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ACFR FY 2022-2023Lake Poway Recreation Area ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2023 CITY OF POWAY, CALIFORNIA This page intentionally left blank. City of Poway Poway, California Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2023 Prepared by: Finance Department This page intentionally left blank. CITY OF POWAY Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2023 Table of Contents Page INTRODUCTORY SECTION Letter of Transmittal ..................................................................................................................................... i Principal Officers .......................................................................................................................................... vi Organization Chart ....................................................................................................................................... vii GFOA Certificate of Achievement for Excellence in Financial Reporting ..................................................... viii FINANCIAL SECTION Independent Auditor’s Report ...................................................................................................................... 1 Management’s Discussion and Analysis ....................................................................................................... 5 Basic Financial Statements: Government–Wide Financial Statements: Statement of Net Position .................................................................................................................... 20 Statement of Activities ......................................................................................................................... 22 Fund Financial Statements: Governmental Fund Financial Statements: Balance Sheet – Governmental Funds .............................................................................................. 28 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ............................................................................................................................... 29 Statement of Revenues, Expenditures, and Changes in Fund Balances ........................................... 30 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ......................................... 31 Proprietary Fund Financial Statements: Statement of Net Position ................................................................................................................. 34 Statement of Revenues, Expenses, and Changes in Net Position ..................................................... 35 Statement of Cash Flows ................................................................................................................... 36 Fiduciary Fund Financial Statements: Statement of Fiduciary Net Position ................................................................................................. 40 Statement of Changes in Fiduciary Net Position ............................................................................... 41 Notes to the Basic Financial Statements .............................................................................................. 44 Required Supplementary Information: Budgetary Comparison Schedule – General Fund ................................................................................... 96 Budgetary Comparison Schedule – Housing Authority Fund .................................................................. 97 Notes to Required Supplementary Information ...................................................................................... 98 Schedule of Changes in Net Pension Liability and Related Ratios, Last 10 Years – Miscellaneous Plan ........................................................................................................... 100 Schedule of Plan Contributions, Last 10 Years – Miscellaneous Plan ................................................... 102 Schedule of the City’s Proportionate Share of the Plan’s Net Pension Liability and Related Ratios, Last 10 Years – Safety Plan ................................................................................. 104 Schedule of Plan Contributions, Last 10 Years – Safety Plan ................................................................. 106 CITY OF POWAY Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2023 Table of Contents (continued) Page Required Supplementary Information (continued): Schedule of Changes in Net Pension Liability and Related Ratios, Last 10 Years – Retirement Enhancement Plan ......................................................................................... 108 Schedule of Plan Contributions, Last 10 Years – Retirement Enhancement Plan ................................. 110 Supplementary Information: Non-Major Governmental Funds: Combining Balance Sheet ................................................................................................................... 116 Combining Statement of Revenues, Expenditures and Changes in Fund Balance ............................. 120 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual Non-Major Special Revenue Funds: Fire Protection ............................................................................................................................. 124 800 MHz Communication System ................................................................................................ 125 Gas Tax ......................................................................................................................................... 126 Drainage ....................................................................................................................................... 127 Miscellaneous Grants ................................................................................................................... 128 AB 939 Integrated Waste Management ...................................................................................... 129 Community Development Block Grant ........................................................................................ 130 Transportation Development Act ................................................................................................ 131 Proposition A................................................................................................................................ 132 SB 1186 Disabled Access Law ....................................................................................................... 133 Excess SAFE Reserve .................................................................................................................... 134 Regional Arterial Traffic Mitigation.............................................................................................. 135 Fire Protection Impact Fees ......................................................................................................... 136 BEGIN Program ............................................................................................................................ 137 Housing In-Lieu ............................................................................................................................ 138 Abandoned Vehicle Fees .............................................................................................................. 139 Habitat In-Lieu.............................................................................................................................. 140 Maintenance Districts .................................................................................................................. 141 Road Repair .................................................................................................................................. 142 Mary Patricia Ross Trust .............................................................................................................. 143 Non-Major Debt Service Fund: City Debt Service .......................................................................................................................... 144 Non-Major Capital Projects Funds: Park Improvement ....................................................................................................................... 145 Community Benefits .................................................................................................................... 146 Street Improvement .................................................................................................................... 147 Municipal Improvement Capital Projects Fund ........................................................................... 148 CITY OF POWAY Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2023 Table of Contents (continued) Page STATISTICAL SECTION Net Position by Component – Last Ten Fiscal Years ................................................................................. 150 Changes in Net Position – Last Ten Fiscal Years........................................................................................ 152 Fund Balances, Governmental Funds – Last Ten Fiscal Years ................................................................... 156 Changes in Fund Balances, Governmental Funds – Last Ten Fiscal Years ................................................ 158 Assessed Value of Taxable Property – Last Ten Fiscal Years..................................................................... 160 Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years ......................................................... 162 Principal Secured Property Taxpayers – Current and Nine Years Ago ...................................................... 163 General Property Tax Levies and Collections – Last Ten Fiscal Years ....................................................... 164 Ratios of Outstanding Debt by Type – Last Ten Fiscal Years..................................................................... 165 Ratios of General Bonded Debt Outstanding – Last Ten Fiscal Years ....................................................... 166 Direct and Overlapping Debt as of June 30, 2023 .................................................................................... 167 Legal Debt Margin Information – Last Ten Fiscal Years ............................................................................ 168 Pledged Revenue Coverage – Last Ten Fiscal Years .................................................................................. 170 Demographic and Economic Statistics – Last Ten Calendar years ............................................................ 171 Full-Time-Equivalent City Employees by Function – Last Ten Fiscal Years ............................................... 172 Operating Indicators – Last Ten Fiscal Years ............................................................................................. 174 Capital Assets Statistics – Last Ten Fiscal Years ........................................................................................ 176 This page intentionally left blank. Introductory Section This page intentionally left blank. CITY OF POWAY Principal Officers June 30, 2023 CITY COUNCIL MAYOR Steve Vaus DEPUTY MAYOR Caylin Frank COUNCIL MEMBERS Peter De Hoff Brian Pepin APPOINTED OFFICIALS CITY MANAGER Chris Hazeltine CITY ATTORNEY Alan Fenstermacher ADMINISTRATIVE PERSONNEL ASSISTANT CITY MANAGER Wendy Kaserman CITY CLERK Carrie Gallagher DIRECTOR OF FINANCE & TREASURER Tim McDermott, Interim DIRECTOR OF HUMAN RESOURCES & RISK MANAGEMENT Jodene Dunphy DIRECTOR OF COMMUNITY SERVICES Audrey Denham DIRECTOR OF DEVELOPMENT SERVICES Robert Manis DIRECTOR OF PUBLIC WORKS Eric Heidemann FIRE CHIEF Jeff Chumbley CITY OF POWAY CITY ORGANIZATION Residents Residents City Council / Planning Commission / Housing Authority City Council / Planning Commission / Housing Authority City Attorney City Attorney City Manager City Manager City Clerk City Clerk Economic Development Economic Development Finance Finance Human Resources & Risk Management Human Resources & Risk Management Community Services Community Services Development Services Development Services Public Works Public Works Fire Fire Finance Finance Customer Services Customer Services Information Technology Information Technology Human Resources Human Resources Risk Management Risk Management Recreation Recreation Lake Poway Lake Poway Aquatics Aquatics Performing Arts Center Performing Arts Center Old Poway Park Old Poway Park Library Library Interpretive Services Interpretive Services Community Park Community Park Land Development Land Development Planning Planning Building & Safety Inspection Building & Safety Inspection Housing Housing EngineeringInspection EngineeringInspection Capital Projects Capital Projects Code Compliance Code Compliance Traffic Engineering Traffic Engineering Maintenance Operations Maintenance Operations Streets Maintenance Streets Maintenance Water Transmission & Distribution Water Transmission & Distribution Wastewater Collection Wastewater Collection Storm Water & Flood Control Storm Water & Flood Control Utility Systems Operations & Maintenance Utility Systems Operations & Maintenance Reclaimed Water Supply & Storage Reclaimed Water Supply & Storage Facilities Maintenance Facilities Maintenance Vehicle & Equipment Maintenance Vehicle & Equipment Maintenance Parks, Trails & Landscape Maintenance Parks, Trails & Landscape Maintenance Special Landscape Districts Special Landscape Districts Fire Prevention Fire Prevention Fire Suppression Fire Suppression Law Enforcement Law Enforcement Assistant City Manager Assistant City Manager Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Poway California For its Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2022 Executive Director/CEO Financial Section This page intentionally left blank. Independent Auditor’s Report City Council City of Poway Poway, California Report on the Audit of the Financial Statements Opinion We have audited the financial statements of the governmental activities, the business-type activities,each major fund, and the aggregate remaining fund information of City of Poway (City), California,as of and for the year June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements 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 of Poway as of June 30, 2023, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Emphasis of Matter As described further in Note 12 to the financial statements, during the year ended June 30 2023, the City implemented Government Accounting Standard (GASB) No. 96: Subscription- Based Information Technology Accounting. Our opinion is not modified with respect to this matter. Responsibilities of Management for the Financial Statements The City’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. 1 In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for one year after the date that the financial statements are issued. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS, we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, Budgetary Comparison Information, Schedules of Changes in Net Pension Liability and Related Ratios, Last Ten Years –Miscellaneous and Retirement Enhancement Plans, Schedules of Plan Contributions, Last Ten Years – Miscellaneous, Safety, and Retirement Enhancement Plans, and Schedule of the City’s Proportionate Share of the Plan’s Net Pension Liability and Related Ratios –Safety Plan,be presented to supplement the basic financial statements. 2 Such information is the responsibility of management and, 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 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. Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual nonmajor fund financial statements and budget to actual schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and budget to actual schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and budget to actual schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the Annual Comprehensive Financial Report. The other information comprises the introductory section and statistical section but does not include the financial statements and our auditor's report thereon. Our opinions on the financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. 3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 27,2023 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 solely 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 the effectiveness of internal control over financial reporting or on compliance.That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Irvine, California December 27, 2023 4 MANAGEMENT’S DISCUSSION AND ANALYSIS The City of Poway (City) offers readers this narrative overview and analysis of the City’s financial activities for the fiscal year ended June 30, 2023. It should be read in conjunction with the accompanying letter of transmittal beginning on page i and the accompanying basic financial statements. FINANCIAL HIGHLIGHTS • The assets and deferred outflows of resources of City exceeded its liabilities and deferred inflows of resources at the close of the current fiscal year by $239 million (net position) an increase of $1.5 million or 0.6%. • At the close of the current fiscal year, the City’s governmental funds reported an increase in combined fund balance of $8.5 million in comparison with the prior fiscal year, to $102.3 million. Of this amount, $17 million is available for spending at the government’s discretion (unassigned fund balance). • At the end of the current fiscal year, unrestricted fund balance (the total of the committed, assigned, and unassigned components of fund balance) for the General Fund was $54 million. Of this amount, $18 million is unassigned. • The unrestricted net position, which represents the amounts available to meet the City’s ongoing obligations to citizens and creditors, was $68.3 million, which decreased by $4 million or 6%, in comparison to the prior fiscal year. The decrease was a combination of the governmental activities decreased by $1.7 million and the business-type activities decreased by $2.3 million. OVERVIEW OF THE ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR) The discussion and analysis provided here are intended to serve as an introduction to the City’s basic financial statements. The basic financial statements consist of three components: (1) government-wide financial statements, which include the Statement of Net Position and the Statement of Activities. These statements provide information about the activities of the City as a whole; (2) fund financial statements, which describe how City services are financed in the short term as well as what resources are available for future spending. Fund financial statements also report the City’s operations in more detail than the government-wide financial statements by providing information about the City’s most significant funds; and (3) notes to the basic financial statements. The report also includes supplemental information intended to furnish additional detail to support the basic financial statements themselves. Government-Wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The Statement of Net Position presents financial information on all the City’s assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. However, it is important to consider other nonfinancial factors, such as changes in the City’s property tax base, or condition of the City’s roads, to accurately assess the overall health of the City. The Statement of Activities presents information showing how the City’s net position changed during the current fiscal year. All changes in net position are reported as soon as the underlying event giving rise to 5 the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported, for some items, that will result in cash flows in future fiscal periods, (e.g., uncollected taxes and earned but unused vacation leave). Both government-wide financial statements mentioned above distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, development services, and community services, which are financed mostly by property taxes, sales tax, motor vehicle license fees, and franchise fees. Whereas the business-type activities include the water and sewer systems, which the City charges fees to customers to cover all or most of the cost of the services provided. The government-wide financial statements include not only the City itself (known as the primary government), but also include two blended component units: the Poway Housing Authority and the Poway Public Financing Authority. Although legally separate, these “component units” are important because the City is financially accountable for them. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. 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 that aid in the administration of resources for particular purposes or to meet legal responsibilities associated with the usage of certain taxes, grants, and other money. The City’s three types of fund financial statements, which use different accounting approaches, are explained below. Governmental funds – Most of the City’s basic services are reported in governmental funds, which focus on how resources flow in and out with the balances remaining at year-end that are available for spending. These funds are reported using an accounting method called modified accrual, 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 shows whether there are more or fewer financial resources that can be spent in the foreseeable future to finance the City’s programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is described through the reconciliation in the Notes to the Basic Financial Statements, Note 1. Proprietary funds – When the City charges customers for the services it provides, these services are generally reported in proprietary funds. These funds are reported using the full accrual accounting method. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Activities. 6 Fiduciary funds - The City is the trustee, or fiduciary, for certain amounts held on behalf of developers, property owners, and others. These fiduciary activities are reported in separate Statements of Fiduciary Net Position and Changes in Fiduciary Net Position. The City is responsible for ensuring that the assets are used for their intended purposes. Therefore, fiduciary activities are excluded from the City’s other financial statements because the assets cannot be used to finance the City’s operations. The City maintains two different types of fiduciary funds. The Custodial accounts for deposits held in trust for specific purpose and the Private-Purpose Trust Fund account for the Successor Agency to the Poway Redevelopment Agency. THE CITY AS A WHOLE The City’s analysis focuses on the City’s net position (Table 1) and changes in net position (Table 2) of the governmental and business-type activities. Analysis of net position The net position of the primary government increased by $1.5 million in FY 2022-23. The total assets increased by $8.7 million and total liabilities decreased by $16 million. Deferred outflows of resources decreased $29 million and deferred inflows of resources increased $6 million. The following analysis of governmental and business-type activities provides more detailed information for these changes. 2023 2022 2023 2022 2023 2022 Assets: Current and other assets 127,391$ 117,462 49,912 58,564 177,303 176,026 Capital assets 120,538 123,075 40,069 30,061 160,607 153,136 Total assets 247,929 240,537 89,981 88,625 337,910 329,162 Deferred Outflows 23,266 47,202 2,905 8,215 26,171 55,417 Liabilities: Long-term debt outstanding 46,383 46,497 24,854 25,210 71,237 71,707 Other liabilities 12,124 12,592 3,755 4,635 15,879 17,227 Net pension liability 21,859 33,409 3,657 6,356 25,516 39,765 Total liabilities 80,366 92,498 32,266 36,201 112,632 128,699 Deferred Inflows 12,158 15,969 104 2,219 12,262 18,188 Net position: Net investment in capital assets 110,355 113,446 26,178 21,736 136,533 135,182 Restricted 34,340 30,145 - - 34,340 30,145 Unrestricted 33,977 35,681 34,337 36,684 68,314 72,365 Total net position 178,672$ 179,272 60,515 58,420 239,187 237,692 (in thousands) Total Primary Government Summary of Net Position Table 1 Governmental Business-Type Activities Activities 7 Governmental Activities The net position of governmental activities decreased by $0.6 million or 0.3% from $179.2 million to $178.6 million. The following is an explanation of the significant changes between fiscal years as shown in Table 1 above: • Current and other assets increased $9.9 million or 9% principally due to an increase in cash and investments as well as prepaid items as part of the normal operations. • Capital assets decreased by $2.5 million or 2% (net of depreciation and additions), as detailed in Table 3. The decrease is mainly due to the disposal of equipment and vehicles the City no longer has. • Total liabilities decreased by $12 million or 13% mainly due to decrease in long-term debt and net pension liabilities. • Net Investment in capital assets decreased by $3 million or 3% mainly due to the disposal of equipment and vehicles the City no longer has. Restricted net position increased by $4 million or 14%, primarily due to street maintenance. • Unrestricted net position, the part of net position that can be used to finance day-to-day operations without constraints established by debt covenants or other legal requirements, decreased by $1.7 million or 5% primarily due to lifting of the COVID-19 emergency order which limited the financial freedom and activities of the City in prior year. The cost of all governmental activities this year was $75 million as shown on Tables 2 and 2.1 below. Total revenue was $74 million, which consisted of $16 million from those who directly benefited from the programs, $6 million from grant and contribution subsidies received from other governmental organizations for both capital and operating activities, and $50 million was financed through general revenues. Items of significance within Table 2 are described after the table. 8 9 Fiscal Year 2023 Governmental Activities (Graphic representation of Table 2 in percentages) Revenues Total revenues increased by $3 million or 4%. The following is an explanation of the changes between fiscal years as shown in Table 2 above: • The total program revenues decreased by $3 million or 11%, mainly due to a one-time $6 million ARPA Act relief funds received because of COVID-19 pandemic in FY2021-22. • The total general revenues increased by $3 million or 4%. Sales tax decreased by $2 million or 11% while property taxes increased by $2 million or 8% mostly due to increase in cost of real estate. Investment and miscellaneous revenue increased by $6 million or 436% mainly due to improved market performance in FY 2023. Expenses • Total expenses increased by $16 million or 26% mainly due to lifting the COVID-19 emergency orders which limited the financial freedom and activities of the City in the prior year. 10 Net Cost of Governmental Activities The City’s programs include General government, Public safety, Public works, Development services and Community services. Each program’s net cost (total cost less total revenues generated by the activities) is presented in Table 2.1. The net cost shows the extent to which the general taxes support each of the City’s programs. 11 Total resources available during the year to finance governmental activities were $179 million, which consisted of net position on July 1, 2022, of $179 million, program revenues of $24 million, general revenues of $50 million, and transfers of $0.4 million. Total governmental expenditure during the year was $75 million. The governmental net position resulted in a $0.6 million decrease, ending with $179 million on June 30, 2023. Business-Type Activities The net position of business-type activities increased by $2 million or 4% from $58 million to $61 million. As shown in Table 2.2 below, program revenues were $41 million, while the cost of providing all business- type activities this year was $39 million. Water Activities The water total operating revenues had no significant change compared to the prior year. The water total operating expenses were decreased by $2.6 million or 7% compared to FY 2022 mainly because the cost of imported water from San Diego County Water District increased in FY 2022. Sewer Activities The sewer total operating revenues decreased by $0.9 million or 7% compared to FY 2022 mainly due to increase in sewer rate increases in FY 2022 and the sewer total operating expenses decreased by $3 million or 24% compared to FY 2022 mainly as a result of increase in maintenance and operations costs in FY 2022. 