CONTRACT 6085A OtherNEW ISSUE —BOOK -ENTRY ONLY
Agreement No. 6085A
RATING: S&P: "AA+"
(See "RATING" herein)
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the City, based upon an analysis
of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of
certain representations and compliance with certain covenants, interest on the Series 2021 Bonds is exempt from
State of California personal income taxes. Bond Counsel observes that interest on the Series 2021 Bonds is not
excluded from gross income for federal income tar; purposes under Section 103 of the Code. Bond Counsel expresses
no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual,
or receipt of interest on, the Series 2021 Bonds. See "TAX MATTERS" herein.
$1443135,000
k CITY OF EL SEGUNDO
✓ 7, (LOS ANGELES COUNTY, CALIFORNIA)
Taxable Pension Obligation Bonds, Series 2021
Dated: Date of Delivery Due: July 1, as shown on the inside front cover page
The City of El Segundo (the "City") is issuing its $144,135,000 aggregate principal amount of City of El Segundo
(Los Angeles County, California) Taxable Pension Obligation Bonds, Series 2021 (the "Series 2021 Bonds"), pursuant
to a Trust Agreement, dated as of June 1, 2021, by and between the City and U.S. Bank National Association, as trustee,
and pursuant to Articles 10 and 11 (commencing with Section 53570) of Chapter 3 of Part 1 of Division 2 of Title 5 of the
California Government Code (the "Act"). The Series 2021 Bonds are being issued: (i) to refund a portion of the City's
obligations to the California Public Employees Retirement System evidenced by the CalPERS Contract (as described
herein); and (ii) to pay costs of issuance of the Series 2021 Bonds. See the caption `PLAN OF REFINANCING." The
Series 2021 Bonds are obligations of the City payable from any lawfully available funds, are not limited as to payment to
any special source of funds of the City. The Indenture permits the issuance of additional bonds on parity with the Series
2021 Bonds. The Series 2021 Bonds and such additional bonds, if any, are referred to herein as "Bonds." See "SECURITY
AND SOURCES OF PAYMENT FOR THE SERIES 2021 BONDS."
The Bonds will be delivered in fully registered form only, and when delivered will be registered in the name of
Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). See the caption "THE SERIES
2021 BONDS —General." So long as Cede & Co. is the registered owner of the Series 2021 Bonds, references herein to
the owners of the Series 2021 Bonds mean Cede & Co. and do not mean the Beneficial Owners of the Series 2021 Bonds.
Interest on the Series 2021 Bonds is payable semiannually on January 1 and July 1 of each year, commencing
January 1, 2022, through the maturity date of such Series 2021 Bonds. The Series 2021 Bonds will be issued in
denominations of integral multiples of $5,000. The Series 2021 Bonds will be issued in such principal amounts, and will
bear interest at the rates, payable on the dates as shown on the inside front cover page of this Official Statement. The
City has not funded a reserve fund in connection with the issuance of the Series 2021 Bonds.
The Series 2021 Bonds are subject to optional and mandatory sinking fund redemption prior to maturity as
described under the caption "THE SERIES 2021 BONDS. "
The obligations of the City under the Series 2021 Bonds, including the obligation to make all payments of interest
and principal when due, are obligations of the City imposed by law payable from funds to be appropriated by the City
pursuant to the Public Employees' Retirement Law, commencing with Section 20000 of the California Government Code
and are absolute and unconditional, without any right of set-off or counterclaim. As provided in the Trust Agreement,
all of the amounts held in the Bond Fund are pledged by the City to secure the payment of the principal or redemption
price of and interest on the Bonds in accordance with their terns, the provisions of the Trust Agreement and the Act.
The Bond Fund shall be funded from any source of legally available funds of the City. See "SECURITY AND SOURCES
OF PAYMENT FOR THE BONDS" herein.
THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR REFERENCE ONLY. IT IS NOT A SUMMARY OF
THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL
TO THE MAKING OF AN INFORMED INVESTMENT DECISION.
The Series 2021 Bonds are offered when, as and if issued and received by the Underwriter, subject to the approval
of the valid, legal and binding nature of the Series 2021 Bonds by Orrick, Herrington & Sutcliffe LLP, Bond Counsel
to the City, and certain other conditions. Certain matters will be passed upon for the City by the Hensley Law Group,
the City Attorney, and by Stradling Yocca Carlson & Rauth, a Professional Corporation, as Disclosure Counsel, for the
Underwriters by their counsel, Hawkins Delafreld & Wood LLP, and for the Trustee by its counsel. It is anticipated
that the Series 2021 Bonds will be available for- delivery through the facilities of The Depository Trust Company on
or about June 9, 2021.
J.P. Morgan Stifel, Nicolaus & Company, Inc.
Dated: May 26, 2021
Agreement No. 6085A
MATURITY SCHEDULE
$144,135,000
CITY OF EL SEGUNDO
(LOS ANGELES COUNTY, CALIFORNIA)
Taxable Pension Obligation Bonds, Series 2021
BASE CUSIP': 284035
Maturity
Principal
Interest
(July 1)
Amount
Rate
Yield
Price
cII,SIP''
2022
$6,535,000
0.191%
0.191%
100.000
AAO
2023
6,735,000
0.371
0.371
100.000
AB8
2024
6,760,000
0.626
0.626
100.000
AC6
2025
6,805,000
0.922
0.922
100.000
AD4
2026
6,865,000
1.232
1.232
100.000
AE2
2027
6,945,000
1.503
1.503
100.000
AF9
2028
7,055,000
1.743
1.743
100.000
AG7
2029
7,180,000
1.977
1.977
100.000
AH5
2030
7,320,000
2.117
2.117
100.000
AJ1
2031
7,470,000
2.267
2.267
100.000
AK8
2032
7,640,000
2.417
2.417
100.000
AL6
2033
7,830,000
2.577
2.577
100.000
AM4
2034
8,030,000
2.697
2.697
100.000
AN2
2035
8,245,000
2.797
2.797
100.000
AP7
2036
8,480,000
2.897
2.897
100.000
AQ5
$34,240,000 3.063% Term Bond due July 1, 2040; Yield 3.063%; Price 100.000; CUSIP': 284035AR3
f CUSIP' is a registered trademark of the American Barkers Association. CU51P Global Services (CGS) is managed on beheaCf
qf' the American Rankers Association b S&P Capital ICI. Copyright` 2021 C U,.S7' Global Services. All right's reserved.
CUSIP" data herein is provided by CUSIP Global .Services. This data is not intended to create a database and does not serve in
any way as a substitute,for the CGS database. CUSIP' numbers are provided,for convenience of'reference only. Neither the
City nor the Underwriters take any responsibility for the accuracy of such numbers.
Agreement No. 6085A
ANY REFERENCES IN THIS OFFICIAL STATEMENT TO THE "ISSUER" MEAN THE CITY
OF EL SEGUNDO AND REFERENCES TO "SERIES 2021 BONDS" OR "SECURITIES" MEAN THE
SERIES 2021 BONDS OFFERED HEREBY. NEITHER THE ISSUER NOR THE UNDERWRITERS
ASSUME ANY RESPONSIBILITY FOR THE CONTENTS OF THIS SECTION.
I►A 11011►l IULVA a"01 V ILy1If
THE SERIES 2021 BONDS WILL TRADE AND SETTLE ON A UNIT BASIS (ONE UNIT
EQUALING ONE SERIES 2021 BOND OF $5,000 PRINCIPAL AMOUNT). FOR ANY SALES MADE
OUTSIDE THE UNITED STATES, THE MINIMUM PURCHASE AND TRADING AMOUNT IS 30
UNITS (BEING 30 SERIES 2021 BONDS IN AN AGGREGATE PRINCIPAL AMOUNT OF $150,000).
NOTICE TO PROSPECTIVE INVESTORS IN THE EUROPEAN• •
• " THE UNITED KINGDOM
THE SERIES 2021 BONDS ARE NOT INTENDED TO BE OFFERED, SOLD OR
OTHERWISE MADE AVAILABLE TO AND SHOULD NOT BE OFFERED, SOLD OR
OTHERWISE MADE AVAILABLE TO ANY RETAIL INVESTOR IN THE EEA. FOR THESE
PURPOSES, A "RETAIL INVESTOR" MEANS A PERSON WHO IS ONE (OR MORE) OF: (I) A
RETAIL CLIENT AS DEFINED IN POINT (11) OF ARTICLE 4(1) OF DIRECTIVE 2014/65/EU (AS
AMENDED, "MIFID 11"); (11) A CUSTOMER WITHIN THE MEANING OF DIRECTIVE (EU)
2016/97 (THE "INSURANCE DISTRIBUTION DIRECTIVE"), WHERE THAT CUSTOMER WOULD
NOT QUALIFY AS A PROFESSIONAL CLIENT AS DEFINED IN POINT (10) OF ARTICLE 4(l) OF
MIFID II; OR (III) NOT A QUALIFIED INVESTOR AS DEFINED IN REGULATION (EU) 2017/1129
(THE "PROSPECTUS REGULATION"). CONSEQUENTLY, NO KEY INFORMATION
DOCUMENT REQUIRED BY REGULATION (EU) NO. 1286/2014 (AS AMENDED, THE "PRIIPS
REGULATION") FOR OFFERING OR SELLING THE SERIES 2021 BONDS OR OTHERWISE
MAKING THEM AVAILABLE TO RETAIL INVESTORS IN THE EEA HAS BEEN PREPARED
AND THEREFORE OFFERING OR SELLING THE SERIES 2021 BONDS OR OTHERWISE
MAKING THEM AVAILABLE TO ANY RETAIL INVESTOR IN THE EEA MAY BE UNLAWFUL
UNDER THE PRIIPS REGULATION.
THE SERIES 2021 BONDS ARE NOT INTENDED TO BE OFFERED, SOLD OR
OTHERWISE MADE AVAILABLE TO AND SHOULD NOT BE OFFERED, SOLD OR
OTHERWISE MADE AVAILABLE TO ANY RETAIL INVESTOR IN THE UNITED KINGDOM.
FOR THESE PURPOSES, A "RETAIL INVESTOR" MEANS A PERSON WHO 1S ONE (OR MORE)
OF: (I) A RETAIL CLIENT, AS DEFINED IN POINT (8) OF ARTICLE 2 OF REGULATION (EU) NO
2017/565 AS IT FORMS PART OF DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION
(WITHDRAWAL) ACT 2018 ("EUWA"); (11) A CUSTOMER WITHIN THE MEANING OF THE
PROVISIONS OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (THE "FSMA") AND
ANY RULES OR REGULATIONS MADE UNDER THE FSMA TO IMPLEMENT DIRECTIVE (EU)
2016/97, WHERE THAT CUSTOMER WOULD NOT QUALIFY AS A PROFESSIONAL CLIENT, AS
DEFINED IN POINT (8) OF ARTICLE 2(1) OF REGULATION (EU) NO 600/2014 AS IT FORMS
PART OF DOMESTIC LAW BY VIRTUE OF THE EUWA; OR (I11) NOT A QUALIFIED INVESTOR
AS DEFINED IN ARTICLE 2 OF REGULATION (EU) 2017/1129 AS IT FORMS PART OF
DOMESTIC LAW BY VIRTUE OF THE EUWA. CONSEQUENTLY NO KEY INFORMATION
DOCUMENT REQUIRED BY REGULATION (EU) NO 1286/2014 AS IT FORMS PART OF
DOMESTIC LAW BY VIRTUE OF THE EUWA (THE "UK PRIIPS REGULATION") FOR
OFFERING OR SELLING THE SERIES 2021 BONDS OR OTHERWISE MAKING THEM
AVAILABLE TO RETAIL INVESTORS IN THE UNITED KINGDOM HAS BEEN PREPARED AND
Agreement No. 6085A
THEREFORE OFFERING OR SELLING THE SERIES 2021 BONDS OR OTHERWISE MAKING
THEM AVAILABLE TO ANY RETAIL INVESTOR IN THE UNITED KINGDOM MAY BE
UNLAWFUL UNDER THE UK PRIIPS REGULATION.
