasonable circumstances, upon reasonable notice.
Rate Covenant. The Authority hereby covenants to fix, prescribe, revise and collect rates and charges for
the services and facilities furnished by the Wastewater Enterprise, or cause the City to do so, during each Fiscal
Year which (together with other funds accumulated from Gross Revenues and which are lawfully available to the
Authority for payment of any of the following amounts during such Fiscal Year) are at least sufficient, after making
allowances for contingencies and errors in estimates, to pay the following amounts in the following order:
(a).
all Direct Costs and Allocated Costs of the Wastewater Enterprise estimated by the
Authority to become due and payable in such Fiscal Year;
(b)
all Debt Service coming due and payable in such Fiscal Year; and
(c)
all payments required to meet any other obligations of Authority which are charges, liens
or encumbrances upon, or payable from, the Net Revenues.
The Authority shall fix, prescribe, revise and collect rates and charges for the services and facilities
furnished by the Wastewater Enterprise, or cause the City to do so, during each Fiscal Year which are sufficient to
yield Net Revenues, at least equal to one hundred and twenty-five percent (125%) of the amounts payable under the
preceding clause (b) in such Fiscal Year.
Maintenance. Throughout the term of the Indenture, all improvement, repair and maintenance of the
Wastewater Projects, shall be the responsibility of the Authority, and the Authority shall pay for or otherwise
arrange for the payment of all utility services supplied to the Wastewater Projects, which may include, without
limitation, janitor service, security, power, gas, telephone, light, heating, water and all other utility services, and
shall pay for or otherwise arrange for the payment of the cost of the repair and replacement of the Wastewater
Projects resulting from ordinary wear and tear.
Operation of Wastewater Projects. The Authority covenants and agrees to operate the Wastewater
Projects in an efficient and economical manner and to operate, maintain and preserve the Wastewater Projects in at
least as good repair and working order as on the effective date of the Indenture. The Authority covenants that, in
order to fully preserve and protect the priority and security of the Net Revenues, the Authority shall pay from the
Gross Revenues and discharge all lawful claims for labor, materials and supplies furnished for or in connection with
the Wastewater Projects which, if unpaid, may become a lien or charge upon the Gross Revenues or the Net
Revenues prior or superior to the lien granted hereunder, or which may otherwise impair the ability of the Authority
to pay the Net Revenues in accordance with the Indenture. The Authority shall be responsible for any fines,
liabilities, or other debts coming due as a result of the operation of the Wastewater Projects.
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Provisions Regarding Insurance. The Authority shall maintain or cause to be maintained the policies of
insurance listed herein. The Authority shall file with the Trustee a certificate stating that the Authority has complied
with the Indenture, within 60 days of the end of each fiscal year. The Trustee is entitled to rely on such certificate
without undertaking to independently investigate the representations contained therein. The Authority shall
maintain:
(a)
Insurance against loss or damage to any structures constituting any part of the
Wastewater Enterprise, as is customarily maintained with respect to works and properties of a like character, which
may be carried in conjunction with any other policies of fire and extended coverage insurance;
(b)
Public Liability and Property Damage the minimum coverages of which shall be
$1,000,000 for personal injury or death per person and $3,000,000 for personal injury or deaths of two or more
persons in each accident or event, and property damage insurance in the minimum coverage of $100,000 per event,
respectively, the property damage being subject to a maximum $25,000 deductible per accident. Such insurance may
be maintained in the form of a minimum $3,000,000 single limit policy covering all such risks;
(c)
Worker’s compensation insurance issued by a responsible carrier authorized under the
laws of the State of California to insure employers against liability for compensation under the Worker’s
Compensation Insurance and Safety Act now in force in California, or any act hereafter enacted as an amendment or
supplement thereto or in lieu thereof, such worker’s compensation insurance to cover all persons employed in
connection with the Wastewater Enterprise and to cover full liability for compensation under any such act aforesaid,
based upon death or bodily injury claims made by, for or on behalf of any person incurring or suffering injury or
death during or in connection with the Wastewater Enterprise.
(d)
Any insurance required by the Indenture, except insurance required under the Indenture,
may be maintained by the Authority in the form of self-insurance. Such self-insurance shall be maintained on a basis
which is actuarially sound as established by the Authority’s risk manager or an independent insurance consultant
which determination shall be made annually. Any deficiency shall be corrected within 60 days of the Authority
becoming aware of such deficiency.
Inability to Obtain Insurance. Notwithstanding the provisions of the Indenture, if at any time Authority
shall be unable to obtain or maintain insurance to the extent required by the Indenture on reasonable terms, either as
to amounts or as to risks, the failure to maintain such insurance shall not constitute a default under the Indenture if
the Authority shall cause the employment of an independent insurance consultant having a favorable reputation for
skill and experience in such matters, for the purpose of reviewing such insurance requirements and making
recommendations respecting the type, amounts and provisions of reasonably obtainable insurance, including selfinsurance, or the establishment of other generally accepted forms of alternative protection that should be carried in
lieu thereof, or the infeasibility of obtaining insurance, and if the Authority shall comply with the recommendations
made in such report. A signed copy of the report of the insurance consultant shall be filed with the Trustee, and the
insurance requirements specified in the Indenture shall be deemed to be modified to conform with the
recommendations in such report.
Observance of Laws and Regulations. The Authority will well and truly keep, observe and perform or
cause to be kept, observed and performed all valid and lawful obligations or regulations now or hereafter imposed
on it by contract, or prescribed by any law of the United States, or of the State of California, or by any officer, board
or commission having jurisdiction or control, as a condition of the continued enjoyment of any and every right,
privilege or franchise now owned or hereafter acquired by the Authority, including its right to exist and carry on
business as a public body, corporate and political, to the end that such rights, privileges and franchises shall be
maintained and preserved, and shall not become abandoned, forfeited or in any manner impaired.
Eminent Domain or Insurance Award. The Authority shall cause amounts received as awards as a result
of the taking of all or any part of the Wastewater Projects by the lawful exercise of eminent domain or the receipt of
insurance award for any casualty loss for any of the Wastewater Projects to be used to repair or replace the
Wastewater Projects or portion thereof so damaged or taken by eminent domain. Alternatively, the Authority and
the City may amend the Indenture to add water capital facilities to be constructed or acquired with the net proceeds
of such insurance or condemnation award. If the Authority cannot repair, replace or substitute the Wastewater
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Projects, then the City may make a deposit pursuant to the Indenture and use such funds for the first date of
redemption pursuant to the Indenture.
Disclaimer of Warranties. The City has made no warranty or representation, either express or implied, as
to the value, design, condition, merchantability or fitness for any particular purpose or fitness for the use
contemplated by the Authority of the Wastewater Projects, or any other representation or warranty with respect to
the Wastewater Projects. In no event shall the City be liable for incidental, indirect, special or consequential
damages in connection with or arising out of the Indenture for the existence, furnishing, functioning or Authority’s
use of the Wastewater Projects.
No Arbitrage. The Authority shall not take, or permit to be taken by the Trustee or otherwise, any action
with respect to the proceeds of the Bonds which, if such action had been reasonably expected to have been taken, or
had been deliberately and intentionally taken, on the date of issuance of the Bonds would have caused the Bonds to
be “arbitrage bonds” within the meaning of Section 148 of the Code.
Rebate Requirement. The Authority shall take any and all actions necessary to assure compliance with
Section 148(f) of the Code, relating to the rebate of excess investments earnings, if any, to the federal government.
Private Activity Bond Limitation. The Authority shall assure that the Proceeds of the Bonds are not so
used as to cause the Bonds to satisfy the private business tests of Section 141(b) of the Code.
Private Loan Financing Limitation. The Authority shall assure that the proceeds of the Bonds are not so
used as to cause the Bonds to satisfy the private loan financing test of Section 141(c) of the Code.
Federal Guaranty Prohibition. The Authority shall not take any action or permit or suffer any action to
be taken if the result of the same would be to cause any of the Bonds to be “federally guaranteed” within the
meaning of Section 149(b) of the Code.
Maintenance of Tax-Exemption. The Authority shall take any and all actions necessary to assure the
exclusion of interest on the Bonds from the gross income of the Owners of the Bonds to the same extent as such
interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the
Bonds.
Waiver of Laws. The Authority shall not at any time insist upon or plead in any manner whatsoever, or
claim or take the benefit or advantage of, any stay or extension law now or at any time hereafter in force that may
affect the covenants and agreements contained in the Indenture or in the Bonds, and all benefit or advantage of any
such law or laws is hereby expressly waived by the Authority to the extent permitted by law.
Protection of Security and Rights of Owners. The Authority will preserve and protect the security of the
Bonds and the rights of the Owners. From and after the date of issuance of any Bonds, such Bonds shall be
incontestable by the Authority.