12 FUND HIGHLIGHTS General Fund Revenue Actual revenues compared favorably to the final budget, resulted in a $2.7 million positive variance (excluding other financing sources). The major variance was in Use (Loss) of Money and Property revenue. Actual revenue in this category was $0.9 million higher than budgeted primarily due to better-than- expected market performance. Expenditures The final appropriations for the City’s General Fund expenditures at year-end were $12 million more than actual expenditures (excluding other financing uses) mainly due to the City’s prudent financial decisions. Housing Authority Special Revenue Fund The City of Poway created its Housing Authority during FY 2010-11 and transferred all of the Poway Redevelopment Agency’s housing assets to the Housing Authority. As a result of California Assembly Bill (AB) X1 26, the Housing Authority was able to retain its capital assets and any related income but was required to transfer its liquid assets as of February 1, 2012, to the Successor Agency. With the passage of subsequent legislation, California AB 1484, twenty percent of the City’s advances to the former Poway Redevelopment Agency were transferred to the Housing Authority. The Housing Authority’s revenue exceeded expenditure by $0.5 million for operations at the end of June 30, 2023. Revenues were primarily made up of lease payments from properties owned by the Housing Authority, residual payments from its non-profit partners that own and operate affordable housing projects, and investment earnings. Expenditures for general government continued to be minimal as the Housing Authority continued to explore how to best use these funds to improve the quantity and quality of affordable housing in the City. 13 However, expenditure related to Development Services increased by $0.6 million mainly due to repayment of loan associated with one of the housing developments. FIDUCIARY FUNDS Successor Agency to the City of Poway Redevelopment Agency The provisions of ABX1 26 include the creation of the Successor Agency to the Poway Redevelopment Agency effective February 1, 2012. All balances previously associated with the Poway Redevelopment Agency were transferred to the Successor Agency. The Successor Agency is accounted for as a Private- Purpose Trust Fund and therefore both capital assets and long-term liabilities are included in the fund. The Successor Agency must prepare Recognized Obligation Payment Schedules (ROPS) for review and approval by its Oversight Board, which was created to oversee the Successor Agency, as well as the State Controller’s Office, the State Department of Finance, and the County of San Diego. Through this process, the Successor Agency is to receive sufficient funding (formerly the Poway Redevelopment Agency’s tax increment revenue) to pay for the approved items on the ROPS. Any funds in excess of ROPS requirements are distributed to the appropriate taxing agencies based on each agency’s pro rata share of the one- percent property tax. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The capital assets of the City are those assets that are used in the performance of City functions. Capital Assets include land, buildings, improvements, infrastructure, machineries, equipment, and construction- in-progress. Total capital assets, net of depreciations, had a decrease of almost 1 million or 0.6% mainly due to the disposal of equipment and vehicles the City no longer has. (See Table 3 below & Note 6 to the Basic Financial Statements.) 14 Debt At year-end, the City had $46 million in governmental debt, $25 million in business-type debt, and $108 million in fiduciary debt (Table 4). The overall decrease in bond balances compared to FY 2022 is mainly due to issuance of Pension Obligation and Water Revenue Series 2021A bond in FY 2022; No new bonds were issued in FY 2023 (See Table 4 below & Note 7 to the Basic Financial Statements.) ECONOMIC FACTORS AND NEXT YEAR’S BUDGET The City Budget for FY2023-24 looks significantly different than last year because of City Council’s leadership and support of major initiatives such as updating the ambulance fees, approving the issuance of pension obligation bonds, executing six-year labor agreement, and entering into a new five-year agreement with the San Diego County Sheriff’s Department for law enforcement services. Global economic trends impact this year’s budget as well due to rising inflation rates and supply chain issues resulting in increased costs. The following are a few of the major initiatives that were pursued to strengthen the long-term financial security of the City. Each one of these long-term financial strategies will positively impact the General Fund in FY2023-24.  The City Council approved the City funded landscape master plan as well as funding for improvements to two entryways into the Landscape Maintenance Districts (LMDs) to demonstrate how the landscape master plan could be used for future LMD improvements.  A significant amount of work has been done related to the Poway Center for the Performing Arts (PCPA). With financial support from the McCarthy Family Foundation, the City completed a fundraising feasibility study. The City also successfully renegotiated the Joint Use Agreement with Poway Unified School District to share operating and capital projects costs associated with PCPA.  Through strong partnership between the City and the Friends of Poway Seniors, the older adult program has flourished at the Mickey Cafagna Community Cetner. The program offers a wide range of classes and activities and the lunch program. Aside from the General Fund, Staff also continues to pursue the largest set of capital projects in the City’s history with the Water Infrastructure Improvement Program (Water Program). The Water Program is comprised of the Clearwell Bypass, the Clearwell Replacement, and the San Diego County Water Authority 15 (SDCWA) Treated Water Connection projects. The Clearwell Bypass project was completed under budget in FY 2022-23. The City’s CIP remains very active for FY2023-24 with a total of 60 existing and proposed projects totaling over $80 million in appropriations. Additionally, the City will invest almost $1.6 million in maintaining and improving Poway’s streets which is an important priority for our community. Additionally, $1.8 million has been set aside to build a brand-new Upper Lake Poway Playground. Approximately, $0.2 million of the cost of this project will be offset by a state grant. CONTACTING THE CITY’S FISCAL MANAGEMENT This financial report is designed to provide the City’s citizens, taxpayers, customers, investors, and creditors with a general overview of the City’s finances and to show the City’s fiduciary responsibility for the funds it receives. If you have questions about this report or need additional financial information, contact the City’s Finance Department, at the City of Poway, 13325 Civic Center Drive, Poway, California 92064 or go online at http://www.poway.org. 16 BASIC FINANCIAL STATEMENTS 17 This page intentionally left blank. 18 GOVERNMENT-WIDE FINANCIAL STATEMENTS 19 Governmental Activities Business-Type Activities Total ASSETS Current assets: Cash and investments (note 2)102,454,787$ 37,812,304 140,267,091 Cash and investments with fiscal agents (note 2)596,781 1,294 598,075 Receivables: Taxes 3,300,926 - 3,300,926 Accounts 2,135,766 6,384,944 8,520,710 Interest 1,082,653 - 1,082,653 Leases (note 3) 181,163 - 181,163 Internal balances (40,291) 40,291 - Due from other governments 323,785 - 323,785 Prepaid items 3,627,095 34,285 3,661,380 Land held for resale 177,000 - 177,000 Inventories 166,104 4,493,116 4,659,220 Total current assets 114,005,769 48,766,234 162,772,003 Noncurrent assets: Leases receivable (note 3)194,778 - 194,778 Notes receivable (note 4)12,515,669 - 12,515,669 Loans to the Successor Agency to the Poway Redevelopment Agency 675,017 1,139,799 1,814,816 Loans to other governments - 5,556 5,556 Capital assets: Nondepreciable assets (note 6)38,916,613 5,773,015 44,689,628 Depreciable assets, net (note 6)81,621,726 34,295,921 115,917,647 Total capital assets 120,538,339 40,068,936 160,607,275 Total noncurrent assets 133,923,803 41,214,291 175,138,094 Total assets 247,929,572 89,980,525 337,910,097 DEFERRED OUTFLOWS OF RESOURCES Deferred loss on refunding of debt 113,363 - 113,363 Pension related (note 8)23,153,117 2,905,109 26,058,226 Total deferred outflows of resources 23,266,480 2,905,109 26,171,589 (Continued) CITY OF POWAY Statement of Net Position June 30, 2023 Primary Government See accompanying notes to the basic financial statements 20 Governmental Activities Business-Type Activities Total LIABILITIES Current liabilities: Accounts payable 6,448,799 3,441,204 9,890,003 Accrued liabilities 1,348,486 142,969 1,491,455 Accrued interest payable 233,267 - 233,267 Deposits 4,054,081 124,670 4,178,751 Unearned revenue 39,111 47,118 86,229 Long-term debt - due within one year (note 7) 4,624,920 1,080,278 5,705,198 Total current liabilities 16,748,664 4,836,239 21,584,903 Noncurrent liabilities: Long-term debt - due in more than one year (note 7) 41,758,185 23,773,446 65,531,631 Net pension liability (note 8) 21,859,291 3,656,687 25,515,978 Total noncurrent liabilities 63,617,476 27,430,133 91,047,609 Total liabilities 80,366,140 32,266,372 112,632,512 DEFERRED INFLOWS OF RESOURCES Leases (note 3) 257,657 - 257,657 Pension related (note 8) 11,900,719 104,027 12,004,746 Total deferred inflows of resources 12,158,376 104,027 12,262,403 NET POSITION Net investment in capital assets 110,354,823 26,178,242 136,533,065 Restricted for: Drainage 5,152,280 - 5,152,280 Fire protection 245,469 - 245,469 Grants 570,560 - 570,560 Housing 5,854,027 - 5,854,027 Maintenance districts 9,630,456 - 9,630,456 Other purposes 1,915,362 - 1,915,362 Parks and recreation 3,354,254 - 3,354,254 Streets 5,793,328 - 5,793,328 Transportation 1,823,798 - 1,823,798 Total restricted 34,339,534 - 34,339,534 Unrestricted 33,977,179 34,336,993 68,314,172 Total net position 178,671,536$ 60,515,235 239,186,771 CITY OF POWAY Statement of Net Position June 30, 2023 Primary Government (Continued) See accompanying notes to the basic financial statements 21 Operating Capital Charges for Contributions Contributions Functions/Programs Expenses Services and Grants and Grants Primary government: Governmental activities: General government 5,985,626$ 2,034,044 192,508 - Public safety 36,002,066 3,578,770 490,668 - Public works 11,280,953 3,154,058 4,826,178 - Development services 10,791,648 3,245,882 191,401 - Community services 9,794,751 4,313,987 257,191 1,441,666 Interest and fiscal charges 1,277,731 - - - Total governmental activities 75,132,775 16,326,741 5,957,946 1,441,666 Business-type activities: Water 28,670,235 29,986,319 6,784 - Sewer 10,360,555 11,101,447 2,896 - Total business-type activities 39,030,790 41,087,766 9,680 - Total primary government 114,163,565$ 57,414,507 5,967,626 1,441,666 ` Program Revenues CITY OF POWAY Statement of Activities Year Ended June 30, 2023 See accompanying notes to the basic financial statements 22 Governmental Business-Type Functions/Programs Activities Activities Total Primary government: Governmental activities: General government (3,759,074)$ - (3,759,074) Public safety (31,932,628) - (31,932,628) Public works (3,300,717) - (3,300,717) Development services (7,354,365) - (7,354,365) Community services (3,781,907) - (3,781,907) Interest and fiscal charges (1,277,731) - (1,277,731) Total governmental activities (51,406,422) - (51,406,422) Business-type activities: Water - 1,322,868 1,322,868 Sewer - 743,788 743,788 Total business-type activities - 2,066,656 2,066,656 Total primary government (51,406,422) 2,066,656 (49,339,766) General revenues: Taxes: Property taxes 28,493,295 - 28,493,295 Sales tax 16,023,705 - 16,023,705 Transient occupancy taxes 791,338 - 791,338 Other taxes 838,001 - 838,001 Total taxes 46,146,339 - 46,146,339 Investment earnings (loss) 2,435,612 380,307 2,815,919 Miscellaneous 1,860,990 10,841 1,871,831 Transfers 362,916 (362,916) - Total general revenues and transfers 50,805,857 28,232 50,834,089 Change in net position (600,565) 2,094,888 1,494,323 Net position, beginning of year 179,272,101 58,420,347 237,692,448 Net position, end of year 178,671,536$ 60,515,235 239,186,771 Changes in Net Position Net (Expense) Revenue and See accompanying notes to the basic financial statements 23 This page intentionally left blank. 24 FUND FINANCIAL STATEMENTS Governmental Fund Financial Statements Proprietary Fund Financial Statements Fiduciary Fund Financial Statements 25 This page intentionally left blank. 26 GOVERNMENTAL FUND FINANCIAL STATEMENTS 27 Special Revenue Fund Total Housing Non-major Total General Authority Governmental Governmental Fund Fund Funds Funds ASSETS Cash and investments 57,746,372$ 5,111,224 29,470,427 92,328,023 Cash and investments with fiscal agents - - 596,772 596,772 Receivables: Taxes 3,300,926 - - 3,300,926 Notes 12,515,669 - - 12,515,669 Accounts 1,981,126 12,390 142,250 2,135,766 Interest 973,630 - 109,023 1,082,653 Leases (note 3) 375,941 - - 375,941 Due from other funds (note 5)276,347 - - 276,347 Due from other governments 69,134 - 254,651 323,785 Prepaid items 1,145,119 - - 1,145,119 Land held for resale 177,000 - - 177,000 Inventories, at cost 166,104 - - 166,104 Advances to fiduciary funds (note 5)- 362,965 312,052 675,017 Total assets 78,727,368$ 5,486,579 30,885,175 115,099,122 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable 4,791,267$ 30,047 1,546,366 6,367,680 Accrued liabilities 1,251,991 - 90,552 1,342,543 Due to other funds (note 5)216,300 - 475,513 691,813 Deposits payable 3,841,197 - 212,884 4,054,081 Unearned revenue 12,550 14,736 11,825 39,111 Total liabilities 10,113,305 44,783 2,337,140 12,495,228 Deferred inflows of resources: Leases (note 3) 257,657 - - 257,657 Unavailable revenue 3,750 - - 3,750 Total deferred inflows of resources 261,407 - - 261,407 Fund Balances: Nonspendable 14,003,892 - - 14,003,892 Restricted - 5,441,796 29,622,465 35,064,261 Committed 23,555,523 - - 23,555,523 Assigned 12,745,574 - - 12,745,574 Unassigned 18,047,667 - (1,074,430) 16,973,237 Total fund balances 68,352,656 5,441,796 28,548,035 102,342,487 Total liabilities, deferred inflows of resources and fund balances 78,727,368$ 5,486,579 30,885,175 115,099,122 CITY OF POWAY Balance Sheet Governmental Funds June 30, 2023 See accompanying notes to the basic financial statements 28 Total Fund Balances - Total Governmental Funds 102,342,487$ Amounts reported for governmental activities in the Statement of Net Position were different because: resources and, therefore, were not reported in the funds. Non-depreciable 38,916,613$ Depreciable, net of accumulated depreciation 81,621,726 120,538,339 on the Government-Wide Statement of Net Position. 113,363 reported in the governmental funds: Pension related deferred outflows of resources (net of $226,367 reported in Internal Service Fund) 22,926,750 Pension related deferred inflows of resources (net of $8,300 reported in Internal Service Fund) (11,892,419) 11,034,331 Long-term liabilities were not due and payable in the current period and therefore were not reported in the governmental funds. Long-term liabilities - due within one year Long-term debt (net of $5,478 reported in Internal Service Fund) (3,067,934) Compensated absences (net of $31,890 reported in Internal Service Fund) (1,525,096) Long-term liabilities - due in more than one year Long-term debt (net of $722,017 reported in Internal Service Fund) (40,646,921) Pension related (net of $278,941 reported in Internal Service Fund) (21,580,350) Compensated absences (net of $7,973 reported in Internal Service Fund) (381,274) (67,201,575) Interest payable on long-term debt did not require current financial resources. Funds Balance Sheet. (233,267) Statements. 3,750 The internal service funds was used by management to charge the costs of certain Statement of Net Position. 12,074,108 Net position of governmental activities 178,671,536$ CITY OF POWAY Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2023 Deferred outflows and inflows of resources related to pensions have not been Capital assets used in governmental activities were not current financial Deferred losses on refunding of debt did not require current financial resources but were deferred and subject to capitalization and amortization Therefore,interest payable was not reported as a liability in the Governmental activities to individual funds. The assets and liabilities of the internal service funds were included in governmental activities in the Government-Wide resulting from activities in which revenues were earned but funds were not available were recognized as revenues in the Government-Wide Financial Unavailable revenues recorded in governmental fund financial statements See accompanying notes to the basic financial statements 29 Special Revenue Fund Total Housing Non-major Total General Authority Governmental Governmental Fund Fund Funds Funds REVENUES Taxes 43,073,491$ - 6,910,433 49,983,924 Licenses and permits 2,391,866 - - 2,391,866 Intergovernmental 496,119 - 690,136 1,186,255 Charges for services 7,502,989 - - 7,502,989 Fines and forfeitures 138,084 - - 138,084 Use (loss) of money and property 1,964,680 64,818 595,455 2,624,953 Developer fees 4,088,267 - 2,707,513 6,795,780 Assessments levied - - 2,045,086 2,045,086 Other revenues 654,552 339,446 351,954 1,345,952 Total revenues 60,310,048 404,264 13,300,577 74,014,889 EXPENDITURES Current: General government 4,103,625 18,875 - 4,122,500 Public safety 29,174,886 - - 29,174,886 Public works 5,646,931 - 3,844,056 9,490,987 Development services 5,733,660 563,995 - 6,297,655 Community services 7,223,380 - - 7,223,380 Capital outlay 1,480,278 - 5,392,037 6,872,315 Debt service: Principal 407,246 - 1,273,720 1,680,966 Interest and fiscal charges 39,360 - 1,552,376 1,591,736 Total expenditures 53,809,366 582,870 12,062,189 66,454,425 Excess (deficiency) of revenues over (under) expenditures 6,500,682 (178,606) 1,238,388 7,560,464 OTHER FINANCING SOURCES (USES) Transfers in (note 5) 1,649,112 - 2,869,566 4,518,678 Transfers out (note 5) (2,726,851) - (829,155) (3,556,006) Total other financing sources (uses) (1,077,739) - 2,040,411 962,672 Net change in fund balances 5,422,943 (178,606) 3,278,799 8,523,136 Fund balances, beginning of year 62,929,713 5,620,402 25,269,236 93,819,351 Fund balances, end of year 68,352,656$ 5,441,796 28,548,035 102,342,487 CITY OF POWAY Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Year Ended June 30, 2023 See accompanying notes to the basic financial statements 30 Net change in fund balances - Total Governmental Funds 8,523,136$ different because: Capital asset expenditures 1,427,019$ Depreciation expense (5,670,108) Disposition of capital assets (35,211) (4,278,300) Principal payments on long-term debt 1,680,966 Adjustment of lease payable 130,846 Changes in pension related items (8,563,789) (6,751,977) Change in compensated absences (net of $586 reported in Internal Service Fund) 28,296 Change in interest expense on long term debt 315,953 Amortization of deferred loss on bond refunding (11,933) Amortization of bond premium 2005 Certificates of Participation 1,749 Amortization of bond premium 2012 Certificates of Participation 14,112 348,177 (225) 1,558,624 Change in net position of governmental activities (600,565)$ to the Statement of Activities CITY OF POWAY Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds Year ended June 30, 2023 Government-Wide Statement of Activities, the cost of those assets will be allocated over their estimated useful lives as depreciation expense. Governmental funds report capital outlay as expenditures. However, in the funds,while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts, and similar items when the debt is first issued, whereas these are deferred and amortized in the statement of activities. The issuance of long-term debt provides current financial resources to governmental current financial resources and, therefore, are not reported as expenditures in Some expenses reported in the statement of activities do not require the use of governmental funds. Amounts reported for governmental activities in the Statement of Activities were service fund was reported with governmental activities. Revenues in the Government-Wide Statement of Activities that did not provide current financial resources are not reported as revenues in the funds. The internal service fund was used by management to charge the costs of certain activities, such as fleet management, to individual funds. The net revenue of the internal See accompanying notes to the basic financial statements 31 This page intentionally left blank. 32 PROPRIETARY FUND FINANCIAL STATEMENTS 33 Governmental Activities - Internal Service Water Sewer Total Fund ASSETS Current assets: Cash and investments (note 2) 19,206,586$ 18,605,718 37,812,304 10,126,764 Cash with fiscal agent (note 2) 1,278 16 1,294 9 Receivables: Accounts 4,823,686 1,561,258 6,384,944 - Inventories 4,453,005 40,111 4,493,116 - Due from other governments 5,556 - 5,556 - Prepaid expenses 34,285 - 34,285 2,481,976 Due from other funds (note 5) 28,949 11,342 40,291 375,175 Total current assets 28,553,345 20,218,445 48,771,790 12,983,924 Noncurrent assets: Advances to the Successor Agency to the Poway Redevelopment Agency (note 5) 796,940 342,859 1,139,799 - Capital assets: Nondepreciable (note 6) 5,691,869 81,146 5,773,015 - Depreciable (note 6) 74,444,460 36,232,493 110,676,953 - Less accumulated depreciation (note 6) (47,370,784) (29,010,248) (76,381,032) - Total net capital assets 32,765,545 7,303,391 40,068,936 - Total noncurrent assets 33,562,485 7,646,250 41,208,735 - Total assets 62,115,830 27,864,695 89,980,525 12,983,924 DEFERRED OUTFLOWS OF RESOURCES Pension related items 2,527,774 377,335 2,905,109 226,367 LIABILITIES Current liabilities: Accounts payable 3,380,365 60,839 3,441,204 81,119 Accrued liabilities 127,806 15,163 142,969 5,943 Deposits 124,670 - 124,670 - Unearned revenue 33,044 14,074 47,118 - Bonds payable, due within one year (note 7) 704,898 60,214 765,112 - Compensated absences due within one year (note 7) 259,672 55,494 315,166 31,890 Total current liabilities 4,630,455 205,784 4,836,239 118,952 Noncurrent liabilities: Bonds payable (note 7) 22,415,223 1,279,432 23,694,655 722,017 Compensated absences (note 7) 64,918 13,873 78,791 7,973 Net pension liability 3,169,817 486,870 3,656,687 278,941 Total noncurrent liabilities 25,649,958 1,780,175 27,430,133 1,008,931 Total liabilities 30,280,413 1,985,959 32,266,372 1,127,883 DEFERRED INFLOWS OF RESOURCES Pension related items 90,902 13,125 104,027 8,300 NET POSITION Net investment in capital assets 18,874,851 7,303,391 26,178,242 - Unrestricted 15,397,438 18,939,555 34,336,993 12,074,108 Total net position 34,272,289$ 26,242,946 60,515,235 12,074,108 CITY OF POWAY Statement of Net Position Proprietary Funds June 30, 2023 See accompanying notes to the basic financial statements 34 Governmental Activities - Internal Service Water Sewer Total Fund OPERATING REVENUES Charges for services 28,646,673$ 9,697,974 38,344,647 3,579,083 Connection fees 1,271,695 1,377,506 2,649,201 - Other 67,951 25,967 93,918 - Total operating revenues 29,986,319 11,101,447 41,087,766 3,579,083 OPERATING EXPENSES Personnel services 5,461,947 944,467 6,406,414 416,070 Maintenance and operations 5,802,373 8,369,669 14,172,042 1,176,665 Administrative expenses 534,894 - 534,894 - Cost of purchased water 14,555,871 - 14,555,871 - Depreciation 1,630,681 1,013,375 2,644,056 - Total operating expenses 27,985,766 10,327,511 38,313,277 1,592,735 Operating income 2,000,553 773,936 2,774,489 1,986,348 NONOPERATING REVENUES (EXPENSES) Interest revenue 197,807 182,500 380,307 95,159 Interest expense and fiscal charges (684,469) (33,044) (717,513) (17,809) Grant revenue 6,784 2,896 9,680 - Other nonoperating revenue 10,841 - 10,841 94,682 Total nonoperating revenues (expenses)(469,037) 152,352 (316,685) 172,032 Income before transfers 1,531,516 926,288 2,457,804 2,158,380 TRANSFERS Transfers in (note 5)- - - 213,370 Transfers out (note 5)(260,919) (101,997) (362,916) (813,126) Total transfers (260,919) (101,997) (362,916) (599,756) Change in net position 1,270,597 824,291 2,094,888 1,558,624 Net position, beginning of year 33,001,692 25,418,655 58,420,347 10,515,484 Net position, end of year 34,272,289$ 26,242,946 60,515,235 12,074,108 Proprietary Funds CITY OF POWAY Statement of Revenues, Expenses and Changes in Net Position Year Ended June 30, 2023 See accompanying notes to the basic financial statements 35 Governmental Activities - Internal Service Water Sewer Total Fund Cash flows from operating activities: Cash received from customers 30,464,496$ 12,342,895 42,807,391 - Cash received from interfund charges - - - 3,579,083 Cash paid to employees for services (5,039,195) (865,904) (5,905,099) (375,457) Cash paid to suppliers for goods or services (22,454,104) (8,351,753) (30,805,857) (2,603,285) Other 67,951 25,967 93,918 94,682 Net cash provided by (used for) operating activities 3,039,148 3,151,205 6,190,353 695,023 Cash flows from noncapital financing activities: Loan repayment from the Successor Agency 98,269 46,813 145,082 - Interest on long-term liabilities (308,009) (33,044) (341,053) (17,809) Principal payments on long-term liablities (63,888) (10,164) (74,052) (5,478) Cash received from other funds 7,464 3,275 10,739 213,370 Cash paid to other funds (260,919) (101,997) (362,916) (809,081) Net cash used for noncapital financing activities (527,083) (95,117) (622,200) (618,998) Cash flows from capital and related financing activities: Acquisition of capital assets (5,415,044) (141,517) (5,556,561) - Principal paid on long-term debt (240,000) - (240,000) - Payment of interest and fees (512,385) - (545,429) - Net cash provided by (used for) capital and related financing activities (6,167,429) (141,517) (6,341,990) - Cash flows from investing activities: Interest income 197,807 182,500 380,307 95,159 Net cash provided by investing activities 197,807 182,500 380,307 95,159 Net increase (decrease) in cash and investments (3,457,557) 3,097,071 (360,486) 171,184 Cash and investments, beginning of year 22,665,421 15,508,663 38,174,084 9,955,589 Cash and investments, end of year 19,207,864$ 18,605,734 37,813,598 10,126,773 CITY OF POWAY Statement of Cash Flows Proprietary Funds Year Ended June 30, 2023 See accompanying notes to the basic financial statements 36 Governmental Activities - Internal Service Water Sewer Total Funds Reconciliation of operating income to net cash provided by operating activities: Operating income 2,000,553$ 773,936 2,774,489 1,986,348 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 1,630,681 1,013,375 2,644,056 - Other nonoperating revenue 17,625 2,896 20,521 94,682 (Increase) decrease in assets: Accounts receivable 478,514 1,264,519 1,743,033 - Inventories (706,061) 4,216 (701,845) - Prepaid expense - - - (1,347,935) Deferred outflows - pension related 4,590,645 719,482 5,310,127 398,806 Increase (decrease) in liabilities: Accounts payable (861,546) 27,814 (833,732) (71,662) Accrued liabilities 6,641 (14,114) (7,473) (7,023) Compensated absences 28,254 5,469 33,723 6,345 Net pension liability (2,343,960) (354,918) (2,698,878) (208,101) Deposits 21,735 - 21,735 - Deferred inflows - pension related (1,823,933) (291,470) (2,115,403) (156,437) Net cash provided by (used for) operating activities 3,039,148$ 3,151,205 6,190,353 695,023 There were no noncash investing, capital and financing activities during fiscal year ended June 30, 2023. City of Poway Statement of Cash Flows Proprietary Funds Year Ended June 30, 2023 (Continued) See accompanying notes to the basic financial statements 37 This page intentionally left blank. 38 FIDUCIARY FUND FINANCIAL STATEMENTS Successor Agency to the Poway Redevelopment Agency Private Purpose Trust Fund is used to account for monies received from the San Diego County Auditor Controller for the repayment of the enforceable obligations of the former Poway Redevelopment Agency. These funds are restricted for the sole purpose of payment of items on an approved Recognized Payment Obligation Schedule (ROPS). 39 Successor Agency to the Poway Redevelopment Agency ASSETS Current assets Cash and investments (note 2)7,227,962$ Cash with fiscal agent (note 2)936 Prepaid charges 130,812 Total current assets 7,359,710 Noncurrent assets Capital assets: Nondepreciable (note 6)2,864,759 Total noncurrent assets 2,864,759 Total assets 10,224,469 LIABILITIES Current liabilities Interest payable 209,825 Long-term debt - due within one year (note 7)10,164,124 Total current liabilities 10,373,949 Noncurrent liabilities Advances from City of Poway (note 5)1,814,816 Long-term debt - due in more than one year (note 7)97,744,668 Total noncurrent liabilities 99,559,484 Total liabilities 109,933,433 DEFERRED INFLOWS OF RESOURCES Deferred gain on refunding of debt 788,756 NET POSITION (DEFICIT) Held in trust for retirement of obligations of the former Poway Redevelopment Agency (100,497,720)$ CITY OF POWAY Statement of Fiduciary Net Position June 30, 2023 Fiduciary Funds See accompanying notes to the basic financial statements 40 Successor Agency to the Poway Redevelopment Agency ADDITIONS Redevelopment Property Tax Trust Fund 61,755,357$ Investment earnings 238,677 Total additions 61,994,034 DEDUCTIONS Enforceable obligations payments 47,007,590 Administration expenses 967,465 Interest expense and fiscal charges 3,777,969 Total deductions 51,753,024 Change in net position 10,241,010 Net position (deficit), beginning of year (110,738,730) Net position (deficit), end of year (100,497,720)$ CITY OF POWAY Statement of Changes in Fiduciary Net Position Year Ended June 30, 2023 See accompanying notes to the basic financial statements 41 This page intentionally left blank. 