THIS OFFICIAL STATEMENT HAS BEEN PREPARED ON THE BASIS THAT ALL
OFFERS OF THE SERIES 2021 BONDS TO ANY PERSON THAT IS LOCATED WITHIN A
MEMBER STATE OF THE EEA OR THE UNITED KINGDOM WILL BE MADE PURSUANT TO
AN EXEMPTION UNDER ARTICLE 1(4) OF THE PROSPECTUS REGULATION OR SECTION 86
OF THE FSMA (IN EACH CASE AS APPLICABLE) FROM THE REQUIREMENT TO PRODUCE A
PROSPECTUS FOR OFFERS OF THE SERIES 2021 BONDS. ACCORDINGLY, ANY PERSON
MAKING OR INTENDING TO MAKE ANY OFFER IN THE EEA OR THE UNITED KINGDOM OF
THE SERIES 2021 BONDS SHOULD ONLY DO SO IN CIRCUMSTANCES IN WHICH NO
OBLIGATION ARISES FOR THE ISSUER OR ANY OF THE UNDERWRITERS TO PROVIDE A
PROSPECTUS FOR SUCH OFFER. NEITHER THE ISSUER NOR THE UNDERWRITERS HAVE
AUTHORIZED, NOR DO THEY AUTHORIZE, THE MAKING OF ANY OFFER OF SERIES 2021
BONDS THROUGH ANY FINANCIAL INTERMEDIARY, OTHER THAN OFFERS MADE BY THE
UNDERWRITERS, WHICH CONSTITUTE THE FINAL PLACEMENT OF THE SERIES 2021
BONDS CONTEMPLATED IN THIS OFFICIAL STATEMENT.
FOR THE PURPOSES OF THIS PROVISION, THE EXPRESSION AN "OFFER OF
SECURITIES TO THE PUBLIC" IN RELATION TO THE SERIES 2021 BONDS IN ANY MEMBER
STATE OF THE EEA OR THE UNITED KINGDOM MEANS THE COMMUNICATION IN ANY
FORM AND BY ANY MEANS OF SUFFICIENT INFORMATION ON THE TERMS OF THE OFFER
AND THE SERIES 2021 BONDS TO BE OFFERED SO AS TO ENABLE AN INVESTOR TO
DECIDE TO PURCHASE THE SERIES 2021 BONDS OR SUBSCRIBE FOR THE SERIES 2021
BONDS.
EACH SUBSCRIBER FOR OR PURCHASER OF THE SERIES 2021 BONDS IN THE
OFFERING LOCATED WITHIN A MEMBER STATE OF THE EEA OR THE UNITED KINGDOM
WILL BE DEEMED TO HAVE REPRESENTED, ACKNOWLEDGED AND AGREED THAT IT IS A
"QUALIFIED INVESTOR" AS DEFINED IN THE PROSPECTUS REGULATION AND IN ARTICLE
2 OF REGULATION (EU) 2017/1129 AS IT FORMS PART OF DOMESTIC LAW BY VIRTUE OF
THE EUWA. THE ISSUER AND EACH UNDERWRITER AND OTHERS WILL RELY ON THE
TRUTH AND ACCURACY OF THE FOREGOING REPRESENTATION, ACKNOWLEDGEMENT
AND AGREEMENT.
THIS OFFICIAL STATEMENT HAS NOT BEEN APPROVED FOR THE PURPOSES OF
SECTION 21 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 ("FSMA") AND DOES
NOT CONSTITUTE AN OFFER TO THE PUBLIC IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 85 OF THE FSMA. THIS OFFICIAL STATEMENT 1S FOR DISTRIBUTION ONLY TO,
AND IS DIRECTED SOLELY AT, PERSONS WHO (I) ARE OUTSIDE THE UNITED KINGDOM,
(II) ARE INVESTMENT PROFESSIONALS, AS SUCH TERM IS DEFINED IN ARTICLE 19(5) OF
THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER
2005, AS AMENDED (THE "FINANCIAL PROMOTION ORDER"), (III) ARE PERSONS FALLING
WITHIN ARTICLE 49(2)(A) TO (D) OF THE FINANCIAL PROMOTION ORDER, OR (IV) ARE
PERSONS TO WHOM AN INVITATION OR INDUCEMENT TO ENGAGE IN INVESTMENT
ACTIVITY (WITHIN THE MEANING OF SECTION 21 OF THE FSMA) IN CONNECTION WITH
THE ISSUE OR SALE OF ANY SECURITIES MAY OTHERWISE BE LAWFULLY
COMMUNICATED OR CAUSED TO BE COMMUNICATED (ALL SUCH PERSONS TOGETHER
BEING REFERRED TO AS "RELEVANT PERSONS"). THIS OFFICIAL STATEMENT IS
Agreement No. 6085A
DIRECTED ONLY AT RELEVANT PERSONS AND MUST NOT BE ACTED ON OR RELIED ON
BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT
ACTIVITY TO WHICH THIS OFFICIAL STATEMENT RELATES IS AVAILABLE ONLY TO
RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. ANY
PERSON WHO IS NOT A RELEVANT PERSON SHOULD NOT ACT OR RELY ON THIS
OFFICIAL STATEMENT OR ANY OF ITS CONTENTS.
THIS OFFICIAL STATEMENT IS NOT INTENDED TO CONSTITUTE AN OFFER OR A
SOLICITATION TO PURCHASE OR INVEST IN THE SERIES 2021 BONDS. THE SERIES 2021
BONDS MAY NOT BE PUBLICLY OFFERED, DIRECTLY OR INDIRECTLY, IN SWITZERLAND
WITHIN THE MEANING OF THE SWISS FINANCIAL SERVICES ACT ("FINSA") AND NO
APPLICATION HAS OR WILL BE MADE TO ADMIT THE SERIES 2021 BONDS TO TRADING
ON ANY TRADING VENUE (EXCHANGE OR MULTILATERAL TRADING FACILITY) IN
SWITZERLAND. NEITHER THIS OFFICIAL STATEMENT NOR ANY OTHER OFFERING OR
MARKETING MATERIAL RELATING TO THE SERIES 2021 BONDS CONSTITUTES A
PROSPECTUS PURSUANT TO (I) THE FINSA OR (II) THE LISTING RULES OF THE SIX SWISS
EXCHANGE AG OR ANY OTHER REGULATED TRADING VENUE IN SWITZERLAND AND
NEITHER THIS OFFICIAL STATEMENT NOR ANY OTHER OFFERING OR MARKETING
MATERIAL RELATING TO THE SERIES 2021 BONDS MAY BE PUBLICLY DISTRIBUTED OR
OTHERWISE MADE PUBLICLY AVAILABLE IN SWITZERLAND. THIS OFFICIAL STATEMENT
WILL NOT BE REVIEWED NOR APPROVED BY A REVIEWING BODY FOR PROSPECTUSES
(PR UFSTELLE).
NONE OF THIS OFFICIAL STATEMENT OR ANY OTHER OFFERING OR MARKETING
MATERIAL RELATING TO THE OFFERING, THE ISSUER OR THE SERIES 2021 BONDS HAVE
BEEN OR WILL BE FILED WITH OR APPROVED BY ANY SWISS REGULATORY AUTHORITY.
IN PARTICULAR, THIS OFFICIAL STATEMENT WILL NOT BE FILED WITH, AND THE OFFER
OF THE SERIES 2021 BONDS WILL NOT BE SUPERVISED BY, THE SWISS FINANCIAL
MARKET SUPERVISORY AUTHORITY ("FINA"), AND THE OFFER OF SERIES 2021 BONDS
HAS NOT BEEN AND WILL NOT BE AUTHORIZED UNDER THE SWISS FEDERAL ACT ON
COLLECTIVE INVESTMENT SCHEMES ("CISA"). ACCORDINGLY, INVESTORS DO NOT
HAVE THE BENEFIT OF THE SPECIFIC INVESTOR PROTECTION PROVIDED UNDER THE
CISA.
jai
THE CONTENTS OF THIS OFFICIAL STATEMENT HAVE NOT BEEN REVIEWED BY ANY
REGULATORY AUTHORITY IN HONG KONG. YOU ARE ADVISED TO EXERCISE CAUTION IN
RELATION TO THE SERIES 2021 BONDS. IF YOU ARE IN ANY DOUBT ABOUT ANY OF THE
CONTENTS OF THIS OFFICIAL STATEMENT, YOU SHOULD OBTAIN INDEPENDENT
PROFESSIONAL ADVICE.
THIS OFFICIAL STATEMENT HAS NOT BEEN REGISTERED BY THE REGISTRAR OF
COMPANIES IN HONG KONG PURSUANT TO THE COMPANIES (WINDING UP AND
MISCELLANEOUS PROVISIONS) ORDINANCE (CHAPTER 32) OF THE LAWS OF HONG KONG
("C (WU M P)O").