Continuing Disclosure. The Authority hereby covenants and agrees that it will comply with and carry out
all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of the
Indenture, failure of the Authority or the Trustee to comply with the Continuing Disclosure Agreement shall not be
considered an Event of Default; however, the Trustee (at the request of any participating underwriter or the Owners
of at least 25% aggregate principal amount of Outstanding Bonds and upon being indemnified to its satisfaction
therefor, shall) or any Bondowner may but shall not be obligated to seek mandamus or specific performance by
court order, to cause the Authority to comply with its obligations under this Section.
Further Assurances. The Authority will make, execute and deliver any and all such further indentures,
instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the
performance of the Indenture and for the better assuring and confirming unto the Owners of the Bonds of the rights
and benefits provided in the Indenture.
B-17
EVENTS OF DEFAULT AND REMEDIES
Events of Default. The following events shall be Events of Default under the Indenture:
(a)
Default in the due and punctual payment by the Authority of the principal of any Bonds when and
as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption,
by acceleration, or otherwise.
(b)
Default in the due and punctual payment by the Authority of any installment of interest on any
Bonds when and as the same shall become due and payable.
(c)
Default by the Authority in the observance of any of the other covenants, agreements or conditions
on its part in the Indenture or in the Bonds contained, if such default shall have continued for a period of thirty (30)
days after written notice thereof, specifying such default and requiring the same to be remedied, shall have been
given to the Authority by the Trustee; provided, however, that if in the reasonable opinion of the Authority the
default stated in the notice can be corrected, but not within such thirty (30) day period, such default shall not
constitute an Event of Default hereunder if the Authority shall commence to cure such default within such thirty (30)
day period and thereafter diligently and in good faith cure such failure in a reasonable period of time.
(d)
The occurrence and continuation of an event of default under and as defined in any other
obligation of the Authority secured by a pledge of Net Revenues on a parity with the pledge made hereunder.
Remedies Upon Event of Default. If any Event of Default shall occur, then, and in each and every such
case during the continuance of such Event of Default, the Trustee shall at the written direction of the Owners of not
less than a majority in aggregate principal amount of the Bonds at the time Outstanding, declare the principal of all
of the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any
such declaration the same shall become and shall be immediately due and payable, anything in the Indenture or in
the Bonds contained to the contrary notwithstanding.
Any such declaration is subject to the condition that if, at any time after such declaration and before any
judgment or decree for the payment of the moneys due shall have been obtained or entered, the Authority, to the
extent of the proportionate share of the deficiency, shall deposit with the Trustee a sum sufficient to pay all the
principal of and installments of interest on the Bonds payment of which is overdue, with interest on such overdue
principal at the rate borne by the respective Bonds to the extent permitted by law, and the reasonable fees, charges
and expenses (including those of its attorneys) of the Trustee, and any and all other Events of Default known to the
Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of
such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the
Trustee to be adequate shall have been made therefor, then, and in every such case, the Owners of not less than a
majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the Authority and the
Trustee, or the Trustee if such declaration was made by the Trustee, may, on behalf of the Owners of all of the
Bonds, rescind and annul such declaration and its consequences and waive such Event of Default; but no such
rescission and annulment shall extend to or shall affect any subsequent Event of Default, or shall impair or exhaust
any right or power consequent thereon.
Application of Net Revenues and Other Funds After Default. If an Event of Default shall occur and be
continuing, all Net Revenues and any other funds then held or thereafter received by the Trustee under any of the
provisions of the Indenture shall be applied by the Trustee as follows and in the following order:
(a)
To the payment of any expenses necessary in the opinion of the Trustee to protect the
interests of the Owners of the Bonds and payment of reasonable fees, charges and expenses of the Trustee
(including reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers
and duties under the Indenture;
(b)
To the payment of the principal of and interest then due on the Bonds (upon presentation
of the Bonds to be paid, and stamping or otherwise noting thereon of the payment if only partially paid, or
surrender thereof if fully paid) in accordance with the provisions of the Indenture, as follows:
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First: To the payment to the persons entitled thereto of all installments of interest then due in the
order of the maturity of such installments, and, if the amount available shall not be sufficient to pay in full any
installment or installments maturing on the same date, then to the payment thereof ratably, according to the
amounts due thereon, to the persons entitled thereto, without any discrimination or preference; and
Second: To the payment to the persons entitled thereto of the unpaid principal of any Bonds
which shall have become due, whether at maturity or by acceleration or redemption, with interest on the overdue
principal at the rate borne by the respective Bonds (to the extent permitted by law), and, if the amount available
shall not be sufficient to pay in full all the Bonds, together with such interest, then to the payment thereof ratably,
according to the amounts of principal due on such date to the persons entitled thereto, without any discrimination or
preference.
Trustee to Represent Bond Owners. The Trustee is hereby irrevocably appointed (and the successive
respective Owners of the Bonds, by taking and holding the same, shall be conclusively deemed to have so appointed
the Trustee) as trustee and true and lawful attorney-in-fact of the Owners of the Bonds for the purpose of exercising
and prosecuting on their behalf such rights and remedies as may be available to such Owners under the provisions of
the Bonds, the Indenture and applicable provisions of any law. Upon the occurrence and continuance of an Event of
Default or other occasion giving rise to a right in the Trustee to represent the Bond Owners, the Trustee in its
discretion may, and upon the written request of the Owners of a majority in aggregate principal amount of the Bonds
then Outstanding and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its
rights or the rights of such Owners by such appropriate action, suit, mandamus or other proceedings as it shall deem
most effectual to protect and enforce any such right, at law or in equity, either for the specific performance of any
covenant or agreement contained herein, or in aid of the execution of any power herein granted, or for the
enforcement of any other appropriate legal or equitable right or remedy vested in the Trustee or in such Owners
under the Bonds, the Indenture or any other law; and upon instituting such proceeding, the Trustee shall be entitled,
as a matter of right, to the appointment of a receiver of the Net Revenues and other assets pledged under the
Indenture, pending such proceedings. All rights of action under the Indenture or the Bonds or otherwise may be
prosecuted and enforced by the Trustee without the possession of any of the Bonds or the production thereof in any
proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in the
name of the Trustee for the benefit and protection of all the Owners of such Bonds, subject to the provisions of the
Indenture.
Bond Owners’ Direction of Proceedings. Anything in the Indenture to the contrary notwithstanding, the
Owners of a majority in aggregate principal amount of the Bonds then Outstanding, shall have the right, by an
instrument or concurrent instruments in writing executed and delivered to the Trustee, and upon indemnification of
the Trustee to its reasonable satisfaction, to direct the method of conducting all remedial proceedings taken by the
Trustee hereunder, provided that such direction shall not be otherwise than in accordance with law and the
provisions of the Indenture, and that the Trustee shall have the right to decline to follow any such direction which in
the opinion of the Trustee would expose it to liability.
Limitation on Bond Owners’ Right to Sue. Notwithstanding any other provision of the Indenture, no
Owner of any Bonds shall have the right to institute any suit, action or proceeding at law or in equity, for the
protection or enforcement of any right or remedy under the Indenture or any other applicable law with respect to
such Bonds, unless (a) such Owner shall have given to the Trustee written notice of the occurrence of an Event of
Default; (b) the Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have made
written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or
proceeding in its own name; (c) such Owner or Owners shall have tendered to the Trustee reasonable indemnity
against the costs, expenses and liabilities to be incurred in compliance with such request; (d) the Trustee shall have
failed to comply with such request for a period of sixty (60) days after such written request shall have been received
by, and said tender of indemnity shall have been made to, the Trustee; and (e) no direction inconsistent with such
written request shall have been given to the Trustee during such sixty (60) day period by the Owners of a majority in
aggregate principal amount of the Bonds then Outstanding.
Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case,
to be conditions precedent to the exercise by any Owner of Bonds of any remedy hereunder or under law; it being
understood and intended that no one or more Owners of Bonds shall have any right in any manner whatever by his
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or their action to affect, disturb or prejudice the security of the Indenture or the rights of any other Owners of Bonds,
or to enforce any right under the Bonds, the Indenture, or other applicable law with respect to the Bonds, except in
the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted,
had and maintained in the manner herein provided and for the benefit and protection of all Owners of the
Outstanding Bonds, subject to the provisions of the Indenture.
Absolute Obligation of Authority. Nothing in the Indenture or in any other provision of the Indenture or
in the Bonds contained shall affect or impair the obligation of the Authority, which is absolute and unconditional, to
pay the principal of and interest and premium (if any) on the Bonds to the respective Owners of the Bonds at their
respective dates of maturity, or upon call for redemption, as herein provided, but only out of the Net Revenues and
other assets herein pledged therefor, or affect or impair the right of such Owners, which is also absolute and
unconditional, to enforce such payment by virtue of the contract embodied in the Bonds.
Termination of Proceedings. In case any proceedings taken by the Trustee, any one or more Bond
Owners on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have
been determined adversely to the Trustee, or the Bond Owners, then in every such case the Authority, the Trustee
and the Bond Owners, subject to any determination in such proceedings, shall be restored to their former positions
and rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the Authority, the
Trustee and the Bond Owners shall continue as though no such proceedings had been taken.
Remedies Not Exclusive. No remedy herein 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, to the
extent permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or
hereafter existing at law or in equity or otherwise.