42 NOTES TO THE BASIC FINANCIAL STATEMENTS 43 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 Note 1 –Summary of Significant Accounting Policies The basic financial statements of the City of Poway, California, (the “City”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as applied to governmental agencies.The Governmental Accounting Standards Board (“GASB”) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below: A.Financial Reporting Entity The City was incorporated on December 1, 1980, 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 –through the County of San Diego, and fire), community services, engineering services, planning services, public works, general administrative services, and capital improvements. As required by U.S. GAAP, these basic financial statements present the City and its component units, entities for which the City is considered to be financially accountable. The City is considered to be financially accountable for an organization if the City appoints a voting majority of that organization’s governing body and either the City is able to impose its will on that organization or there is a potential for that organization to provide specific financial benefits to or impose specific financial burdens on the City. The City is also considered to be financially accountable for an organization if that organization is fiscally dependent (i.e., it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval from the City).In certain cases, other organizations are included as component units if the nature and significance of their relationship with the City are such that their exclusion would cause the City’s financial statements to be misleading or incomplete. Although the following are legally separate from the City, they have been “blended” as though they are part of the City because the component unit’s governing body is substantially the same as the City’s and there is a financial benefit or burden relationship between the City and the component unit; management of the City has operational responsibilities for the component units; and/or the component units provide services entirely, or almost entirely, to the City or otherwise exclusively, or almost exclusively, benefits the City, even though it does not provide services directly to it. Component units for which the City is considered financially accountable are described below: Poway Public Financing Authority The Poway Public Financing Authority (the “Authority”), a blended component unit of the City, is a joint powers authority organized pursuant to the State of California Government Code, Section 6500.The Authority exists under a Joint Exercise of Power Agreement dated October 8, 1991, between the City and the former Poway Redevelopment Agency (the “Agency”). Its purpose is to assist in financing and refinancing projects for the benefit of the City and the Agency. The Authority was included within the scope of the reporting entity of the City because its governing body is composed in its entirety of council members of the City.Separate financial statements can be obtained from the Finance Department located at Poway City Hall. 44 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 1 –Summary of Significant Accounting Policies (continued) A.Financial Reporting Entity (continued) Housing Authority On March 1, 2011, the City Council of the City of Poway declared a need for a housing authority in the City of Poway and adopted a resolution forming the Poway Housing Authority (the “Housing Authority”), a blended component unit of the City.The creation of the Housing Authority provides the City legal authority to continue monitoring ongoing rent and income compliance at affordable housing developments. The former Poway Redevelopment Agency (the “Agency”) and the Housing Authority prepared a Cooperation Agreement to provide for implementation of certain low-and moderate-income housing projects and to make payments by the Agency to the Housing Authority for the costs to the Housing Authority for performing its obligations. The Agency was dissolved due to the passage of Assembly Bill x1 26 which became effective on October 1, 2011. In accordance with Health and Safety code 34175(b), on February 1, 2012, all housing assets, liabilities and fund balance of the Agency were transferred to the Housing Authority as the Successor Agency to the Poway Redevelopment Agency. The Housing Authority is included within the scope of the reporting entity of the City because its governing body is composed in its entirety of council members of the City. Separate financial statements can be obtained from the Finance Department located at Poway City Hall. B.Basis of Accounting and 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 by providing a separate set of self- balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and means by which spending activities are controlled. Government–Wide and Fund Financial Statements The City’s Government-Wide Financial Statements include a Statement of Net Position and a Statement of Activities and Changes in Net Position. These statements present summaries of governmental and business-type activities for the City accompanied by a total column. These basic financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in 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. 45 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 1 –Summary of Significant Accounting Policies (continued) B.Basis of Accounting and Measurement Focus (continued) Government–Wide and Fund Financial Statements (continued) Certain types of transactions are reported as program revenues for the City in three categories: Charges for services Operating contributions and grants Capital contributions and grants Certain eliminations have been made in regard 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 fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. The following interfund activities have been eliminated: Due to and from other funds Advances to and from other funds Transfers in and out 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 aggregated.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 government-wide financial statements.The City has presented all major funds that met those qualifications. 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 present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balances. 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. Revenues are recorded when received in cash, except that revenues subject to accrual (generally 60 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the City, are real and personal property tax, other local taxes, franchise fees, forfeitures and penalties, motor license fees, rents and concessions, interest revenue, and state and federal grants and subventions. Expenditures are recorded in the accounting period in which the related fund liability is incurred except for interest on long-term debt, claims and judgments, and compensated absences, which are recorded only when due. 46 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 1 –Summary of Significant Accounting Policies (continued) B.Basis of Accounting and Measurement Focus (continued) Governmental Fund Financial Statements (continued) Unearned revenues arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods when both revenue recognition criteria are met or when the government has a legal claim to the resources, the unearned revenue is removed from the Balance Sheet and revenue is recognized. The 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. The City reports the following major governmental funds: The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. The Housing Authority Fund receives lease payments from properties owned by the Housing Authority as well as residual payments from its non-profit partners that own and operate affordable housing projects that received funding from the former Redevelopment Agency. The fund is not required to be reported as a major fund every year but is reported as such due to the significance of its operations. In addition to the fund types described earlier, the City reports the following fund types: The Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted to expenditure for special purposes other than debt service or capital projects. The Capital Projects Funds are used to account for and report financial resources that are restricted or assigned to expenditures for capital outlays including the acquisition or construction of capital facilities and other capital assets. The Debt Service Funds are used to account for the principal and interest payments on current and long-term debt. Proprietary Fund Financial Statements Proprietary Fund Financial Statements include a Statement of Net Position, a Statement of Revenues, Expenses and Changes in Net Position, and a Statement of Cash Flows for all proprietary funds. 47 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 1 –Summary of Significant Accounting Policies (continued) B.Basis of Accounting and Measurement Focus (continued) Proprietary Fund Financial Statements (continued) A separate column representing the internal service fund is also presented in these statements. However, internal service balances and activities have been combined with governmental activities in the government-wide financial statements. 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 noncurrent) are included on the Statement of Net Position.The Statement of Revenues, Expenses and Change 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. The City reports the following major proprietary funds: The Water Enterprise Fund is used to account for the provision of water services to the residents of the City. All activities necessary to provide such services are accounted for in this fund, including, but not limited to administration, operations, maintenance, financing and related debt service, and billing and collection. The Sewer Enterprise Fund is used to account for the provision of sewer services to the residents of the City. All activities necessary to provide such services are accounted for in this fund, including, but not limited to administration, operations, maintenance, financing and related debt service, and billing and collection. The City reports one internal service fund that is used to account for the financing of special activities that provide services within the City. The primary activity of the City’s Internal Service Fund is vehicle and equipment maintenance. Fiduciary Fund Financial Statements The Private Purpose Trust Fund is used to account for non-housing activities of the City of Poway Successor Agency on behalf of the former Poway Redevelopment Agency. 48 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 1 –Summary of Significant Accounting Policies (continued) C.Cash, Cash Equivalents and Investments The City pools its available cash for investment purposes. The City considers pooled cash and highly liquid investments held with financial institutions, a fiscal agent, and in a pooled account with the State, to be cash equivalents. The cash flow statements require presentation of “cash and cash equivalents.” For the purposes of the Statement of Cash Flows, the City considers all proprietary fund pooled cash and investments as “cash and cash equivalents,” as such funds are available to the various funds as needed. With respect to cash and investments with fiscal agents, the City considers all investments with an original maturity of less than three months to be cash equivalents. The City participates in an investment pool managed by the State of California titled Local Agency Investment Fund (LAIF) which has invested a portion of the pooled 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 and to changes in interest rates. The City adheres to certain disclosure requirements, if applicable for deposit and investment risk that are specified for the following areas: Interest Rate Risk Credit Risk o Overall o Custodial Credit Risk o Concentration of Credit Risk Foreign Currency Risk The City pools cash and investments of all funds, except assets held by fiscal agents. Each fund’s share in this pool is displayed in the accompanying financial statements as cash and investments. Investment income earned by the pooled investments is allocated to the various funds on each fund’s average cash and investment balance. Investments are reported in the accompanying financial statements at fair value. Changes in fair value that occur during a fiscal year are recognized as investment earnings reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon liquidation, maturity, or sale of an investment. The City categorizes its fair value measurement within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the relative inputs used to measure the fair value of the investments. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). 49 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 1 – Summary of Significant Accounting Policies (continued) C. Cash, Cash Equivalents and Investments (continued) The three levels of the fair value hierarchy are described as follows: Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the City has the ability to access. Level 2: Inputs to the valuation methodology include:  Quoted prices for similar assets or liabilities in active markets;  Quoted prices for identical or similar assets or liabilities in inactive markets;  Inputs other than quoted prices that are observable for the asset or liability;  Inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Unobservable inputs reflect the City’s own assumptions about the inputs market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the City’s own data. D. Interfund Transactions Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “due to/from other funds” (i.e., current portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the Governmental-Wide Financial Statements as “interfund balances.” E. Inventories Inventories within the various fund types consist of water, materials and supplies which are valued at cost on a first-in, first-out basis. Reported expenditures reflecting the purchase of supplies have been restated to reflect the consumption method of recognizing inventory-related expenditures. F. Leases The City is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. For additional information, refer to the disclosures in Footnote 3. Key estimates and judgments include how the City determines the discount rate it uses to discount the expected lease receipts to present value, lease term and lease receipts. 50 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 1 –Summary of Significant Accounting Policies (continued) F.Leases (continued) The City used the estimated incremental borrowing rate as the discount rate for leases. The lease term includes the non-cancellable period of the lease. Lease receipts included the measurement of the lease receivable is composed of fixed payments from the lessee. The City monitors changes in circumstances that would require a remeasurement of its leases and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable. G.Subscription-Based Information Technology (IT) Arrangements The City is a participant in subscription-based IT arrangements as detailed in Note 12. The City recognizes a subscription-based IT payable and right to use IT assets in the financial statements. At the commencement of the arrangement, the City initially measures the payable at the present value of payments expected to be paid during the arrangement term. Subsequently, the payable is reduced by the principal portion of payments made. The right to use assets are initially measured at the initial amount of the subscription-based IT payable. Subsequently, the right to use assets are amortized over the life of the arrangement term. H.Capital Assets Capital assets, which include property, plant, equipment,and infrastructure assets (e.g., roads, streets, sidewalks, medians,and storm drains), are reported in the applicable governmental or business-type activities in the Government-Wide Financial Statements. City policy has set the capitalization threshold for reporting capital assets at $5,000. Capital assets are valued at historical cost or estimated historical cost if actual historical cost was not available. Donated assets are valued at acquisition value at the acquisition date. Depreciation is recorded on a straight-line basis over estimated useful lives of the assets as follows: Buildings 10-50 years Building improvements 10-100 years Machinery and equipment 5-20 years Infrastructure 20-50 years Right to use assets Life of lease/arrangement term The City defines infrastructure as the basic physical assets that allow the City to function. These assets include streets, bridges, sidewalks, drainage systems, and lighting systems, etc.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, landscaping,and land. These subsystems are not delineated in the basic financial statements. The appropriate operating department maintains information regarding the subsystems. 51 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 1 –Summary of Significant Accounting Policies (continued) H.Capital Assets (continued) Major outlays for capital assets and improvements are capitalized as projects are constructed. Capital assets acquired under lease are capitalized at the net present value of the total lease payments. Capital Assets Acquired Under Lease Purchase Contracts The long-term principal portion of debt on non-proprietary capital assets acquired through lease purchase contracts is accounted for in the government-wide financial statements as “lease obligations.” A capital asset is recorded at the net present value of total lease payments in the government-wide financial statements. I.Deferred Inflows and Deferred Outflows of Resources Deferred outflows of resources are transactions that represent a consumption of net assets that applies to future periods and are not considered assets. Deferred outflows of resources are required to be presented separately after assets on the Statement of Net Position. The City has two items that qualify for reporting in this category, deferred loss on refunding of debt and outflows related to pensions. Deferred inflows of resources represent an acquisition to net assets that applies to future periods and are not considered to be liabilities. Deferred inflows of resources are required to be presented separately after liabilities on the Statement of Net Position and the Statement of Fiduciary Net Position. The City has four items that qualifies for reporting in this category, deferred inflows related to pensions, unavailable revenues, leases and deferred gain on refunding of debt. Unavailable revenues are reported only in the governmental funds balance sheet and from accounts, taxes,and grant receivables. These amounts are deferred and recognized as revenues in the period that the amounts become available.Deferred gain on refunding is only reported in the Statement of Fiduciary Net Position. A deferred gain on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the refunded or refunding debt. J.Compensated Absences Government-Wide Financial Statements For governmental and business-type activities, compensated absences are recorded as incurred and the related expenses and liabilities are reported. 52 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 1 –Summary of Significant Accounting Policies (continued) J.Compensated Absences (continued) Fund Financial Statements In governmental funds, compensated absences are recorded as expenditures in the years paid, as it is the City’s policy to liquidate any unpaid compensated absences at June 30 from future resources, rather than currently available financial resources. In proprietary funds, compensated absences are expensed to the various funds in the period they are earned, and such fund’s share of the unpaid liability is recorded as a long-term liability of the fund. Vested or accumulated compensated absences are recorded in proprietary funds as an expense and liability of those funds as the benefits accrue to employees. K.Long-Term Debt Government-Wide Financial Statements Long-term debt and other long-term obligations are reported as liabilities in the appropriate activities. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of applicable premium or discount. Fund Financial Statements The Governmental Fund Financial Statements do not present long-term debt but are shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position. L.Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the plans and additions to/deductions from the plan fiduciary net position have been determined on the same basis as they are reported by the plans. For this purpose, benefit payments (including refund of employee contributions) are recognized when due and payable in accordance with benefit terms. Investments are reported at fair value. GASB 68 requires that the reported results must pertain to liability and asset information within certain defined timeframes. The following timeframes are used for pension reporting: CalPERS Plans Valuation Date June 30, 2021 Measurement Date June 30, 2022 Measurement Period July 1, 2021 to June 30, 2022 53 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 1 –Summary of Significant Accounting Policies (continued) L. Pensions (continued) PARS Plan Valuation Date June 30, 2022 Measurement Date June 30, 2023 Measurement Period July 1, 2022 to June 30, 2023 Gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense. The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earning is amortized straight-line over 5 years. All other amounts are amortized straight-line over the average expected remaining service lives of all members with benefits (active, inactive, and retired) as of the beginning of the measurement period. M.Property Taxes Property taxes are levied on March 1 and are payable in two installments: November 1 and February 1 of each year. Property taxes become delinquent on December 10 and April 10, for the first and second installments, respectively. The lien date is January 1. The County of San Diego, California (the “County”) bills and collects property taxes and remits them to the City according to a payment schedule established by the County. The County is permitted by State law to levy taxes at 1% of full market value (at time of purchase) and can increase the assessed value of the property no more than 2% per year. The City receives a share of this basic tax levy proportionate to what it received during the years 1980-1981. Property tax revenue is recognized in the fiscal year for which the taxes have been levied, provided the taxes are received within 60 days after the end of the fiscal year.Property taxes received after this date are not considered available as a resource that can be used to finance the current year operations of the City and, therefore, are not recorded as revenue until collected. No allowance for doubtful accounts was considered necessary. 54 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 1 –Summary of Significant Accounting Policies (continued) N.Net Position In the Government-Wide Financial Statements and Proprietary Fund Financial Statements, net position is classified as follows: Net Investment in Capital Assets –This component of net position consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of those assets. Restricted –This component of net position consists of restricted assets and deferred outflows of resources reduced by liabilities and deferred inflows of resources related to those assets. Unrestricted –This component of net position is the amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position. When expenses are incurred for purposes for which both restricted and unrestricted net position are available, the City’s policy is to apply restricted net position first, then unrestricted net position as it is needed. O.Fund Balances In the Governmental Fund Financial Statements, fund balances are classified in the following categories: Nonspendable fund balances are items that cannot be spent because they are not in spendable form, such as prepaid items and inventories, and/or items that are legally or contractually required to be maintained intact, such as principal of an endowment or revolving loan funds. Restricted fund balances encompass the portion of net fund resources subject to externally enforceable legal restrictions. This includes externally imposed restrictions by creditors, such as through debt covenants, grantors, contributions, laws,or regulations of other governments, as well as restrictions imposed by law through constitutional provisions or enabling legislation. Committed fund balances encompass the portion of net fund resources, the use of which is constrained by limitations that the government imposes upon itself at its highest level of decision making, normally the governing body through council resolutions, etc., and that remain binding unless removed in the same manner. The City Council is considered the highest authority for the City. Assigned fund balances encompass the portion of net fund resources reflecting the government’s intended use of resources. Assignment of resources can be done by the highest level of decision making or by a committee or official designated for that purpose. The City Council has authorized the City Manager for that purpose. 55 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 1 –Summary of Significant Accounting Policies (continued) O. Fund Balances (continued) Unassigned fund balances include all residual fund balances for the General Fund that have not been restricted, committed or assigned to specific purposes within the General Fund. The General Fund is the only fund that reports a positive unassigned fund balance amount. The unassigned classification also includes negative residual fund balance of any other governmental fund that cannot be eliminated by offsetting the assigned fund balance amounts. It is the City’s policy to consider restricted fund balance spent first when an expenditure is incurred for purposes for which both restricted and unrestricted fund balance are 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. P.Use of Estimates The preparation of the basic financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the disclosure of contingent assets and liabilities at the date of the basic financial statements and the related reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management believes that the estimates are reasonable. Note 2 –Cash, Cash Equivalents and Investments The City maintains a cash and investment pool, which includes cash balances and authorized investments of all funds. This pooled cash is invested by the City Treasurer to enhance earnings. The pooled interest earned is allocated to the funds based on average month-end cash balances of the various funds. The following is a summary of cash and investments at June 30, 2023: Fiduciary Funds Governmental Business-Type Statement of Activities Activities Net Position Total Cash and investments 102,454,787$ 37,812,304 7,227,962 147,495,053 Cash and investments with fiscal agents 596,781 1,294 936 599,011 Total 103,051,568$ 37,813,598 7,228,898 148,094,064 Government-Wide Statement of Net Position 56 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 2 –Cash, Cash Equivalents and Investments (continued) Cash, cash equivalents, and investments consisted of the following at June 30, 2023: A.Cash Deposits The carrying amounts of the City’s demand deposits were $1,495,029 at June 30, 2023.Bank balances at June 30, 2023 were $2,239,828,which were fully insured or collateralized with securities held by the pledging financial institutions in the City’s name as discussed below: The California Government Code requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City's name. The market value of pledged securities must equal at least 110% of the City's cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured by the Federal Deposit Insurance Corporation. The City, however, has not waived the collateralization requirements. The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund. B.Investments City Cash & Investment Pool The table on the following page identifies the investment types that are authorized for the City by the California Government Code (or the City’s investment policy, where more restrictive).The table also identifies certain provisions of the California Government Code (or the City’s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. Cash on hand 8,600$ Demand deposits 1,495,029 Investments 146,590,435 Total 148,094,064$ 57 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 2 –Cash, Cash Equivalents and Investments (continued) B.Investments (continued) This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy. Authorized Investment Type Maximum Maturity Maximum Percentage of Portfolio* Maximum Investment In One Issuer* U.S. Treasury Obligation 5 years None None U.S. Agency Securities 5 years 75%25% Bankers Acceptances 180 days 40%5% Medium-Term and Corporate Notes 5 years 30%5% Money Market Mutual Funds N/A 20%10% Mortgage and Asset-Backed Securities 5 years 20%None Supranationals 5 years 30%None Commercial Paper 270 days 25%5% Municipal Bonds 5 years 30%5% Negotiable Certificates of Deposits 5 years 30%5% Local Agency Investment Fund (LAIF)N/A None None County of San Diego Investment Pool N/A None None CalTRUST Joint Powers Authority N/A None None Obligation of any State 5 years None None * Excluding amounts held by trustee that are not subject to California Government Code restriction. Investments Authorized by Debt Agreements Investments of debt proceeds held by bond trustees are governed by provisions of the debt agreement, rather than the general provisions of the California Government Code or the City’s investment policy. The table below identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk. Authorized Investment Type Maximum Maturity Maximum Percentage of Portfolio Maximum Investment in One Issuer Repurchase Agreement 1 year None None Money Market Mutual funds N/A None None U.S. Agency Securities 5 years None None Investment Contracts 30 years None None Local Agency Investment Fund (LAIF)N/A None None 58 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 2 –Cash, Cash Equivalents and Investments (continued) C.Risk Disclosures Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value is to changes in the market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer-term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity: Credit Risk Generally, credit risk is the risk that the issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. 