Agreement No. 6085A
. •----------
wpikIllpiaM SIMI*;
THE SERIES 2021 BONDS HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
FINANCIAL INSTRUMENTS AND EXCHANGE ACT OF JAPAN (ACT NO. 25 OF 1948, AS
AMENDED, THE "FIEA"). NEITHER THE SERIES 2021 BONDS NOR ANY INTEREST THEREIN MAY
BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN JAPAN OR TO, OR FOR THE BENEFIT OF,
ANY RESIDENT OF JAPAN l DEFINED • ' ITEM 5, PARAGRAPH ARTICLE # OF
FOREIGN EXCHANGE AND FOREIGN TRADE ACT (ACT NO. 228 OF 1949, AS AMENDED)), OR T*
OTHERS FOR RE -OFFERING OR RESALE, DIRECTLY OR INDIRECTLY, IN JAPAN OR TO, OR FOR
THE BENEFIT OF, ANY RESIDENT OF JAPAN, EXCEPT PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF, AND OTHERWISE IN COMPLIANCE WITH, THE FIEA
AND ANY OTHER APPLICABLE LAWS, REGULATIONS AND MINISTERIAL GUIDELINES OF
i. ! AL
THE PRIMARY OFFERING OF I BONDS AND THE SOLICITATIONOF
OFFER FOR ACQUISITION THEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
PARAGRAPH ARTICLE l OF THE FIEA. AS IT IS . PRIMARY OFFERING, JAPAN, SERIES
INSTITUTIONAL2021 BONDS MAY ONLY BE OFFERED, SOLD, RESOLD OR OTHERWISE TRANSFERRED,
DIRECTLY OR INDIRECTLY TO, OR FOR THE BENEFIT OF CERTAIN QUALIFIE1
• • • ON QIIS-
ONLY
2 OF THE FIEA. A QII WHO PURCHASED OR OTHERWISE OBTAINED THE SERIES 2021 BONDS
CANNOT RESELL OR OTHERWISE TRANSFER THE SERIES 2021 BONDS IN JAPAN TO ANY
PERSON
. .#.. EXCEPT ANOTHER #
Agreement No. 6085A
JURISDICTIONINVESTORS VIA A TAIWAN LICENSED INTERMEDIARY, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAWS AND REGULATIONS. ANY SUBSCRIPTIONS OF SERIES 2021 BONDS SHALL
ONLY BECOME EFFECTIVE UPON ACCEPTANCE BY THE ISSUER OR THE RELEVANT DEALER
OUTSIDE TAIWAN AND SHALL BE DEEMED A CONTRACT ENTERED INTO IN THE
OF •'''OR # OF ORRELEVANT DEALER, AS THE CASE
MAY BE, UNLESS OTHERWISE SPECIFIED IN THE SUBSCRIPTION DOCUMENTS RELATING TO
THE SERIES 2021 BONDS SIGNED BY THE INVESTORS.
I' ' i a ! '. f a. ► ► ,. •. ► ► •... i ■. ♦ 1. • a
♦ 1 ♦. ': f • # . 1. ! ► • . •.
ADVISOR.
a ' • ' • • •: i ':K@31611 ' ' • ': • .:.
Agreement No. 6085A
CITY OF EL SEGUNDO
Q 01 njJXY_, IJ
Drew Boyles, Mayor
Chi -is Pimentel, Mayor Pro Tern
Carol Pirsztuk, Council Member
Scot Nicol, Council Member
Lance Giroux, Council Member
Matthew Robinson, City Treasurer
Tracy Weaver, City Clerk
Scott Mitnick, City Manager
Joseph Lillio, CFO
Wei Cao, Management Analyst
Orrick, Herrington & Sutcliffe LLP
Irvine, California
Disclosure Counsel
Stradling Yocca Carlson & Rauth, a Professional Corporation
Newport Beach, California
WE=
Hensley Law Group
Los Angeles, California
umz�M
KNN Public Finance LLC
Los Angeles, California
U.S. Bank National Association
Los Angeles, California
Agreement No. 6085A
No dealer, broker, salesperson or other person has been authorized by the City, the Fiscal Agent or the
Underwriters to give any information or to make any representations in connection with the offer or sale of the
Series 2021 Bonds other than those contained herein and, if given or made, such other information or representations
must not be relied upon as having been authorized by the City, the Fiscal Agent or the Underwriter. This Official
Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the
Series 2021 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer,
solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers or Owners of the Series
2021 Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of
opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as
representations of fact. This Official Statement, including any supplement or amendment hereto, is intended to be
deposited with a nationally recognized municipal securities depository.
The Underwriters have provided the following sentence for inclusion in this Official Statement:
The Underwriters have reviewed the information in this Official Statement in accordance with, and as part
of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this
transaction, but the Underwriters do not guarantee the accuracy or completeness of such information.
The information set forth herein which has been obtained by the City from third party sources is believed to
be reliable but is not guaranteed as to accuracy or completeness by the City or the Fiscal Agent. The information
and expressions of opinion herein are subject to change without notice and neither the delivery of this Official
Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no
change in the affairs of the City, the landowners within the City or any other parties described herein since the date
hereof. All summaries of the Trust Agreement or other documents are made subject to the provisions of such
documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is
hereby made to such documents on file with the City for further information in connection therewith.
While the City maintains an internet website for various purposes, none of the information on that website
is incorporated by reference herein or intended to assist investors in making any investment decision or to provide
any continuing information with respect to the Series 2021 Bonds or any other bonds or obligations of the City.
Certain statements included or incorporated by reference in this Official Statement constitute "forward -
looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995,
Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United
States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such
as "plan " "expect," "estimate," "project," "budget' or other similar words.
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN
SUCH FORWARD -LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE
OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,
PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD -LOOKING
STATEMENTS. THE CITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE
FORWARD -LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT.
THE SERIES 2021 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE
SERIES 2021 BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
LAWS OF ANY STATE.
Agreement No. 6085A
INT'RODUC"TION—
General ................. 1
The Series 2021 Bonds„ ........
Security and Sources of Payment for the Bonds ..... .,,.,..2'
Validation .
Cont rtrrrrrrg 1)ILlaq:C:ant
Misee plAtrtc011 S ........... . 2
THE SERIES 2021 BONDS 3
General ...... 3
Clptrorral I1:cdcmption >I r9te Scrre 2('t 3
1tur:adatt9rw° SrnkinIll Fund kcda nplioat rrpl`�h �Selics.....3
2021 Borlds.. -
Selection Ol' Scraes 20121 Bonds to Be. ]tcalec°rrtcd 5
Notice 01 Redernparora
Sl C IDS 1'1' ^1' 1,1
BONDS SC1I J R C I` C,* PAYMENT FOR p l W
Genera] .... ........................
Bond Payments ,,, 7
Limited Obligations,.,,.,,,,,, 7
Additional Bonds...,...
No Reserve Fund.°,.."..
.8
PLAN OF REFINANCING
Plan of Refinancing 8
Policies for Addressing Unfunded Retirement Costs 9
ESTIMATED SOURCES AND USES OF FUNDS ......... 9
ANNUAL DEBTSERVICE REQUIREMENTS ........... 10
THE CITY.....
History__,, 10
MaJor I rrrplaro��ers.,...,.,. I0
C"un°cart 14cvc1of M0r11 Activiijes rn the (70 11
1'opu lat9 non ... .,......... I
Municipal Government. . ... 12
City Employees .,..,.... , H
City t'aerrcraG Fund Budget Process .................... l3
....:.....,„. '14
Cweraer°ttp 1 c°ryaar,rnyrc C'eyrtelstrarn 15
Lard (IutlOok of the City 15
N rnrtrrer"sip �^la7rtac°rt�er�t Cits:.N�olrcr��s
..........18]rLrrroatior
18
Sour°cesOft 01cr rp Fund lax I�csvcrtUcs......................21
C orrstructron „,..
1 cax ahlc 1 r rnsrtctrcrrrs a5
OUIstanroclnng General l and Delit nand 1—case ()1JEr„t atrarras
C upiUd ]ntp�rovernertts <arrd ('urrt Apr°rrctlou f unds.°..atio 2,
h1vePolatiarp Costs RcP;ated to S'orn':t arte�r In Pr0NV1a�teuts2
itv 1tuacrtt eaf C.°itr 1 Funds f rtw 1.rnp�lovec l ttrperr7c,°rrN b�rargrtrrtt .„ .;... ?
C rt Insur urce Prograrrr... 3CI
Public tiaal�t l'S
...". . 36
RISK ] AC""1 C)f 5,...
City Obligations... ..................... 36
Certain Risks Associated with Sales.............Tax and O..... Other
.....
36
..........
Local Tax Revenues....................................................36
Certain Risk Factors Associated With Chevron Tax
Resolution Agreement ....
Assessed Value of Taxable Proltea�,, ° "37
Increasing Retirement-Rchiled Costs----, ..".3�7
Dependence on State for Certain Revenues_--,-__,, ` 38
No Reserve38
Litigation..,__ ........
Natural 38
Disasters ...
...
Climate Change...... ....,...38
Cybersecurity ......... .3 9
Limitation on Sources of Revenues..." 39
40
Impacts and Potential Impacts of COVID-I 9,
40
Economy ofCity and State. ,
Limitation on Trustee s Obligations Bankruptcy 11
Limitation on Remedies:
41
Limited Secondary Market..... ...'
Changes in Law.... 43
43
CONSTITUTIONAL AND .STATUTORY LIMITATIONS
ON TAXES AND APPROPRIATIONS,
Article XIIIA of the State Constitution 43
Article XIBB of the State Constitution IwI
Proposition 62 ......... 44
Proposition 218 '" "" 4'5
Proposition ]A........ .
.., 5
Proposition 22 46
Proposition 26 ........ 47
Future Initiatives ..... 47
TAX MATTERS...........
U.S. l folders.. 47
Non-U.S. Holders
Foreign Account Tax Compliance Act (` F'AT'CA °).., 49
U.S. Holders and Non-U.S. Holders..
VALIDATION,.
FINANCIAL STATEMENTS fl
CONTINUING DISCLOSURE .... ..
RATING ........................
LITIGATION .........................
MUNICIPAL ADVISOR ..............
5a
UNDERWRITING ......................
MISCELLANEOUS ......................
APPENDIX C"Cl N9'1C1?111 NSleal!: AirrN�p.rAq.I1NrANC'lAI,
REPORT p pSCAg v 1`AIt 1 NVf I-j SI I'rl ti91IImR 30.
F' CERTAIN A-1
APPENDIX B SUMMARY O
020 ..
OF THE T'RUS T AGREEMENT,, TAT.. PROVISIONS
APPENDIX C-- FORM OF BOND COUNSEL OPINION C-I
APPENDIX D--FORM OF CONTINUING DISCLOSURE;
APPENDIX SYSTEM —PROVISION ONFOR BOOK-ENTRYONLY
I
AND LY
CLEARANCE PROCEDURES
Agreement No. 6085A
$144,135,000
CITY OF EL SEGUNDO
(LOS ANGELES COUNTY, CALIFORNIA)
Win t, nition Bonds, Series 2021
17lis t,.el,rtiin of'ihe ter ins ,V iho, Series 2021 B(n ids beil'W
o the en,, fl statenienry contained in this Ore
ficial St 'atelil ences 10,sleflunares of
in, their epllil-iq rq/'io-ence to the el1li)%, ()jfij Stweinew, Re i�v
) - I deared io
'lhe Constitution and /aIrs qf1he State (the
provisions #) 61 �ljc- 1�e , 11fied in their eirrtt�'Wre�v 1�)� 1he c0i"I'Vele
'i ) he coinplete, an Ih 'f�,rences are qua
herein do 1101 dram as A
documents. This official Statenientspeaks orid�lq as, (�01,5 d(Ite, and the il#6rination contained herein is subject
to change.
General
This Official Statement provide, certain inforniation concernill" (fie issuance, sale and delivery of the
City of El Scoundo (Los Angeles 0,111111)f, California) Ta,\able Pension ObligM
ation Bonds, Series 2021 (the
�,-
"Series 2021 Bonds"), in the agLgregale Principal antount of 144,135000 The Series 2021 Bonds are being
bY and between the
(�)1, june 1. 202 1 (the Trust. Areenient
issued pui'suanj to the'Trust Agreement, dated as gZn
Ille -City-) and U.S. Bank National Association. Los Angeles, California. as trustee (the
City oustef El Sv,nindo (, For definitions of certain Words and terms which are used herein but not otherwise defined, see
"Tre"),
Appendix B.
jig issued- (j) to refund a portion of tile City's obligations (the "PciisiOn
The Series 2021 Bonds are being obligations
W dic Calif'01"ilia Public [,,,inployees Retirement System (CaJPF.rRS) evidenced by the CaIPERS
Contract (as described herein); and 00 to M' costs of issuance of the Series 2021 Bonds. See the caption
"PLAN OF REFINANCING."