No Waiver of Default. No delay or omission of the Trustee, or of any Owner of the Bonds to exercise any
right or power arising upon the occurrence of any Event of Default shall impair any such right or power or shall be
construed to be a waiver of any such Event of Default or an acquiescence therein; and every power and remedy
given by the Indenture to the Trustee, or the Owners of the Bonds may be exercised from time to time and as often
as may be deemed expedient.
THE TRUSTEE
Duties, Immunities and Liabilities of Trustee.
(a)
The Trustee shall, prior to an Event of Default, and after the curing or waiver of all Events of
Default which may have occurred, perform such duties and only such duties as are expressly and specifically set
forth in the Indenture and no implied duties or covenants shall be read into the Indenture against the Trustee. The
Trustee shall, during the existence of any Event of Default (which has not been cured or waived), exercise such of
the rights and powers vested in it by the Indenture, and use the same degree of care and skill in its exercise, as
responsible person would exercise or use under the circumstances in the conduct of his or her own affairs.
(b)
The Authority may remove the Trustee at any time unless an Event of Default shall have occurred
and then be continuing, and the Authority shall at any time upon the request of the Owners of not less than a
majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys duly authorized in writing)
or if at any time the Trustee shall cease to be eligible in accordance with the Indenture, or shall become incapable of
acting, or shall be adjudged 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 by giving written notice of such removal to the Trustee and
the City and thereupon shall appoint a successor Trustee by an instrument in writing. Any such removal shall be
made upon at least thirty (30) days’ prior written notice to the Trustee.
(c)
The Trustee may at any time resign by giving written notice of such resignation to the Authority
and by giving the Bond Owners notice of such resignation by mail at the respective addresses shown on the
Registration Books at least 45 days prior to the date of resignation. Upon receiving such notice of resignation, the
Authority shall promptly appoint a successor Trustee by an instrument in writing.
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(d)
Any removal or resignation of the Trustee and appointment of a successor Trustee shall become
effective upon acceptance of appointment by the successor Trustee. If no successor Trustee shall have been
appointed and have accepted appointment within forty-five (45) days of giving notice of removal or notice of
resignation as aforesaid, the Authority shall petition any federal or state court for the appointment of a successor
Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor
Trustee. Any successor Trustee appointed under the Indenture, shall signify its acceptance of such appointment by
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, shall become vested with all the moneys,
estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if
originally named Trustee herein; but, nevertheless at the Written Request of the Authority or the request of the
successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or
further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and
confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any
property held by it under the Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any
money or other property subject to the trusts and conditions herein set forth. Upon request of the successor Trustee,
the Authority shall execute and deliver any and all instruments as may be reasonably required for more fully and
certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers,
trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in this
subsection, the Authority shall mail or cause the successor Trustee to mail a notice of the succession of such Trustee
to the trusts hereunder to each rating agency which is then rating the Bonds and to the Bond Owners at the
respective addresses shown on the Registration Books. If the Authority fails to mail such notice within fifteen (15)
days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be
mailed at the expense of the Authority.
(e)
Any Trustee appointed under the Indenture shall be a corporation or association organized and
doing business under the laws of any state or the United States of America or the District of Columbia, authorized
under such laws to exercise corporate trust powers, which shall have (or, in the case of a corporation included in a
bank holding company system, the related bank holding company shall have) a combined capital and surplus of at
least Fifty Million Dollars ($50,000,000), and subject to supervision or examination by federal or State agency, so
long as any Bonds are Outstanding. If such corporation or association publishes a report of condition at least
annually pursuant to law or to the requirements of any supervising or examining agency above referred to then for
the purpose of this subsection (e), the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this subsection (e), the Trustee shall resign
immediately in the manner and with the effect specified in the Indenture.
(f)
The Trustee shall have no responsibility or liability with respect to any information, statements or
recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance
of these Bonds other than for statements provided by the Trustee which relate directly to the status of the Trustee’s
corporate trust business.
Merger or Consolidation. Any bank, national banking association or trust company into which the
Trustee may be merged or converted or with which it may be consolidated or any bank, national banking association
or trust company resulting from any merger, conversion or consolidation to which it shall be a party or any bank,
national banking association or trust company to which the Trustee may sell or transfer all or substantially all of its
corporate trust business, provided such bank, national banking association or trust company shall be eligible under
the Indenture shall be the successor to such Trustee, without the execution or filing of any paper or any further act,
anything in the Indenture to the contrary notwithstanding.
Liability of Trustee.
(a)
The recitals of facts herein and in the Bonds contained shall be taken as statements of the
Authority, and the Trustee shall not assume responsibility nor liability therefore for the correctness of the same, or
make any representations as to the validity or sufficiency of the Indenture or the Bonds, nor shall the Trustee incur
any responsibility nor liability therefore in respect thereof, other than as expressly stated herein in connection with
the respective duties or obligations in the Indenture or in the Bonds assigned to or imposed upon it. The Trustee
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shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds. The
Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence
or willful misconduct. The Trustee may become the Owner of Bonds with the same rights it would have if it were
not Trustee, and, to the extent permitted by law, may act as depository for and permit any of its officers or directors
to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Bond
Owners, whether or not such committee shall represent the Owners of a majority in principal amount of the Bonds
then Outstanding.
(b)
The Trustee shall not be liable for any error of judgment made in good faith by a responsible
officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts.
(c)
The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Owners of not less than a majority in aggregate principal amount of the
Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the Trustee under the Indenture.
(d)
The Trustee shall not be liable for any action taken by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by the Indenture.
(e)
The Trustee shall not be deemed to have knowledge of any Event of Default hereunder, or any
other event which, with the passage of time, the giving of notice, or both, would constitute an Event of Default
hereunder, unless and until the responsible trust officer shall have actual knowledge thereof, or shall have received
written notice thereof at its Trust Office. Except as otherwise expressly provided herein, the Trustee shall not be
bound to ascertain or inquire as to the performance or observance by the Authority of any of the terms, conditions,
covenants or agreements herein, or of any of the documents executed in connection with the Bonds, or as to the
existence of an Event of Default or an event which would, with the giving of notice, the passage of time, or both,
constitute an Event of Default. The Trustee shall not be responsible for the validity, effectiveness or priority of any
collateral given to or held by it. Without limiting the generality of the foregoing, the Trustee shall not be required to
ascertain or inquire as to the performance or observance by the Authority of the terms, conditions, covenants or
agreements set forth herein, other than the covenants of the Authority to deliver Net Revenues to the Trustee when
due and to file with the Trustee when due, such reports and certifications as the Authority is required to file with the
Trustee hereunder.
(f)
No provision of the Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it is not assured to its satisfaction that the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
(g)
The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder
either directly or through agents or attorneys.
(h)
The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by the
Indenture at the request or direction of Owners pursuant to the Indenture, unless such Owners shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction. No permissive power, right or remedy conferred upon the Trustee
hereunder shall be construed to impose a duty to exercise such power, right or remedy.
(i)
Whether or not therein expressly so provided, every provision of the Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of the
Indenture.
(j)
The Trustee shall not be concerned with 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 Indenture.
(k)
The Trustee makes no representation or warranty, expressed or implied as to the title, value,
design, compliance with specifications or legal requirements, quality, durability, operation, condition,
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merchantability or fitness for any particular purpose for the use contemplated by the Authority of the 2013 Project.
In no event shall the Trustee be liable for incidental, indirect, special or consequential damages in connection with
or arising from the Indenture for the existence, furnishing or use of the 2013 Project.
(l)
The Trustee shall not be liable to the parties hereto or deemed in breach or default hereunder if and
to the extent its performance hereunder is prevented by reason of force majeure. The term “force majeure” means
an occurrence that is beyond the control of the Trustee and could not have been avoided by exercising due care.
Force majeure shall include acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics or other
similar occurrences.
Right to Rely on Documents. The Trustee shall be protected in acting upon any notice, resolution,
request, consent, order, certificate, report, opinion, bonds or other paper or document believed by them to be genuine
and to have been signed or presented by the proper party or parties. The Trustee may consult with counsel, who
may be counsel of or to the Authority, with regard to legal questions, and the opinion of such counsel shall be full
and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith
and in accordance therewith.
The Trustee may treat the Owners of the Bonds appearing in the Registration Books as the absolute owners
of the Bonds for all purposes and the Trustee shall not be affected by any notice to the contrary.
Whenever in the administration of the trusts imposed upon it by the Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a Written Certificate, Written Request or Written Requisition of the Authority or the City,
and such Written Certificate, Written Request or Written Requisition 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,
Written Request or Written Requisition, but in its discretion the Trustee may, in lieu thereof, accept other evidence
of such matter or may require such additional evidence as to it may deem reasonable.