12 Months 13 to 24 25 to 60 Investment Type Amounts or Less Months Months U.S. Treasury Bills 28,980,315$ 13,101,713 12,750,442 3,128,160 U.S. Agencies 25,612,868 11,881,354 3,744,790 9,986,724 CalTrust Investment Pool - Short term 11,753,031 11,753,031 - - CalTrust Investment Pool - Medium term 11,488,838 - 11,488,838 - Medium-Term and Corporate Notes 21,609,722 7,461,261 7,439,845 6,708,616 Local Agency Investment Fund (LAIF)46,450,591 46,450,591 - - San Diego County Investment Pool 98,289 98,289 - - Held by bond trustee: Money Market Funds 596,781 596,781 - - Total 146,590,435$ 91,343,020 35,423,915 19,823,500 Remaining Maturities 59 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 2 –Cash, Cash Equivalents and Investments (continued) Credit Risk (continued) The following presentation is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreements, and the actual rating as of June 30, 2023 for each investment type: Concentration of Credit Risk The City’s Policy states that not more than 25% of the portfolio shall be invested in any one entity or any one instrument to protect the City from concentration of credit risk, with the following exceptions: U.S. Treasury Obligations and investments pools (State of California –Local Agency Investment Fund and CalTRUST Investment Pool). In addition, purchases of commercial paper must not exceed 25% of the value of the portfolio at any time and single issuer holdings must not exceed 5% per issuer. The City is in compliance with these provisions of the Policy.Investments in any one issuer that represent 5% or more of the total City’s investments are as follows: D.Investment in Local Agency Investment Funds The City is a participant in the Local Agency Investment Fund (LAIF) which is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. There are no restrictions on participant withdrawals. Minimum Investment Type Rating S&P Moody's Fair Value U.S. Treasury Bills exempt exempt exempt 28,980,315$ U.S. Agencies Aaa AA Aaa 25,612,868 CalTrust Investment Pool-Short term AAf AAf not rated 11,753,031 CalTrust Investment Pool-Medium term N/A not rated not rated 11,488,838 Medium-Term and Corporate Notes A-/A3 AA Aaa 21,609,722 Local Agency Investment Fund (LAIF)N/A not rated not rated 46,450,591 San Diego County Investment Pool AAAf AAAf not rated 98,289 Held by bond trustee: Money Market Funds AAA AAAm Aaamf 596,781 Total 146,590,435$ Issuer Investment Type Reported Amount % of Investments Federal Home Loan Bank U.S. Agencies 11,895,540$ 8% Federal Farm Credit Bank U.S. Agencies 8,185,140 6% 60 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 2 –Cash, Cash Equivalents and Investments (continued) D.Investment in CalTRUST The City is a voluntary participant in the Investment Trust of California (CalTRUST) a Joint Powers Authority. CalTRUST is a program established by public agencies in California for the purpose of pooling and investing local agency funds.CalTRUST invests in fixed income securities eligible for investment pursuant to California Government Code Sections 53601, et. seq. and 53635, et. seq. Investments in CalTRUST are highly liquid, as deposits can be converted to cash within 24 hours without loss of interest. The balance available for withdrawal is based on the accounting records maintained by CalTRUST, which are recorded on a fair market value basis. Separate CalTRUST financial statements are available from CalTRUST’s offices at 400 Capitol Mall, Suite 702, Sacramento, CA 95814. E.Investment in San Diego County Investment Pool The City is a voluntary participant in the County Treasury Pool (“County Pool”) which is regulated under the oversight of the Treasurer of the County of San Diego. The fair value of the City’s investment in the County Pool is reported in the accompanying financial statements based upon the City’s pro-rata share of the fair value provided by the County Pool for the entire portfolio. The balance available for withdrawal is based on the accounting records maintained by the Pool. F.Investment in San Diego County Investment Pool (continued) Included in the County Pool’s investment portfolio are collateralized and negotiable certificates of deposit, floating rate securities issued by federal agencies and corporations, money market funds, repurchase agreements and commercial paper. Separate San Diego County financial statements are available from County Administration Center at 1600 Pacific Highway, San Diego, CA 92101. At June 30, 2023, the City had $97,828 invested in the San Diego County Investment Pool. The City’s investment in this pool is reported in the accompanying financial statements at fair market value. G.Fair Value Measurements The following table presents the balances of the assets measured at fair value on a recurring basis as of June 30, 2023. Not Subject to Fair Value Level Total Level 1 Level 2 Level 3 GASB 72 U.S. Treasury Bills 28,980,315$ 28,980,315 - - - U.S. Agencies 25,612,868 - 25,612,868 - - CalTrust Investment Pools 23,241,869 - - - 23,241,869 Medium-Term and Corporate Notes 21,609,722 - 21,609,722 - - Local Agency Investment Fund (LAIF)46,450,591 - - - 46,450,591 San Diego County Investment Pool 98,289 - - - 98,289 Money Market Funds 596,781 - - - 596,781 Total investments by fair value level 146,590,435$ 28,980,315 47,222,590 - 70,387,530 Investments by 61 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 3 –Leases Receivable The City is a lessor in non-cancellable leases for use of City property.The leases range from 10 to 15 years.The leases are required to make fixed monthly payments starting at $4,000 to $5,000 per month and additional annual percentage rent payment starting at 7% to 10% of total annual gross revenues. The City is also a lessor in a 14-year non-cancellable lease for restaurant space with fixed monthly rent payments of $7,550 per month. The City recognized $8,808 in lease revenue and $1,797 in interest revenue during the current fiscal year related to these agreements.As of June 30, 2023, the lease receivable is $375,941 and deferred inflows of resources is $257,657. Note 4 –Notes Receivable At June 30, 2023, notes receivable consisted of the following: The City owned the Poway Royal Mobilehome Park until it was sold to Hometown America Communities in July 2010. As part of the sale, the City received a 20-year interest only note for $10,000,000. The annual interest payment is $500,000 and due each July. The note matures on 7/12/2030.$10,000,000 In April 2020, the City loaned $1,700,000 to a developer for the acquisition, development and construction of a commercial project. The annual interest rate, which will be determined 14 days prior to the due date, is the sum of the rate published by the United States Department of the Treasury, as the interest rate for its Five-Year Treasury Bill, plus 2.25%. The interest is compounded monthly. The note and all accrued interest are due in April 2024. 1,700,000 On March 13, 2020, the City declared a Local Emergency as a result of the novel coronavirus disease 2019 (COVID-19) pandemic. On April 16, 2020, the City implemented the Poway Emergency Assistance Recovery Loan (PEARL) program to offer financial assistance to small, independently owned businesses located in the City. The maximum loan amount is $50,000 per business. The term of the loan is three years at 3% annual interest beginning 90 days after the City rescinds the Local Emergency declaration. However, if the loan is repaid in full within 90 days, then the interest is 0%. As of June 30, 2023, the City has not rescinded the Local Emergency declaration.812,746 The City established the Employee Computer Purchase Program to provide eligible employees the opportunity to increase their knowledge of computers and business software. Under this program, the City made computer loans to eligible employees. The term of the loan is 12 or 24 months at a 4% annual interest rate or the current interest rate received by the City’s investment portfolio, whichever is greater. 2,923 Total notes receivable $ 12,515,669 62 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 5 –Interfund Transactions A.Due To and Due From Other Funds As of June 30, 2023, balances were as follows: These balances resulted from loans to cover negative cash balances and capital replacement costs. B.Advances To and Advances From Fiduciary Funds The advances to fiduciary funds were primarily used for the following: Advances to Fiduciary Funds Advances from Governmental Funds Governmental Activities: Housing Authority $ 362,965 Non-major Governmental Funds 312,052 Business-Type Activities: Water Fund 796,940 Sewer Fund 342,859 Total $ 1,814,816 The City Council authorized various advances to the former Poway Redevelopment Agency, which now reside in the Successor Agency, totaling $1,814,816. As approved by the State of California Department of Finance, these advances are being repaid through fiscal year 2032-33. The advances bear a 3% interest rate, payable over 18 years. Internal General Water Sewer Service Due to other funds Fund Fund Fund Fund Total Governmental Activities: General Fund -$ - - 216,300 216,300 Non-major Governmental Funds 276,347 28,949 11,342 158,875 475,513 Total due to other funds 276,347$ 28,949 11,342 375,175 691,813 Due from other funds 63 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 5 –Interfund Transactions (continued) C.Transfers To and From Other Funds Transfers for the year ended June 30, 2023: Transfers are primarily used for the following: Move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them; Move receipt restricted to the debt service from the funds collecting the receipts, to the debt service fund as debt service payments become due; Move available funds to capital project funds for approved projects. Non-major Governmental Internal Transfers Out General Funds Service Total General Fund -$ 2,513,481 213,370 2,726,851 Non-major Governmental Funds 829,155 - - 829,155 Water Enterprise Fund 6,831 254,088 - 260,919 Sewer Enterprise Fund - 101,997 - 101,997 Internal Service Fund 813,126 - - 813,126 Total 1,649,112$ 2,869,566 213,370 4,732,048 Transfers In 64 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 6 –Capital Assets A.Governmental Activities A summary of changes in capital assets for governmental activities for the year ended June 30, 2023: Governmental activities depreciation expense for capital assets for the year ended June 30, 2023: General Government $1,425,796 Public Safety 626,031 Public Works 2,482,440 Community Services 1,135,841 Total Depreciation Expense $ 5,670,108 Balance at Balance at June 30, 2022 Additions Deletions Transfers June 30, 2023 Non-Depreciable Assets Land 38,370,065$ - - - 38,370,065 Construction in progress 497,130 557,159 (3,750) (503,991) 546,548 Total non-depreciable assets 38,867,195 557,159 (3,750) (503,991) 38,916,613 Depreciable Assets Buildings 78,340,503 - (66,935) 105,000 78,378,568 Improvements other than buildings 15,419,072 587,553 - - 16,006,625 Infrastructure 142,349,175 - - - 142,349,175 Right to use assets 1,330,746 - - - 1,330,746 Right to use assets-SBITA*1,741,615 1,741,615 Machinery and equipment 20,299,491 286,057 (651,472) 398,991 20,333,067 Total depreciable assets 259,480,602 873,610 (718,407) 503,991 260,139,796 Less accumulated depreciation Buildings (42,325,408) (1,918,974)66,935 - (44,177,447) Improvements other than buildings (4,152,505) (470,658) - - (4,623,163) Infrastructure (112,983,108)(1,679,359)- - (114,662,467) Right to use assets (798,447) (133,075) - - (931,522) Right to use assets-SBITA - (415,392) - - (415,392) Machinery and equipment (13,271,689) (1,052,650)616,260 - (13,708,079) Total accumulated depreciation (173,531,157)(5,670,108)683,195 - (178,518,070) Total depreciable assets, net 85,949,445 (4,796,498)(35,212) 503,991 81,621,726 Total governmental activities 124,816,640$ (4,239,339)(38,962) - 120,538,339 *Beginning balance restated due to implementation of GASB 96. See note 19 for additional details. 65 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 6 – Capital Assets (continued) B.Business-type Activities A summary of changes in capital assets for business-type activities for the year ended June 30, 2023: Business-type activities depreciation expense for capital assets for the year ended June 30, 2023: Water Enterprise Fund $1,6,30,681 Sewer Enterprise Fund 1,013,375 Total Depreciation Expense $ 2,644,056 Balance at Balance at June 30, 2022 Additions Deletions Transfers June 30, 2023 Non-Depreciable Assets Land 76,797$ - - - 76,797 Construction in progress 11,595,031 5,140,143 - (11,038,956)5,696,218 Total non-depreciable assets 11,671,828 5,140,143 - - 5,773,015 Depreciable Assets Buildings 22,063,561 - - - 22,063,561 Improvements other than buildings 73,933,017 - - 11,318,206 85,251,223 Machinery and equipment 3,468,300 416,418 (243,299) (279,250) 3,362,169 Total depreciable assets 99,464,878 416,418 (243,299)- 110,676,953 Less accumulated depreciation Buildings (19,827,599) (466,744) - - (20,294,343) Improvements other than buildings (51,400,837) (2,048,117)- - (53,448,954) Machinery and equipment (2,751,839) (129,195) 243,299 - (2,637,735) Total accumulated depreciation (73,980,275) (2,644,056)243,299 - (76,381,032) Total depreciable assets, net 25,484,603 (2,227,638)- - 34,295,921 Total business-type activities 37,156,431$ 2,912,505 - - 40,068,936 66 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 6 – Capital Assets (continued) C.Fiduciary Activities A summary of changes in capital assets for fiduciary activities for the year ended June 30, 2023: Note 7 –Long-Term Debt A summary of changes in long-term debt for the year ended June 30, 2023: Balance at Balance at June 30, 2022 Additions Deletions June 30, 2023 Non-Depreciable Assets Land 2,864,759$ - - 2,864,759 Total non-depreciable assets 2,864,759 - - 2,864,759 Total fiduciary activities 2,864,759$ - - 2,864,759 Amount Amount Balance Balance Due Within Due In More June 30, 2022 Additions Reductions June 30, 2023 One Year Than One Year Governmental Activities: 2005 Certificates of Participation 1,205,000$ - (220,000) 985,000 230,000 755,000 Bond Premium 4,986 - (1,749) 3,237 1,390 1,847 2012 Certificates of Participation 8,530,000 - (665,000) 7,865,000 685,000 7,180,000 Bond Premium 90,329 - (14,112) 76,217 13,046 63,171 2021 Pension Obligation Bonds 33,990,670 - (255,948) 33,734,722 1,516,298 32,218,424 Compensated Absences 1,968,184 2,255,338 (2,277,289) 1,946,233 1,556,986 389,247 Subscription Based IT Arrangements*1,741,615 - (407,246) 1,334,369 480,093 854,276 Regional Communications System Lease 707,424 - (269,097) 438,327 142,107 296,220 Total governmental activities 48,238,208$ 2,255,338 (4,110,441) 46,383,105 4,624,920 41,758,185 Business-Type Activities: 2021 Water Revenue Bonds 12,800,000$ - (240,000) 12,560,000 250,000 12,310,000 Bond Premium 2,215,899 - (76,410) 2,139,489 76,410 2,063,079 2021 Pension Obligation Bonds 9,834,330 - (74,052) 9,760,278 438,702 9,321,576 Compensated Absences 360,234 520,889 (487,166) 393,957 315,166 78,791 Total business-type activities 25,210,463$ 520,889 (877,628) 24,853,724 1,080,278 23,773,446 Fiduciary Funds: 2015A Tax Allocation Bonds 108,555,000$ - (8,345,000) 100,210,000 8,770,000 91,440,000 Bond Premium 9,213,759 - (1,514,967) 7,698,792 1,394,124 6,304,668 Total fiduciary activities 127,333,638$ - (9,859,967) 107,908,792 10,164,124 97,744,668 *Beginning balance restated due to implementation of GASB 96. See note 19 for additional details. Classification 67 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 7 –Long-Term Debt (continued) A.Governmental Activities Long-Term Debt 2005 Certificates of Participation In April 2005, the City issued 2005 Refunding Certificates of Participation in the amount of $8,245,000 to refund and defease the City’s outstanding 1995 and 1996 Certificates of Participation. The original 1995 Certificates of Participation were used for several projects such as the City’s pool and Performing Arts Center, while the 1996 Certificates of Participation were used to build the City’s Sheriff Substation. The 2005 Refunding Certificates of Participation consisted of $6,830,000 serial certificates maturing from 2005 through 2020 in annual installments of $305,000 to $610,000 and term certificates of $1,415,000 maturing in 2026. Interest is payable semi-annually on February 1 and August 1 at rates ranging from 3.00% to 4.50%. Certificates maturing on or after August 1, 2016 are subject to optional redemption in whole or in part, on any date beginning August 1, 2015. Certificates maturing on August 1, 2026 are subject to mandatory redemptions on August 1 of each year beginning August 1, 2021. At February 1, 2012, $2,335,000 was transferred to the Successor Agency. At June 30, 2023, the City’s portion of the outstanding balance of the 2005 Certificates of Participation was $985,000. The annual requirements to amortize the City portion of Certificates of Participation outstanding at June 30, 2023: 2012 Certificates of Participation On October 5, 2012, the Public Financing Authority (the “Authority”) issued 2012 Refunding Certificates of Participation to provide for the defeasance and refunding of 2003 Certificates of Participation, to fund a reserve account for the Certificates, and to pay costs incurred in connection with executing and delivering the Certificates. The City leased certain existing property from the Public Financing Authority pursuant to a Site and Facilities Lease dated as of January 1, 2003, as amended by an Amendment to Site and Facilities Lease, dated as of October 1, 2012.The Certificates are payable solely from and secured by certain lease payments to be made by the City to the Authority.The interest with respect to the Certificates is payable on January 1 and July 1 of each year, commencing January 1, 2013 at rates ranging from 2.00% to 3.25%. At June 30, 2023, the outstanding balance of the 2012 Certificates of Participation was $7,865,000. Year Ending June 30,Principal Interest Total 2024 230,000$ 39,150 269,150 2025 240,000 28,575 268,575 2026 250,000 17,550 267,550 2027 265,000 5,963 270,963 Total 985,000$ 91,238 1,076,238 68 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 7 –Long-Term Debt (continued) A.Governmental Activities Long-Term Debt (continued) The annual requirements to amortize Certificates of Participation outstanding at June 30, 2023: 2021 Pension Obligation Bonds On December 1, 2021, the City of Poway issued 2021 Pension Obligation Bonds to pay a portion of the City’s currently unamortized, unfunded accrued actuarial liability to the California Public Employees’ Retirement System with respect to the City’s defined retirement plans for City employees. The interest with respect to the Bonds is payable on December 1 and June 1 of each year, commencing December 1, 2022 at rates ranging from .079% to 2.98%. The pension obligation bonds are allocated across all the City’s funds based on the percentage share of the CalPERS unfunded accrued liability per the GASB 68 Actuarial reports.At June 30, 2023, the outstanding balance of the 2021 Pension Obligation Bonds for governmental activities was $33,734,722. The annual requirements to amortize the governmental activities Pension Obligation Bonds outstanding at June 30, 2023: Year Ending June 30,Principal Interest Total 2024 1,516,298$ 852,458 2,368,756 2025 1,531,810 836,143 2,367,953 2026 1,551,200 815,417 2,366,617 2027 1,574,468 791,482 2,365,950 2028 1,601,614 764,213 2,365,827 2029 - 2033 8,535,478 3,300,028 11,835,506 2034 - 2038 9,729,902 2,112,086 11,841,988 2039 - 2043 5,630,856 824,522 6,455,378 2044 - 2048 2,063,096 154,724 2,217,820 Total 33,734,722$ 10,451,073 44,185,795 Year Ending June 30,Principal Interest Total 2024 685,000$ 244,308 929,308 2025 710,000 223,758 933,758 2026 725,000 202,458 927,458 2027 745,000 180,708 925,708 2028 770,000 158,358 928,358 2029 - 2033 4,230,000 417,633 4,647,633 Total 7,865,000$ 1,427,223 9,292,223 69 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 7 –Long-Term Debt (continued) A.Governmental Activities Long-Term Debt (continued) Regional Communication System In October 2016, the City of Poway entered into an agreement with the County of San Diego with respect to the Next Generation Regional Communications System (NextGen RCS). Under this agreement, beginning on June 1, 2017, the City will pay an annual payment of $154,337 for ten years to the County of San Diego for rights of use of the NextGen RCS.As of June 30, 2023, the remaining balance on the lease is $438,327. The following are remaining annual lease payments June 30, 2023: B.Proprietary Funds Long Term Debt 2021 Water Revenue Bonds On November 1, 2021, the Public Financing Authority (the “Authority”) issued 2021 Water revenue Bonds to provide financing for certain capital improvements to the City’s Water System. The interest with respect to the Bonds is payable on June 1 of each year, commencing June 1, 2022 at rates ranging from 3.00% to 4.00%. At June 30, 2023, the outstanding balance of the 2021 Water Revenue Bonds was $12,560,000. Year Ending June 30,Principal Interest Total 2024 142,107$ 12,230 154,337 2025 146,072 8,265 154,337 2026 150,148 4,189 154,337 Total 438,327$ 24,684 463,011 Year Ending June 30,Principal Interest Total 2024 250,000$ 502,400 752,400 2025 260,000 492,400 752,400 2026 270,000 482,000 752,000 2027 285,000 471,200 756,200 2028 295,000 459,800 754,800 2029-2033 1,660,000 2,112,600 3,772,600 2034-2038 2,010,000 1,753,800 3,763,800 2039-2043 2,455,000 1,317,200 3,772,200 2044-2048 2,985,000 785,600 3,770,600 2049-2051 2,090,000 169,400 2,259,400 Total 12,560,000$ 8,546,400 21,106,400 70 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 7 –Long-Term Debt (continued) B.Proprietary Funds Long-Term Debt (continued) 2021 Pension Obligation Bonds On December 1, 2021, the City of Poway issued 2021 Pension Obligation Bonds to pay a portion of the City’s currently unamortized, unfunded accrued actuarial liability to the California Public Employees’ Retirement System with respect to the City’s defined retirement plans for City employees. The interest with respect to the Bonds is payable on December 1 and June 1 of each year, commencing December 1, 2022 at rates ranging from .079% to 2.98%. The pension obligation bonds are allocated across all the City’s funds based on the percentage share of the CalPERS unfunded accrued liability per the GASB 68 Actuarial reports. At June 30, 2023, the outstanding balance of the 2021 Pension Obligation Bonds for business-type activities was $9,760,278. The annual requirements to amortize the proprietary funds Pension Obligation Bonds outstanding at June 30, 2023: C.Fiduciary Funds Long Term Debt 2015A Tax Allocation Bonds On July 1, 2015, the Successor Agency to the Poway Redevelopment Agency (Successor Agency) issued 2015A Tax Allocation Bonds in the amount of $133,110,000 for the purpose of effecting a refunding of the Poway Redevelopment Agency’s outstanding Paguay Redevelopment Project Tax Allocation Refunding Bonds, Series 2000, Series 2001 and Series 2003. The bonds are dated July 1, 2015 and mature on June 15, 2033 in the principal amount and bear interest from 4% to 5%. Interest is payable semi-annually on June 15 and December 15 through 2033. The bonds maturing on December 15, 2026, December 15, 2027, June 15, 2028, December 15, 2028 and on December 15, 2029 are subject to optional redemption prior to maturity at the option of the Successor Agency. Year Ending June 30,Principal Interest Total 2024 438,702$ 1,099,095 1,537,797 2025 443,190 1,078,059 1,521,249 2026 448,800 1,051,337 1,500,137 2027 455,532 1,020,477 1,476,009 2028 463,386 221,105 684,491 2029 - 2033 2,469,522 954,778 3,424,300 2034 - 2038 2,815,098 611,078 3,426,176 2039 - 2043 1,629,144 238,554 1,867,698 2044 - 2048 596,904 44,766 641,670 Total 9,760,278$ 6,319,249 16,079,527 71 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 7 –Long-Term Debt (continued) C.Fiduciary Funds Long Term Debt (continued) The Successor Agency has pledged all revenues and all of the monies in the Redevelopment Obligation Retirement Fund and all monies in the Debt Service Fund. No funds or properties, other than those previously stated, shall be pledged for the payment of the principal or interest or redemption premium on the bonds. As of June 30, 2023, the balance of the 2015A Tax Allocation Bonds was $100,210,000. The annual requirements to amortize the bonds outstanding at June 30, 2023: D.Compensated Absences This liability represents the total unpaid vacation,compensatory time, and unpaid sick leave earned by employees of the City.Since this amount is paid to the employee upon termination of employment, there is no fixed payment schedule for earned but unpaid compensated absences. The compensated absences are predominately associated with the General Fund, Water Fund and Sewer Fund. At June 30, 2023, the outstanding balance of governmental activities and business- type activities compensated absences were $1,946,233 and $393,957, respectively. Note 8 –Pension Plan Summary The City currently has two pension plans administered by the California Public Employees’ Retirement System (CalPERS) and one retirement enhancement plan administered by the Public Agency Retirement Services (PARS). The pension plans consist of a miscellaneous agent plan and a cost-sharing safety plan (see Note 9 for a full description of the plans). The retirement enhancement plan serves as a supplemental defined benefit pension plan (see Note 10 for a full description of the plan).The summary of the deferred outflows of resources, deferred inflows of resources, net pension liability and pension expense: Year Ending June 30,Principal Interest Total 2024 8,770,000$ 4,902,250 13,672,250 2025 9,215,000 4,458,250 13,673,250 2026 11,430,000 3,970,125 15,400,125 2027 9,420,000 3,423,500 12,843,500 2028 9,010,000 2,957,500 11,967,500 2029-2033 52,365,000 7,032,125 59,397,125 Total 100,210,000$ 26,743,750 126,953,750 72 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 8 – Pension Plan Summary (continued) The net pension liabilities for the City’s pension plans are primarily liquidated by funding from the General, Water, Sewer and Internal Service funds based on their proportionate personnel costs each year. Note 9 – Defined Benefit Pension Plans - CalPERS A. General Information about the Pension Plans Plan Descriptions The Plans consist of an agent multiple-employer defined benefit pension plan and a public agency cost-sharing multiple-employer defined benefit pension plan administered by CalPERS. Miscellaneous – Agent, Multiple-Employer Defined Benefit Pension Plan A full description of the pension plan regarding number of employees covered, benefit provisions, assumptions (for funding, but not accounting purposes), and membership information are listed in the plan’s June 30, 2021, Annual Actuarial Valuation Report (funding valuation). Details of the benefits provided can be obtained in Appendix B of the actuarial valuation report. This report and CalPERS audited financial statements are publicly available reports that can be obtained on the CalPERS website, at www.calpers.ca.gov. Miscellaneous Safety PARS Total Deferred Outflows of Resources 11,255,193$ 13,289,042 1,513,991 26,058,226 Deferred Inflows of Resources (372,525) (11,550,704) (81,517) (12,004,746) Net Pension (Liability)/Asset (15,110,746) (9,343,895) (1,061,337) (25,515,978) Pension Expense 4,427,991 8,339,096 149,771 12,916,858 73 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 9 –Defined Benefit Pension Plans -CalPERS (continued) A.General Information about the Pension Plans (continued) Safety –Cost Sharing, Multiple-Employer Defined Benefit Pension Plan All qualified permanent and probationary employees are eligible to participate in the Public Agency Cost-Sharing Multiple-Employer Defined Benefit Pension Plan (Plan) administered by CalPERS.The Plan consists of individual rate plans (benefit tiers) within a safety risk pool (police and fire) and a miscellaneous risk pool (all other). Plan assets may be used to pay benefits for any employer rate plan of the safety and miscellaneous pools.Accordingly, rate plans within the safety or miscellaneous pools are not separate plans under GASB Statement No. 68. Individual employers may sponsor more than one rate plan in the miscellaneous or safety risk pools. The City sponsors one safety plan in safety risk pools. Benefit provisions under the Plan are established by State statute and the City resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the CalPERS’ website, at www.calpers.ca.gov. Benefits Provided CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after five years of service. The death benefit is one of the following:the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law. The Plan operates under the provisions of the California Public Employees’ Retirement Law (PERL), the California Public Employees’ Pension Reform Act of 2013 (PEPRA), and the regulations, procedures and policies adopted by the CalPERS Board of Administration. The Plan’s authority to establish and amend the benefit terms are set by the PERL and PEPRA and may be amended by the California state legislature and in some cases require approval by the CalPERS Board. The Plans’ provisions and benefits in effect at June 30, 2023: On or After Prior to January 1, 2011 Prior On or After Hire date January 1, 2011 to January 1, 2013 January 1, 2013 Benefit formula 2.0% @ 55 2.0% @ 60 2.0% @ 62 Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 - 63 & Up 50 - 63 & Up 52-67 & Up Monthly benefits, as a % of eligible compensations 1.426% to 2.418%1.092% to 2.418%1.0% or 2.5% Miscellaneous Plans 74 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 9 –Defined Benefit Pension Plans -CalPERS (continued) A.General Information about the Pension Plans (continued) Employees Covered At June 30, 2022 (measurement date), the following employees were covered by the benefit terms: Contributions Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions. On or After Prior to January 1, 2011 Prior On or After Hire date January 1, 2011 to January 1, 2013 January 1, 2013 Benefit formula 3.0% @ 50 3.0% @ 55 2.7% @ 57 Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 & Up 50-55 & Up 50-57 & Up Monthly benefits, as a % of eligible compensations 3.0%2.4% to 3.0%2.0% to 2.7% Safety Plan Miscellaneous Safety Inactive employees or beneficiaries currently receiving benefits 292 55 Inactive employees entitled to but not yet receiving benefits 235 41 Active employees 172 50 Total 699 146 75 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 9 –Defined Benefit Pension Plans -CalPERS (continued) B.Net Pension Liability (continued) The City’s net pension liability for the Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of the Plan is measured as of June 30, 2022, using an annual actuarial valuation as of June 30, 2021 rolled forward to June 30, 2022, using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability: Actuarial Methods and Assumptions Used to Determine Total Pension Liability Actuarial Cost Method Entry Age Normal Asset Valuation Method Market Value of Assets Actuarial Assumptions: Discount Rate 6.90% Inflation 2.30% Salary Increase Varies by Entry Age and Service Mortality Rate Table 1 Derived using CalPERS’ membership data for all funds Post Retirement Benefit Increase The lesser of contract COLA or 2.30% until Purchasing Power Protection Allowance floor on purchasing power applies, 2.30% thereafter 1 The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study for the period from 2001 to 2019. Pre- retirement and post-retirement mortality rates include generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from November 2021 that can be found on the CalPERS website. Discount Rate The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at the statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members.Therefore, the long term expected rate of return on plan on investment was applied to all periods of projected benefit payments to determine the total pension liability. The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, except compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. 