The Series 2021 Bonds
The City is a member of CaIPERS, an agent multiple -employer public employee defined benefit
irerrient and disability benefits, annual cost -of -living a(�Iustnlents and
pension plan. CalPERS provides ret aiP[,',RS acts as a common investment and administrative
death benefits to plan members and beneficiaries. C illcindulltl , the City. As such,
agent for participating, public entities Wilt) it, the State of California (',the "State"'). Title 111ployees' Retirement Law. constituting Part 3 ol'Division 5 of''i e 2 of
the City is obligated, by the Public E ""Retirement Law"). and the contract. dated August "15. 1943 (as
the California (,
loverinnient Code (the Ile City C01111cil of tile City (the ily Council") and the
antlended, the `'CaIP[-'IRS Contract"). by and between ujjorls� to CaMERS: (alto fulld Pension benefits for Cit)�
Board ofAdministration of CalK.RS, to inake contrib emembers who are of CalPERS: (b)'10 amortize the 11111"llided actuarial liability with rcsi�lec' to such
pension berset"Its.-, and (c) to appropriate funds for such purposes.
The City is authorized pursuant to Articles 10 and 11 (commencing witti Section 53570) of Chapter 3
of Division 2 of Title 5 of the California Government Code (the "Act"), to issue bonds for the P111-POse Of'
refunding obligations evidenced by the Cail]"ERS Contracl. 'J"he Series 2021 Bonds are authorized and issued
pursuant to the Trust Agreenient and a resolution adopted by the City Council Oil January 19, 2021 (the
Resolution")'I'lle proceeds of the safe of the Series 2021 Bonds (exclusive of arnotints applied to pay costs
",
of issuance) will be used to refund a portion of the City's obligations evidenced by tile CaMIRS Contract,
representing the Pension Liability with respect to certain pension benefits Linder the Retirement Law.
Agreement No. 6085A
Security and Sources of Payment for the Bonds
The obligations of the City under the Series 2021 Bonds, inChldim-,; the obligation to make all
ru 11
(.�bligaflons Of tile Cit)' imposed by law payable It-om , ds to
payments of interest and principal when due, are 1-111ployees' Retirement 1,mv, "COMIllellcin" with
be appropriated by the City pursuant to the PUblic
Section 20000 ofthe California Government Code (tile "Relirement l.aw and are absolute and unconditional,
without any right of set-off or counterclairm The indenture perInjis the issuance of additional bonds on parity
with the Series 2021 Bonds. The Series 202 1 Bonds and such additional bonds, if any, are referred to herein as
"Bonds." See "SECURITY AND SOtjRCI-"S, OF PAYMENT FOR HE BONDS." The"I'rust Agreement
provides forthe establishinent and maintenaue in trust a special fund designated the "Bond Fund.- Subject
only 10 tile provisions of tile Trust Agreement Pffnlittill` tile application thereof for the purposes and oil the
c' are p -, liedoed by the City to
terms and conditions set forth therein, all of the amounts held hi the Bond Fund
secure the payllienj of the principal Or redemption price of injerest on the Bonds in accrdance with their
terms, the provis Illent and tile Act, As described herein, the Bond Funod shall be funded
ions of the Trust Agree pursuant to the tenns of the Trust Agreement from any source (�)f leM .gally available funds of the City.
Pursuant to the Trust A-0-reenlent, not later than five (5) Business Days prior to each Interest Payineill
Date, the City is oblileated to deposit Or cause to be deposited with the DIISICC for deposit into tile Bond Fund
-i oil tile Bonds corning de on such
the amount which will equal the amount of the principal of and res z'
Interest Payment Date. See "SECURITY AND SOLIRCES OF PAYMENT FOR THE BONDS" herein.
THE OBLIGATIONS OF THE CITY UNDER THE BONDS, INCLUDING THE OBLIGATION TO
MAKE ALL PAYMENTS OF INTEREST AND PRINCIPAL WHEN DUI,"', ARC OBI,IGATIONS OF THE
CITY IMPOSED BY LAW AND ARE, ABSOLUTE AND UNCONDITIONAI- wrnIOUT ANY RIGHT
OF SET-OFF OR COUNTERCLAIM� THE', BONDS DO NOT CONS'rjTUTF AN OBLIGATION OFTHE
CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION.
NEITHER THE BONDS NOR THE OBLIGATION OF THE CITY TO MAKE PAYMENTS ON THE
BONDS CONSTITUTE AN INDEBTEDNESS OF THE CITY, THE STATE, OR ANY OF ITS POLITICAL
SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT
LIMITATION OR RESTRICTION.
Validation
filed complaillt in the Superior Court 01, tile Slate of California f6r the
Oil Febrliary 1202 1 � the City C
'11) a niatter entitled 0ay q 'El Seglold() V All 1;11el' el a'
County ofl-os Angeles (the -Courl-) The City I,/ filed the valid'ation Petition in order to seek
z� (Case No. 21TRCV0007( (tile "Validation Petition" Ily future bonds issued, to refund pension
judicial validation of, the iss,jallce, of the Series 2021 Bonds and a . ult entered a
obligations or Bonds then 011tstanding under tile Trust Agreerrient. Oil April 11 2021, the Co
with respect to tile Validation Petili011, See
default judoment (the ',,Val idation JudiLi'll,lent") in favor of the cil)
tile caption -VAIJDATION."
Continuing Disclosure
'File City has covenanted for the benefit of the Holders of the Series 2021 Bonds to provide, or to
cause to be provided, to tile Municipal Securities Ruletnaking Board's Electronic Municillal Market Access
System certain annual financial information all() operating data and, hi a tirnely mam'C'r- ljolice of certain
enumerated events. These covenants have been made in order to assist the IJriderwrkers in conlply�nlg Will'
chang sision under the Securities Excilae Act of
Rule 15c2-12 pronwigated by the Securities and Ex e CoMilli 1-Yng
1934. as the same may be amended from time to time ("RUIC 15c"-12"), See the caption ,C(NTINIJING
DISCLOSURE" and Appendix 1) for a description Of the specific tiatul-c of the annual report and notices of
enumerated events,
2
Agreement No. 6085A
Miscellaneous
file infornm6on and expressiolls Of ()Piriorl ljerein speak ojllw, as Of 111cir date and are, subJect to
cl-lange witilout notice. Neither tile defivery of this Official Statement nor any sale made hereunder nor any
l,uturc us Statenjerli will. under any cil-c"Instances. create ally, 1111plication that there has been
ruse of this (Wficial
,to chan(,e ill the aft7zlirs of tile City since tile date hereof
Included herein are brief surninaries of tile Trust Agreculetit and: certain docurnents and repons, which
summaries do not purport to be complete or definitive. and reference is made to such documents and reports
f'or full and complete statements of the Contents 111cl-cof, See Appendix B. Any statements in this Offilcial
such and not as
Statement involving maner-
Of opillion, wbetiler ot� not expressly so stated, are intended as
lernern is not to be construed as a contract or agreement between the
representations of fact. This official St,aCopies 01, tile doctullents are on file and
City and tile purchasers or [iolders of tile Series 2021 B - onds. des, wnia, All capitalized
trust offIce of tile 'I rustec in Los Ange Cal,ifo
available for inspccti011 ,It the corporate
terms used it, this Official Statement and not otherwise defined have the rnearill-P give", to such tern's it' tile
Trust Agreement.
THE SERIES 2021 BONDS
General
-�d form only and. when delivere& will be
file Series 2021 Bonds %ill be issued In fuliN, registered I York
1-coistered in tile name OfCcde & (70-- as nominee of 'flic, Depository' T'Alst Compan\., New York, Ne\N,,
the Series 2021 Bonds. Ownership interests in Ole Series
("I)TC), 1)"I'C will act as Securifies Depository' for tI only, in the denonlinatioris hereinafter set forth. PrincipaL
2021 Bonds may be purchased in, book -entry, fOrl", On by the Trustee to DTC, which o
pl-enlitini. if' any. and interest 01) the 'Series 2021 Bonds will be payable , disbursement
oblioated in turn to reinit such Principal and imerest to D"VC llar6ciparns fk)V Subsequent cfisbur�
BenefIcial Owners ol'Ille Series 202 1 Bonds. See Appendix E.
The Series 2021 Bonds will be dated the date of delivery. raratttrre on the dates and in the Principal
20inside front cover page of this official Statement. The
amounts and bear interest at the rates set for"' oil 'Ile re t�
Series 21 Bonds will be delivered in denominations equal to S5,000 or any integral multiple tile' 0'
each July I and January 1, commencingJanuai-Y I.21022
Interesi oil the Series 2021 Bonds will be payable oil
(each. an '-hmerest Payment Date"),
payment of interest on tote Series 2021 Bonds due Oil or before (Ile IllatUrity Or prior redernplion
istration books kepi by the TrUSICC ass 111C
thereof will be niade to the person wilos e name appears in tile MEg
Owner thereof as of the close of business Oil the Record Date for 111 interest payment Date. whether Or not
such (lay is a Business Day, such interest to be paid by check mailed on the Interest Payment Date by first class
mail to such Owner at the address as it appears in such books, provided that upon [Ile written request Of at'
01, $1,0()0.00() or njore in aggegate principal amount of Series 2021 Bonds received by the Trustee
Owner = Z- interest will be paid by wirer transfer it' immediately avaijal)Ie ftjnds�
prior" to the applicable Record Date, month preceding each Interest Payment Date, whether Or not
"Record Date" means, the 15'�` calendar day of the in ril)tioll of tile Series 20221 Bonds. see "-- Redemption
such day, is a Business Day. ]-'or a further desc provisions" below and AFIIIENDIX B -SUMMARY or CERTAIN PROVISIONS OF 'I'ltic TRUST
AGREEMENT."
Optional Redemption of the Series 2021 Bonds
01:,Wonal Redejljj,)ti(,ajj. Ilse Series 2021 Bonds are SUbj)eCt to optional redemption prior to their
, City, in \vh0le or ill part, oil any date oil or arter July 1, 203 1, fron, all\,, source of
maturity at tile OPti011 Of Illt ipal anlount of tile Series 2021 lionds to be
available funds, at a redemption price equal to 100% ofthe prine
redeemed, plus unpaid. accrued interest thercon to tile date of redemption, without premium.