The Trustee agrees to accept and act upon instructions or directions pursuant to the Indenture sent by
unsecured e-mail, facsimile transmission or other similar unsecured electronic methods, provided, however, that, the
Trustee shall have received an incumbency certificate listing persons designated to give such instructions or
directions and containing specimen signatures of such designated persons, which such incumbency certificate shall
be amended and replaced whenever a person is to be added or deleted from the listing. If the Authority elects to
give the Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee in
its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed
controlling so long as such understanding is a reasonable interpretation of the instructions according to industry
standards. 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 instructions notwithstanding such instructions conflict or are
inconsistent with a subsequent written instruction unless such losses, costs or expenses arise out of the willful
misconduct or gross negligence of the Trustee. The Authority agrees to assume liability arising out of the use of
such electronic methods to submit instructions and directions to the Trustee, including the risk of the Trustee acting
on unauthorized instructions, and the risk of interception and misuse by third parties, unless such liability arises out
of the willful misconduct or gross negligence of the Trustee.
Preservation and Inspection of Documents. All documents received by the Trustee under the provisions
of the Indenture shall be retained in their respective possession and shall be subject at all reasonable times to the
inspection of the Authority, the City and any Bond Owner, and their agents and representatives duly authorized in
writing, at reasonable hours and under reasonable conditions.
Compensation and Indemnification. The Authority shall pay to the Trustee (solely from Additional
Payments) from time to time the compensation for all services rendered under the Indenture and also all reasonable
expenses and disbursements, incurred in and about the performance of its powers and duties under the Indenture. In
the event the Trustee advances its own funds for the payment of the Bonds or for the protection or benefit of the
Owners of the Bonds, the Authority shall promptly reimburse the Trustee for such advances with interest at the
maximum rate allowed by law.
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The Authority shall indemnify, defend and hold harmless the Trustee against any loss, liability or expense
including legal fees and expenses incurred without gross negligence or willful misconduct on its part, arising out of
or in connection with the acceptance or administration of this trust, including costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of any of its powers hereunder. The
rights of the Trustee and the obligations of the Authority under the Indenture shall survive the resignation or
removal of the Trustee or the discharge of the Bonds and the Indenture.
MODIFICATION OR AMENDMENT OF THE INDENTURE
Amendments Permitted.
(a)
The Indenture and the rights and obligations of the Authority and of the Owners of the Bonds and
of the Trustee may be modified or amended from time to time and at any time by an indenture or indentures
supplemental thereto, which the Authority and the Trustee may enter into when the written consent of the Owners of
a majority in aggregate principal amount of all Bonds then Outstanding, shall 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 principal
thereof or extend the time of payment, or change the method of computing the rate of interest thereon, or extend the
time of payment of interest thereon, without the consent of the Owner of each Bond so affected, or (ii) reduce the
aforesaid percentage of Bonds the consent of the Owners of which is required to effect any such modification or
amendment, or permit the creation of any lien on the Net Revenues and other assets pledged under the Indenture
prior to or on a parity with the lien created by the Indenture except as permitted herein, or deprive the Owners of the
Bonds of the lien created by the Indenture on Net Revenues and other assets (except as expressly provided in the
Indenture), without consent of the Owners of all of the Bonds then Outstanding, or (iii) modify any of the rights or
obligations of the Trustee hereunder without its written consent thereto. It shall not be necessary for the consent of
the Bond Owners to approve the particular form of any Supplemental Indenture, but it shall be sufficient if such
consent shall approve the substance thereof.
(b)
The Indenture and the rights and obligations of the Authority, of the Trustee and the Owners of the
Bonds may also be modified or amended from time to time and at any time by a Supplemental Indenture, which the
Authority and the Trustee may enter into without the consent of any Bond Owners, if the Trustee has been furnished
an opinion of counsel that the provisions of such Supplemental Indenture shall not materially adversely affect the
interests of the Owners of the Bonds, including, without limitation, for any one or more of the following purposes:
(i)
to add to the covenants and agreements of the Authority in the Indenture contained other
covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any
portion thereof), or to surrender any right or power herein reserved to or conferred upon the Authority;
(ii)
to make such provisions for the purpose of curing any ambiguity, inconsistency or
omission, or of curing or correcting any defective provision, contained in the Indenture, or in regard to matters or
questions arising under the Indenture, as the Authority may deem necessary or desirable, provided that such
modification or amendment does not materially adversely affect the interests of the Bond Owners;
(iii)
to modify, amend or supplement the Indenture in such manner as to permit the
qualification of the Indenture under the Trust Indenture Act of 1939, as amended, or any similar federal statute
hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar
federal statute;
(iv)
to modify, amend or supplement the Indenture in such manner as to cause interest on the
Bonds to remain excludable from gross income under the Code; or
(v)
to facilitate the issuance of Parity Obligations.
(c)
The Trustee may in its discretion, but shall not be obligated to, enter into any such Supplemental
Indenture authorized by the Indenture which adversely affects the Trustee’s own rights, duties or immunities under
the Indenture or otherwise.
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(d)
Prior to the Trustee entering into any Supplemental Indenture, there shall be delivered to the
Trustee an opinion of Bond Counsel stating, in substance, that such Supplemental Indenture has been adopted in
compliance with the requirements of the Indenture and that the adoption of such Supplemental Indenture will not, in
and of itself, adversely affect the exclusion from gross income for purposes of federal income taxes of interest on the
Bonds.
(e)
Notice of any modification or amendment shall be given by the Authority to each rating agency
which then maintains a rating on the Bonds, at least fifteen (15) days prior to the effective date of the related
Supplemental Indenture.
Effect of Supplemental Indenture. Upon the execution of any Supplemental Indenture pursuant to the
Indenture, the Indenture shall be deemed to be modified 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 hereunder subject in all respects to such modification and
amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the
terms and conditions of the Indenture for any and all purposes.
Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after the execution of any
Supplemental Indenture pursuant to this Article may, and if the Authority so determines shall, bear a notation by
endorsement or otherwise in form approved by the Authority and the Trustee as to any modification or amendment
provided for in such Supplemental Indenture, and, in that case, upon demand on the Owner of any Bonds
Outstanding at the time of such execution and presentation of his Bonds for the purpose at the Trust Office or at
such additional offices as the Trustee may select and designate for that purpose, a suitable notation shall be made on
such Bonds. If the Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the opinion of
the Authority and the Trustee, to any modification or amendment contained in such Supplemental Indenture, shall be
prepared and executed by the Authority and authenticated by the Trustee, and upon demand on the Owners of any
Bonds then Outstanding shall be exchanged at the Trust Office, without cost to any Bond Owner, for Bonds then
Outstanding, upon surrender for cancellation of such Bonds, in equal aggregate principal amount of the same series
and maturity.
Amendment of Particular Bonds. The provisions of the Indenture shall not prevent any Bond Owner
from accepting any amendment as to the particular Bonds held by him.
DEFEASANCE
Discharge of Indenture. Any portion or all of the Outstanding Bonds may be paid by the Authority in any
of the following ways, provided that the Authority also pays or causes to be paid any other sums payable hereunder
by the Authority with respect to such Bonds:
(a)
by paying or causing to be paid the principal of and interest and premium (if any) on such
Bonds, as and when the same become due and payable;
(b)
by depositing with the Trustee, in trust, at or before maturity, money or non-callable
Federal Securities in the necessary amount (as provided in the Indenture) to pay or redeem such Bonds; or
(c)
by delivering such Bonds to the Trustee for cancellation.
The Authority shall defease such portion of the Bonds outstanding upon receipt of cash or securities
sufficient to defease such specified amount of Bonds.
If the Authority shall also pay or cause to be paid all other sums payable hereunder, then and in that case, at
the election of the Authority (evidenced by a Written Certificate of the Authority, filed with the Trustee, signifying
the intention of the Authority to discharge such Bonds and the Indenture with respect to such Bonds), and
notwithstanding that any of such Bonds shall not have been surrendered for payment, the Indenture and the pledge
of Net Revenues and other assets made under the Indenture with respect to such Bonds and all covenants,
agreements and other obligations of the Authority under the Indenture with respect to such Bonds shall cease,
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terminate, become void and be completely discharged and satisfied. In such event, upon the Written Request of the
Authority, the Trustee shall be authorized to take such actions and execute and deliver to the Authority all such
instruments as may be necessary or desirable to evidence such discharge and satisfaction. In the event all
Outstanding Bonds are paid as provided in the Indenture, the Trustee shall pay over, transfer, assign or deliver to the
Authority all moneys or securities or other property held by it pursuant to the Indenture which are not required for
the payment or redemption of any Bonds not theretofore surrendered for such payment or redemption and after
payment of amounts due to the Trustee under the Indenture.
Prior to the defeasance of the Bonds, the Authority shall obtain the following items:
a.
An opinion of Bond Counsel to the effect (i) that the defeasance will not adversely
impact the exclusion from gross income for federal income tax purposes of interest on the Bonds or refunded bonds
and (ii) that the Bonds are no longer "Outstanding" under the Indenture;
b.
If the Bonds are being advance-refunded, a refunding trust or escrow agreement and an
opinion of counsel regarding the validity and enforceability of the Escrow Agreement. In addition, such escrow
agreement shall provide that:
i.
certified public accountant.
Any substitution of securities shall require verification by an independent
ii.