76 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 9 –Defined Benefit Pension Plans -CalPERS (continued) B.Net Pension Liability (continued) The expected real rate of return by asset class: 1 An expected inflation of 2.30% used for this period. 2 Figures are based on the 2021 Asset Liability Management study. Pension Plan Fiduciary Net Position Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports. Assumed Asset Real Asset Class1 Allocation Return 1,2 Global Equity - Cap-weighted 30.00%4.54% Global Equity - Non-Cap-weighted 12.00%3.84% Private Equity 13.00%7.28% Treasury 5.00%0.27% Mortgage-backed Securities 5.00%0.50% Investment Grade Corporates 10.00%1.56% High Yield 5.00%2.27% Emerging Market Debt 5.00%2.48% Private Debt 5.00%3.57% Real Assets 15.00%3.21% Leverage -5.00%-0.59% Total 100.0% 77 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 9 –Defined Benefit Pension Plans -CalPERS (continued) B.Net Pension Liability (continued) Miscellaneous Plan The following table shows the Plan’s change in net pension liability over the measurement period. Increase (Decrease) Total Pension Liability Plan Fiduciary Net Position Net Pension Liability/(Asset) (a)(b)(c) = (a) –(b) Balance at: 6/30/2021 (VD)$ 128,679,349 102,766,275 25,913,074 Changes Recognized for the Measurement Period: Service Cost 2,106,424 -2,106,424 Interest on the Total Pension Liability 8,950,009 -8,950,009 Change of Assumptions Differences between Expected and Actual Experience 4,268,441 (579,484) - - 4,268,441 (579,484) Contributions –Employer - 33,458,912 (33,458,912) Contributions –Employees -1,012,404 (1,012,404) Net Investment Income -(8,859,581)8,859,581 Benefit Payments, including Refunds of Employee Contributions (7,422,494) (7,422,494) - Administrative Expense - (64,017) 64,017 Net Change During 2021-22 7,322,896 18,125,224 (10,802,328) Balance at: 6/30/2022 (MD)$ 136,002,245 120,891,499 15,110,746 Safety Plan The City’s net pension liability for each of the cost sharing, multiple-employer Plans is measured as the proportionate share of the net pension liability. The net pension liability of each of the Plans is measured as of June 30, 2022, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2021, rolled forward to June 30, 2022, using standard update procedures. The City’s proportion of the net pension liability was determined by CalPERS using the output from the Actuarial Valuation System and the fiduciary net position, as provided in the CalPERS Public Agency Cost-Sharing Allocation Methodology Report, which is a publicly available report that can be obtained at CalPERS’ website under Forms and Publications, at www.calpers.ca.gov. The City’s proportionate share of the net pension liability for each Plan as of June 30, 2021, and 2022, was as follows: Safety Plan Proportionate Share of NPL -June 30, 2021 0.33319% Proportionate Share of NPL -June 30, 2022 0.13598% Change -Increase (Decrease)(0.19721%) 78 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 9 –Defined Benefit Pension Plans -CalPERS (continued) B.Net Pension Liability (continued) The following table shows the Plan’s proportionate share of the net pension liability over the measurement period. Increase (Decrease) Plan Total Pension Liability Plan Fiduciary Net Position Plan Net Pension Liability (a)(b)(c) = (a) -(b) Balance at: 6/30/2021 (VD)$ 69,918,725 58,225,442 11,693,293 Balance at: 6/30/2022 (MD) 75,336,537 65,992,641 9,343,895 Net changes during 2021-22 $ 5,417,812 7,767,199 (2,349,398) Valuation Date (VD), Measurement Date (MD) Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the City’s proportionate share of the net pension liability of each Plan as of the measurement date, calculated using the discount rate of 6.90 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (5.90 percent) or 1 percentage-point higher (7.90 percent) than the current rate: Discount Rate -1%Current Discount Rate Discount Rate + 1% (5.90%)(6.90%)(7.90%) Miscellaneous Plan $ 32,492,161 15,110,746 714,274 Safety Plan 19,747,753 9,343,895 841,092 Amortization of Deferred Outflows and Deferred Inflows of Resources Under GASB 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense. 79 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 9 – Defined Benefit Pension Plans - CalPERS (continued) B. Net Pension Liability (continued) The amortization period differs depending on the source of the gain or loss: Net difference between projected and actual earnings on pension plan investments 5-year straight-line amortization All other amounts Straight-line amortization over the expected average remaining service lifetime (EARSL) of all members that are provided with benefits (active, inactive and retired) as of the beginning of the measurement period. For the year ended June 30, 2023, the City recognized pension expense of $4,427,991 and $8,339,096 for the Miscellaneous and Safety Plans, respectively. At June 30, 2022 measurement date, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: The $1,818,108 and $1,497,160 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the fiscal year ended June 30, 2024. Deferred Outflows of Resources Deferred Inflows of Resources Deferred Outflows of Resources Deferred Inflows of Resources Differences between Expected and Actual Experience 323,325$ (372,525) 386,710 - Changes of Assumptions 2,743,998 - 942,148 - Net Difference between Projected and Actual Earnings on Pension Plan Investments 6,369,762 - 1,475,532 (101,467) Change in Employer's Proportion - - 8,627,598 (10,909,175) Difference in Actual vs Projected Contributions - - 359,894 (540,062) Pension Contributions Subsequent to Measurement Date 1,818,108 - 1,497,160 - 11,255,193$ (372,525) 13,289,042 (11,550,704) Miscellaneous Safety 80 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 9 –Defined Benefit Pension Plans -CalPERS (continued) C.Net Pension Liability (continued) Amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in future pension expense as follows: Subsequent Events On July 12, 2021, CalPERS reported a preliminary 21.3% net return on investments for fiscal year 2020-21. Based on the thresholds specified in CalPERS Funding Risk Mitigation policy, the excess return of 14.3% prescribes a reduction in investment volatility that corresponds to a reduction in the discount rate used for funding purposes of 0.20%, from 7.00% to 6.80%. Since CalPERS was in the final stages of the four-year Asset Liability Management (ALM) cycle, the board elected to defer any changes to the asset allocation until the ALM process concluded, and the board could make its final decision on the asset allocation in November 2021. On November 17, 2021, the board adopted a new strategic asset allocation. The new asset allocation along with the new capital market assumptions, economic assumptions and administrative expense assumption support a discount rate of 6.90% (net of investment expense but without a reduction for administrative expense) for financial reporting purposes. This includes a reduction in the price inflation assumption from 2.50% to 2.30% as recommended in the November 2021 CalPERS Experience Study and Review of Actuarial Assumptions. This study also recommended modification to retirement rates, termination rates, mortality rates and rates of salary increases that were adopted by the board. These new assumptions will be reflected in the GASB 68 accounting valuation reports for the June 30, 2022, measurement date. Measurement Period Ended June 30,Miscellaneous Safety 2023 2,808,720$ (130,494) 2024 2,145,838 (273,325) 2025 735,248 (255,098) 2026 3,374,754 900,095 2027 - - Thereafter - - Deferred Outflows/(Inflows) of Resources 81 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 10 –Defined Benefit Pension Plan -Retirement Enhancement Plan A.General Information about the Pension Plan Plan Description The Plan is a single-employer, supplemental employee defined benefit pension plan (the plan II) administered by the Public Agency Retirement Services (PARS) Phase II Systems. A full description of the pension plan regarding number of employees covered, benefit provisions, assumptions (for funding, but not account purposes), and membership information are listed in the July 1, 2022, Annual Actuarial Valuation Report.Details of the benefits provided can be obtained from the actuarial valuation reports. PARS issues a publicly available financial report that includes financial statements and required supplementary information for the plan II.That report may be obtained by writing to PARS, 3961 MacArthur Boulevard, Suite 200, Newport Beach, California, 92660. Benefits Provided The Retirement Enhancement Plan provides a benefit equal to the PARS "2.7% at 55" plan factor (formula is a static 2.7% at age 55 and older), less the CalPERS "2.0% at 55" plan factor times final compensation for all years of benefit service. The Plan provides a pre-retirement death benefit for the eligible surviving spouse of any active employee who dies after attaining the minimum age requirement and completing the required years of service for the supplemental retirement benefit. The benefit will be equal to the participant’s retirement benefit, actuarially reduced as if the participant had retired and elected a 100% joint- and-survivor annuity and paid as an annuity over the lifetime of the surviving spouse. There is no death benefit payable if there is no surviving spouse. City Councilmembers who do not meet eligibility requirements at termination of employment but will meet the eligibility requirements at a later date, will be eligible for a deferred retirement benefit upon meeting all the requirements including retirement under CalPERS. The Plan is closed to all employees hired after January 9, 2012 ("soft-freeze"). The Plan’s provisions and benefits in effect at June 30, 2022 (measurement date), are summarized as follows: Supplemental Hire date On or before January 9, 2012 Benefit formula 2.7% @ 55 less CalPERS 2.0% @ 55 Benefit vesting schedule from date of hire Benefit payments life only annuity Retirement age 55 Monthly benefits, as a % of eligible compensation 38.46% Required employee contribution rates none 82 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 10 –Defined Benefit Pension Plan -Retirement Enhancement Plan (continued) A.General Information about the Pension Plan (continued) Contributions Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through PARS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employer contributions for the measurement period ended June 30, 2023 are $1,278,809. B.Net Pension Liability The City’s net pension liability for the Retirement Enhancement Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of the Plan is measured as of June 30, 2023, using an annual actuarial valuation as of June 30, 2022. A summary of principal assumptions and methods used to determine the net pension asset is as follows. Actuarial Methods and Assumptions Used to Determine Total Pension Liability Valuation Date June 30, 2022 Measurement Date June 30, 2023 Actuarial Cost Method Entry Age Normal Actuarial Assumptions Discount Rate 6.50% Inflation 2.30% Salary Increases1 Consistent with the rates used to value CalPERS Miscellaneous Public Agency Pension Plans (Entry Age 30) Investment Rate of Return 6.50% Cost of Living Adjustments 2.00%compounded annually Mortality Rate Table Pre-retirement: CalPERS Miscellaneous Non-Industrial Rates Post-retirement:CalPERS Miscellaneous Non-Industrial Rates 1 Includes inflation. Graded based on years of service, 3.40% after 22 years of service. Employees Covered At June 30, 2022 (actuarial valuation date), the following employees were covered by the benefit terms: Supplemental Inactive employees or beneficiaries currently receiving benefits 94 Active employees 45 Total 139 83 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 10 –Defined Benefit Pension Plan -Retirement Enhancement Plan (continued) B.Net Pension Liability (continued) Discount Rate GASB 68 generally requires that a blended discount rate be used to measure the total pension liability (the actuarial accrued liability calculated using the Individual Entry Age Normal Cost Method).The long-term expected return on plan investments may be used to discount liabilities to the extent that the plan's fiduciary net position (fair market value of assets) is projected to cover benefit payments and administrative expenses. A 20-year high quality (AA/Aa or higher) municipal bond rate must be used for periods where the fiduciary net position is not projected to cover benefit payments and administrative expenses. Determining the discount rate under GASB 68 will often require that the actuary perform complex projections of future benefit payments and asset values. GASB 68 (paragraph 29) does allow for alternative evaluations of projected solvency if such evaluation can reliably be made. GASB does not contemplate a specific method for making an alternative evaluation of sufficiency; it is left to professional judgment. The following circumstances justify an alternative evaluation of sufficiency for the City of Poway: The City of Poway has at least a five year history of paying at least 100% of the Actuarially Determined Contribution (previously termed the Annual Required Contribution). The Actuarially Determined Contribution is based on a closed amortization period, which means that payment of the Actuarially Determined Contribution each year will bring the plan to a 100% funded position by the end of the amortization period. GASB 68 specifies that the projections regarding future solvency assume that plan assets earn the assumed rate of return and there are no future changes in the plan provisions or actuarial methods and assumptions, which means that the projections would not reflect any adverse future experience which might impact the plan's funded position. Based on these circumstances, the City believes that the detailed depletion date projections outlined in GASB 68 will show that the fiduciary net position is always projected to be sufficient to cover benefit payments and administrative expenses. June 30, 2023 Discount rate 6.50% Long-term expected rate of return, net of investment expense 6.50 Municipal bond rate N/A The plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculating the total pension liability is equal to the long-term expected rate of return. 84 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 10 –Defined Benefit Pension Plan -Retirement Enhancement Plan (continued) B.Net Pension Liability (continued) Pension Plan Fiduciary Net Position Information about the pension plan’s assets, deferred outflows of resources, liabilities, deferred inflows of resources, and fiduciary net position are presented in the City’s GASB 68 Employer Accounting Information report. The plan’s fiduciary net position and additions to/deductions from the plan’s fiduciary net position have been determined on the same basis used by the pension plan, which is the economic resources measurement focus and the accrual basis of accounting. Benefits and refunds are recognized when due and payable in accordance with the terms of each plan. Investments are reported at fair value. C.Changes in the Net Pension Liability The following table shows the changes in net pension liability recognized over the measurement period. Increase (Decrease) Total Pension Liability (a) Plan Fiduciary Net Position (b) Net Pension Liability (c) = (a) - (b) Balances as of June 30, 2022 20,979,331$ 18,821,156$ 2,158,175$ Changes for the year: Service Cost 135,556 - 135,556 Interest on the Total Pension Liability 1,330,737 - 1,330,737 Effect of Economic Demographic Gains or Losses (144,222) - (144,222) Effect of Assumptions Changes or Inputs 50,309 - 50,309 Benefit Payments (1,304,558) (1,304,558) - Employer Contributions - 1,278,809 (1,278,809) Net Investment Income - 1,245,584 (1,245,584) Administrative Expenses - (55,175) 55,175 Net Changes during 2022-23 67,822 1,164,660 (1,096,838) Balance as of June 30, 2023 21,047,153$ 19,985,816$ 1,061,337$ 85 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 10 –Defined Benefit Pension Plan -Retirement Enhancement Plan (continued) C.Changes in the Net Pension Liability (continued) Sensitivity of the Net Pension Asset to Changes in the Discount Rate The following presents the net pension asset of the City of Poway Retirement Enhancement Plan, calculated using the discount rate of 6.50%, as well as what Plan's net pension asset would be if it were calculated using a discount rate that is one percentage point lower (5.50%) or one percentage point higher (7.50%) than the current rate. Discount Rate -1%Current Discount Rate Discount Rate + 1% (5.50%)(6.50%)(7.50%) Net Pension Liability $ 3,380,991 1,061,337 (906,305) Recognition of Gains and Losses Investment gains/losses are recognized in pension expense over a period of five years; economic/demographic gains/losses and assumption changes or inputs are recognized over the average remaining service life for all active and inactive members. D.Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2023, the City incurred a pension expense of $149,771 for the Plan. As of June 30, 2023, the City has deferred outflows and deferred inflows of resources related to pensions: Amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in future pension expense: Measurement Period Ended Deferred Outflows/(Inflows) of Resources, Net June 30,PARS 2024 $ 331,748 2025 205,296 2026 900,391 2027 (4,961) Deferred Outflows of Resources Deferred Inflows of Resources Differences between Expected and Actual Experience 18,854$ (81,517) Changes of Assumptions 28,436 - Net Difference between Projected and Actual Earnings on Pension Plan 1,466,701 - Total 1,513,991$ (81,517) 86 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 11 – City and Housing Authority Rehabilitation Loan Programs Housing Rehabilitation Loan Program There are two types of housing rehabilitation loans. Forgivable rehabilitation loans are forgiven at a rate of 10% per year given all loan covenants are met.Non-forgivable loans are due upon the sale, transfer or foreclosure of the property. Due to the contingent nature of the repayment schedule of these loans, there is an allowance recorded at 100% of the outstanding balance. The balance of the non-forgivable rehabilitation loans at June 30, 2023 is $7,870. BEGIN Program Loans This program is sponsored by a State of California grant to aid first-time buyers in the purchase of affordable housing in the City of Poway. These loans have a 30-year term with a one percent interest rate.If the property is transferred or sold within five years, the loan must be repaid. After five years, if the property is transferred or sold the loan must be assumed by the buyer for the remaining term. At the end of the thirty years,the loan must be repaid with principal and interest.Per the grant terms, loan repayments must be re-loaned. Due to the contingent nature of the repayment schedule of these loans, there is an allowance recorded at 100% of the outstanding balance. The balance of the BEGIN loans, including accrued interest, at June 30, 2023 is $1,737,712. Affordable Housing Loans These loans are made to aid in the purchase of affordable housing in the City of Poway. They are for a 45-year term with interest between 2 percent and 3 percent and if there is a sale, transfer, or foreclosure before the end of the term the loan must be assumed by an income qualified buyer and the 45-year term starts over. Due to the contingent nature of the repayment schedule of these loans, there is an allowance recorded at 100% of the outstanding balance. The balance of these Affordable Housing loans at June 30, 2023 is $2,072,774. Development Loans The City, through the Housing Authority, has development loans primarily for affordable rental housing projects and for one group home for the developmentally disabled. The affordable rental housing loans have 55-year to 57-year terms with three percent simple interest. Loan payments are made from residual receipts and generally do not cover the annual accrued interest. Therefore, due to the contingent nature of the repayment schedule of these loans, there is an allowance recorded at 100% of the outstanding balance. The balance of the development loans, including accrued interest, at June 30, 2023 is $41,119,809. 87 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 12 – Subscription-Based Information Technology Arrangements The City has entered into subscription-based information technology (IT) arrangements with various vendors. These arrangements are governed by Governmental Accounting Standards Board Statement No. 96, Subscription-Based IT Arrangements. As of June 30, 2023, the City has recognized a liability of $1,334,369 related to these subscription-based IT arrangements. This liability represents the total estimated cost of the remaining subscription period, as determined by the contract terms and usage data. The City has also recognized an intangible asset of $1,741,615, representing the right to use the subscription-based IT arrangements for the remaining subscription period, as determined by the contract terms and usage data. The City has disclosed additional information about these subscription-based IT arrangements in the City's financial statements, including the nature of the obligation and the term of the subscription, as well as any changes to the estimate of the liability or the intangible asset since the previous financial statements. The City believes that it has complied with the requirements of GASB Statement No. 96 in all material respects, and that the financial statements present fairly, in all material respects, the financial position of the City as of June 30, 2023. Note 13 – Risk Management A. Description of Self-Insurance Pool Pursuant to Joint Powers Agreement The City of Poway is a member of the CALIFORNIA JOINT POWERS INSURANCE AUTHORITY (CJPIA). The CJPIA is composed of 124 California public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 et seq. The purpose of the CJPIA is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The California JPIA began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board operates through a nine-member Executive Committee. B. Primary Self-Insurance Programs of the CJPIA Each member pays an annual contribution at the beginning of the coverage period. A retrospective adjustment is then conducted annually thereafter, for coverage years 2012-13 and prior. Coverage years 2013-14 and forward are not subject to routine annual retrospective adjustment. The total funding requirement for primary self-insurance programs is based on an actuarial analysis. Costs are allocated to individual agencies based on payroll and claims history, relative to other members of the risk-sharing pool. 88 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 13 –Risk Management (continued) B.Primary Self-Insurance Programs of the CJPIA (continued) Primary Liability Program Claims are pooled separately between police and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $30,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $30,000 to $750,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs from $750,000 to $50 million, are distributed based on the outcome of cost allocation within the first and second loss layers. The overall coverage limit for each member, including all layers of coverage, is $50 million per occurrence. Subsidence losses have a sub-limit of $40 million per occurrence. The coverage structure includes retained risk that is pooled among members, reinsurance, and excess insurance. More detailed information about the various layers of coverage is available on the following website: https://cjpia.org/coverage/risk-sharing-pools/. Primary Workers’ Compensation Program Claims are pooled separately between public safety (police and fire) and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $50,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $50,000 to $100,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs from $100,000 to statutory limits are distributed based on the outcome of cost allocation within the first and second loss layers. For 2022-23 the CJPIA’s pooled retention is $1 million per occurrence, with reinsurance to statutory limits under California Workers’ Compensation Law. Employer’s Liability losses are pooled among members to $2 million. Coverage from $1 million to $5 million is purchased through reinsurance policies, and Employer’s Liability losses from $5 million to $10 million are pooled among members. 89 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 13 –Risk Management (continued) C.Purchased Insurance Pollution Legal Liability Insurance The City of Poway participates in the pollution legal liability insurance program which is available through the CJPIA. The policy covers sudden and gradual pollution of scheduled property, streets, and storm drains owned by the City of Poway. Coverage is on a claims-made basis. There is a $250,000 deductible. The CJPIA has an aggregate limit of $50 million for the period from July 1, 2022 through July 1, 2023. Each member of the CJPIA has a $5 million sub-limit during the three year policy term. Property Insurance The City of Poway participates in the all-risk property protection program of the CJPIA. This insurance protection is underwritten by several insurance companies. City of Poway property is currently insured according to a schedule of covered property submitted by the City of Poway to the CJPIA. City of Poway property currently has all-risk property insurance protection in the amount of $235,564,394. There is a $10,000 deductible per occurrence except for non-emergency vehicle insurance which has a $2,500 deductible. Crime Insurance The City of Poway purchases crime insurance coverage in the amount of $1,000,000 with a $2,500 deductible. The fidelity coverage is provided through the CJPIA. D.Adequacy of Protection During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in fiscal year 2022-23. Note 14 –Joint Venture The City is a member of the Regional Solid Waste Association Joint Powers Authority (“JPA”). The JPA was formed on September 1, 1997 by the cities of Del Mar, Encinitas, National City, Poway, Solana Beach and Vista to provide stable, long-term, cost-effective options for all aspects of regional solid waste disposal. Each member provides a proportionate percentage of revenue to cover all costs related to the obligations and liabilities of the JPA when they become due and payable. In the event of dissolution of the JPA, any money or assets in possession of the Regional Solid Waste Association after the payment of all liabilities, costs, expenses and charges shall be distributed to the member agencies in proportion to their contributions determined as of the time of termination. The activities of the JPA are supervised by a board consisting of one elected member of the legislative body of each of the member agencies. 