Agreement No. 6085A
Vake-14"hide (. rt aaraaaa' Rechaaipfiom 1•"Worn the date of issuarace of the Series, 2021 Bounds to but not
including July 1. 20a1, tlue Series 021 ] rands are subject 'tea redearptiora ]error 10 their` �respective stated
matrrurtias. at the olwtrora of tlae rtw� trearua lawfully availarble funds deposited in the Redemption 1`und au a
Cily filed
whole or it, part (ill sticlr order of maturity ors shall be; selected by the City it' "r ww�ritteat Dialer of rlrr r arer .
wi'tla tlae `1"i ristee erne] if tlae series 2021 Bonds are held in k'all book entry d`or'lt with TC. by s s
� ° � 1 a
through distribution of principal in accordance with the Trust Agreement]. ore any date. at a rerlinptiort p°°ice
equal to the greater of:
(1) 100% of the principal amount of such Series 2021 Bonds to be redeemed; or
(2) the surn of the present value of the rervi wining scheduied pa,yrneruts of
principal and interest to the stated r'naturrty date or elates of such Series 2021 Bonds to be redeemed.
not including any portion of t'hose payinents of interest accrued and unpaid as of tile date on wvhich
such Series 2021 Bonds are to be redeemed, discounted to the dale on which such. Series 2021 Bounds
are to be redeemed our a serni annual basis assuming a 360 day year corrsrsturar of twcl�e �1�1-c1ayI
rnenrths. at the y Rate (described below) talus the basis points set forth below, plus. ire each.
case. accrued interest orgy such Series ie*s 2021 Bonds to be redeemed to the redemption date:
Maturity
Make -Whole
Maturity
Make -Whole
(July 1)
Spread
(July 1)
Spread
2022
5 basis points
2030
10 basis points
2023
5 basis points
2031
15 basis points
2024
5 basis points
2032
15 basis points
2025
5 basis points
2033
15 basis points
2026
10 basis points
2034
20 basis points
2027
5 basis points
2035
20 basis points
2028
10 basis points
2036
20 basis points
2029
10 basis points
2040
15 basis points
l reastrry hate"" riaeans, w'i'tla� re laect to arty rcdenaptiora date for a particular Series 2021 Bond, the
rities
yield to maturity as of such redemption date of 1JI. . Treasury'secustitla a constant maturity most nearly
pr
equal to the period l°i'otla the redemption date to the maturity date of strata Scar°ie 2021 Bond (tukirug into
�yevcr, if
account any sinldiwg furtcl irastallra°lerrts for rseries p into ar�w sinkiray21 �llirradrrnsta�llraaer tst�for sauclerioe�crres fat}'tl
redaarr�w'l'�ation date to such rarattrrrty date (t,xkril
Bonds) is less tlaarr erne year, ilea yield to rnaturrty of the U.S Treasury seeurrtres ,,tile a eorastant rrtaturu°rty of
one year, in each case as compiled and published in tlae most recent fcclertr1 Reserve Release 11.'VS wwlaicla leas
is°°:cearawe pr�rblicY available at least two business days, but not more than 45 calendar days. prior to the
redemption date (cycluding inllatior) indexed securities) or, if such Release �is�� no longer priblr hed, aray
publicly available source ofsimr`lar ivi arket data reasonably selected by the Trustee.
Mandatory Sinking Fund Redemption of the Series 2021 Bonds
The Series 2021 Bonds maturing July 1, 2040 (the "2040 l cane Se r res 2021 Bonds") are subject to
ed
naandator)sinking Aind redemption at a redemption tar ic�11 equal l to il Serrathe ��s�principal
]Bonds will be so amount thereof. �elecmedus ron
interest to the redemption date, ww�ithout l�arerniusn. The
ilea, fialloww�ing dates ar d in the 1 'r1lerwwrrng rrrarorrrrt.s:
Agreement No. 6085A
Redemption Date
Principal
(July 1)
Amount
2037
$8,720,000
2038
8,990,000
2039
9,265,000
2040*
7,265,000
* Final maturity.
Selection of Series 2021 Bonds to Be Redeemed
Whenever provision is made, for tile redemption of less than all 01, jile Series 2021 Bonds of as
J)artiCl.dar maturity, she Trustee Will select the SelIeS 2021 Bonds to be redeLilled Fron . I all Series 2021 Bonds
not preVioUsly called for redemption (a) with respect to ally opliollal redemption Of Series 20211 Bonds
V I ally other redernplion of Additional Bonds.,
directed in a Written Certiticate of tile Citv- and with PC (11) N res' cr 0 LIrsualu to which such Additional Bonds,
a 1110 1121 aiurities., as ix-ovided in tile Supplemental Trust AgrCeillent P
tile SaM', ItutflUl'ity ill any, nianner
are issued, and by lot among Series 2021 Bonds, of the saine Series Wilil
deems appropriate and lair. 'File "frusiee Will promptly u(AifY the City
which the rruslee ill its sole discrelion Irposes of
ill Writir,L, of tile numbers of tile Series 2021 Bonds so selected for redemption Oil Such date, For pL
��llojl.,,jjly Series 2021 Bond niaN d ill part in Authorized Denominations.
such scle y be redeelne
e to redeem such Series 2021 Bonds (iricitiding the Series 2021 Bonds)
The City may direct the Trustee r,
on apro rata basis as I(> each Ov,,ner in, whose name such Series 2021 Bonds are registered on tile Rec()rd Date
immediately preceding a redemption dale, "Pro PY1161" is determined. in connection xAvill, any niandatoty
sinking fund redemption or a: LIV optional redeniplion, in part. by 11julliplying the principal al"OUnt Of the Series
I .
2021 Bonds of such maturity to be redeemed on tile aPPlicable redemption date by a fraction. the numerator Of
of Series 202 1 Bonds of such rnau,,�rity t)Nxned by all owuef% and the
which is equal to the principal anlOunt 0 t d Z7
denominator of which is equal to tl:ie total amount of the Series 2021 Bonds of such maturity then u mail ing
date, and then rounding tile prodUd cloxii to the next lower integral
Z_ �1
immediately prior to SUCII re(IC1111)('011
Illultiple of $5.000. provided that tile portion, ofany Series 2021 Bonds to be redeemed shall be in Authorized
Denorilillations and all Series 2021 Bonds of a Maturity to refrjaill oulsIalldil1q, following any redemption shall
be in Authorized Denominations.
lj"tile Series 2021 Bonds are in book -entry ift)rIll at tile time ofsUch redemption, any direction l'Or tile
Pro raw redemption Series 2021 Bonds would be subject to "'ritten notice to Dl't.. in accordance \vilh file
TnAst Agreement and the Pro r0to reduction ill principal provision included if, the j)'rC Letter of
Representations of file 01Y Oil file with DTC, in accordance with tile operational arrangements of DTC Illen ill
efre,ct, The Underwriters have advised the Trustee and tile Cily that tile Series 1011 Bonds will be made
eligible for partial re(jelliption to be treated by DIV in accordance Will' its rules and procedures as a "pro rata
pass -through distribution Of principal." 'fhe Trustee Will send notice to DTC ill accordance with such rules and
procedures to effect a pro re,10 reduction of principal of all affected outstanding Series 2021 Bonds to
accomplish tile optional and mandatory sinking account redemptions described above using a pass -through
distribution of principal. in connection With each SUCII redemption, the Trustee will incit"le ill tile Written
notice of redemption described above the dollar arnount per $1.000 principal aniount, payable on account of
-ued interest to effect a pix') raia reduction tilrough a pass -through distribution of principal on
principal and acci ill, J)e respon,sible for distributing the prilicipal and accrued in teres
the related redemption date, UTC w accordance Witt, rules and procedures for a PV0 r'010 pass -
its Direct Participants, as applicable. pro raho ill Cc ficiaits i interest in the Series 2021 Bonds beirlu redeemed
through distribution of principal based upon the bene
that 6TC records list as owned by each DTC Direct Participant as of the record date for such payment, Ally
,l1l'uStee to provide such notice. or of. DTC or its participants or any otiler intennediary 10 "take
faurc or the such selection or proportional allocalion, for whatever season, will not affect tile sufficiency of tile validity Of'
Series 2021 Bonds, Ili addiliixm. if' DTC's prevailing, operational arrangements do not
the redemption ofthe Set )ass -through distribution 01'principal basis., the po'-fl(in Of
allow for allocation of a redemption till a pro rata I
Agreement No. 6085A
the Series 2021 Bonds to be redeemed on such redemption date will be selected in accordance with DTC's
then existing rules and procedures, and may be by lot.
So long as there is a Securities L)epository for the Series 2021 Bonds, there will be only one registered
responsibility for prorating partial redemptions among
owner and neither the City nor the Trustee will have r
beneficial owners of the Series 2021 Bonds.
Notice of Redemption
ed by first-class Iliad by the "FrUS(Cc. 1101 less than 20 nor more th8n
Notice ofreclerription will be ill,afl
to the respective
)\vjjcrs ol' tlie Series 202 1 Bonds desitgnaled 1`01'
60 days prior to tile redemption date rilption
oil the registration books of the Trustee. Each notice of rede
redemption at their addresses appearing 1� e, ifany, (including the name, and appropriate a . ddreif' lss of
%vill, state the date or suell notice. tile redemption Pric I i , and. the Trustee), tile CUSSIP number (ifany) and ISIN number (if any) of the. Mat[lritY 01' n"t"' ties
that, all of7aily such maturity is to be redeemed, the distinctive certificate numbers of1he Series 202 1 Bonds of
such nialijritv, to be redeemed 8TI(L in tile case of'Serjes, 2021 Bonds to be redeemed in pail only. the respective
portions of the principal am(nint thereof' to be rcdeerncdEach sLlcil notice will also slate that oil said date tilere will become due and payable oil each ofsaid Series 2021 Bonds the redemption price. if anY , thereof and
in the case of a Series 2021 Bond to be I-edeerned in par, only. tile specified portion of tile principal amount
thereof to be redeemed, together with interest accrued thereon to the redemption date, and that froni and after
stleh redemption date interest thereon will cease to accrue. and wvill require that such Series 202 1 Bonds be
then surrendered at the address of tIle 1'rttsice specified in the redemption notice-. provided howo evelr, thTrUstcat any
such notice ofredeniption inay, be cancelled arid annulled by a Written Request of the City given ttie c
wherLupon [lie 'l-rustee will forthwith give appropriate
al least five daysprior to the date fixed For redemption, e I" any
notice of susuchcancellation and annulment it) al I the recipients Of such notice of redemption. file CaiIn r 0 Owner to receive notice pursuant to the Trust Agreement or any defect therein shall not invalidate any of' ITh
e
proceedings taken in connection with such redemption.