The Authority will not exercise any optional redemption of Bonds secured
by such escrow agreement or any other redemption other than mandatory sinking fund redemptions unless
the right to make any such redemption has been expressly reserved in the escrow agreement and such reservation
has been disclosed in detail in the official statement for the refunding bonds.
Discharge of Liability on Bonds. Upon the deposit with the Trustee, in trust, at or before maturity, of
money or non-callable Federal Securities in the necessary amount (as provided the Indenture) to pay or redeem any
Outstanding Bonds (whether upon or prior to the maturity or the redemption date of such Bonds), provided that, if
such Bonds are to be redeemed prior to maturity, notice of such redemption shall have been given as provided in the
Indenture or provision satisfactory to the Trustee shall have been made for the giving of such notice, then all liability
of the Authority in respect of such Bonds shall cease, terminate and be completely discharged, and the Owners
thereof shall thereafter be entitled only to payment out of such money or securities deposited with the Trustee as
aforesaid for their payment, subject, however, to the provisions of the Indenture.
The Authority may at any time surrender to the Trustee for cancellation by it any Bonds previously issued
and delivered, which the Authority may have acquired in any manner whatsoever, and such Bonds, upon such
surrender and cancellation, shall be deemed to be paid and retired.
Deposit of Money or Securities with Trustee. Whenever in the Indenture it is provided or permitted that
there be deposited with or held in trust by the Trustee money or non-callable Federal Securities in the necessary
amount to pay or redeem any Bonds, the money or non-callable Federal Securities so to be deposited or held may
include money or non-callable Federal Securities held by the Trustee in the funds and accounts established pursuant
to the Indenture and shall be:
(a)
lawful money of the United States of America in an amount equal to the principal amount
of such Bonds and all unpaid interest thereon to maturity, except that, in the case of Bonds which are to be redeemed
prior to maturity and in respect of which notice of such redemption shall have been given as provided in the
Indenture or provision satisfactory to the Trustee shall have been made for the giving of such notice, the amount to
be deposited or held shall be the principal amount of such Bonds and all unpaid interest thereon to the redemption
date; or
(b)
non-callable Federal Securities, the principal of and interest on which when due will, in
the written opinion of an Independent Accountant filed with the Authority and the Trustee, provide money sufficient
to pay the principal of and interest and premium (if any) on the Bonds to be paid or redeemed, as such principal,
interest and premium become due, provided that in the case of Bonds which are to be redeemed prior to the maturity
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thereof, notice of such redemption shall have been given as provided in the Indenture or provision satisfactory to the
Trustee shall have been made for the giving of such notice;
provided, in each case, that (i) the Trustee shall have been irrevocably instructed (by the terms of the Indenture or by
Written Request of the Authority) to apply such money to the payment of such principal, interest and premium (if
any) with respect to such Bonds, (ii) the Authority shall have delivered to the Trustee an opinion of Bond Counsel to
the effect that such Bonds have been discharged in accordance with the Indenture, and (iii) a report of an
independent firm of nationally recognized certified public accountants verifying the sufficiency of the escrow
established to pay the Bonds in full on the maturity or redemption date; and a certificate of discharge of the Trustee
with respect to the Bonds.
Unclaimed Funds. Notwithstanding any provisions of the Indenture, and subject to applicable provisions
of State law, any moneys held by the Trustee in trust for the payment of the principal of, or interest on, any Bonds
and remaining unclaimed for two (2) years after the principal of all of the Bonds has become due and payable
(whether at maturity or upon call for redemption or by acceleration as provided in the Indenture), if such moneys
were so held at such date, or two (2) years after the date of deposit of such moneys if deposited after said date when
all of the Bonds became due and payable, shall be repaid to the Authority free from the trusts created by the
Indenture and at the request of the Trustee an indemnification agreement acceptable to the Authority and the Trustee
indemnifying the Trustee with respect to claims of Owners of Bonds which have not yet been paid, and all liability
of the Trustee with respect to such moneys shall thereupon cease; provided, however, that before the repayment of
such moneys to the Authority as aforesaid, the Trustee shall (at the cost of the Authority) first mail to the Owners of
Bonds which have not yet been paid, at the addresses shown on the Registration Books, a notice, in such form as
may be deemed appropriate by the Trustee with respect to the Bonds so payable and not presented and with respect
to the provisions relating to the repayment to the Authority of the moneys held for the payment thereof.
MISCELLANEOUS
Liability of Authority Limited to Net Revenues. Notwithstanding anything in the Indenture or in the
Bonds contained, the Authority shall not be required to advance any moneys derived from any source other than the
Net Revenues and other assets pledged under the Indenture for any of the purposes in the Indenture mentioned,
whether for the payment of the principal of or interest on the Bonds or for any other purpose of the Indenture.
Nevertheless, the Authority may, but shall not be required to, advance for any of the purposes of the Indenture any
funds of the Authority which may be made available to it for such purposes.
Limitation of Rights to Parties; Bond Owners. Nothing in the Indenture or in the Bonds expressed or
implied is intended or shall be construed to give to any person other than the Authority, the Trustee, the City and the
Owners of the Bonds, any legal or equitable right, remedy or claim under or in respect of the Indenture or any
covenant, condition or provision therein or herein contained; and all such covenants, conditions and provisions are
and shall be held to be for the sole and exclusive benefit of the Authority, the Trustee, the City and the Owners of
the Bonds.
Funds and Accounts. Any fund or account required by the Indenture to be established and maintained by
the Trustee may be established and maintained in the accounting records of the Trustee, either as a fund or an
account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect
thereto, be treated either as a fund or as an account; but all such records with respect to all such funds and accounts
shall at all times be maintained in accordance with corporate trust industry standards to the extent practicable, and
with due regard for the requirements of the Indenture and for the protection of the security of the Bonds and the
rights of every Owner thereof.
Waiver of Notice; Requirement of Mailed Notice. Whenever in the Indenture the giving of notice by
mail or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive
such notice and in any such case the giving or receipt of such notice shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver. Whenever in the Indenture any notice shall be required to be
given by mail, such requirement shall be satisfied by the deposit of such notice in the United States mail, postage
prepaid, by first class mail.
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Destruction of Bonds. Whenever in the Indenture provision is made for the cancellation by the Trustee
and the delivery to the Authority of any Bonds, the Trustee shall, in lieu of such cancellation and delivery, destroy
such Bonds as may be allowed by law, and, upon written request of the Authority, deliver a certificate of such
destruction to the Authority.
Severability of Invalid Provisions. If any one or more of the provisions contained in the Indenture or in
the Bonds shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or
provisions shall be deemed severable from the remaining provisions contained in the Indenture and such invalidity,
illegality or unenforceability shall not affect any other provision of the Indenture, and the Indenture shall be
construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Authority
hereby declares that it would have entered into the Indenture and each and every other Section, paragraph, sentence,
clause or phrase hereof and authorized the issuance of the Bonds pursuant thereto irrespective of the fact that any
one or more Sections, paragraphs, sentences, clauses or phrases of the Indenture may be held illegal, invalid or
unenforceable.
Evidence of Rights of Bond Owners. Any request, consent or other instrument required or permitted by
the Indenture to be signed and executed by Bond Owners may be in any number of concurrent instruments of
substantially similar tenor and shall be signed or executed by such Bond Owners in person or by an agent or agents
duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing
appointing any such agent, or of the holding by any person of Bonds transferable by delivery, shall be sufficient for
any purpose of the Indenture and shall be conclusive in favor of the Trustee and the Authority if made in the manner
provided in the Indenture.
The fact and date of the execution by any person of any such request, consent or other instrument or writing
may be proved by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws
thereof to take acknowledgments of deeds, certifying that the person signing such request, consent or other
instrument acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn
to before such notary public or other officer.
The ownership of Bonds shall be proved by the Registration Books.
Any request, consent, or other instrument or writing of the Owner of any Bond shall bind every future
Owner of the same Bond and the Owner of every Bond issued in exchange therefor or in lieu thereof, in respect of
anything done or suffered to be done by the Trustee or the Authority in accordance therewith or reliance thereon.
Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of
Bonds have concurred in any demand, request, direction, consent or waiver under the Indenture, Bonds which are
known by the Trustee to be owned or held by or for the account of the Authority, or by any other obligor on the
Bonds, or by any person directly or indirectly controlling or controlled by, or under direct or indirect common
control with, the Authority or any other obligor on the Bonds, shall be disregarded and deemed not to be
Outstanding for the purpose of any such determination. Bonds so owned which have been pledged in good faith
may be regarded as Outstanding for the purposes of the Indenture if the pledgee shall certify to the Trustee the
pledgee’s right to vote such Bonds and that the pledgee is not a person directly or indirectly controlling or controlled
by, 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 by the Trustee taken upon the advice of counsel shall be full protection to the
Trustee. Upon request of the Trustee, the Authority shall specify to the Trustee those Bonds which are disqualified
pursuant to the Indenture and the Trustee may conclusively rely on a certificate.