90 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 14 –Joint Venture (continued) The City of Escondido joined the JPA as a special contract party for the purpose of working on Regional Household Hazardous Waste issues. Summarized audited information of the JPA for the fiscal year ended June 30, 2023, which is the latest information available: The City’s share of the JPA’s assets and liabilities are not available. Separate financial statements of the JPA are available at the City of Poway. Note 15 –Deficit Net Position At June 30, 2023, the following funds had deficit net position: Fund Type Fund Name Deficit Special Revenue Fund 800 MHz Communication System $ (43,279) Special Revenue Fund Special Revenue Fund Community Development Block Grant (CDBG) Proposition A (306) (1,030,845) Fiduciary Fund Successor Agency to the Poway Redevelopment Agency (100,497,720) The 800 MHz Communication System Special Revenue fund had a deficit balance of $43,279 due to the timing of collections of the voter-approved special tax. The CDBG Special Revenue fund had a deficit balance of $306 due to the timing of reimbursement of eligible expenditures. The Proposition A Special Revenue fund had a deficit balance of $1,030,845 due to the timing of reimbursement of eligible expenditures. The Successor Agency to the Poway Redevelopment Agency Private Purpose Trust fund had an accumulated deficit of $100,497,720, which resulted from the issuance of tax allocation bonds that were intended to be repaid by the former Poway Redevelopment Agency’s future property tax increment revenue. Now that the Redevelopment Agency has been dissolved, the Successor Agency expects to receive sufficient Redevelopment Property Tax Trust Fund distributions through the remaining life of the bonds to fully fund their repayment. Total Assets 357$ Total Liabilities 37$ Total Equity 320$ Total Revenues 353$ Total Expenses 500$ Net Decrease in Fund Equity (147)$ Amounts in Thousands 91 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 16 –Contingent Liabilities and Commitments A.Litigation The City is a defendant in certain legal actions arising in the normal course of operations. The accompanying basic financial statements reflect a liability for the probable amounts of loss associated with these claims. B.Construction Various construction projects were in progress at June 30, 2023 with an estimated cost to complete of approximately $40,992,146 in all fund types. C.Significant Encumbrances Encumbrances represent purchase orders, contracts,or other commitments for the expenditure of monies. However, because these commitments will be honored in subsequent years, they do not constitute an expenditure or liability for financial statement purposes. At fiscal year-end, the City had the following significant encumbrances. Special Internal General Revenue Enterprise Service Purpose Fund Funds Funds Funds Total Water Projects -$ - 4,385,987 - 4,385,987 Sewer Projects - - 362,456 - 362,456 Street Projects - 342,048 - - 342,048 Drainage Projects - 299,657 - - 299,657 Professional Services 103,439 155,172 - 2,873 261,484 Equipment 217,479 40,674 - 12,203 270,356 Vehicles - 24,931 - 200,726 225,657 Facilities 81,713 - - 524,905 606,618 Computer Equipment and Software 145,138 - - 125,871 271,009 Total Outstanding Encumbrances 547,769$ 862,482 4,748,443 866,578 7,025,272 92 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 17 –Fund Balances Classification The City’s fund balances at June 30, 2023: * The $812,746 of Notes Receivables related to the PEARL program (see Note 3)is included in the Extreme Events committed fund balance instead because the funding for the PEARL program came from there and that amount eventually collected is subject to the same constraints. Total Housing Non-Major General Authority Governmental Fund Fund Funds Total Nonspendable: Prepaid items 1,145,119$ - - 1,145,119 Inventories 166,104 - - 166,104 Land held for resale 177,000 - - 177,000 Notes receivable 12,515,669 - - 12,515,669 Total nonspendable 14,003,892 - - 14,003,892 Restricted: Debt service payments - - 724,685 724,685 Drainage - - 5,152,280 5,152,280 Fire protection - - 245,469 245,469 Grants - - 570,560 570,560 Housing - 5,441,796 412,231 5,854,027 Maintenance districts - - 9,630,456 9,630,456 Other purposes - - 1,915,362 1,915,362 Parks and recreation - - 3,354,254 3,354,254 Streets - - 5,793,328 5,793,328 Transportation - - 1,823,798 1,823,798 Total restricted - 5,441,796 29,622,423 35,064,219 Committed: Economic volatility 7,649,478 - - 7,649,478 Extreme events 14,606,394 - - 14,606,394 Pension Stabilization 1,299,651 - - 1,299,651 Total committed 23,555,523 - - 23,555,523 Assigned: Capital projects 7,988,135 - - 7,988,135 Contractual services 288,689 - - 288,689 Equipment/ furniture 86,563 - - 86,563 Library 265,336 - - 265,336 Parks and recreation 304,536 - - 304,536 Public education & govt programming 1,148,193 - - 1,148,193 Public safety 92,478 - - 92,478 Repair and maintenance 2,571,644 - - 2,571,644 Total assigned 12,745,574 - - 12,745,574 Unassigned 18,047,667 - (1,074,430) 16,973,237 Total unassigned 18,047,667 - (1,074,430) 16,973,237 Total fund balances 68,352,656$ 5,441,796 28,547,993 102,342,445 Major Funds 93 CITY OF POWAY Notes to the Basic Financial Statements Year Ended June 30, 2023 (continued) Note 18 – Expenditures in Excess of Appropriations Excess of expenditures over appropriations in individual funds at the function level (level of budgetary control) is as follows at June 30, 2023: Note 19 – Implementation of New Accounting Standard As described in Note 12 to the financial statements, the City changed accounting policies related to leases by adopting Statement of Governmental Accounting Standards Board (GASB) Statement No. 96, Subscription-Based Information Technology Assessments, in fiscal year 2023. The City did not restate prior year balances as it was not practicable to do so. Note 20 – Subsequent Event In September 2023, the Poway Public Financing Authority issued $35,790,000 in Water Revenue Bonds, Series 2023A. The proceeds will be used to finance a portion of the Water Infrastructure Improvement Program. The bonds have an interest rate of 5% and principal payments due semi-annually from 2024 through 2053. Final Governmental Funds - Non-Major Fund Budget Expenditures Excess Special Revenue Funds: 800 MHz Communication System 154,337$ 154,366 (29) Road Repair 809,717 809,757 (40) Debt Service Funds: City Debt Service 2,664,617 2,671,772 (7,155) 94 REQUIRED SUPPLEMENTARY INFORMATION 95 Actual Variance with Original Final Amounts Final Budget REVENUES Taxes 42,534,119$ 42,534,119 43,073,491 539,372 Licenses and permits 2,100,384 2,100,384 2,391,866 291,482 Intergovernmental 523,338 523,338 496,119 (27,219) Charges for services 6,695,780 7,237,380 7,502,989 265,609 Fines and forfeitures 115,000 115,000 138,084 23,084 Use (loss) of money and property 1,111,550 1,111,550 1,964,680 853,130 Developer fees 2,986,769 3,658,769 4,088,267 429,498 Other revenues 144,740 280,465 654,552 374,087 Total revenues 56,211,680 57,561,005 60,310,048 2,749,043 EXPENDITURES Current: General government 9,402,774 10,147,955 4,103,625 6,044,330 Public safety 28,430,656 28,698,670 29,174,886 (476,216) Public works 5,838,733 6,279,583 5,646,931 632,652 Development services 6,410,167 7,110,750 5,733,660 1,377,090 Community services 6,890,581 7,625,165 7,223,380 401,785 Capital outlay 1,458,427 5,462,226 1,480,278 3,981,948 Debt service: Principal - - 407,246 (407,246) Interest - - 39,360 (39,360) Total expenditures 58,431,338 65,324,349 53,809,366 11,514,983 Excess (deficiency) of revenues over (under) expenditures (2,219,658) (7,763,344) 6,500,682 14,264,026 OTHER FINANCING SOURCES (USES) Transfers in 2,857,271 3,670,397 1,649,112 (2,021,285) Transfers out (4,113,205) (4,113,205) (2,726,851) 1,386,354 Total other financing sources (uses)(1,255,934) (442,808) (1,077,739) (634,931) Net change in fund balance (3,475,592)$ (8,206,152) 5,422,943 13,629,095 Fund balance, beginning of year 62,929,713 Fund balance, end of year 68,352,656$ Budget Amounts CITY OF POWAY Required Supplementary Information Budgetary Comparison Schedule - General Fund Year Ended June 30, 2023 96 Actual Variance with Original Final Amounts Final Budget REVENUES Charges for services 18,389$ 18,389 - (18,389) Use of money and property 69,227 69,227 64,818 (4,409) Other revenues 40,000 40,000 339,446 299,446 Total revenues 127,616 127,616 404,264 276,648 EXPENDITURES Current: General government 106,100 116,110 18,875 97,235 Development services 55,300 663,953 563,995 99,958 Total expenditures 161,400 780,063 582,870 197,193 Excess (deficiency) of revenues over (under) expenditures (33,784) (652,447) (178,606) 473,841 Net change in fund balance (33,784)$ (652,447) (178,606) 473,841 Fund balance, beginning of year 5,620,402 Fund balance, end of year 5,441,796$ Budget Amounts CITY OF POWAY Budgetary Comparison Schedule - Housing Authority Fund Required Supplementary Information Year Ended June 30, 2023 97 CITY OF POWAY Required Supplementary Information Notes to Required Supplementary Information June 30, 2023 Note 1 – Budgetary Information The City prepares its budgets on the basis of estimated expenditures and, accordingly, the budget amounts included in the accompanying financial statements are presented on a basis consistent with generally accepted accounting principles. The City Manager presents a proposed budget to the City Council appointed Budget Review Committee (BRC) in May. The BRC holds public budget meetings during May and early June. The final budget is adopted by the City Council during late June. No budget expenditures can be disbursed without proper appropriations. Once the budget is adopted, no additional fund appropriations can be authorized without the Council’s approval. The level of budget control (the level on which expenditures may not legally exceed appropriations) is the individual fund level. The City Manager can authorize budget transfers between departments without additional appropriations. The City holds a mid-year budget review meeting. During the meeting, all the budget expenditures are reviewed and projections for the whole year are made. Therefore, any necessary changes are submitted for approval by the City Council with a resolution. Annual appropriated budgets are adopted for the general, special revenue, capital projects and one debt service fund. Budgets are adopted on a basis consistent with generally accepted accounting principles. Budgeted amounts are as originally adopted and as further amended by the City Council. Capital improvement projects budgets are adopted upon project approval and remaining project balances are carried forward to subsequent fiscal years until the project’s completion. Encumbrance accounting is employed in governmental funds. Encumbrances (e.g., purchase orders and contracts) outstanding at year-end are reported as reservations of fund balances and do not constitute expenditures or liabilities. The commitments will be re-appropriated and honored in the subsequent year. The following are the budget comparison schedules for the General Fund and Housing Authority Fund. 98 This page intentionally left blank. 99 Measurement Period 6/30/2014 6/30/2015 6/30/2016 6/30/2017 TOTAL PENSION LIABILITY Service Cost 1,515,714$ 1,463,621 1,552,133 1,785,822 Interest 6,646,592 6,973,473 7,241,818 7,456,135 Difference Between Expected and Actual Experience - 179,245 (444,504) (471,057) Changes of Assumptions - (1,692,043) - 6,085,867 Benefit Payments, Including Refunds of Employee Contributions (3,875,819) (4,300,520) (4,757,620) (5,058,914) Net Change in Total Pension Liability 4,286,487 2,623,776 3,591,827 9,797,853 Total Pension Liability - Beginning 89,801,273 94,087,760 96,711,536 100,303,363 Total Pension Liability - Ending (a) 94,087,760$ 96,711,536 100,303,363 110,101,216 PLAN FIDUCIARY NET POSITION Net Plan to Plan Resource Movement -$ - - - Contributions - Employer 1,590,147 1,651,614 1,961,662 2,311,817 Contributions - Employee 716,942 773,660 778,160 806,615 Net Investment Income 11,075,599 1,674,500 387,630 7,966,356 Benefit Payments, Including Refunds of Employee Contributions (3,875,819) (4,300,520) (4,757,620) (5,058,914) Administrative Expenses - (82,323) (44,608) (105,594) Other Miscellaneous Income/(Expense) - - - - Net Change in Fiduciary Net Position 9,506,869 (283,069) (1,674,776) 5,920,280 Plan Fiduciary Net Position - Beginning 63,970,749 73,477,618 73,194,551 71,519,775 Plan Fiduciary Net Position - Ending (b) 73,477,618$ 73,194,549 71,519,775 77,440,055 Plan Net Position Liability - Ending (a) - (b) 20,610,142$ 23,516,987 28,783,588 32,661,161 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 78.09% 75.68% 71.30% 70.34% Covered Payroll 10,373,075$ 10,272,463 10,938,986 11,566,248 Plan Net Pension Liability as a Percentage of Covered Payroll 198.69% 228.93% 263.13% 282.38% * Measurement date 6/30/2014 (fiscal year 2015) was the first year of implementation, therefore, only nine years are presented. Notes to Schedule: In 2016, there were no changes in assumptions. In 2017, The accounting discount rate reduced from 7.65% to 7.15%. In 2019 - 2021, there were no changes in assumptions. In 2018, demographic assumptions and inflation were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. Changes in Benefit Terms: The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30, 2017 valuation date. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes). Changes in Assumptions: Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. CITY OF POWAY Required Supplementary Information Schedule of Changes in Net Pension Liability and Related Ratios Last 10 Years* Miscellaneous Plan 100 6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 1,801,815 1,869,509 1,919,815 1,880,665 2,106,424 7,769,440 8,226,054 8,411,998 8,750,527 8,950,009 1,018,162 2,664,769 (1,093,882) 1,131,639 (579,484) (586,664) - - - 4,268,441 (5,540,276) (6,227,010) (6,625,427) (6,793,001) (7,422,494) 4,462,477 6,533,322 2,612,504 4,969,830 7,322,896 110,101,216 114,563,693 121,097,015 123,709,519 128,679,349 114,563,693 121,097,015 123,709,519 128,679,349 136,002,245 (189) - - - - 2,452,303 2,918,133 3,324,148 3,728,403 33,458,912 844,131 871,415 857,470 903,026 1,012,404 6,511,984 5,335,764 4,135,937 19,241,494 (8,859,581) (5,540,276) (6,227,011) (6,625,427) (6,793,001) (7,422,494) (120,673) (58,059) (118,699) (85,681) (64,017) (229,160) 189 - - - 3,918,120 2,840,431 1,573,429 16,994,241 18,125,224 77,440,054 81,358,174 84,198,605 85,772,034 102,766,275 81,358,174 84,198,605 85,772,034 102,766,275 120,891,499 33,205,519 36,898,410 37,937,485 25,913,074 15,110,746 71.02% 69.53% 69.33% 79.86% 88.89% 11,662,050 12,831,311 12,607,269 12,763,683 13,473,879 284.73% 287.57% 300.92% 203.02% 112.15% 101 Fiscal Year 6/30/2015 6/30/2016 6/30/2017 6/30/2018 Actuarially determined contribution 1,651,614$ 1,961,662 2,311,817 2,452,302 Contributions in relation to the actuarially determined contributions (1,651,614) (1,961,662) (2,311,817) (2,452,302) Contribution deficiency (excess)-$ - - - Covered payroll 10,272,463 10,938,986 11,566,248 11,662,050 Contributions as a percentage of covered payroll 16.08% 17.93% 19.99% 21.03% Notes to Schedule: Actuarial Cost Method Entry Age Normal Amortization Method/Period Level percent of payroll Asset Valuation Method Inflation 2.50% Salary Increases Varies by Entry Age and Service Payroll Growth 2.75% Investment Rate of Return Retirement Age Mortality CITY OF POWAY Required Supplementary Information Schedule of Plan Contributions Last 10 Years* The probabilities of Retirement are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post- retirement mortality rates include period from 1997 to 2015. Pre- retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries. Miscellaneous Plan * Measurement date 6/30/2014 (fiscal year 2015) was the first year of implementation, therefore, only nine years are presented. The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2021 were derived from the June 30, 2018, Funding Valuation Report. Fair value 7.00% Net of Pension Plan Investment and Administrative Expenses; includes Inflation. 102 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 2,918,133 3,324,147 3,728,403 3,958,965 1,818,108 (2,918,133) (3,324,147) (3,728,403) (33,458,493) (1,818,108) - - - (29,499,528) - 12,831,311 12,607,269 12,763,683 13,473,879 13,500,188 22.74% 26.37% 29.21% 29.38% 13.47% 103 Employer's Proportionate Share of the Collective Net Pension's Plans Employer's Employer's Pension Liability Fiduciary Net Proportion of Proportion as a Percentage Position as a the Collective Share of the of the Employer's Percentage of Net Pension Collective Net Employer's Covered the Total Liability1 Pension Liability Covered Payroll Payroll Pension Liability 6/30/2014 0.14119%8,785,355$ 4,733,734 185.59%81.42% 6/30/2015 0.25032%10,314,344 4,875,746 211.54%79.03% 6/30/2016 0.25757%13,340,151 4,765,209 279.95%74.44% 6/30/2017 0.25775%15,401,317 4,813,604 319.95%74.14% 6/30/2018 0.26652%15,638,347 4,948,089 316.05%73.39% 6/30/2019 0.27260%17,016,976 5,696,517 298.73%73.52% 6/30/2020 0.28155%18,758,073 5,427,653 345.60%72.19% 6/30/2021 0.26676%11,693,283 5,418,184 215.82%83.28% 6/30/2022 0.26833%9,343,895 5,505,282 169.73%87.60% In 2016, there were no changes in assumptions. In 2017, The accounting discount rate reduced from 7.65% to 7.15%. In 2018, demographic assumptions and inflation were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. In 2019 - 2021, there were no changes in assumptions. Safety Plan CITY OF POWAY Required Supplementary Information Schedule of the City's Proportionate Share of the Plan's Net Pension Liability and Related Ratios Last 10 Years* Changes in Assumptions: Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Changes in Benefit Terms: The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30, 2017 valuation date. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes). Measurement Date 1 Proportion of the collective net pension liability represents the plan's proportion of PERF C, which includes both the Miscellaneous and Safety Risk Pools excluding the 1959 Survivors Risk Pool. *Measurement date 6/30/2014 (fiscal year 2015)was the first year of implementation,therefore,only nine years are presented. 104 This page intentionally left blank. 105 6/30/2015 6/30/2016 6/30/2017 6/30/2018 Actuarially determined contribution 1,159,123$ 1,322,635 1,340,317 1,517,719 Contributions in relation to the actuarially determined contributions (1,159,123) (1,172,369) (1,340,317) (1,517,719) Contribution deficiency (excess)-$ 150,266 - - Covered payroll 4,875,746 4,765,209 4,813,604 4,948,089 Contributions as a percentage of covered payroll 23.77% 27.76% 27.84% 30.67% Notes to Schedule: Actuarial Cost Method Entry Age Normal Amortization Method/Period Level percent of payroll Asset Valuation Method Inflation 2.50% Salary Increases Varies by Entry Age and Service Payroll Growth 2.75% Investment Rate of Return Retirement Age Mortality The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries. The probabilities of Retirement are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. CITY OF POWAY Required Supplementary Information Schedule of Plan Contributions Last 10 Years* Safety Plan Fiscal Year Ended * Measurement date 6/30/2014 (fiscal year 2015) was the first year of implementation, therefore, only nine years are presented. Change in Benefit Terms: There were no changesto benefit terms that applied to all members of the Public Agency Pool. However, individual employers in the Plan may have provided a benefit improvement to their employees by granting Two Years Additional Service Credit to member retiring during a specified time period (a.k.a. Golden Handshakes). Change in Assumptions: In 2015, the discount rate waschangedfrom 7.5 percent (net of administrativeexpense) to 7.65 percent to correct for an adjustment to exclude administrative expense. In 2017, the discount rate was changed from 7.65 percent to 7.15 percent. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2022 were derived from the June 30, 2019, Funding Valuation Report. Fair value 7.00% Net of Pension Plan Investment and Administrative Expenses; includes Inflation. 106 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 1,766,069 1,971,402 2,186,412 2,377,145 1,497,160 (1,766,069) (1,971,402) (2,186,412) (16,225,745) (1,497,160) - - - (13,848,600) - 5,696,517 5,427,653 5,418,184 5,505,282 5,750,758 31.00% 36.32% 40.35% 43.18% 26.03% 107 Measurement Date 6/30/2015 6/30/2016 6/30/2017 6/30/2018 TOTAL PENSION LIABILITY Service Cost 252,845$ 253,408 235,041 228,468 Interest 1,071,102 1,117,733 1,148,044 1,191,080 Effect of plan changes - - - - Effect of economic/demographic gains or losses - 32,923 (231,575) 52,208 Effect of assumptions changes or inputs - - - - Benefit payments (628,101) (689,668) (753,594) (876,349) Net Change in Total Pension Liability 695,846 714,396 397,916 595,407 Total Pension Liability - Beginning 15,357,354 16,053,200 16,767,596 17,165,512 Total Pension Liability - Ending (a) 16,053,200$ 16,767,596 17,165,512 17,760,919 PLAN FIDUCIARY NET POSITION Contributions - Employer 1,302,085$ 1,379,421 3,846,093 1,560,917 Net Investment Income 205,418 (43,672) 1,332,806 1,062,788 Benefit Payments, Including Refunds of Employee Contributions (628,101) (689,668) (753,594) (876,349) Administrative Expenses (18,030) (18,906) (24,614) (25,431) Net Change in Fiduciary Net Position 861,372 627,175 4,400,691 1,721,925 Plan Fiduciary Net Position - Beginning 8,451,533 9,312,905 9,940,080 14,340,771 Plan Fiduciary Net Position - Ending (b) 9,312,905$ 9,940,080 14,340,771 16,062,696 Plan Net Position Liability (asset) - Ending (a) - (b) 6,740,295$ 6,827,516 2,824,741 1,698,223 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 58.01% 59.28% 83.54% 90.44% Covered Payroll 8,347,917$ 7,653,837 7,041,971 6,666,563 Plan Net Pension Liability as a Percentage of Covered Payroll 80.74% 89.20% 40.11% 25.47% Notes to Schedule: In 2019, the accounting discount rate reduced from 7.00% to 6.50%. Changes in Assumptions: The retirement, disability, salary scale and pre-retirement mortality assumptions were updated to be consistent with those recommended for CalPERS actuarial valuations of public agency pension plans. These new demographic assumptions are described in the January 2014 experience study of the California Public Employees Retirement System. This study used data from 1997 to 2011. The post-retirement mortality was updated to the CalPERS 1997-2011 Healthy Retiree Mortality Tables (sex-distinct) with an assumed base year of 2008 and full generational projections using Scale AA. Changes in Benefit Terms: None * Measurement date 6/30/2014 (fiscal year 2015) was the first year of implementation, therefore, only nine years are presented. CITY OF POWAY Required Supplementary Information Schedule of Changes in Net Pension Liability and Related Ratios Last 10 Years* Retirement Enhancement Plan 108 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 227,611 171,732 159,613 137,242 135,556 1,138,559 1,245,453 1,288,577 1,315,323 1,330,737 - - - - - 382,609 368,850 155,191 39,664 (144,222) 973,111 - - - 50,309 (959,590) (1,085,388) (1,136,314) (1,203,831) (1,304,558) 1,762,300 700,647 467,067 288,398 67,822 17,760,919 19,523,219 20,223,866 20,690,933 20,979,331 19,523,219 20,223,866 20,690,933 20,979,331 21,047,153 866,896 970,122 1,090,398 1,491,927 1,278,809 1,002,486 416,083 4,539,010 (3,109,657) 1,245,584 (959,590) (1,085,388) (1,136,314) (1,203,831) (1,304,558) (25,748) (26,853) (37,980) (33,101) (55,175) 884,044 273,964 4,455,114 (2,854,662) 1,164,660 16,062,696 16,946,740 17,220,704 21,675,818 18,821,156 16,946,740 17,220,704 21,675,818 18,821,156 19,985,816 2,576,479 3,003,162 (984,885) 2,158,175 1,061,337 86.80% 85.15% 104.76% 89.71% 94.96% 5,323,333 4,841,056 4,596,615 3,889,239 3,392,960 48.40% 62.04% -21.43% 55.49% 31.28% 109 Contribution in Relation to the Contributions as Contractually Contractually Contribution a Percentage of Determined Determined Deficiency Employer's Covered Fiscal Year Contributions Contributions (Excess) Covered Payroll Payroll 6/30/2015 1,298,155$ (1,302,085) (3,930) 7,807,232 16.68% 6/30/2016 1,335,335 (1,379,421) (44,086) 7,653,837 18.02% 6/30/2017 1,320,199 (3,846,093) (2,525,894) 7,041,971 54.62% 6/30/2018 1,427,809 (1,560,917) (133,108) 6,666,563 23.41% 6/30/2019 813,314 (866,896) (53,582) 6,126,687 14.15% 6/30/2020 794,810 (970,122) (175,312) 4,880,520 19.88% 6/30/2021 1,019,979 (1,090,398) (70,419) 4,596,615 23.72% 6/30/2022 1,214,578 (1,491,927) (277,349) 3,889,239 38.36% 6/30/2023 131,842 (1,278,809) (1,146,967) 3,392,960 37.69% Notes to Schedule: Valuation Timing Actuarial Cost Method Amortization Method/Period Asset Valuation Method Inflation Salary Increases Cost of Living Adjustments 2.00% Investment Rate of Return 6.50% Payroll Growth 2.80% Withdrawal/Disability Retirement Age Mortality Maximum Benefits and Salary Family Composition Form of Payment Single Life Annuity Retirement Enhancement Plan CITY OF POWAY Required Supplementary Information Schedule of Plan Contributions Last 10 Years* Pre-Retirement: Consistent with the Non-Industrial rates used to value the Miscellaneous CalPERS Pension Plans after June 30, 2021. Post-Retirement: Consistent with the Non-Industrial rates used to value the Miscellaneous CalPERS Pension Plans after June 30, 2021. 70% of active members are assumed to have an eligible beneficiary who is potentially eligible to receive a preretirement death benefit. Females are assumed to be three years younger than males. Entry Age Normal Level dollar, closed periods, The actuarial value of assets is the market value of assets as provided by Public Agency Retirement Services. 2.30% Salary used in the calculation of final average compensation is subject to the limitations of IRC Section 401(a)(17). The limit is assumed to increase 2.30% per annum Consistent with Non-Industrial rates used to value Miscellaneous Agency CalPERS Pension Plans. Actuarially determined contribution rates are calculated as of June 30 year end and are applied the following fiscal year. Consistent with the rates used to value CalPERS Miscellaneous Public Agency Pension Plans after June 30, 2021. The retirement rates are consistent with those used to value the Miscellaneous CalPERS Pension Plans 2.7% at age 55. The rates used are those for retirees with 20 years of service, with an increased retirement rate of 20% at age 55. The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2022-23 were from the June 30, 2022 actuarial valuation. * Measurement date 6/30/2014 (fiscal year 2015) was the first year of implementation, therefore, only nine years are presented. 110 SUPPLEMENTARY INFORMATION 111 This page intentionally left blank. 112 NON-MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Fire Protection Fund –Used to account for revenues received from the Fire Protection Special Tax. Voters approved this special tax in June 1997. It is used to pay for a portion of the costs of fire protection within the City of Poway. 800 MHz Communication System Fund –Used to account for revenues received from the 800 MHz Regional Communication System Special Tax. Voters approved this special tax in June 1998. It is used to pay for the City's share of the County-wide radio backbone system, and a portion of the annual maintenance expenses. Gas Tax Fund –Used to account for revenues received and expenditures made for street maintenance. Financing is provided by the City's share of State gasoline taxes made pursuant to the California State Constitution and authorized by the State Legislature. Drainage Fund –Used to account for operations of the flood control and drainage division. Financing is provided by developer's drainage fees and flood zone fees from the County.Poway Municipal Code Section 16.72 requires the segregation of the funding. Miscellaneous Grants Fund –Used to account for grants from various agencies used for operations and maintenance, and to account for specific in-lieu fees from developers. Financing for grants is provided by the State, County and Federal Government. Such grants provide for payment of all current operating costs and may be used only for specified purposes. AB 939 Integrated Waste Management Fund –Used to account for revenue received from a fee collected with solid waste disposal that was created as a result of AB 939. All revenues in this fund are to be used to reduce the toxicity of solid waste in landfills and improve the management of waste resources. Community Development Block Grant Fund –Used to account for revenues received and expenditures made for community development and housing assistance.Financing is provided under agreement with the County whereby the City is a secondary recipient with funds made available from the U.S. Department of Housing and Urban Development under the Housing and Community Development Acts of 1974 and 1977. Transportation Development Act Fund –Used to account for revenues received and expenditures made for transportation development, transit and related studies. Funding is provided to the City as secondary recipient under agreements with the County and with the San Diego Association of Governments. 113 NON-MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS (continued) Proposition A Fund –Used to account for the San Diego County special Proposition A one-half (1/2) cent transportation sales tax which became effective July 1, 1988. All revenues of this fund must be expended for certain transportation-related purposes. SB 1186 Disabled Access Law Fund –Used to account for revenue received from a fee collected upon issuance of a business registration that was created as a result of AB 1186. All revenues in this fund are to be used to pay for certified access specialists in local building departments and to pay for educational and training resources at the state and local level to promote compliance. Excess SAFE Reserve Fund –Used to account for revenue received related to the dissolution of the San Diego Service Authority for Freeway Emergencies (SAFE), and the expenditures for motorist aid services and support. Regional Arterial Traffic Mitigation Fund –Used to account for new fees required by the San Diego Association of Governments. Fire Protection Impact Fees Fund –Used to account for revenues received and expenditures made for fire protection improvements. Financing is provided primarily from developer fees. BEGIN Program Fund –The Building Equity and Growth in Neighborhoods program (BEGIN) is funded by the California Department of Housing and Community Development to provide down payment assistance to low-and moderate-income first-time home buyers of newly constructed homes. Housing In-lieu Fund –Used to account for revenues received and expenditures made for affordable housing. Funding is provided primarily from developer fees that are collected in-lieu of the developer providing inclusionary affordable housing units. The funds are used by the City to support its first-time home buyer program, Supporting Home Ownership in Poway (SHOP), which is available to low-and moderate-income homebuyers. Abandoned Vehicle Fees Fund –Used to account for fees collected from the sale and citation of abandoned vehicles remitted from San Diego County. Habitat In-lieu Fund –Used to account for revenues received and expenditures made for the mitigation of environmental impacts to natural habitat. Funding is provided primarily from developer fees that are collected in-lieu of the developer providing actual land. The funds are used by the City to purchase open space as land as funding becomes available. 