With respect to any notice of any optional redemption of Series 2021 Bonds, such notice rnay state
that such redemption is conditklilal till, receipt by tile Trustee. on or prior to the date fixed for such
Ill, other, available alljounts held by tile "I"rustce, tire stifficieril to pay tile
redemptiom Ofu'011eYs that, tooe'ller " st oil. the Series �2021 Bonds to be redeerried, arid that if sUch 111011CYS is
redernption price of, and accrued iniere -cc and effect arid, tile City will not be reqtijred to redeeni such
not so received, such notice wilt be Of no for 2021 Bonds. In tile event a no
1'erje. � lice of'redemption ofScries 201-1 Bonds contains such a cond
ition anti
such nioneys are not so received. [lie redemption of Series 2021 Bonds as, described in the conditional notice of
redemption will not be made and tile Trustee Wilk within a reasonable time after the (late oil which such
and ill tjlc Illartnel- in which file jj()tice of redemption was,
redeniption was to occur, give notice to the persons that there will be no redemption of Series )0',) 1 Bonds
cjven, that such moneys were not so received and
Z71
pursuant 10 such notice of redemption.
if notice of redemption has been duly given as aforesaid arid money for the payment Of the redemption
price of Series 2021 Bonds called for redemption is held by the Trusice. then On tile redemption dale
designated ill such notice Series 2021 Bonds so called for redeniption shall become due and payable, and front
a CCrUe. and tile. Owners of
-ies 2021 Bonds shall, cease to ,
and after the date so designated interest oil such Sei Xcep, to receive pavIllern of tile redernplion
such Series 2021 Bonds shall have no, rights ill respect thereof e
price thereof.
All Series 2021 Bonds redeemed pursuant to the provisions of the Trust Agreement will be canceled
by the Trustee upon surrender thereof and destroyed.
0
Agreement No. 6085A
SECURITY AND SOURCE OF PAYMENT FOR THE BONDS
General
file City is a nlerriber, of CaIPf RS. all agent, njoilipic-elliployer public employee defined benefit
pensioll plait. -'RS provides retirement and disability benel'us, annual cost -of -living adjustments, and
aries, S as a contillon investillent and administ"alivc
death betlefus to plan menibers and beriefick . CalPf 16 acts
hill [lie State. including the CityAs such. the City is obligated by the
agent for participatin-2 public entities wit Rand pet s o bellefils for
1� `Contract to nialke contributions to CaIIIERS to (a)� f
Retirenlerlt Law and the CalPERS Co
City employces who are members OfCaIPERS, (b) amortize the unfunded actuarial liability with respect to
such pension benefits, and (c) appr-opriate funds, 1-01- Such purposes. T Ile City is authorized PUTSUarn to the Act
dinobligations evidenced by tile CalPERS Contract. ]'he ff0ccccls'
to issue bonds fear tile purpose of f-efUll g , 1 11 0 Ill
(e,,clusive of costs Of isstlallce) wi 11 be used to refund a por io f e
fi-otn she sale of the Se"ies 2021 Bonds , pjcscntino 95% of tile cjjqerjt tuilunded
City's obligations to CalPERS 'pursuant to tile Call . IERS Contract re Z, lent Law. The
its tinder tile Retiren
actuariaI accrued liability with respecl, to certain pension benefits
e of the Series 202 1 Bonds as Obligations of" the Cil)' Imposed by law,
alithorization by the City c,fthe issuanc
f tile Series 202 1 Bonds with all applicable provisions of la"', were
and as to the validity and confortnitY 0 Angeles
, COUrt of tile State of California in and roj° Iie Coniny of Los Ange e
validated by a Judgment ofthe SUPe"i0i
t' entered on April 12. 2021. See "VALADA11ON" herein.
Bond Payments
under tile Scries 2021 Bonds, including the obligation to rriake all
The oblig'ations, of' tile ("'ity 17
payments Of interest and principal when due, are obligations of tile City imposed by law payable from funds to
be appropriated by the City pursuant to the Retirement Law and Marc absolute and unconditional,unconditional,without any
rrglIt of'sej,-offer counterclaim. the Trust Agreement provides to,• tile establishment and n1a i file nance in trust
Trust Agreenleilt Pei'miltint-�
a special fund designated tile "Bond Fund," Subject only to the provisions of the
the application thereof for tile purposes and on the terms and conditions set forth therein. all of the amounts
held in the Bond I"und are pledged by file City to secure tile paYnient ofthe principal, or redemption P11cc Of
and hiterest oil the Bonds in accordance with their terms, the provisions OfIlle TRISI Agrecinew and the Act,
Said pledge $11all constitute a first lien on such assets.
The Trust Aoreenient provides that not later thall five (5) Business Days prior to each Interest
to deposit or cause to be deposited with the "trustee for deposit into the
Payment Date. tile City is obligated Bond 11 1] Bonds coming due on such Interest Payment Date.
Fund an aniounofthe pricipal of and interest 0 le
The Bond Fund shallt be fundednpursuant to the terms of the Trust Agreement any source of legally available
funds of the City.
In the event that, on the fourth Business Day prior to each interest Payment Date, aniounis in the Bond
Fund are insufficient to pay the principal, if an),, ofand interest on the Bonds due and payable on Stich Interest
Payment Date. the Trustee shall inittlediately n(Ilify tile City ofthe arnount of such insufficiencyUpding on being
,so notified. tile City shall, prior to tile cl()se of bUsiness on the Business Day immediately Pe
cesuch
rustee immediately available funds in an
interest Payment Dale. deliver or Cause to be delivered to the T -Cof theTrustee shall deposit
atnount, equal to tile an aunt of such insufficiency. immediately upon receipt thei
such funds, in tile Bond Fluid.
on each Interest paynieni Date, tile 1411stee shall, NvithdraW from the Bond I-"und for payment to tile
Owners of the Bonds the principall, if art),, of and interest on the Bonds then due and payablc. If there are
insufficient funds in the Bond Fund to Pay tile principal, if allyof and interest oil the Bonds, therustce Shall
apply the available fluids first to the payniew of interest oil tile Bonds. then to tile payinent of principal of the
Bonds.
Agreement No. 6085A
The Series 2021 Bonds do not constitute an obligation of the City for' which tile City is obligated to
levy or pledge any forn't Of lax3ti0l". Neither tile Series 202 1 Bonds 1101- the obligation of tile City 10 Inake
payments on tile Sel-ics 202 1 Bonds c(�qjstnine an indebtedness Of the City, tile Slate. or any of i,ts Political
I u I al or statutory debt finiiiation or restriction, See
subdivisions Within the nleallillp of all), corishl AEI ein
"CONISTIT[JIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROFIRIAT IONS" her
Limited Obligations
THE BONDS ARE GENERAL OBLIGATIONS OF THE CITY PAYABLE FROM ANY
LAWFULLY AVAILABLE FUNDS OF` THE CITY AND ARE NOT LIMITED AS TO PAYMENT TO
ANY SPECIAL SOURCE OF F1,JNDS OF THE CITY. TI,jE, OBLK'JATIONS Oj':THE CITY LINDER THE
BONDS, INCLUDING THE OBLIGATION TO MAKE ALL I"AYMENTS OF INTEREST AND
PRINCIPAL WHEN DUE, ARE OBLIGATIONS OF THE CITY IMPOSED BY LAW AND ARE
ABSOLUTE AND UNCONDITJONAI- WIT'HOUT ANY RIG] IT 01"" SEI -OFI-OR COUNTERCLAJM�
THE BONI)S DO NOT CONSTITUTE AN OBLIGATION OF THE CITY FOR W111CII "FI'IE Cl`lY IS
THEBONDS NORTHE
OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION. NEITHER
THE OF BONDS CONSTITUTE, AN
OBLIGATION THE CITY TO MAKE PAYMENTS ON
INDEBTF`-DNESS OF TIIE CFry-'FIIE STATES OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN
'I'I,JE MEANING OF ANY CON STI 11,JTIONAL OR STATUl'()RY DEBT LIMITATION OR
RESTRICTION.
Additional Bonds
The City may from time to time issue additional bonds for (i) the purpose of'satisfying any obligation
of, the; City to nlake payllients to CaIPERS pursaiant to the Retirementrelating 10 pension benefits
accruing tea CaIPERS' members and/or for payment ofall costs incidental to oj� connected with tile issuance (it
I purpose, alld/or (ii) the purpose of mfundint', all), Bonds then Ovistandinolincluding
additional bonds for Suet nnecled with such refunding� Such additional bonds tnay be issued oil a
pa.��jljejjj 01, all costs incidental to Or W ore information regardinIg the issuance of'
parity with tile Bonds without tile consent of any Owner. For m CERTAIN PROVISIONS OF I HE TRUST
additional bonds. see APPENDIX B - "SUMMARY OF
AGREEMENT - Additional Bonds."
No Reserve Fund
The City has not funded a reserve fund in connection with the issuance of the Series 2021 Bonds.
Plan of Refinancing
1"Ile Series 2021 Bonds are being issued- (i) to refund as portion Of" tile (,'it y ',s pension Liability
consisting 0(" 95% ofthe City unfunded actuarial accrued liability to CaIPERS as of June 302021 with
1"espect to tile City,,s Miscellaneous pl,111, Saj-ety Police 1,1 Tier Plan and Safety Fire Plait (the "Unfunded
Liability-): and 00 to pay costs of issuance of tile Series 2021 Bonds. See ESTI MATED SOURCES AND
USES OF FUNDS" herein.
CalPERS has notified the City as, to the amount of the Unfunded Liability based oil tile June 30, 2019
actuarial valuations, wiliell are tile most recent actuarial valuations perfonried by CaIIIERS for the CiVs
M,5cejlat1coL1!s pl,111, Safet), 1�olice 1,, Tier p1wi and Safety Fire I'llan. Based oil tile jitille 3(). 2019 actuarial
to (Ile City, CalPERS has projected the City's total unfunded actuarial
valuation as 1-eported by CalPE'RS y
accrued liability to be $151,6631,248 as, of June 30, 2021. consisting of $3,4,407,895 with respect to the City's
Miscellaneous Plan, $61,677,695 with respect to the City's Safetv 1,1 -Tier Police Plan and S55,577,658 with
Agreement No. 6085A
respect to the Safety Fire Plan. The Series 2021 Bonds are being issued to refund 95% of the current
Unfunded Liability.
The City also contributes to a Safety Police 2"d Tier Plan, a PEPRA Safety Police Plan and a PEPRA
Safety Fire Plan. The proceeds of the Series 2021 Bonds will not be used to refund any unfunded actuarial
accrued liability to CalPERS for such plans. On March 29, 2021, the City prepaid its share of the unfunded
actuarial accrued liability with respect to the Safety Police 2"d Tier Plan, the PEPRA Safety Police Plan, and
the PEPRA Safety Fire Plan. See the caption "THE CITY —City Employees Retirement Program" for
information with respect to such plans.
Policies for Addressing Unfunded Retirement Costs
On March 16, 2021, the City Council adopted an Unfunded Actuarial Liability Policy (the "UAL
Policy") to provide guidance on the development and adoption of a funding plan for any unfunded actuarial
liabilities that are calculated annually by CalPERS, or for any unfunded actuarial liabilities remaining
immediately after the issuance of the Series 2021 Bonds. The purpose of the UAL Policy is to establish a
framework for funding the City's defined benefit pension plan, taking into account factors that are relevant to
the plan and the City. The UAL Policy provides that the City's overall objective is to fund its CalPERS plans
near 100% of the total actuarial liability, and no less than 80% whenever possible. The UAL Policy also
provides that the City should dedicate 30-60% of budgetary savings resulting from the issuance of the Series
2021 Bonds for future unfunded actuarial liabilities and 40-70% for General Fund operational costs, and that
the City should make no offers of enhanced benefits to City employees while the Series 2021 Bonds are
outstanding. The UAL Policy also provides certain payoff/funding period for potential new, future unfunded
actuarial liabilities, ranging from 1 to 5 years for unfunded actuarial liabilities up to $5,000,000 and 16 to 20
years for unfunded actuarial liabilities over $15,000,000.