Money Held for Particular Bonds. The money held by the Trustee for the payment of the interest or
principal due on any date with respect to particular Bonds (or portions of Bonds in the case of Bonds redeemed in
part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for
the Owners of the Bonds entitled thereto, subject, however, to the provisions of the Indenture but without any
liability for interest thereon.
Waiver of Personal Liability. No member, officer, agent or employee of the Authority shall be
individually or personally liable for the payment of the principal of or interest or premium (if any) on the Bonds or
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be subject to any personal liability or accountability by reason of the issuance thereof; but nothing herein contained
shall relieve any such member, officer, agent or employee from the performance of any official duty provided by
law or by the Indenture.
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APPENDIX C
FORM OF OPINION OF BOND COUNSEL
Upon issuance of the Bonds, Best Best & Krieger LLP, Bond Counsel, proposes to render its final
approving opinion in substantially the following form:
[Closing Date]
Corona Utility Authority
400 South Vicentia Avenue, Suite 120
Corona, CA 92882
Re:
$20,890,000 Corona Utility Authority 2013 Wastewater Revenue Bonds (Wastewater
Projects)
Ladies and Gentlemen:
We have reviewed the Constitution and laws of the State of California and certain proceedings taken
by the Corona Utility Authority (the “Authority”) in connection with the issuance by the Authority of the
$20,890,000 Corona Utility Authority 2013 Wastewater Revenue Bonds (Wastewater Projects) (the “Bonds”),
pursuant to the provisions of Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code
(the “Law”) and pursuant to an Indenture of Trust, dated as of June 1, 2013 (the “Indenture of Trust”) by and
between The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) and the Authority.
The proceeds of the Bonds have been applied by the Authority to finance and refinance the acquisition and
construction of water system improvements for the Authority. We have also examined such certified
proceedings and other papers and materials as we deem necessary to render this opinion.
In such connection, we have reviewed the Indenture of Trust, the tax certificate of the Authority for
the Bonds dated the date hereof (the “Tax Certificate”), certificates of the Authority and others, and such other
documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein.
The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court
decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected
by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or
to inform any person, whether any such actions are taken or omitted or events do occur or any other events
come to our attention after the date hereof. Accordingly, this opinion speaks only as of its date and is not
intended to, and may not, be relied upon in connection with any such actions, events or matters. Our
engagement with respect to the Bonds has concluded with their issuance, and we disclaim any obligation to
update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether
as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any
parties other than the Authority. We have assumed, without undertaking to verify, the accuracy of the factual
matters represented, warranted or certified in the documents, and of the legal conclusions contained in the
opinions, referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all
covenants and agreements contained in the Indenture of Trust and the Tax Certificate, including (without
limitation) covenants and agreements compliance with which is necessary to ensure that future actions,
omissions or events will not cause interest on the Bonds to be included in gross income for federal income tax
purposes. We call attention to the fact that the rights and obligations under the Bonds, the Indenture of Trust
and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the
application of equitable principles, to the exercise of judicial discretion in appropriate cases, and to the
C-1
limitations on legal remedies against cities and joint powers authorities in the State of California. We express
no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum, choice of
venue, waiver or severability provisions contained in the documents mentioned in the preceding sentence.
Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or
other offering materials relating to the Bonds and express no opinion with respect thereto.
Based upon the foregoing, we are of the opinion, under existing law, that:
1.
The Authority is a joint powers authority duly organized and validly existing under the laws
of the State of California, with power to enter into the Indenture of Trust, to perform the agreements on its part
contained therein and to issue the Bonds;
2.
The Bonds constitute the valid and legally binding special obligations of the Authority
enforceable in accordance with their terms and payable solely from the sources provided therefor in the
Indenture of Trust;
3.
The Indenture of Trust has been duly approved by the Authority and constitutes the valid and
legally binding obligation of the Authority enforceable against the Authority in accordance with its terms
except as such enforcement may be limited by bankruptcy, insolvency, moratorium, transfer or conveyance, or
other laws affecting creditor’s rights generally, or the exercise of judicial discretion in accordance with general
principals of equity or otherwise in appropriate cases; provided, however, we express no opinion with respect
to any indemnification, contribution, choice of law or waiver provisions contained therein;
4.
The Indenture of Trust establishes a first lien on and pledge of the Net Revenues (as such
term is defined in the Indenture of Trust) and other funds pledged thereby for the security of the Bonds, in
accordance with the terms of the Indenture of Trust;
5.
Interest on the Bonds is exempt from California personal income taxation; and
6.
Under existing statutes, regulations, rulings and court decisions, the interest on the Bonds is
excluded from gross income for purposes of federal income taxation. Interest on the Bonds is not a specific
preference item for purposes of the federal individual or corporate alternative minimum tax provisions of the
Code; it should be further noted, however, that, with respect to corporations, such interest will be included in
adjusted current earnings when calculating corporate alternative minimum taxable income. Although the
interest on the Bonds is excluded from gross income for purposes of federal income taxation, the accrual or
receipt of interest on the Bonds, or any portion thereof, may otherwise affect the federal income tax liability of
the recipient. The extent of these other tax consequences will depend on the recipient’s particular tax status or
other items of income or deduction. We express no opinion regarding any such consequences.
Respectfully submitted,
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APPENDIX D
INFORMATION CONCERNING DTC
The information in this Appendix concerning DTC and DTC’s book-entry only system has been
obtained from sources that the Utility Authority, the City and the Underwriter believe to be reliable, but none
of the Utility Authority, the City or the Underwriter take any responsibility for the completeness or accuracy
thereof. The following description of the procedures and record keeping with respect to beneficial ownership
interests in the Bonds, payment of principal, premium, if any, accreted value and interest on the Bonds to DTC
Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Bonds
and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based
solely on information provided by DTC.
The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Bonds.
The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership
nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered
bond will be issued for each annual maturity of the Bonds, each in the aggregate principal amount of such annual
maturity, and will be deposited with DTC.
DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New
York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code,
and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues,
corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s
participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct
Participants of sales and other securities transactions in deposited securities, through electronic computerized
book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical
movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned
subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC,
National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered
clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also
available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and
clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly
or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to
its Participants are on file with the Securities and Exchange Commission. More information about DTC can be
found at www.dtcc.com.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will
receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond
(“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners
will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to
receive written confirmations providing details of the transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive bonds representing their
ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is
discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the
name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized
representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such
other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts
D-1
such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will
remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to
Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of
significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the
Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the
Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial
Owners may wish to provide their names and addresses to the registrar and request that copies of notices be
provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being
redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such
maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds
unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures,
DTC mails an Omnibus Proxy to the Utility Authority as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited
on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or
such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct
Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Utility Authority
or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by
Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the
responsibility of such Participant and not of DTC, the Trustee, or the Utility Authority, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and
dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of
DTC) is the responsibility of the Utility Authority or the Trustee, disbursement of such payments to Direct
Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be
the responsibility of Direct and Indirect Participants.
A Bond Owner shall give notice to elect to have its Bonds purchased or tendered, through its Participant, to
the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant’s
interest in the Bonds, on DTC’s records, to the Trustee. The requirement for physical delivery of Bonds in
connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in
the Bonds are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered
Bonds to the Trustee’s DTC account.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving
reasonable notice to the Utility Authority or the Trustee. Under such circumstances, in the event that a successor
depository is not obtained, physical certificates are required to be printed and delivered.
The Utility Authority may decide to discontinue use of the system of book-entry only transfers through
DTC (or a successor securities depository). In that event, Bonds will be printed and delivered to DTC.
THE TRUSTEE, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE BONDS, WILL
SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC. ANY
FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY
ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE
VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE
BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE.
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
Upon the issuance of the Bonds, the Utility Authority proposes to enter into a Continuing Disclosure
Certificate in substantially the following form:
This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the
Corona Utility Authority (the “Utility Authority”) in connection with the issuance of the $20,890,000 Corona Utility
Authority 2013 Wastewater Revenue Bonds (Wastewater Projects) (the “Bonds”). The Bonds are being issued
pursuant to an Indenture of Trust, dated as of June 1, 2013 (the “Indenture”), by and between the Utility Authority
(the “Utility Authority”) and The Bank of New York Mellon Trust Company, N.A., as trustee. The Utility Authority
covenants and agrees as follows:
1.
Purpose of this Disclosure Certificate. This Disclosure Certificate is being executed and delivered
by the Utility Authority for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the
Participating Underwriter in complying with the Rule.
2.
Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized
term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall
have the following meanings:
Annual Report. The term “Annual Report” means any Annual Report provided by the Utility Authority
pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
Beneficial Owner. The term “Beneficial Owner” means any person which: (a) has the power, directly or
indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding
Bonds through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Bonds for
federal income tax purposes.
EMMA. The term “EMMA” means the Municipal Securities Rulemaking Board’s Electronic Municipal
Market Access System for municipal securities disclosures, maintained on the Internet at http://emma.msrb.org/.