114 NON-MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS (continued) Maintenance Districts Fund –Used to account for assessments from property owners based on the proportionate share of the costs, as estimated by an engineer’s report. Assessments are collected via tax rolls. The fund is used for lighting, landscape,and maintenance. Road Repair –Used to account for revenues received and expenditures made for road maintenance and rehabilitation. Financing is provided by the City’s share of the Road Maintenance and Rehabilitation account revenues pursuant to the Road Repair and Accountability Act of 2017 (SB1). Mary Patricia Ross Trust Fund –Used to account for revenue and expenses provided by a private estate to finance community park and recreation purposes. The principal was maintained intact until 2006. Interest income must also be used to finance such recreational purposes. DEBT SERVICE FUND City of Poway Debt Service Fund –Used to account for lease payments received and transfers in from other funds that are used to make debt service payments. CAPITAL PROJECTS FUNDS Park Improvement Fund –Used to account for the financing and construction of park facilities throughout the City. Community Benefits Fund –Used to account for significant streetscape and mobility improvements such as lane restriping, median and sidewalk enhancements, additional traffic signal and pedestrian crossings, undergrounding utilities, and parklets among other improvements on Poway Road. Street Improvement Fund –Used to account for financing of street improvements. Financing is provided primarily from developer's traffic mitigation fees. City Ordinance No. 80 authorized the collection and the segregation of the funding. Municipal Improvement Fund –Used to account for the financing and construction of the Old Coach water line. The remaining funds are to be used for the maintenance and operation costs of the water line. 115 CITY OF POWAY Combining Balance Sheet Non-major Governmental Funds June 30, 2023 AB 939 800 MHz Integrated Fire Communication Gas Miscellaneous Waste Protection System Tax Drainage Grants Management ASSETS Cash and investments -$ 115,595 2,351,913 4,867,340 594,567 777,726 Receivables: Accounts - - - - - - Interest - - 109,023 - - - Due from other governments - - - - - - Advances to fiduciary funds - - - 312,052 - - Restricted assets: Cash and investments with fiscal agents - - - - - - Total assets -$ 115,595 2,460,936 5,179,392 594,567 777,726 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable -$ - 255,821 7,192 39,030 99,635 Accrued liabilities - - 13,190 8,095 - - Due to other funds - 158,874 - - 4,700 - Deposits - - - - - - Unearned revenues - - - 11,825 - - Total liabilities - 158,874 269,011 27,112 43,730 99,635 FUND BALANCES (DEFICIT) Restricted - - 2,191,925 5,152,280 550,837 678,091 Unassigned - (43,279) - - - - Total fund balances (deficit) - (43,279) 2,191,925 5,152,280 550,837 678,091 Total liabilities, deferred inflows of resources and fund balances -$ 115,595 2,460,936 5,179,392 594,567 777,726 Special Revenue Funds 116 Regional Fire Community Transportation SB 1186 Excess Arterial Protection Development Development Disabled SAFE Traffic Impact Block Grant Act Proposition A Access Law Reserve Mitigation Fees 306 364,537 113,657 42,832 161,564 1,429,067 245,469 - - - - - - - - - - - - - - 33,776 30,194 - - - - - - - - - - - - - - - - - - - 34,082 394,731 113,657 42,832 161,564 1,429,067 245,469 306 - 990,584 204 - - - - - - - - - - 34,082 - 153,918 - - - - - - - - - - - - - - - - - - 34,388 - 1,144,502 204 - - - - 394,731 - 42,628 161,564 1,429,067 245,469 (306) - (1,030,845) - - - - (306) 394,731 (1,030,845) 42,628 161,564 1,429,067 245,469 34,082 394,731 113,657 42,832 161,564 1,429,067 245,469 Special Revenue Funds 117 City of Poway Combining Balance Sheet (Continued) Non-major Governmental Funds June 30, 2023 Abandoned BEGIN Housing Vehicle Habitat Maintenance Program In-lieu Fees In-lieu Districts ASSETS Cash and investments 19,723$ 412,231 348,694 725,512 9,850,691 Receivables: Accounts - - - - - Interest - - - - - Due from other governments - - - - - Advances to fiduciary funds - - - - - Restricted assets: Cash and investments with fiscal agents - - - - - Total assets 19,723$ 412,231 348,694 725,512 9,850,691 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable -$ - - - 153,553 Accrued liabilities - - - - 66,682 Due to other funds - - - - - Deposits - - - - - Unearned revenues - - - - - Total liabilities - - - - 220,235 FUND BALANCES (deficit) Restricted 19,723 412,231 348,694 725,512 9,630,456 Unassigned - - - - - Total fund balances (deficit) 19,723 412,231 348,694 725,512 9,630,456 Total liabilities, deferred inflows of resources and fund balances 19,723$ 412,231 348,694 725,512 9,850,691 Special Revenue Funds 118 Debt Service Fund Total Mary City of Poway Non-major Road Patricia Debt Park Community Street Municipal Governmental Repair Ross Trust Service Improvement Benefits Improvement Improvement Funds 1,043,535 102,028 112,229 3,252,226 107,304 2,205,664 226,017 29,470,427 - - 142,250 - - - - 142,250 - - - - - - - 109,023 190,681 - - - - - - 254,651 - - - - - - - 312,052 - - 596,772 - - - - 596,772 1,234,216 102,028 851,251 3,252,226 107,304 2,205,664 226,017 30,885,175 41 - - - - - - 1,546,366 - - 2,585 - - - - 90,552 - - 123,939 - - - - 475,513 - - - - - - 212,884 212,884 - - - - - - - 11,825 41 - 126,524 - - - 212,884 2,337,140 1,234,175 102,028 724,727 3,252,226 107,304 2,205,664 13,133 29,622,465 - - - - - - - (1,074,430) 1,234,175 102,028 724,727 3,252,226 107,304 2,205,664 13,133 28,548,035 1,234,216 102,028 851,251 3,252,226 107,304 2,205,664 226,017 30,885,175 Special Revenue Funds Capital Projects Funds 119 CITY OF POWAY Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2023 800 MHz Fire Communication Gas Miscellaneous Protection System Tax Drainage Grants REVENUES Taxes 651,592$ 136,430 1,245,316 1,712,952 - Intergovernmental - - - - 439,780 Use (loss) of money and property - 3,032 26,823 54,140 2,542 Developer fees - - - 31,099 - Assessments levied - - - - - Other revenues - - 34,228 - - Total revenues 651,592 139,462 1,306,367 1,798,191 442,322 EXPENDITURES Current: Public works - - 800,978 807,504 - Capital outlay - - 368,108 410,178 163,298 Debt service: Principal - 138,250 - - - Interest and fiscal charges - 16,116 - - - Total expenditures - 154,366 1,169,086 1,217,682 163,298 Excess (deficiency) of revenues over (under) expenditures 651,592 (14,904) 137,281 580,509 279,024 OTHER FINANCING SOURCES (USES) Transfers in - - - - - Transfer out (651,592) - (11,914) - (161,285) Total other financing sources (uses) (651,592) - (11,914) - (161,285) Net change in fund balances - (14,904) 125,367 580,509 117,739 Fund balances (deficit), beginning of year - (28,375) 2,066,558 4,571,771 433,098 Fund balances (deficit), end of year -$ (43,279) 2,191,925 5,152,280 550,837 Special Revenue Funds 120 AB 939 Regional Fire Integrated Community Transportation SB 1186 Excess Arterial Protection Waste Development Development Disabled SAFE Traffic Impact Management Block Grant Act Proposition A Access Law Reserve Mitigation Fees - - - 1,504,090 - - - - 28,761 191,401 30,194 - - - - - 6,672 - 3,624 32 398 1,579 14,476 2,353 - - - - - - 938,186 42,210 - - - - - - - - 231,733 - 8,731 - 6,368 - - - 267,166 191,401 42,549 1,504,122 6,766 1,579 952,662 44,563 - - 4,122 - - - - - 276,833 165,665 35,880 2,538,038 - - 401,260 - - - - - - - - - - - - - - - - - 276,833 165,665 40,002 2,538,038 - - 401,260 - (9,667) 25,736 2,547 (1,033,916) 6,766 1,579 551,402 44,563 - - - - - - - - - - - - - - - - - - - - - - - - (9,667) 25,736 2,547 (1,033,916) 6,766 1,579 551,402 44,563 687,758 (26,042) 392,184 3,071 35,862 159,985 877,665 200,906 678,091 (306) 394,731 (1,030,845) 42,628 161,564 1,429,067 245,469 Special Revenue Funds 121 CITY OF POWAY Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Continued) Non-Major Governmental Funds For the year ended June 30, 2023 Abandoned BEGIN Housing Vehicle Habitat Maintenance Program In-lieu Fees In-lieu Districts REVENUES Taxes -$ - - - 571,874 Intergovernmental - - - - - Use (loss) of money and property 7,439 3,759 3,408 8,777 94,228 Developer fees - 168,750 - 29,818 - Assessments levied - - - - 2,045,086 Other revenues - - - - 70,894 Total revenues 7,439 172,509 3,408 38,595 2,782,082 EXPENDITURES Current: Public works - - - - 2,231,452 Capital outlay - - - - 223,020 Debt service: Principal - - - - - Interest and fiscal charges - - - - - Total expenditures - - - - 2,454,472 Excess (deficiency) of revenues over (under) expenditures 7,439 172,509 3,408 38,595 327,610 OTHER FINANCING SOURCES Transfers in - - - - 489,601 Transfer out - - - - - Total other financing sources (uses) - - - - 489,601 Net change in fund balances 7,439 172,509 3,408 38,595 817,211 Fund balances (deficit), beginning of year 12,284 239,722 345,286 686,917 8,813,245 Fund balances (deficit), end of year 19,723$ 412,231 348,694 725,512 9,630,456 Special Revenue Funds 122 Debt Service Fund Total Mary City of Poway Non-major Road Patricia Debt Park Community Street Municipal Governmental Repair Ross Trust Service Improvement Benefits Improvement Improvement Funds 1,088,179 - - - - - - 6,910,433 - - - - - - - 690,136 7,163 997 301,288 30,165 1,048 21,470 42 595,455 - - - 1,441,666 - 55,784 - 2,707,513 - - - - - - - 2,045,086 - - - - - - - 351,954 1,095,342 997 301,288 1,471,831 1,048 77,254 42 13,300,577 - - - - - - - 3,844,056 809,757 - - - - - - 5,392,037 - - 1,135,470 - - - - 1,273,720 - - 1,536,260 - - - - 1,552,376 809,757 - 2,671,730 - - - - 12,062,189 285,585 997 (2,370,442) 1,471,831 1,048 77,254 42 1,238,388 - - 2,379,965 - - - - 2,869,566 - - (4,364) - - - - (829,155) - - 2,375,601 - - - - 2,040,411 285,585 997 5,159 1,471,831 1,048 77,254 42 3,278,799 948,590 101,031 719,568 1,780,395 106,256 2,128,410 13,091 25,269,236 1,234,175 102,028 724,727 3,252,226 107,304 2,205,664 13,133 28,548,035 Capital Projects FundsSpecial Revenue Funds 123 Actual Variance with Original Final Amounts Final Budget REVENUES Taxes 644,000$ 644,000 651,592 7,592 Use (loss) of money and property 1,065 1,065 - (1,065) Total revenues 645,065 645,065 651,592 6,527 OTHER FINANCING (USES) Transfers out (644,000) (644,000) (651,592) (7,592) Total other financing (uses) (644,000) (644,000) (651,592) (7,592) Net change in fund balance 1,065 1,065 - (1,065) Fund balance, beginning of year - - - - Fund balance, end of year 1,065$ 1,065 - (1,065) Budget Amounts CITY OF POWAY Fire Protection Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Year Ended June 30, 2023 124 Actual Variance with Original Final Amounts Final Budget REVENUES Taxes 136,000$ 136,000 136,430 430 Use (loss) of money and property 777 777 3,032 2,255 Total revenues 136,777 136,777 139,462 2,685 EXPENDITURES Debt service: Principal 138,250 138,250 138,250 - Interest and fiscal charges 16,087 16,087 16,116 (29) Total expenditures 154,337 154,337 154,366 (29) Net change in fund balance (17,560) (17,560) (14,904) 2,656 Fund balance (deficit), beginning of year (28,375) (28,375) (28,375) - Fund balance (deficit), end of year (45,935)$ (45,935) (43,279) 2,656 Budget Amounts CITY OF POWAY 800 MHz Communication System Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Year Ended June 30, 2023 125 Actual Variance with Original Final Amounts Final Budget REVENUES Taxes 1,435,630$ 1,435,630 1,245,316 (190,314) Use of money and property 18,695 18,695 26,823 8,128 Other revenues - - 34,228 34,228 Total revenues 1,454,325 1,454,325 1,306,367 (147,958) EXPENDITURES Current: Public works 2,418,956 2,687,501 800,978 1,886,523 Capital outlay 380,000 368,067 368,108 (41) Total expenditures 2,798,956 3,055,568 1,169,086 1,886,482 OTHER FINANCING SOURCES Transfers out - - (11,914) (11,914) Total other financing sources - - (11,914) (11,914) Net change in fund balance (1,344,631) (1,601,243) 125,367 1,726,610 Fund balance, beginning of year 2,066,558 2,066,558 2,066,558 - Fund balance, end of year 721,927$ 465,315 2,191,925 1,726,610 Budget Amounts CITY OF POWAY Gas Tax Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Year Ended June 30, 2023 126 Actual Variance with Original Final Amounts Final Budget REVENUES Taxes 1,424,910$ 1,424,910 1,712,952 288,042 Use of money and property 68,468 68,468 54,140 (14,328) Developer fees 83,485 83,485 31,099 (52,386) Total revenues 1,576,863 1,576,863 1,798,191 221,328 EXPENDITURES Current: Public works 1,215,059 1,304,602 807,504 497,098 Capital outlay 505,000 1,514,767 410,178 1,104,589 Total expenditures 1,720,059 2,819,369 1,217,682 1,601,687 Net change in fund balance (143,196) (1,242,506) 580,509 1,823,015 Fund balance, beginning of year 4,571,771 4,571,771 4,571,771 - Fund balance, end of year 4,428,575$ 3,329,265 5,152,280 1,823,015 Budget Amounts CITY OF POWAY Drainage Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Year Ended June 30, 2023 127 Actual Variance with Original Final Amounts Final Budget REVENUES Intergovernmental 276,256$ 276,256 439,780 163,524 Use of money and property 3,814 3,814 2,542 (1,272) Total revenues 280,070 280,070 442,322 162,252 EXPENDITURES Capital outlay 119,256 1,071,544 163,298 908,246 Total expenditures 119,256 1,071,544 163,298 908,246 OTHER FINANCING USES Transfers out (157,000) (157,000) (161,285) (4,285) Total other financing uses (157,000) (157,000) (161,285) (4,285) Net change in fund balance 3,814 (948,474) 117,739 1,066,213 Fund balance, beginning of year 433,098 433,098 433,098 - Fund balance, end of year 436,912$ (515,376) 550,837 1,066,213 CITY OF POWAY Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Miscellaneous Grants Special Revenue Fund Year Ended June 30, 2023 Budget Amounts 128 Actual Variance with Original Final Amounts Final Budget REVENUES Intergovernmental 35,000$ 35,000 28,761 (6,239) Use of money and property 10,510 10,510 6,672 (3,838) Other revenue 199,000 199,000 231,733 32,733 Total revenues 244,510 244,510 267,166 22,656 EXPENDITURES Capital outlay 355,000 430,216 276,833 153,383 Total expenditures 355,000 430,216 276,833 153,383 Net change in fund balance (110,490) (185,706) (9,667) 176,039 Fund balance, beginning of year 687,758 687,758 687,758 - Fund balance, end of year 577,268$ 502,052 678,091 176,039 CITY OF POWAY Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual AB 939 Integrated Waste Management Fund Year Ended June 30, 2023 Budget Amounts 129 Actual Variance with Original Final Amounts Final Budget REVENUES Intergovernmental 212,103$ 212,103 191,401 (20,702) Total revenues 212,103 212,103 191,401 (20,702) EXPENDITURES Capital outlay 212,103 324,378 165,665 158,713 Total expenditures 212,103 324,378 165,665 158,713 Net change in fund balance - (112,275) 25,736 138,011 Fund balance (deficit), beginning of year (26,042) (26,042) (26,042) - Fund balance (deficit), end of year (26,042)$ (138,317) (306) 138,011 CITY OF POWAY Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Community Development Block Grant Special Revenue Fund Year Ended June 30, 2023 Budget Amounts 130 Actual Variance with Original Final Amounts Final Budget REVENUES Intergovernmental -$ - 30,194 30,194 Use of money and property 5,150 5,150 3,624 (1,526) Other revenue - - 8,731 8,731 Total revenues 5,150 5,150 42,549 37,399 EXPENDITURES Current: Public works 4,000 4,000 4,122 (122) Capital outlay - 265,960 35,880 230,080 Total expenditures 4,000 269,960 40,002 229,958 Net change in fund balance 1,150 (264,810) 2,547 267,357 Fund balance, beginning of year 392,184 392,184 392,184 - Fund balance, end of year 393,334$ 127,374 394,731 267,357 CITY OF POWAY Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Transportation Development Act Special Revenue Fund Year Ended June 30, 2023 Budget Amounts 131 Actual Variance with Original Final Amounts Final Budget REVENUES Taxes 2,568,233$ 2,568,233 1,504,090 (1,064,143) Use of money and property 5,661 5,661 32 (5,629) Total revenues 2,573,894 2,573,894 1,504,122 (1,069,772) EXPENDITURES Capital outlay 2,414,111 3,870,288 2,538,038 1,332,250 Total expenditures 2,414,111 3,870,288 2,538,038 1,332,250 Net change in fund balance 159,783 (1,296,394) (1,033,916) 262,478 Fund balance, beginning of year 3,071 3,071 3,071 - Fund balance, end of year 162,854$ (1,293,323) (1,030,845) 262,478 CITY OF POWAY Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Proposition A Special Revenue Fund Year Ended June 30, 2023 Budget Amounts 132 Actual Variance with Original Final Amounts Final Budget REVENUES Use of money and property 363$ 363 398 35 Other revenue 1,050 1,050 6,368 5,318 Total revenues 1,413 1,413 6,766 5,353 Net change in fund balance 1,413 1,413 6,766 5,353 Fund balance, beginning of year 35,862 35,862 35,862 - Fund balance, end of year 37,275$ 37,275 42,628 5,353 CITY OF POWAY Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual SB 1186 Disabled Access Law Special Revenue Fund Year Ended June 30, 2023 Budget Amounts 133 Actual Variance with Original Final Amounts Final Budget REVENUES Use of money and property 2,145$ 2,145 1,579 (566) Total revenues 2,145 2,145 1,579 (566) EXPENDITURES Capital outlay - 141,872 - 141,872 Total expenditures - 141,872 - 141,872 Net change in fund balance 2,145 (139,727) 1,579 141,306 Fund balance, beginning of year 159,985 159,985 159,985 - Fund balance, end of year 162,130$ 20,258 161,564 141,306 CITY OF POWAY Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Excess SAFE Reserve Special Revenue Fund Year Ended June 30, 2023 Budget Amounts 134 Actual Variance with Original Final Amounts Final Budget REVENUES Use of money and property 6,743$ 6,743 14,476 7,733 Developer fees 954,240 954,240 938,186 (16,054) Total revenues 960,983 960,983 952,662 (8,321) EXPENDITURES Capital outlay - 591,419 401,260 190,159 Total expenditures - 591,419 401,260 190,159 Net change in fund balance 960,983 369,564 551,402 181,838 Fund balance, beginning of year 877,665 877,665 877,665 - Fund balance, end of year 1,838,648$ 1,247,229 1,429,067 181,838 Budget Amounts CITY OF POWAY Regional Arterial Traffic Mitigation Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Year Ended June 30, 2023 135 Actual Variance with Original Final Amounts Final Budget REVENUES Use of money and property 2,337$ 2,337 2,353 16 Developer fees 40,859 40,859 42,210 1,351 Total revenues 43,196 43,196 44,563 1,367 Net change in fund balance 43,196 43,196 44,563 1,367 Fund balance, beginning of year 200,906 200,906 200,906 - Fund balance, end of year 244,102$ 244,102 245,469 1,367 Budget Amounts CITY OF POWAY Fire Protection Impact Fees Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Year Ended June 30, 2023 136 Actual Variance with Original Final Amounts Final Budget REVENUES Use of money and property 122$ 122 7,439 7,317 Total revenues 122 122 7,439 7,317 Net change in fund balance 122 122 7,439 7,317 Fund balance, beginning of year 12,284 12,284 12,284 - Fund balance, end of year 12,406$ 12,406 19,723 7,317 Budget Amounts CITY OF POWAY BEGIN Program Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Year Ended June 30, 2023 137 Actual Variance with Original Final Amounts Final Budget REVENUES Use of money and property 2,590$ 2,590 3,759 1,169 Developer fees 47,500 47,500 168,750 121,250 Total revenues 50,090 50,090 172,509 122,419 EXPENDITURES Capital outlay - 136,719 - 136,719 Total expenditures - 136,719 - 136,719 Net change in fund balance 50,090 (86,629) 172,509 259,138 Fund balance, beginning of year 239,722 239,722 239,722 - Fund balance, end of year 289,812$ 153,093 412,231 259,138 Budget Amounts CITY OF POWAY Housing In-Lieu Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Year Ended June 30, 2023 138 Actual Variance with Original Final Amounts Final Budget REVENUES Use of money and property 4,629$ 4,629 3,408 (1,221) Total revenues 4,629 4,629 3,408 (1,221) Net change in fund balance 4,629 4,629 3,408 (1,221) Fund balance, beginning of year 345,286 345,286 345,286 - Fund balance, end of year 349,915$ 349,915 348,694 (1,221) CITY OF POWAY Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Abandoned Vehicle Fees Special Revenue Fund Year Ended June 30, 2023 Budget Amounts 139 Actual Variance with Original Final Amounts Final Budget REVENUES Use of money and property 15,642$ 15,642 8,777 (6,865) Developer fees 17,000 17,000 29,818 12,818 Total revenues 32,642 32,642 38,595 5,953 EXPENDITURES Capital outlay - 22,888 - 22,888 Total expenditures - 22,888 - 22,888 Net change in fund balance 32,642 9,754 38,595 28,841 Fund balance, beginning of year 686,917 686,917 686,917 - Fund balance, end of year 719,559$ 696,671 725,512 28,841 CITY OF POWAY Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Habitat In-Lieu Special Revenue Fund Year Ended June 30, 2023 Budget Amounts 140 Actual Variance with Original Final Amounts Final Budget REVENUES Taxes 549,111$ 549,111 571,874 22,763 Use of money and property 114,827 114,827 94,228 (20,599) Assessment levied 2,077,954 2,077,954 2,045,086 (32,868) Other revenue - - 70,894 70,894 Total revenues 2,741,892 2,741,892 2,782,082 40,190 EXPENDITURES Current: Public works 2,799,430 3,038,297 2,231,452 806,845 Capital outlay 250,000 535,466 223,020 312,446 Total expenditures 3,049,430 3,573,763 2,454,472 1,119,291 OTHER FINANCING SOURCES Transfers in 445,395 489,601 489,601 - Total other financing sources 445,395 489,601 489,601 - Net change in fund balance 137,857 (342,270) 817,211 1,159,481 Fund balance, beginning of year 8,813,245 8,813,245 8,813,245 - Fund balance, end of year 8,951,102$ 8,470,975 9,630,456 1,159,481 Budget Amounts CITY OF POWAY Maintenance Districts Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Year Ended June 30, 2023 141 Actual Variance with Original Final Amounts Final Budget REVENUES Taxes 1,115,480$ 1,115,480 1,088,179 (27,301) Use of money and property 4,263 4,263 7,163 2,900 Total revenues 1,119,743 1,119,743 1,095,342 (24,401) EXPENDITURES Capital outlay 1,115,480 809,717 809,757 (40) Total expenditures 1,115,480 809,717 809,757 (40) Net change in fund balance 4,263 310,026 285,585 (24,441) Fund balance, beginning of year 948,590 948,590 948,590 - Fund balance, end of year 952,853$ 1,258,616 1,234,175 (24,441) CITY OF POWAY Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Road Repair Special Revenue Fund Year Ended June 30, 2023 Budget Amounts 142 Actual Variance with Original Final Amounts Final Budget REVENUES Use of money and property 1,354$ 1,354 997 (357) Total revenues 1,354 1,354 997 (357) Net change in fund balance 1,354 1,354 997 (357) Fund balance, beginning of year 101,031 101,031 101,031 - Fund balance, end of year 102,385$ 102,385 102,028 (357) Budget Amounts CITY OF POWAY Mary Patricia Ross Trust Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Year Ended June 30, 2023 143 Actual Variance with Original Final Amounts Final Budget REVENUES Use of money and property 287,501$ 287,501 301,288 13,787 Total revenues 287,501 287,501 301,288 13,787 EXPENDITURES Debt service: Principal 1,135,470 1,135,470 1,135,470 - Interest and fiscal charges 1,529,147 1,529,147 1,536,260 (7,113) Total expenditures 2,664,617 2,664,617 2,671,730 (7,113) OTHER FINANCING SOURCES (USES) Transfers in 2,395,344 2,395,344 2,379,965 (15,379) Transfers out (4,364) (4,364) (4,364) - Total other financing sources (uses) 2,390,980 2,390,980 2,375,601 (15,379) Net change in fund balance 13,864 13,864 5,159 (8,705) Fund balance, beginning of year 719,568 719,568 719,568 - Fund balance, end of year 733,432$ 733,432 724,727 (8,705) Budget Amounts CITY OF POWAY City Debt Service Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Year Ended June 30, 2023 144 Actual Variance with Original Final Amounts Final Budget REVENUES Use of money and property 14,795$ 14,795 30,165 15,370 Developer fees 1,413,738 1,413,738 1,441,666 27,928 Total revenues 1,428,533 1,428,533 1,471,831 43,298 EXPENDITURES Capital outlay - 1,591,293 - 1,591,293 Total expenditures - 1,591,293 - 1,591,293 Net change in fund balance 1,428,533 (162,760) 1,471,831 1,634,591 Fund balance, beginning of year 1,780,395 1,780,395 1,780,395 - Fund balance, end of year 3,208,928$ 1,617,635 3,252,226 1,634,591 Budget Amounts CITY OF POWAY Park Improvement Capital Projects Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Year Ended June 30, 2023 145 Actual Variance with Original Final Amounts Final Budget REVENUES Use of money and property 286$ 286 1,048 762 Total revenues 286 286 1,048 762 Net change in fund balance 286 286 1,048 762 Fund balance, beginning of year 106,256 106,256 106,256 - Fund balance, end of year 106,542$ 106,542 107,304 762 CITY OF POWAY Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Community Benefits Capital Projects Fund Year Ended June 30, 2023 Budget Amounts 146 Actual Variance with Original Final Amounts Final Budget REVENUES Use of money and property 25,826$ 25,826 21,470 (4,356) Developer fees 131,892 131,892 55,784 (76,108) Total revenues 157,718 157,718 77,254 (80,464) Net change in fund balance 157,718 157,718 77,254 (80,464) Fund balance, beginning of year 2,128,410 2,128,410 2,128,410 - Fund balance, end of year 2,286,128$ 2,286,128 2,205,664 (80,464) Budget Amounts CITY OF POWAY Street Improvement Capital Projects Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Year Ended June 30, 2023 147 Actual Variance with Original Final Amounts Final Budget REVENUES Use of money and property 57$ 57 42 (15) Total revenues 57 57 42 (15) EXPENDITURES Capital outlay - 43,008 - 43,008 Total expenditures - 43,008 - 43,008 Net change in fund balance 57 (42,951) 42 42,993 Fund balance, beginning of year 13,091 13,091 13,091 - Fund balance, end of year 13,148$ (29,860) 13,133 42,993 CITY OF POWAY Budget Amounts Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Year Ended June 30, 2023 Municipal Improvements Capital Projects Fund 148 STATISTICAL SECTION This part of the City of Poway's annual comprehensive financial report presents detailed information as context for understanding the information in the financial statements, note disclosures, and required supplementary information. CONTENTS Page Financial Trends 150 These schedules contain trend information to help the reader understand how the government's financial performance and well-being have changed over time. Revenue Capacity 160 These schedules contain information to help the reader assess the government's most significant local revenue sources. Debt Capacity 165 These schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future. Demographic and Economic Information 171 These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. Operating Information 174 These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the annual comprehensive financial reports for the relevant year. CITY OF POWAY Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) 2023 2022 2021 2020 2019 Governmental activities Net investment in capital assets 110,354,823$ 113,445,694 114,890,993 108,541,416 112,250,350 Restricted 34,339,534 30,144,735 26,451,907 25,225,622 22,030,955 Unrestricted - as restated 33,977,179 35,681,672 25,672,610 34,897,989 39,587,799 Total governmental activities net position 178,671,536 179,272,101 167,015,510 168,665,027 173,869,104 Business-type activities Net investment in capital assets 26,178,242 21,736,424 30,061,389 30,936,131 31,143,299 Restricted - - - - - Unrestricted - as restated 34,336,993 36,683,923 30,270,417 28,113,570 31,593,881 Total business-type activities net position 60,515,235 58,420,347 60,331,806 59,049,701 62,737,180 Primary government Net investment in capital assets 136,533,065 135,182,118 144,952,382 139,477,547 143,393,649 Restricted 34,339,534 30,144,735 26,451,907 25,225,622 22,030,955 Unrestricted - as restated 68,314,172 72,365,595 55,943,027 63,011,559 71,181,680 Total primary government net position 239,186,771$ 237,692,448$ 227,347,316 227,714,728 236,606,284 Note: The City restated the Unrestricted Net Position as of June 30, 2014 for the implementation of GASB 68. Fiscal Year 150 2018 2017 2016 2015 2014 108,494,835 82,020,900 83,171,720 86,341,264 90,442,061 20,641,475 20,453,766 20,846,798 27,543,292 28,126,711 41,227,106 41,716,900 40,985,170 38,671,488 33,998,725 170,363,416 144,191,566 145,003,688 152,556,044 152,567,497 32,118,064 32,941,440 34,817,565 36,827,442 38,731,821 - - - 272,301 279,579 31,108,285 26,735,432 21,537,274 26,130,925 26,867,660 63,226,349 59,676,872 56,354,839 63,230,668 65,879,060 140,612,899 114,962,340 117,989,285 123,168,706 129,173,882 20,641,475 20,453,766 20,846,798 27,815,593 28,406,290 72,335,391 68,452,332 62,522,444 64,802,413 60,866,385 233,589,765 203,868,438 201,358,527 215,786,712 218,446,557 Fiscal Year 151 CITY OF POWAY Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) 2023 2022 2021 2020 Expenses Governmental Activities: General government 5,985,626$ 7,194,352 7,817,836 5,630,649 Public safety 36,002,066 26,534,269 29,504,602 29,324,572 Public works 11,280,953 9,817,864 13,889,911 14,704,110 Development services 10,791,648 7,791,058 7,625,662 9,143,279 Community services 9,794,751 7,465,888 5,812,376 6,593,797 Interest and fiscal charges 1,277,731 670,976 362,224 387,747 Total governmental activities 75,132,775 59,474,407 65,012,611 65,784,154 Business-type activities: Water 28,670,235 30,924,172 27,535,324 25,062,142 Sewer 10,360,555 13,642,182 10,536,979 12,999,256 Total business-type activities 39,030,790 44,566,354 38,072,303 38,061,398 Total primary government expenses 114,163,565$ 104,040,761$ 103,084,914 103,845,552 Program revenues Governmental Activities: Charges for services: General Government 2,034,044$ 1,844,709 1,810,549 1,937,084 Public Safety 3,578,770 2,480,786 2,197,208 1,961,348 Public Works 3,154,058 3,088,137 3,021,750 3,430,815 Development services 3,245,882 2,880,318 