The UAL Policy provides that it should be reviewed on an annual basis, during the strategic planning
session or the budget study session, to ensure compliance and to consider potential updates to the UAL Policy.
The UAL Policy provided guidance with respect to the issuance of the Series 2021 Bonds; however, the UAL
Policy may be adjusted in the future at the discretion of the City Council.
EmployeesThe City has also established two Section 115 Trusts to prefund certain pension costs and other post -
Retirement,
See the caption "THE CITY —Financial Management Policies" for more information with respect to
other financial management policies adopted by the City Council.
The proceeds to be received from the sale of the Series 2021 Bonds are estimated to be applied as set
forth below.
Sources
Principal Amount of Series 2021 Bonds S 144,135.000
Total Sources $ 144,135,000
Uses
Funding of Unfunded Liability") $ 143,520,700
Costs of Issuance(2) 614,300
Total Uses $ 144,135,000
(") Deposit to CalPERS Payment Fund. See the caption "PLAN OF REFINANCING."
(�) Includes Underwriters' discount, fees of the rating agency, Municipal Advisor, Bond Counsel, Disclosure Counsel and
Trustee, printing costs and other costs of issuance.
Agreement No. 6085A
The following table sets forth scheduled debt service on the Series 2021 Bonds, assuming no optional
redemptions prior to maturity.
City of El Segundo
Debt Service Schedule
Period Ending
July I
Principal
Interest
Total
2022
$ 6,535,000
$ 3,235,085.38
$ 9,770,085.38
2023
6,735,000
3,036,289.72
9,771,289.72
2024
6,760,000
3,011,302.88
9,771,302.88
2025
6,805,000
2,968,985.28
9,773,985.28
2026
6,865,000
2,906,243.18
9,771,243.18
2027
6,945,000
2,821,666.38
9,766,666.38
2028
7,055,000
2,717,283.02
9,772,283.02
2029
7,180,000
2,594,314.36
9,774,31436
2030
7,320,000
2,452,365.78
9,772,365.78
2031
7,470,000
2,297,401.38
9,767,401.38
2032
7,640,000
2,128,056.46
9,768,056.46
2033
7,830,000
1,943,397.68
9,773,397.68
2034
8,030,000
1,741,618.56
9,771,618.56
2035
8,245,000
1,525,049.48
9,770,049.48
2036
8,480,000
1,294,436.82
9,774,436.82
2037
8,720,000
1,048,771.20
9,768,771.20
2038
8,990,000
781,677.62
9,771,677.62
2039
9,265,000
506,313.90
9,771,313.90
2040
7265.000
222 526.96
7.487.526.96
Total
$ 144,135,000
$ 39,232,786.04
$ 183,367,786.04
H-14-moll 011'1
The City of El Segundo is a general law city located in the South Bay area of Los Angeles County on
the coast of the Pacific Ocean. The City is located 14 miles southwest of downtown Los Angeles, adjacent to
the Los Angeles International Airport. The City is 16 miles from Century City, the City of Santa Monica and
UCLA, and seven miles from the newly -constructed SoFi Stadium, the home field for the Los Angeles Rams
and Los Angeles Chargers. The 105 and 405 freeways provide access to the City. There are three stations of
the Green Line of the Los Angeles Metro Rail System located in the City.
The City provides a full range of municipal services, including police and fire protection; highway,
street and infrastructure maintenance and construction; water and wastewater operations; solid waste
operations; library services; planning, zoning and code enforcement; recreational and cultural activities; and
general administration.
The City celebrated its centennial anniversary in 2017, commemorating 100 years of innovation,
leadership, and growth. In 1911, Standard Oil (Chevron) opened its second refinery in California in what is
now the City. The City was incorporated 1917 with its foundation as home to workers in the petroleum
industry.
1i17
Agreement No. 6085A
Major Employers
Following is a description of significant employers and businesses located in the City.
Chevron. As described above, Chevron Products Company/USA Inc. operates a significant refinery in
the City, which generates significant City revenues. See "Sources of General Fund Revenues —Chevron Tax
Resolution Agreement."
Aerospace. A number of aerospace companies have had operations within the City for many years,
including the Aerospace Corporation. Boeing, Northrop Grumman, Lockheed Martin and Raytheon (all
Fortune 500 companies) have facilities in the City. Significant development activity relating to Global
Positioning Satellite Systems, Global Hawk's unmanned aerial vehicle surveillance aircraft, and the FA-18
occurred in the City.
Los Angeles Air Force The United States Air Force also recently announced that Los Angeles
Air Force Base, which is located in the City, will become headquarters for the Space Systems Command, a
field command of the United States Space Force.
P o6e lion al Ste. The office headquarters and training facilities for Los Angeles Lakers and the Los
Angeles Kings are located in the City.
Media. The headquarters of the Los Angeles Times is located in the City.
Mattel. The headquarters of Mattel Inc. is located in the City.
Other. Other companies which maintain operations in the City include Belkin, Internet Brands Inc.,
Karl Storz Endoscopy America Inc., Infineon Technologies Americas Corp., Big 5 Sporting Goods, Kite
Pharma, JustFab and WPromote.
Current Development Activities in the City
Based on information provided by the involved companies, developers and property owners, the City
estimates there is currently over $1 billion in new construction taking place within the City. The following is a
description of certain ongoing development activity.
'r2,2&o FFacility. The City has entered into a Golf Course Management Agreement and a related lease
and other agreements with entities related to Topgolf USA (the "Topgolf Agreements"). The Topgolf
Agreements provide for the lease of a City -owned 9 hole par three golf course to Topgolf, which will renovate
the course and construct a driving range and related facilities, with a total estimated construction cost of
approximately $40 million. Construction commenced in April 2021, and is expected to be completed in the
summer of 2022. The City expects to receive approximately $1.9 million pursuant to the Topgolf Agreement
commencing in Fiscal Year 2022-23 (which will escalate annually) pursuant to the Topgolf Agreements.
Beyond Meat. The global headquarters of Beyond Meat, Inc., located in the City, is expected to open
by early 2022. The 300,000 square foot facility will be located in a redeveloped aerospace manufacturing
facility. Beyond Meat has reported that it expects approximately 1,000 employees will ultimately be housed in
the headquarters facility.
L'Oreal USA. L'Oreal USA has publicly announced that it will be opening a second company
headquarters (which it expects eventually will house approximately 400 employees) in the City with more than
100,000 square feet of indoor and outdoor workspaces in early 2022.
Agreement No. 6085A
Population
The City has a population of approximately 17,000 residents and is basically "built -out." The City's
day -time population increases to approximately 70,000.
The following table shows the unemployment rate within the City, the County and State and the
United States.
TABLE 1
City of El Segundo
Unemployment Rates for City, County, State and United States(O
2016-2021
2016
2017
2018
2019
2020
..... .
Mar-21
. .......... . . ...... —
El Segundo
6.2%
5.6%
5.4%
5.2%
13.5%
11.5%
Los Angeles County
5.2
4.7
4.7
4.4
12.80
10.9
State of California
5.4
4.8
4.2
4.0
10.10
8.2
United States
4.9
4.4
3.9
3.7
8.10
6.2
(1) Data Not Seasonally Adjusted
Source: Employment Development Department Labor Market Information Division
U.S. Bureau of Labor Statistics
The following tables show the per capita income and the median household income, respectively,
within the City, the County, the State and the United States for the ten most recently available years.
TABLE2A
City of El Segundo
Per Capita Income City, County, State and United States
2010-2019
Per Capita Income
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
El Segundo
$47,421
$46e 185
$44.188
$43e218
$42,575
$45e644
$47,749
$48,205
$49.818
$55.948
Los Angeles County
27.344
27,954
27.900
27,749
27.987
28.337
29.301
30.798
32,469
34.156
State of California
29.188
29,634
29.551
29.527
29.906
30.318
31,458
33.128
35.021
36,955
United States
27.334
27.915
28.051
28,155
28.555
28.930
29.829
31.177
32,621
34,103
Source: U.S. Census Bureau, American Community Survey 5-Year Estimates
12
Agreement No. 6085A
TABLE213
City of El Segundo
Median Household Income City, County, State and United States
2010-2019
Median Household
2010
2011
2012
2013
2014
2015
2016
2017
2018
20 19
Income
El Segundo
1'89�926
8 8 � -1
63,04
S94.341
S84.004
S85.717
$91,62�
S92.9421
$99.813
S 109 3 7 7
Los Angeles County
55.476
56-266
56.241
55,909
55.870
56.196
57,952
61.015
64,251
68.044
State of California
60.883
61,632
61,400
61,O94
61.489
61,818
63,783
67.169
71,228
75,235
United States
51.914
521.762
53.046
53,046
53,482
53,889
55,322
57.652
60,293
62.843
U.S. Census ...-B-,—ureau,' American Community Survey 5-Year Estimates
Municipal Government
Tjc City Council, consisting of five members, City Clerk and City Treasurer are elected at large for
four -yeas, WrIlls. The City's CUITeTlt elected officials are:
Title
Member
Term Expires
Mayor
Drew Boyles
June 2024
Mayor Pro Tern
Chris Pimentel
June 2022
Councilmember
Carol Pirsztuk
June 2024
Councilmember
Scot Nicol
June 2022
Councilmember
Lance Giroux
June 2024
City Clerk
Tracy Weaver
June 2024
City Treasurer
Matthew Robinson
June 2024
Appointed staff members serving the City are:
Scott Mitnick City Manager
Mark D. Hensley City Attorney
City Employees
There are aipproximately 278 budgeted, authorized full-time City eniplOYcesS, excluding elected
officials, Additionally. [lie City employs part-linie stall equating to, approxiniately 86.76 full-time equivalent
poshionsThe City generally enjoys positive relations with its employees. Approxiniateh 18 %) 0r the Citv's
C
full-time employees are not represented. while the remaining 8294o are represented by employee organizations
Z
within six bargaining units, The six bargaining units are,. General J-1inployees Association, Supervisol-Y &
Professional Employees, Fh-612111ters Association, Police Officers Associatioll. pojicc Stippoij Services, and
Management police, Cio,, Mana(jeejDirectors/Executives, Fire Management and Mid -Management &
Confidential are unrepresented. The labor aomements for all bargaining units are effective from October 1,
2018 thl-OU011 dIC flw
n1C 11111ge between September I ber 30. 20�21 and September 30, 2023.
ZVI
The following summarizes the membership of the City's unrepresented unit and employee
associations:
13
Agreement No. 6085A
TABLE 3
City of El Segundo
Unrepresented Unit and Employee Associations
Fiscal Year Ending September
30, 2020
Number of Full
Percent of
Contract
F�a alat ee llr�.i.... _
Time Employees(') _.....-.