Fiscal Year. The term “Fiscal Year” means the one-year period ending on the last day of June of each year.
Holder. The term “Holder” means a registered owner of the Bonds.
Listed Events. The term “Listed Events” means any of the events listed in Sections 5(a) and (b) of this
Disclosure Certificate.
Official Statement. The term “Official Statement” means the Official Statement relating to the Bonds dated
June 4, 2013 delivered in connection with the issuance of the Bonds.
Participating Underwriter. The term “Participating Underwriter” means the original underwriters of the
Bonds required to comply with the Rule in connection with offering of the Bonds.
Rule. The term “Rule” means Rule 15c2-12 adopted by the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as the same may be amended from time to time.
3.
Provision of Annual Reports.
(a)
The Utility Authority shall provide not later than 270 days following the end of its Fiscal
Year (commencing with Fiscal Year 2013) to EMMA an Annual Report relating to the immediately preceding Fiscal
Year which is consistent with the requirements of Section 4 of this Disclosure Certificate, which Annual Report may
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be submitted as a single document or as separate documents comprising a package, and may cross-reference other
information as provided in Section 4 of this Disclosure Certificate.
(b)
If the Utility Authority is unable to provide to EMMA an Annual Report by the date
required in subsection (a), the Utility Authority shall send to EMMA a notice in substantially the manner prescribed
by the Municipal Securities Rulemaking Board.
4.
following:
Content of Annual Reports. The Annual Report shall contain or incorporate by reference the
(a)
The combined audited financial statements of the City of Corona (the “City”) and the
Utility Authority for the prior Fiscal Year, prepared in accordance with generally accepted accounting principles as
promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board.
If such audited financial statements are not available by the time the Annual Report is required to be filed pursuant
to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial
statements contained in the final Official Statement, and the audited financial statements shall be filed in the same
manner as the Annual Report when they become available.
(b)
Principal amount of the Bonds outstanding.
(c)
An update of the information in the following tables in the Official Statement:
(I)
Under the caption “THE WASTEWATER ENTERPRISE”:
(i)
CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE
Historic Wastewater Enterprise Connections;
(ii)
CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE
Historic Wastewater Enterprise Daily Average Flow;
(iii)
CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE
Ten Largest Wastewater Enterprise Customers; and
(iv)
Selected Wastewater Enterprise Rates;
CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE
(II)
Under the caption “WASTEWATER ENTERPRISE FINANCIAL
INFORMATION,” CORONA UTILITY AUTHORITY WASTEWATER ENTERPRISE Historic Operating
Results (Fiscal Year Ended June 30); and
(III)
Under the caption “ELECTRIC DISTRIBUTION SYSTEM,” CITY OF
CORONA ELECTRIC DISTRIBUTION SYSTEM Historic Operating Results (Fiscal Year Ended June 30) (such
table shall be updated until such time as the Wastewater Enterprise is no longer subject to the applicable Power
Sales Agreement (as such term is defined in the Official Statement)).
Any or all of the items listed above may be included by specific reference to other documents, including official
statements of debt issues of the City or related public entities, which have been submitted to EMMA or the
Securities and Exchange Commission; provided that if any document included by reference is a final official
statement, it must be available from the Municipal Securities Rulemaking Board; and provided further that the
Utility Authority shall clearly identify each such document so included by reference.
5.
Reporting of Significant Events.
(a)
Pursuant to the provisions of this Section 5, the Utility Authority shall give, or cause to
be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not
more than ten (10) Business Days after the event:
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1.
principal and interest payment delinquencies;
2.
unscheduled draws on debt service reserves reflecting financial difficulties;
3.
unscheduled draws on credit enhancements reflecting financial difficulties;
4.
substitution of credit or liquidity providers, or their failure to perform;
5.
issuance by the Internal Revenue Service of proposed or final determination of
taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB);
6.
tender offers;
7.
defeasances;
8.
ratings changes; and
9.
bankruptcy, insolvency, receivership or similar proceedings.
Note: For the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the
following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding
under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or
governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated
person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers
in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order
confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having
supervision or jurisdiction over substantially all of the assets or business of the obligated person.
(b)
Pursuant to the provisions of this Section 5, the Utility Authority shall give, or cause to
be given, notice of the occurrence of any of the following events with respect to the Bonds, if material:
1.
unless described in Section 5(a)(5), other notices or determinations by the
Internal Revenue Service with respect to the tax status of the Bonds or other events affecting the tax status of the
Bonds;
2.
modifications to the rights of Bondholders;
3.
optional, unscheduled or contingent Bond calls;
4.
release, substitution or sale of property securing repayment of the Bonds;
5.
non-payment related defaults;
6.
the consummation of a merger, consolidation, or acquisition involving the
Utility Authority or the sale of all or substantially all of the assets of the Utility Authority, other than in the ordinary
course of business, the entry into a definitive agreement to undertake such an action or the termination of a
definitive agreement relating to any such actions, other than pursuant to its terms; and
7.
appointment of a successor or additional trustee or the change of the name of a
trustee.
(c)
If the Utility Authority determines that knowledge of the occurrence of a Listed Event
under Section 5(b) would be material under applicable federal securities laws, the Utility Authority shall file a notice
of such occurrence with EMMA in a timely manner not more than ten (10) Business Days after the event.
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6.
Customarily Prepared and Public Information. Upon request, the Utility Authority shall provide to
any person financial information and operating data regarding the Utility Authority which is customarily prepared
by the Utility Authority and is publicly available.
7.
Termination of Obligation. The Utility Authority’s obligations under this Disclosure Certificate
shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such
termination occurs prior to the final maturity of the Bonds, the Utility Authority shall give notice of such termination
in the same manner as for a Listed Event under Section 5(c).
8.
Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the
Utility Authority may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be
waived, provided that, in the opinion of nationally recognized bond counsel, such amendment or waiver is permitted
by the Rule.
9.
Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the
Utility Authority from disseminating any other information, using the means of dissemination set forth in this
Disclosure Certificate or any other means of communication, or including any other information in any notice of
occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Utility
Authority chooses to include any information in any notice of occurrence of a Listed Event in addition to that which
is specifically required by this Disclosure Certificate, the Utility Authority shall not thereby have any obligation
under this Disclosure Certificate to update such information or include it in any future notice of occurrence of a
Listed Event.
10.
Default. In the event of a failure of the Utility Authority to comply with any provision of this
Disclosure Certificate, any Holders or Beneficial Owners of at least 50% aggregate principal amount of the Bonds
may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by
court order, to cause the Utility Authority to comply with its obligations under this Disclosure Certificate. A default
under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy
under this Disclosure Certificate in the event of any failure of the Utility Authority to comply with this Disclosure
Certificate shall be an action to compel performance.
No Holder or Beneficial Owner of the Bonds may institute such action, suit or proceeding to compel
performance unless they shall have first delivered to the Utility Authority satisfactory written evidence of their
status as such, and a written notice of and request to cure such failure, and the Utility Authority shall have refused to
comply therewith within a reasonable time.
11.
Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Utility Authority,
the City, the Participating Underwriter and Holders and Beneficial Owners from time to time of the Bonds, and shall
create no rights in any other person or entity.
Dated: June 26, 2013
CORONA UTILITY AUTHORITY
By:
Its:
E-4
APPENDIX F
CITY AND COUNTY INFORMATION
The following information relating to the City of Corona (the “City”) and the County of Riverside (the
“County”), California is supplied solely for purposes of information. Neither the City nor the County is
obligated in any manner to pay principal of or interest on the Bonds or to cure any delinquency or default on
the Bonds. The Bonds are payable solely from the sources described in the Official Statement.
General
The City is located in western Riverside County, approximately 45 miles southeast of Los Angeles
along State Route 91 and Interstate 15. The City encompasses an area of 39.2 square miles.
Incorporated in 1896, the City operates as a general law city with a council-manager form of
government. The five City Council members are elected at large for staggered four-year terms. The City
Council elects one of the City Council members as Mayor.
The City provides police protection, fire protection, animal control, building safety regulation and
inspection, street lighting, beautification, water and wastewater service, refuse collection, land use planning,
and zoning, housing and community services, maintenance and improvement of streets and related structures,
traffic safety maintenance and improvement and recreational and cultural programs for citizen participation.
Population
The following table offers population figures for the City, the County and the State of California as of
January 1, 2008 through January 1, 2012.
CITY OF CORONA, COUNTY OF RIVERSIDE AND STATE OF CALIFORNIA
Population
City of Corona
County of Riverside
State of California
1/1/2008
146,272
2,049,902
36,399,676
1/1/2009
147,319
2,102,741
36,704,375
1/1/2010
149,692
2,140,626
36,966,713
1/1/2011
151,858
2,179,692
37,233,900
1/1/2012
152,374
2,189,641
37,253,956
Source: State of California, Department of Finance, E-4 Population Estimates for Cities, Counties, and the State, 2001-2010,
with 2000 and 2010 Census Counts. Sacramento, California, November 2012.
F-1
Construction Activity
The following table shows building permit valuations and new housing units in the City for calendar
years 2007 through 2011.