2,475,724 2,377,564 Community services 4,313,987 3,965,132 2,230,065 2,513,457 Operating grants and contributions 5,957,946 11,962,047 6,785,703 3,528,190 Capital grants and contributions 1,441,666 471,112 371,231 109,207 Total governmental activities 23,726,353 26,692,241 18,892,230 15,857,665 Business-type activities: Charges for services: Water 29,986,319 29,690,399 28,740,594 24,748,591 Sewer 11,101,447 11,982,222 9,443,436 8,632,712 Operating grants and contributions 9,680 151,314 91,825 91,825 Capital grants and contributions - - - - Total business-type activities 41,097,446 41,823,935 38,275,855 33,473,128 Total primary government revenues 64,823,799$ 68,516,176$ 57,168,085 49,330,793 Net (expense)/revenue Governmental activities (51,406,422)$ (32,782,166) (46,120,381) (49,926,489) Business-type activities 2,066,656 (2,742,419) 203,552 (4,588,270) Total primary government net expense (49,339,766)$ (35,524,585)$ (45,916,829) (54,514,759) Fiscal Year 152 2019 2018 2017 2016 2015 2014 7,352,494 8,048,190 7,897,624 5,131,272 5,196,033 5,227,809 26,562,602 25,139,954 22,939,218 22,347,525 21,500,327 20,906,884 13,031,776 15,818,102 13,424,529 12,381,234 11,595,286 11,863,623 6,097,846 4,793,032 4,122,212 3,821,920 3,664,378 3,815,282 6,445,379 7,372,710 7,695,548 7,197,816 5,843,807 6,115,485 407,214 429,617 443,901 505,811 481,905 509,206 59,897,311 61,601,605 56,523,032 51,385,578 48,281,736 48,438,289 24,026,914 25,502,524 21,005,264 21,502,464 22,349,556 23,314,233 10,141,290 8,797,837 8,564,971 8,730,955 9,451,529 9,434,739 34,168,204 34,300,361 29,570,235 30,233,419 31,801,085 32,748,972 94,065,515 95,901,966 86,093,267 81,618,997 80,082,821 81,187,261 1,766,808 1,963,830 1,792,407 1,916,069 1,976,982 1,816,618 1,810,431 2,171,552 2,067,306 1,884,369 1,759,543 1,908,337 3,157,508 2,740,562 2,727,104 2,733,956 2,699,095 2,753,917 2,175,062 1,975,450 1,648,388 1,780,160 1,558,945 1,534,304 3,081,321 2,595,229 2,862,789 2,625,260 2,570,423 2,436,024 3,599,420 3,841,821 2,616,884 2,913,411 2,621,885 3,076,481 1,808,484 198,584 270,802 120,271 90,379 66,168 17,399,034 15,487,028 13,985,680 13,973,496 13,277,252 13,591,849 22,984,400 25,583,581 21,450,064 18,590,894 20,629,080 23,381,953 8,737,411 8,486,571 8,396,553 8,003,913 7,423,494 7,347,502 - - - - - - - 3,589 - - - - 31,721,811 34,073,741 29,846,617 26,594,807 28,052,574 30,729,455 49,120,845 49,560,769 43,832,297 40,568,303 41,329,826 44,321,304 (42,498,277) (46,114,577) (42,537,352) (37,412,082) (35,004,484) (34,846,440) (2,446,393) (226,620) 276,382 (3,638,612) (3,748,511) (2,019,517) (44,944,670) (46,341,197) (42,260,970) (41,050,694) (38,752,995) (36,865,957) Fiscal Year 153 CITY OF POWAY Changes in Net Position (continued) Last Ten Fiscal Years (accrual basis of accounting) 2023 2022 2021 2020 General revenues and Other Changes in Net Position Governmental Activities: Taxes: Property taxes 28,493,295$ 26,360,676 25,159,940 24,251,068 Sales taxes 16,023,705 17,959,219 15,952,859 14,185,047 Motor vehicle license tax - - - - Transient occupancy tax 791,338 753,932 403,071 515,633 Other taxes 838,001 890,406 804,462 807,777 Total taxes 46,146,339 45,964,233 42,320,332 39,759,525 Investment earnings 2,435,612 (2,205,471) 731,656 3,093,107 Sale/disposal of capital assets - (531,796) - - Miscellaneous 1,860,990 1,457,229 1,105,949 1,259,020 Transfers 362,916 354,562 312,927 610,760 Extraordinary item - - - - Total governmental activities 50,805,857 45,038,757 44,470,864 44,722,412 Business-type activities: Investment earnings 380,307 136,733 197,121 1,166,885 Sale/disposal of capital assets - (63,380) - - Miscellaneous 10,841 1,112,169 1,194,359 344,666 Transfers (362,916) (354,562) (312,927) (610,760) Extraordinary Item - - - Total business-type activities 28,232 830,960 1,078,553 900,791 Total primary government 50,834,089$ 45,869,717 45,549,417 45,623,203 Change in Net Position Governmental activities (600,565)$ 12,256,591 (1,649,517) (5,204,077) Business-type activities 2,094,888 (1,911,459) 1,282,105 (3,687,479) Total primary government 1,494,323$ 10,345,132 (367,412) (8,891,556) Fiscal Year 154 2019 2018 2017 2016 2015 2014 23,819,845 24,153,826 22,166,004 20,455,287 18,998,523 20,188,541 14,774,047 12,462,528 12,291,613 11,615,867 11,442,003 12,047,687 - - - - - - 674,230 654,235 609,306 615,482 573,531 523,112 2,709,246 3,630,276 3,247,931 3,423,165 3,192,356 2,761,696 41,977,368 40,900,865 38,314,854 36,109,801 34,206,413 35,521,036 2,267,414 1,468,845 1,165,528 1,845,972 1,380,030 1,573,545 - - - - (385,253) - 1,237,072 3,285,592 1,805,482 1,195,244 1,330,954 1,846,762 522,111 426,823 439,366 467,591 (1,539,113) 1,425 - 26,204,302 - (9,758,882) - - 46,003,965 72,286,427 41,725,230 29,859,726 34,993,031 38,942,768 1,144,612 264,609 102,656 230,982 149,611 217,194 - - - - - 1,334,723 3,938,311 3,382,361 1,077,957 1,261,448 82,930 (522,111) (426,823) (439,366) (467,591) (310,940) (441,725) - - - (4,078,565) - - 1,957,224 3,776,097 3,045,651 (3,237,217) 1,100,119 (141,601) 47,961,189 76,062,524 44,770,881 26,622,509 36,093,150 38,801,167 3,505,688 26,171,850 (812,122) (7,552,356) (11,453) 4,096,328 (489,169) 3,549,477 3,322,033 (6,875,829) (2,648,392) (2,161,118) 3,016,519 29,721,327 2,509,911 (14,428,185) (2,659,845) 1,935,210 Fiscal Year 155 CITY OF POWAY Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 2023 2022 2021 2020 2019 General Fund Nonspendable 14,003,892$ 13,738,495 13,267,000 12,042,735 15,550,648 Committed 23,555,523 20,441,896 20,393,896 21,233,004 20,961,853 Assigned 12,745,574 12,851,725 16,251,291 24,780,312 22,536,818 Unassigned 18,047,667 15,897,597 9,327,401 6,728,100 7,192,106 Total General Fund 68,352,656 62,929,713 59,239,588 64,784,151 66,241,425 All Other Governmental Funds Restricted 35,064,261 30,916,053 27,237,226 25,866,759 22,587,652 Unassigned (1,074,430) (54,417) (327,588) (54,815) (29,018) Total all Other Governmental Funds 33,989,831 30,861,636 26,909,638 25,811,944 22,558,634 Total Fund Balance 102,342,487$ 93,791,349 86,149,226 90,596,095 88,800,059 Fiscal Year 156 2018 2017 2016 2015 2014 15,639,036 10,477,915 10,286,955 10,495,426 10,134,007 19,321,583 - - 10,022,691 10,026,079 16,613,992 40,438,366 40,367,436 15,870,595 15,383,344 14,063,706 14,649,159 16,010,227 29,285,138 26,624,039 65,638,317 65,565,440 66,664,618 65,673,850 62,167,469 20,641,475 20,453,766 20,846,798 27,543,292 28,126,711 (15,860) - - - - 20,625,615 20,453,766 20,846,798 27,543,292 28,126,711 86,263,932 86,019,206 87,511,416 93,217,142 90,294,180 Fiscal Year 157 CITY OF POWAY Changes In Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 2023 2022 2021 2020 Revenues Taxes 49,983,924$ 48,858,112$ 45,645,457 41,733,998 Licenses and permits 2,391,866 2,140,086 2,249,668 2,078,662 Intergovernmental 1,186,255 7,486,849 2,561,929 1,782,269 Charges for services 7,502,989 6,102,019 3,893,569 4,056,966 Fines and forfeitures 138,084 121,691 109,335 170,527 Use of money and property 2,624,953 (1,947,758) 1,153,513 3,730,562 Developer fees 6,795,780 4,789,988 4,471,246 3,333,550 Assessment levied 2,045,086 2,031,459 1,996,156 1,991,331 Other revenues 1,345,952 2,397,484 591,790 735,669 Total revenues 74,014,889 71,979,930 62,672,663 59,613,534 Expenditures Current: General government 4,122,500 14,392,602 6,021,748 4,189,609 Public safety 29,174,886 41,401,603 27,692,953 26,841,433 Public works 9,490,987 13,626,589 11,080,613 11,827,517 Development services 6,297,655 12,634,077 7,504,194 7,992,456 Community services 7,223,380 10,053,029 5,021,273 5,719,232 Capital outlay 6,872,315 5,477,761 10,340,337 6,777,582 Debt service: Principal 1,680,966 989,498 835,000 810,000 Interest and fiscal charges 1,591,736 298,373 374,402 397,941 Issuance Costs - 361,947 - - Transfers to fiduciary funds - - - - Total expenditures 66,454,425 99,235,479 68,870,520 64,555,770 Excess of revenues over (under) expenditures 7,560,464 (27,255,549) (6,197,857) (4,942,236) Other Financing Sources (Uses) Issuance of debt - 33,263,175 - - Proceeds from sale of capital assets - - - 4,560,967 Transfers in (out) - net 962,672 1,634,497 1,750,988 2,061,298 Total other financing sources 962,672 34,897,672 1,750,988 6,622,265 Extraordinary items - - - - Net change in fund balance 8,523,136$ 7,642,123$ (4,446,869) 1,680,029 Debt service as a percentage of noncapital expenditures 5.0%1.7%2.1%2.1% Fiscal Year 158 2019 2018 2017 2016 2015 2014 41,971,756 40,900,865 38,314,854 36,109,801 34,206,413 35,521,036 2,237,766 2,309,848 2,157,912 2,248,870 2,242,928 2,117,067 4,016,199 2,968,487 2,461,909 2,809,204 2,439,771 2,198,678 4,394,947 2,682,918 2,870,826 2,629,776 2,564,852 2,386,206 174,431 150,968 137,772 121,246 135,609 184,855 2,638,552 1,376,993 1,116,686 1,664,836 1,265,837 1,495,911 4,257,642 5,538,625 4,339,215 4,317,628 4,013,227 4,806,170 1,913,839 1,900,026 1,919,533 1,926,988 1,903,369 1,898,872 603,143 3,280,099 1,802,405 1,241,968 1,328,515 1,834,531 62,208,275 61,108,829 55,121,112 53,070,317 50,100,521 52,443,326 6,165,984 4,356,172 4,920,707 4,713,981 4,372,077 4,202,841 25,247,048 24,361,353 22,842,844 21,857,490 21,299,851 20,433,826 10,796,442 11,665,054 10,914,521 10,063,808 9,526,140 9,639,766 5,741,072 4,503,384 4,305,937 4,067,434 3,811,954 3,830,435 5,834,051 5,837,896 6,197,514 5,954,740 5,212,917 4,912,545 7,249,857 10,049,051 7,898,228 2,855,748 1,603,241 2,282,947 790,000 770,000 755,000 735,000 715,000 700,000 416,310 438,961 452,512 514,008 490,336 506,527 - - - - - - - - - - - 440,300 62,240,764 61,981,871 58,287,263 50,762,209 47,031,516 46,949,187 (32,489) (873,042) (3,166,151) 2,308,108 3,069,005 5,494,139 - - - - - - - - - - - - 2,295,513 1,117,768 1,673,941 1,745,048 (146,043) 843,982 2,295,513 1,117,768 1,673,941 1,745,048 (146,043) 843,982 - - - (9,758,882) - - 2,263,024 244,726 (1,492,210) (5,705,726) 2,922,962 6,338,121 2.2%2.1%2.2%2.5%2.6%2.6% Fiscal Year 159 CITY OF POWAY Assessed Value of Taxable Property Last Ten Fiscal Years Fiscal Year Assessed Value Ended Personal June 30,Land Improvements Property Total Exemptions 2014 3,770,334,144 4,733,730,176 298,807,480 8,802,871,800 (227,065,282) 2015 3,980,268,935 4,944,098,407 286,435,733 9,210,803,075 (236,519,578) 2016 4,198,319,498 5,193,793,825 287,853,187 9,679,966,510 (243,798,083) 2017 4,360,983,790 5,372,307,118 303,567,743 10,036,858,651 (248,041,928) 2018 4,572,607,138 5,547,678,336 299,989,126 10,420,274,600 (255,512,475) 2019 4,827,930,308 5,779,676,596 326,995,646 10,934,602,550 (270,178,713) 2020 5,024,172,625 5,972,443,632 331,806,064 11,328,422,321 (268,904,312) 2021 5,232,189,372 6,226,364,668 360,724,645 11,819,278,685 (251,470,706) 2022 5,450,174,643 6,442,288,341 305,150,033 12,197,613,017 (267,310,398) 2023 5,969,756,384 6,805,543,470 395,257,340 13,170,557,194 (292,504,729) Note: In 1978,the voters of the State of California passed Proposition 13 which resulted in dramatic tax reform as it relates to property tax collections.Proposition 13 established a property tax of 1%based upon the assessed value of the property being taxed.Each year the assessed value of property may be increased by an "inflation factor"that may not exceed 2%.With few exceptions,property is only re-assessed at the time that it is sold to a new owner.At that point the new assessed value is fixed at the purchase price of the property.Due to the nature of Proposition 13,over time the assessed value base has become significantly undervalued when compared to the true market value of the property.Because the true market value is not tied to any type of annual valuation process,there is no reliable means of determining the market value of the parcels within the City and therefore this amount is not disclosed. 160 Assessed Value (Continued)Change Estimated Total Net Taxable Homeowners Net Taxable From Tax Direct Value before HOE Exemptions (HOE)Value Prior Year Revenues Tax Rate 8,575,806,518 (74,913,680) 8,500,892,838 3.35%9,648,224 0.211% 8,974,283,497 (74,448,910) 8,899,834,587 4.69%10,117,764 0.211% 9,436,168,427 (73,706,162) 9,362,462,265 5.20%10,614,545 0.211% 9,788,816,723 (73,044,158) 9,715,772,565 3.77%11,043,425 0.211% 10,164,762,125 (72,492,736) 10,092,269,389 3.88%11,498,968 0.211% 10,664,423,837 (71,935,662) 10,592,488,175 4.96%12,032,539 0.211% 11,059,518,009 (72,435,591) 10,987,082,418 3.73%12,558,848 0.211% 11,567,807,979 (71,824,395) 11,495,983,584 4.63%13,632,548 0.211% 11,930,302,619 (70,250,600) 11,860,052,019 3.17%13,524,924 0.211% 12,878,052,465 (69,501,526) 12,808,550,939 8.00%14,526,941 0.211% 161 CITY OF POWAY Direct and Overlapping Property Tax Rates Last Ten Fiscal Years Overlapping Rates Fiscal Year Ended June 30,City Direct Rate Poway Unified School District San Diego County Education Revenue Augmentation Fund Palomar Community College District All Other Total 1% Property Tax Rate 2014 0.211%0.389%0.167%0.118%0.067%0.047%1.000% 2015 0.211%0.389%0.167%0.118%0.067%0.047%1.000% 2016 0.211%0.389%0.167%0.118%0.067%0.047%1.000% 2017 0.211%0.389%0.167%0.118%0.067%0.047%1.000% 2018 0.211%0.389%0.167%0.118%0.067%0.047%1.000% 2019 0.211%0.389%0.167%0.118%0.067%0.047%1.000% 2020 0.211%0.389%0.167%0.118%0.067%0.047%1.000% 2021 0.211%0.389%0.167%0.118%0.067%0.047%1.000% 2022 0.211%0.389%0.167%0.118%0.067%0.047%1.000% 2023 0.211%0.389%0.167%0.118%0.067%0.047%1.000% Rates for Voter Approved Bond Indebtedness Fiscal Year Ended June 30, Total 1% Property Tax Rate City Rate Poway Unified School District All Other Total Property Tax Rate 2014 1.000%0.000%0.055%0.040%1.095% 2015 1.000%0.000%0.055%0.040%1.095% 2016 1.000%0.000%0.055%0.040%1.095% 2017 1.000%0.000%0.055%0.045%1.100% 2018 1.000%0.000%0.055%0.045%1.100% 2019 1.000%0.000%0.063%0.045%1.108% 2020 1.000%0.000%0.064%0.044%1.108% 2021 1.000%0.000%0.065%0.050%1.115% 2022 1.000%0.000%0.069%0.053%1.122% 2023 1.000%0.000%0.063%0.061%1.124% Note: Source: San Diego County Assessor's Office In 1978,the voters of the State of California passed Proposition13 which resulted in dramatic tax reform as it relates to property tax collections.Proposition 13 established a property taxof 1%based upon the assessedvalue oftheproperty being taxed.The1.00%is shared byall taxing agencieswhich the subject propertyresides within.Becausethe rate is fixed at 1.00%, each agency's portion of the 1.00% does not change materially from year-to-year. Rates over the 1.00% are for voter approved bonded indebtedness. 162 CITY OF POWAY Principal Secured Property Taxpayers Current Year and Nine Years Ago 2023 2014 Taxpayer Taxable Assessed Secured Value Rank Percentage of Total City Net Assessed Secured Value Taxable Assessed Secured Value Rank Percentage of Total City Net Assessed Secured Value Sorrento West Properties Inc 451,523,763$ 1 3.51%184,133,360$ 1 2.15% HCPLS Poway I LLC 149,044,675 2 1.16%72,295,572 3 0.84% Rreef Cpif Kirkham Way Jv LLC 117,026,823 3 0.91%0.00% Pomerado Pavilion Mob LLC 106,797,060 4 0.83%0.00% Madison-Lpc Poway Jv LLC 62,986,468 5 0.49%0.00% Haven Poway LLC 61,998,833 6 0.48%0.00% Lennar Homes Of California LLC 61,632,930 7 0.48%0.00% Sysco Food Services Of San Diego 51,734,616 8 0.40%39,900,000 5 0.47% Parkway Commerce Center LLC 49,596,310 9 0.39%0.00% Hometown Poway Royal Estates LLC 47,009,786 10 0.37%39,717,270 6 0.46% Ventas Inc 76,048,361 2 0.89% San Miguel Valley Corp 44,572,162 4 0.52% Toray Membrane USA Inc 34,050,825 7 0.40% Poway Crossings Investors LLC 30,373,282 8 0.35% Costco Wholesale Corp 29,850,000 9 0.35% PR Stowe LLC 28,377,812 10 0.33% Total 1,159,351,264$ 8.99%579,318,644$ 6.43% Total City net assessed secured value 12,878,052,465$ 8,575,806,518$ Source: County of San Diego Offices of the Auditor and Controller, and Assessor's Office 163 CITY OF POWAY General Property Tax Levies and Collections Last Ten Fiscal Years Within The Year of Levy Cumulative Prior Years of Levy Total Collections to Date Fiscal Year Ended June 30,Current Tax Levy Current Collected Percent of Levy Collected Prior Years' Levies Collection from Prior Years' Levies (1) Percent of Prior Years' Levies Collected Total Levies Total Collections Percentage 2014 15,325,043 15,160,972 98.93%507,586 226,146 44.55%15,832,630 15,387,118 97.19% 2015 12,524,910 12,418,741 (2)99.15%470,515 278,069 59.10%12,995,425 12,696,810 97.70% 2016 12,958,510 12,859,128 99.23%312,585 143,345 45.86%13,271,094 13,002,474 97.98% 2017 13,390,895 13,279,054 99.16%285,552 140,081 49.06%13,676,447 13,419,135 98.12% 2018 13,802,364 13,694,433 99.22%267,874 133,325 49.77%14,070,237 13,827,758 98.28% 2019 14,345,375 14,229,865 99.19%254,246 134,667 52.97%14,599,621 14,364,532 98.39% 2020 14,928,965 14,729,661 98.66%248,805 123,517 49.64%15,177,770 14,853,178 97.86% 2021 15,453,799 15,277,726 98.86%355,750 196,527 55.24%15,809,549 15,474,253 97.88% 2022 15,932,867 15,789,695 99.10%333,765 187,130 56.07%16,266,632 15,976,825 98.22% 2023 16,977,159 16,855,335 99.28%283,896 149,071 52.51%17,261,056 17,004,407 98.51% Notes: (1) San Diego County does not break out prior years' collections by fiscal year, therefore, the amount reported is the cumulative amount collected during that fiscal year for all prior year levies, not the amount related to each fiscal year. (2) The significant decrease was due to the final assessment for the Community Facilities District #88-1 being in the prior fiscal year. That amount was $3,209,813. Source: San Diego County Assessor's Office 164 CITY OF POWAY Ratios of Outstanding Debt by Type Last Ten Fiscal Years Business-type Private Purpose Trust Fiscal Year Ended June 30, Certificates ofParticipation Pension Obligation Bonds Subscription Based IT Arrangements Lease Payable (Regional Comm System Water Revenue Bonds Pension Obligation Bonds Revenue Bonds Total PrimaryGovernment Percentage of Personal Income Per Capita Certificates ofParticipation Tax Allocation Bonds Loan Payable Total PrivatePurpose Trust 2014 16,261,467 - - - - - 512,660 16,774,127 0.69%342 1,618,877 208,316,472 2,885,549 212,820,898 2015 15,522,575 - - - - - 264,415 15,786,990 0.62%322 1,237,034 200,633,015 2,971,614 204,841,663 2016 14,764,508 - - - - - - 14,764,508 0.54%295 840,722 172,587,873 3,087,885 176,516,480 2017 13,987,299 - - - - - - 13,987,299 0.49%278 430,053 163,593,731 3,193,031 167,216,815 2018 13,195,977 - - - - - - 13,195,977 0.45%263 - 154,504,587 3,338,564 157,843,151 2019 12,385,546 - - - - - - 12,385,546 0.41%246 - 145,646,325 - 145,646,325 2020 11,556,033 - - - - - - 11,556,033 0.37%234 - 136,617,815 - 136,617,815 2021 10,702,553 - - 841,922 - - - 11,544,475 0.36%236 - 127,333,638 - 127,333,638 2022 9,830,315 33,990,670 - 707,424 15,015,899 9,834,330 - 69,378,638 2.02%1,420 - 117,768,759 - 117,768,759 2023 8,929,454 33,734,722 1,334,369 438,327 14,699,489 9,760,278 - 68,896,639 1.94%1,421 - 107,908,792 - 107,908,792 Notes:Details regarding the City's outstanding debt can be found in the notes to the financial statements. The Private Purpose Trust's Tax Allocation Bonds were refunded in July 2015. Source: City of Poway Finance Department Governmental Activities Activities 165 CITY OF POWAY Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Outstanding General Bonded Debt Fiscal Year Ended June 30, Tax Allocation Bonds Percent of Assessed Value (a) Per Capita 2014 208,316,472 2.37%4,253 2015 200,633,015 2.18%4,091 2016 172,587,873 1.78%3,445 2017 163,593,731 1.63%3,255 2018 154,504,587 1.48%3,077 2019 145,646,325 1.33%2,894 2020 136,617,815 1.21%2,769 2021 127,333,638 1.08%2,602 2022 117,768,759 0.97%2,411 2023 107,908,792 0.82%2,226 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (a) Assessed value has been used because the actual value of taxable property is not readily available in California. The Tax Allocation Bonds were refunded in July 2015. Source: City of Poway Finance Department 166 CITY OF POWAY Direct and Overlapping Debt As of June 30, 2023 2022-23 Assessed Valuation: 12,878,052,465 OVERLAPPING TAX AND ASSESSMENT DEBT:Debt Outstanding % Applicable (1) Estimated Share of Overlapping Debt Metropolitan Water District $19,215,000 0.353%$67,829 Palomar Community College District 641,965,146 8.54 54,823,823 Poway Unified School District School Facilities Improvement District No. 2002-1 105,410,766 39.322 41,449,621 Poway Unified School District School Facilities Improvement District No. 2007-1 160,781,672 40.248 64,711,407 Escondido Union High School District 76,648,138 0.062 47,522 San Pasqual Union School District 35,069 1.954 685 Palomar Health District 400,167,282 12.494 49,996,900 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $211,097,787 DIRECT AND OVERLAPPING GENERAL FUND DEBT: San Diego County General Fund Obligations $229,680,000 1.96%$4,501,728 San Diego County Pension Obligation Bonds 277,990,000 1.96 5,448,604 San Diego County Superintendent of Schools Obligations 6,935,000 1.96 135,926 Palomar Community College District Certificates of Participation 1,310,000 8.54 111,874 Escondido Union High School District Certificates of Participation 47,555,000 0.062 29,484 Poway Unified School District Certificates of Participation 53,720,000 23.829 12,800,939 City of Poway Certificates of Participation 8,850,000 100 8,850,000 City of Poway Pension Obligation Bonds 43,495,000 100 33,734,722 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $65,613,277 OVERLAPPING TAX INCREMENT DEBT (Successor Agency):$100,210,000 100.00%100,210,000 TOTAL DIRECT DEBT 44,436,872 TOTAL OVERLAPPING DEBT $334,336,342 COMBINED TOTAL DEBT $378,773,214 (2) Ratios to 2022-23 Assessed Valuation: Total Overlapping Tax and Assessment Debt 1.64% Total Direct Debt ($52,345,000)0.41% Combined Total Debt 3.00% Ratios to 2022-23 Redevelopment Successor Agency Incremental Valuation ($6,000,996,482): Total Overlapping Tax Increment Debt 1.67% Notes: (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded lease obligations. Source: California Municipal Statistics, Inc. and City of Poway Finance Department Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. (1) The percentage of overlapping debt applicable to the City is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the City divided by the district's total taxable assessed value. 167 CITY OF POWAY Legal Debt Margin Information Last Ten Fiscal Years 2023 2022 2021 2020 2019 Assessed valuation 6,877,055,983$ 6,402,700,920 6,191,840,175 5,945,360,349 5,696,205,876 Conversion percentage 25%25%25%25%25% Adjusted assessed valuation 1,719,263,996 1,600,675,230 1,547,960,044 1,486,340,087 1,424,051,469 Debt limit percentage 15%15%15%15%15% Debt limit 257,889,599 240,101,285 232,194,007 222,951,013 213,607,720 Total net debt applicable to limit: General obligation bonds - - - - - Legal debt margin 0.00%0.00%0.00%0.00%0.00% Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Source: City of Poway Finance Department San Diego County Assessor's Office Fiscal Year The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market value. Effective with the 1981-82 fiscal year, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in effect at the time that the legal debt margin was enacted by the State of California for local governments located within the state. 168 2018 2017 2016 2015 2014 5,443,613,176 5,227,958,736 5,024,927,288 4,789,751,105 4,567,470,473 25%25%25%25%25% 1,360,903,294 1,306,989,684 1,256,231,822 1,197,437,776 1,141,867,618 15%15%15%15%15% 204,135,494 196,048,453 188,434,773 179,615,666 171,280,143 - - - - - 0.00%0.00%0.00%0.00%0.00% Fiscal Year 169 CITY OF POWAY Pledged Revenue Coverage Last Ten Fiscal Years Tax Allocation Bonds Fiscal Year Debt Service Ended Tax RPTTF June 30,Increment Distribution Principal Interest Total Coverage 2014 - 40,907,420 7,020,000 10,889,354 17,909,354 2.28 2015 - 42,495,591 7,450,000 10,565,336 18,015,336 2.36 2016 - 44,786,412 7,440,000 6,558,087 13,998,087 3.20 2017 - 46,953,802 7,110,000 6,895,377 14,005,377 3.35 2018 - 47,750,166 7,205,000 6,802,425 14,007,425 3.41 2019 - 50,733,852 6,975,000 6,674,688 13,649,688 3.72 2020 - 51,213,979 7,190,000 6,454,450 13,644,450 3.75 2021 - 55,323,182 7,545,000 6,108,625 13,653,625 4.05 2022 - 57,517,332 7,935,000 5,726,500 13,661,500 4.21 2023 - 61,755,357 8,345,000 5,324,750 13,669,750 4.52 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. RPTTF is the acronym for the Redevelopment Property Tax Trust Fund. Source: City of Poway Finance Department 170 CITY OF POWAY Demographic and Economic Statistics Last Ten Calendar Years Calendar Year Population Personal Income Per Capita Personal Income Labor Force Unemployment Rate 2014 48,979 2,434,081,675 49,696 28,900 3.6% 2015 49,041 2,530,262,475 51,595 26,000 3.2% 2016 50,103 2,723,873,711 54,365 25,900 3.3% 2017 50,253 2,832,840,386 56,372 25,500 2.8% 2018 50,207 2,934,117,370 58,440 26,000 3.2% 2019 50,320 3,053,938,899 60,690 25,700 2.7% 2020 49,338 3,106,029,884 62,954 24,600 9.8% 2021 48,936 3,195,633,275 65,302 24,200 5.1% 2022 48,850 3,430,863,582 70,233 25,100 2.3% 2023 48,483 3,556,274,126 73,351 25,500 3.4% Sources: Population - State of California Department of Finance Personal Income - State of California Department of Finance/U.S. Bureau of Economic Analysis Employment Information - State of California Employment Development Department - Fiscal Year 171 CITY OF POWAY Full-Time-Equivalent City Employees by Function Last Ten Fiscal Years Function 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 General government 36.5 35.75 35.50 35.50 35.98 31.21 32.44 32.44 29.48 28.96 Public safety (a)57 57.00 57.00 57.00 57.00 58.00 56.00 56.00 55.00 54.00 Public works 87 87.00 83.00 78.96 82.36 86.84 89.36 88.36 84.36 79.96 Community services 27.23 23.12 24.10 24.10 50.39 50.03 49.47 48.99 46.49 45.78 Development services 26 25.50 25.50 25.50 25.50 25.50 22.50 22.50 21.96 22.96 Total 233.73 228.37 225.10 221.06 251.23 251.58 249.77 248.29 237.29 231.66 Notes: Amounts shown are the number of full-time-equivalents (FTEs) approved in each operating budget for the fiscal year. Source: City of Poway FY23 Operating Budget Fiscal Year (a) Not including law enforcement services, which are provided through contract with the County of San Diego Sheriff. Beginning in Fiscal Year 2020, part-time temporary staffing is no longer reflected in the FTE count. 172 This page intentionally left blank. 173 CITY OF POWAY Operating Indicators Last Ten Fiscal Years Function 2023 2022 2021 2020 2019 General government: Business registrations issued 1,835 1,958 1,630 1,759 2,253 Vendor payments processed 5,415 6,207 6,160 6,185 6,580 Public Safety: Arrests made 945 892 838 1,150 978 Fire emergency responses 5,102 4,968 4,757 4,780 5,706 Safety Inspections 1,595 1,047 1,577 1,692 2,100 Development Services: Building permits issued 2,923 2,480 2,410 2,217 2,168 Building inspections 13,094 9,280 8,266 7,480 8,572 Culture and recreation: Performing arts center attendance 51,880 37,359 500 20,496 51,806 Library-number of holdings in collection (1) (1) (1) (1) (1) Library-number of holdings circulated 765,413 606,351 425,983 711,446 924,021 Athletic field permits issued 222 229 191 258 301 Highways and streets: Roads resurfaced in square feet 237,162 61,856 199,661 283,121 122,250 Roads slurry sealed in square feet 5,253,714 4,712,146 4,380,343 4,313,485 4,282,280 Pot holes repaired 130 135 199 236 216 Water: Residential water customers 12,760 12,686 12,681 12,659 12,673 Commercial water customers 500 496 501 510 509 All other water customers 861 847 845 824 821 Average daily consumption (mg) (2)7.21 5.76 8.30 7.34 7.39 Sewer: Residential sewer customers 11,512 11,440 11,428 11,402 11,417 Commercial sewer customers 455 463 477 510 488 All other sewer customers 376 360 351 334 331 Average daily flow (mg)2.52 2.04 2.36 2.88 2.41 Notes: (1) Because of County-wide interbranch loan program, this statistic is no longer tracked. 2013 through 2022 was revised to reflect more accurate reporting. Source: City of Poway (2) After an internal review of the City's reporting mechanisms, the Average Daily Consumption (mg) data for the period Fiscal Year 174 2018 2017 2016 2015 2014 1,859 1,987 1,509 1,510 1,285 6,203 6,689 6,623 6,705 6,426 900 900 1,079 1,214 1,069 5,146 4,755 4,564 4,229 4,099 2,451 2,652 2,587 3,069 2,899 2,465 2,013 2,444 2,070 1,504 9,023 9,600 9,162 12,488 8,221 56,573 56,637 57,908 60,276 55,652 (1) (1) (1) (1)93,951 897,531 863,874 782,599 733,689 709,823 335 285 225 232 282 204,000 306,543 306,000 237,024 299,038 4,231,308 4,627,262 4,933,522 4,378,483 4,379,695 189 191 213 193 175 12,662 12,631 12,625 12,765 12,674 500 495 493 658 645 816 812 811 /--------not reported------/ 8.31 7.34 6.78 9.23 10.20 11,410 11,391 11,381 11,530 11,498 480 475 472 630 627 328 329 329 /--------not reported------/ 2.35 2.68 2.48 2.53 2.73 Fiscal Year 175 CITY OF POWAY Capital Assets Statistics Last Ten Fiscal Years Function 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Public safety: Number of fire stations 3 3 3 3 3 3 3 3 3 3 Number of sheriff stations 1 1 1 1 1 1 1 1 1 1 Public works: Total number of streetlights 3,910 3,066 3,897 3,021 3,059 3,059 3,059 3,059 3,059 3,059 Signal controlled intersections 59 57 58 56 56 56 56 56 56 56 Health and welfare: Senior center facilities 1 1 1 1 1 1 1 1 1 1 Culture and recreation: Number of libraries 1 1 1 1 1 1 1 1 1 1 Number of performing arts centers 1 1 1 1 1 1 1 1 1 1 Number of parks 19 19 19 19 19 19 19 19 19 19 Acres of developed parks 232 232 232 232 232 232 232 232 232 232 Number of reserves/preserves 2 2 2 2 2 2 2 2 2 2 Acres of reserves/preserves 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 Miles of trails 78 78 78 78 56 56 56 56 56 56 Highways and streets: Miles of roadway 165 165 165 165 165 165 165 165 165 165 Water: Miles of water lines 319 317 289 289 289 289 289 289 289 289 Water storage capacity (billion/gallons)1 1 1 1 1 1 1 1 1 1 Sewer: Miles of sewer lines 186 186 186 186 186 186 186 186 186 186 Miles of storm pipes 76(1)64 64 64 64 64 64 64 64 64 Notes: and new storm pipe installed through development. Source: City of Poway Fiscal Year (1) The 12 foot increase in miles of storm pipes from FY 2022 to FY 2023 is due to internal data review 176 This page intentionally left blank. 177