CITY OF CORONA
Building Permit Valuation and New Housing Units
2007
2008
2009
$
1,797,704
28,692,489
3,100,268
$ 33,590,461
$ 6,816,057
7,589,858
4,374,613
$ 18,780,534
$ 10,225,820
1,159,516
2,712,494
$ 18,097,830
$ 18,639,992
48,134,059
2,628,047
$ 69,402,098
$ 48,596,455
2,763,756
10,639,621
31,885,689
$ 93,885,522
$ 74,256,067
6,450,621
7,545,296
20,785,677
$ 109,038,661
$ 1,599,196
0
2,621,627
14,705,067
$ 18,925,890
$
329,627
6,685,531
2,609,673
41,651,861
$51,276,692
$
$ 129,127,233
$ 142,629,122
$ 37,706,424
$69,374,522
$113,678,192
76
40
116
6
359
365
33
58
91
31
38
69
55
408
463
Residential
Single Family
Multi-Family
Alteration/Additions
Total(1)
$ 24,622,642
5,673,752
4,945,307
$ 35,241,701
Non-Residential
New Commercial
New Industry
Other(2)
Alteration/Additions
Total(1)
Total All Industry(1)
New Housing Units
Single Family Units
Multi-Family Units
Total
(1)
2010
2011
512,548
0
2,967,698
40,795,848
$ 44,276,094
Totals may not add due to rounding.
Includes churches and religious building, hospitals and institutional buildings, schools and educational buildings, residential
garages, public works and utilities buildings and non-residential alterations and additions.
Source: Construction Industry Research Board.
(2)
F-2
Employment
The following table sets forth the major employers located in the County in 2012.
COUNTY OF RIVERSIDE
Largest Employers
Rank
Name of Business
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
County of Riverside
March Air Reserve Base
Stater Bros. Markets
University of California, Riverside
Walmart
Corona-Norco Unified School District
Pechanga Resort & Casino
Riverside Unified School District
Moreno Valley Unified School District
Kaiser Permanente Riverside Medical Center(1)
Number of
Employees in
County
19,150
9,000
6,900
5,790
5,360
4,686
4,000
3,796
3,500
3,500
(1)
Type of Business
County Government
Military Reserve Base
Supermarkets
University
Retail
School District
Casino & Resort
School District
School District
Medical Center
2011 figure.
Source: Information gathered by Riverside County Economic Development Agency from employers listed websites and public
records.
F-3
Employment and Industry
Employment data by industry is not separately reported on an annual basis for the City but is compiled
for the County. In addition to varied manufacturing employment, the County has large and growing
commercial and service sector employment, as reflected in the table below.
The following table represents the Annual Average Labor Force and Industry Employment for the
Riverside-San Bernardino-Ontario Metropolitan Statistical Area for calendar years 2008 through 2011 and the
preliminary numbers for 2012.
RIVERSIDE-SAN BERNARDINO-ONTARIO METROPOLITAN STATISTICAL AREA
Industry Employment & Labor Force - by Annual Average
March 2010 Benchmark
2008
2009
2010
2011
2012(1)
Civilian Labor Force
Civilian Employment
Civilian Unemployment
Civilian Unemployment Rate
1,776,000
1,629,500
146,500
8.3%
1,774,300
1,540,100
234,200
13.2%
1,798,200
1,540,500
257,700
14.3%
1,799,000
1,557,800
241,200
13.4%
1,816,600
1,617,800
198,800
10.9%
Total Farm
Total Nonfarm
Total Private
Goods Producing
Natural Resources and Mining
Construction
Manufacturing
Service Providing
Trade, Transportation and Utilities
Wholesale Trade
Retail Trade
Transportation, Warehousing and
Utilities
Information
Financial Activities
Professional and Business Services
Educational and Health Services
Leisure and Hospitality
Other Services
Government
Total, All Industries
15,900
1,223,800
994,000
198,800
1,200
90,700
106,900
1,025,000
292,900
54,100
168,600
70,200
14,900
1,134,800
906,400
157,800
1,100
67,900
88,800
977,000
271,900
48,900
156,200
66,800
15,000
1,125,900
891,600
145,800
1,000
59,700
85,100
980,000
270,800
48,600
155,500
66,600
14,900
1,129,700
902,400
145,600
1,000
58,700
85,800
984,200
275,100
49,400
157,200
68,500
15,800
1,165,700
939,900
144,800
1,000
57,400
86,400
1,020,900
294,000
54,300
164,900
74,800
14,900
46,100
137,700
131,800
131,000
40,800
229,900
1,239,700
15,100
42,500
124,300
133,600
123,800
37,300
228,400
1,149,700
15,800
41,000
123,400
133,800
122,800
38,200
234,300
1,140,900
15,000
39,200
126,100
137,900
124,300
39,300
227,300
1,144,600
15,400
39,700
133,300
143,100
130,500
38,500
226,400
1,181,600
Note:
Does not include proprietors, self-employed, unpaid volunteers or family workers, domestic workers in households and persons
involved in labor-management trade disputes. Employment reported by place of work. Items may not add to total due to independent
rounding. The “Total, All Industries” data is not directly comparable to the employment data found in this Appendix F.
(1)
Preliminary; represents sum of monthly totals.
Source: State of California Employment Development Department.
F-4
The following table summarizes the labor force, employment and unemployment figures over the past
six years for the City, the County, the State and the nation as a whole.
CITY OF CORONA, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA AND UNITED STATES
Average Annual Civilian Labor Force, Employment and Unemployment
Employment(1)
2006
City of Corona
Riverside County
California
United States(4)
83,100
890,100
17,821,100
151,428,000
80,000
845,300
16,948,400
144,427,000
3,000
44,800
872,700
7,001,000
3.6%
5.0
4.9
4.6
2007
City of Corona
Riverside County
California
United States(4)
84,700
911,500
18,078,000
153,124,000
81,000
856,500
17,108,700
146,047,000
3,700
55,000
969,300
7,078,000
4.3%
6.0
5.4
4.6
2008
City of Corona
Riverside County
California
United States(4)
84,900
918,800
18,391,800
154,287,000
79,600
839,900
17,059,600
145,362,000
5,200
79,000
1,332,300
8,924,000
6.2%
8.6
7.2
5.8
2009
City of Corona
Riverside County
California
United States(4)
84,100
913,900
18,250,200
154,142,000
75,700
790,000
16,163,900
139,877,000
8,300
123,900
2,086,200
14,265,000
9.9%
13.6
11.4
9.3
2010
City of Corona
Riverside County
California
United States(4)
83,500
913,400
18,176,200
153,889,000
74,400
779,100
15,916,300
139,064
9,100
134,300
2,259,900
14,825,000
10.9%
14.7
12.4
9.6
2011
City of Corona
Riverside County
California
United States(4)
86,000
938,400
18,384,900
153,617,000
77,300
810,600
16,226,600
139,869,000
8,700
127,800
2,158,300
13,747,000
10.1%
13.6
11.7
8.9
(1)
Unemployment(2)
Unemployment
Rate (%)(3)
Labor Force
Year and Area
Includes persons involved in labor-management trade disputes.
Includes all persons without jobs who are actively seeking work.
(3)
The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded
figures in this table.
(4)
Not strictly comparable with data for prior years.
Source: California Employment Development Department and U.S. Department of Labor, Bureau of Labor Statistics.
(2)
F-5
Property Values and Property Taxes
The following table summarizes the assessed valuation of the City for Fiscal Years 2008 through
2012.
CITY OF CORONA
Assessed Valuation
Fiscal Year
2008
2009
2010
2011
2012
Secured
$16,566,883,043
16,455,428,732
15,114,420,610
14,903,117,173
14,827,189,610
Utility
Unsecured
$3,724,135
3,724,135
3,724,135
3,724,135
3,724,135
$1,120,466,497
1,230,076,672
1,186,468,433
1,141,931,720
1,119,361,542
Total
$17,691,073,675
17,689,229,539
16,304,613,178
16,048,773,028
15,950,275,287
Source: California Municipal Statistics, Inc.
Retail Sales
The table below presents the City’s retail permits and transactions for calendar years 2005 through
20109 and first three quarters of calendar year 2011.
CITY OF CORONA
Taxable Transactions (in Thousands)
Calendar
Year
2005
2006
2007
2008
2009
2010
2011(1)
Retail Permits
831
1,919
1,876
1,920
2,295
2,438
2,554
Retail Stores
Taxable Transactions
$
705,491
2,159,434
2,078,527
1,809,673
1,484,916
1,536,310
1,230,101
Total Permits
1,802
3,768
3,958
3,994
3,693
3,851
4,045
(1)
Taxable Transactions through third quarter of 2011.
Source: California State Board of Equalization.
F-6
Total Outlets
Taxable Transactions
$
804,873
3,576,700
3,478,337
2,994,438
2,426,746
2,454,989
2,019,681
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CORONA UTILITY AUTHORITY • 2013 WASTEWATER REVENUE BONDS (WASTEWATER PROJECTS)