.w.°.rk0.4% - _
......force Ex ion
a
ity Manager
N/A
Directors/Executives
9
3.7
Firefighters Association
37
15.2
9/30/2021
General Employees Association
60
24.6
9/30/2023
Mid -Management & Confidential('l
32
13.1
N/A
Management Fire(l)
3
1.2
N/A
Management Police
6
2.5
9/30/2023
Police Officers Association
47
19.3
9/30/2021
Police Support Services
15
6.1
9/30/2022
Supervisory & Professional Employees
34ww„mm
13.9 __ ...............
........ 9/30/2022m
Total
244
100.0%
�� ���� �� Unrepresented e � mployees.
('-) Excludes elected officials.
Source: City of El Segundo
City General Fund Budget Process
The fiscal year of the City historically began on the first day of October of each year and ended on the
thirtieth day of September the following year. With the City's Fiscal Year 2020-21 Operating Budget, the City
began the process to shift from using the October 1 to September 30 fiscal year cycle to a more traditional July
1 to June 30 cycle. As a result, Fiscal Year 2020-21 will operate within an abbreviated nine -month budget
cycle from October 1, 2020 to June 30, 2021. This will allow the Fiscal Year 2021-22 year to run for a full 12
months from July 1, 2021 to June 30, 2022.
As the Budget is developed, requests are submitted by department heads to the City Manager for
review. The City Manager, the Finance Director and department heads meet to review the requests and
establish program objectives for the coming year, including a proposed multi -year Capital Improvement Plan.
The City Manager then prepares his recommendations to the City Council and the Finance Director submits
the financing plan to fund the recommended budget.
Historically, the City Council typically received the proposed budget by the second week of July
(expected to be May commencing with the Fiscal Year 2021-22 Budget) and thereafter scheduled two or more
public study sessions to review the recommendations with the City Manager and department heads. Tentative
approvals are made by the City Council, pending determination of final fund balance and revenue figures. The
Finance Director usually submits the City Council approved budget for final public hearing and adoption in
mid -September (expected to be early June commencing with the Fiscal Year 2021-22 Budget).
Early in the calendar year, the finance department presents a mid -year review of the budget
performance. At that time, mid -year results are presented to the City Council with a special emphasis placed on
the financial performance to date and the state of the economy. A projection of fund balances through the end
of the fiscal year is presented as well as key performance measures to assist in tracking operational goals.
From the effective date of the budget, the amounts adopted as expenditures become appropriated to
the several departments, offices and agencies for the projects and purposes named. All appropriations (except
appropriations for capital projects which are in effect until the project is completed) lapse at the end of the
fiscal year to the extent that they have not been expended or lawfully encumbered. At any public meeting after
R
Agreement No. 6085A
the adoption of the budget, the City Council may amend or supplement the adopted budget with a majority
vote of the members of the Council.
At the beginning of each fiscal year the City Council employs an independent certified public
accounting firm which, at such times as specified by the City Council, but not less than annually, examines the
financial statements. As soon as practicable after the end of each fiscal year, these financial statements and an
accountant's report are submitted by the accounting fine to the City Council.
COVID-19 Outbreak
The COVID-19 pandemic, and local, state and federal actions in response to the COVID-19 pandemic,
are having a significant impact on the City's operations and finances. In response to COVID-19, from time to
time since the onset of the pandemic in March 2020 governments mandated a variety of responses ranging
from travel bans and social distancing practices to complete shut -downs of certain services and facilities.
Many school districts across the State temporarily closed some or all school campuses (including the El
Segundo Unified School District schools within the City) in response to local and State directives or guidance.
Restrictions on personal and commercial activities were imposed and have been subsequently revised by the
City, Los Angeles County and the State throughout the COVID-19 pandemic based on the then -current status
of infection rates and hospitalizations and other factors.
The COVID-19 pandemic materially impacted economic activity throughout the world. It resulted in
increased costs and challenges to the public health system in and around the City, cancellations of public
events and disruption of the regional and local economy with corresponding decreases in the City's revenues,
including transient occupancy tax revenue, sales tax revenue and other revenues.
On March 27, 2020, the President signed the $2.2 trillion Coronavirus Aid, Relief, and Economic
Stabilization Act (the "CARES Act") which provides, among other measures, $150 billion in financial
assistance to states, tribal governments and local governments to provide emergency assistance to those most
significantly impacted by COVID-19. Under the CARES Act, local governments are eligible for
reimbursement of certain costs which are expended to address the impacts of the pandemic. However, any
funds received by the City under the CARES Act are not available for payment of debt service on the Series
2021 Bonds and cannot be used to backfill City revenue losses related to COVID-19. The City has received
approximately $518,663 in reimbursements under the CARES Act to date, and expects to receive an additional
approximately $2.76 million in reimbursements under the CARES Act.
On March 11, 2021, the President signed the $1.9 trillion American Rescue Plan Act of 2021 (the
"American Rescue Plan"). Approximately $130 billion of these funds are dedicated to local aid for relief to
cities and counties. The City currently expects to receive approximately $3.2 million in funds under the
American Rescue Plan, with half expected in Fiscal Year 2020-21 and half expected in Fiscal Year 2021-22.
In December 2020, two vaccines were approved for emergency use in the United States and
vaccinations began in California. A third vaccine was approved for emergency use in February 2021. Vaccine
distribution is ongoing, limitations on business activity have begun to be relaxed, and schools have reopened
for limited in -person learning.
The City cannot predict future events relating to the pandemic. There can be no assurances that
COVID-19 will not materially adversely impact the City's financial condition in the future.
General Economic Condition and Outlook of the City
Fiscal Year 2019-20 Results. The Fiscal Year 2019-20 General Fund, which ended September 30,
2020 and therefore reflected almost seven months of impacts of the COVID-19 pandemic, had a year-end
deficit (expenditures in excess of revenues) of approximately $2.1 million. Notable revenue categories include
lD
Agreement No. 6085A
transient occupancy tax receipts approximately $6.9 million (or approximately 45.5%) below budgeted
amounts and charges for services approximately $1.2 million (or approximately 23.6%) below budgeted
amounts, each of which the City attributes largely to the impacts of COViD-19.
During Fiscal Year 2019-20, which ran from October 1, 2019 through September 30, 2020, the City
made additional discretionary payments to CalPERS in the total amount of $44,831 and contributed
$1,560,000 to its Section 115 Trust. As described under the caption "—Financial Management Policies," the
City by policy maintains reserves equal to 20% of General Fund expenditures, which the City maintained in
Fiscal Year 2019-20.
Change in Fiscal Year End. With the City's Fiscal Year 2020-21 Operating Budget, the City began
the process to shift from using the October 1 to September 30 fiscal year cycle to a more traditional July 1 to
June 30 cycle. As a result, Fiscal Year 2020-21 will operate within an abbreviated nine -month budget cycle
from October 1, 2020 to June 30, 2021. This will allow the Fiscal Year 2021-22 year to run for a full 12
months from July 1, 2021 to June 30, 2022.
Fiscal Year 2020-21 Adopted Budget. The City Council adopted a balanced Operating Budget for
Fiscal Year 2020-21, with recurring operating revenues sufficient to cover recurring operating expenditures,
projecting General Fund revenues and appropriations to be $59,051,732. The Operating Budget for Fiscal
Year 2020-21 calls for the one-time use of funds from the City's Economic Uncertainty Reserve for one-time
capital improvement projects to partially maintain deteriorating facilities and aging public infrastructure, in
compliance with the City's financial policies. The Fiscal Year 2020-21 Budget is described in Table 4 and
reflected the continuing impact of the COVID-19 pandemic.
Fiscal Year 2020-21 Mid -Year Budget Update. On April 20, 2021, the City Council approved a mid-
year amendment to the City's Fiscal Year 2020-21 Operating Budget, with an increase to General Fund
expenditures of $1,638,107 due to (i) a higher number of retirements than anticipated, resulting in an increase
in accrued leaves being paid out to retiring employees; (ii) an increase in the City's LAX mitigation efforts,
resulting in increased professional services costs, and (iii) an increase in unemployment claims paid to part-
time City employees due to the impacts of COVID-19. The mid -year budget amendment also included an
increase in revenues of $1,672,283, which is largely attributable to $1,563,235 the City expects to receive
under the American Rescue Plan and an expected $688,107 in FEMA reimbursements related to the impacts of
COVID-19.
As described under the caption "—Financial Management Policies," the City by policy maintains a
$2,000,000 Economic Uncertainty Reserve. In the mid -year budget update for Fiscal Year 2020-21, the City
reports that it expects to use $923,708 of the funds received under the American Rescue Plan to increase
amounts in the Economic Uncertainty Reserve from approximately $1,000,000 included in the City's Fiscal
Year 2020-21 operating budget to the $2,000,000 level prescribed by City policy.
Fiscal Year 2021-22 City Manager's Recommended Budget. On May 4, 2021, the City Manager
made a presentation regarding the recommended Fiscal Year 2021-22 Budget (the "City Manager's
Recommended Budget") during a City Council Budget Study Session. The City Manager's Recommended
Budget identified a budget shortfall (absent corrective actions) of approximately $9 million, attributed
primarily to an approximately $7 million decline in transient occupancy tax revenues (as compared to recent
historical levels) due to the continuing impacts of the COVID-19 pandemic, increasing pension costs and
increased costs associated with labor contracts which are set to expire during Fiscal Year 2021-22.
The City Manager's Recommended Budget proposes several strategies for addressing the budget
shortfall, including the use of approximately $2,400,000 from the City's Section 115 OPEB Trust, the use of
General Fund reserves of approximately $2,200,000 (after fully funding the 20% policy reserve described
under the caption —Financial Management Policies"), freezing 18 vacant staff positions for an estimated
savings of approximately $2,000,000, a reduction in operations and maintenance items for a savings of
16
Agreement No. 6085A
approximately $1,500,000 and a reduction in the Equipment Replacement Fund contribution of approximately
$900,000.
The City expects that the City Council will adopt a Fiscal Year 2021-22 Budget on June 15, 2021.
However, there can be no assurance that the City Council will follow the recommendations
set forth in the City
Manager's Recommended Budget to address the expected budget shortfall.
Table 2 below compares the Adopted Fiscal Year 2019-20 General Fund Budget, Actual Fiscal Year
2019-20 Results and the Adopted Fiscal Year 2020-21 Budget.
TABLE 4
City of El Segundo
Adopted General Fund Budget Comparison
October 1, 2020 through June 30, 2021
Variance from
2019-20 2019-20 2020-21
2019-20 Actual
12 Months 12 Months 9 Months
prorated to
General Fund Ado pted Actual Arlo ated
9 months
�..
EVENUES
Transient Occupancy Tax $15,200,000 $8,283,596 $7,524,570
$1,311,873
21%
Sales Tax 11,500,000 12,006,731 8,373,683
(631,365)
-7
Property Tax 8,816,500 9,771,825 9,645,025
2,316,156
32
Utility Users Tax 6,450,000 6,488,837 4,494,047
(372,581)
-8
Chevron Tax Resolution
Agreement(') 5,600,000 5,902,063 6,000,000
1,573,453
36
Charges for Service 5,307,168 4,307,599 3,415,836
185,137
6
Other Revenues 2,500,795 2,548,226 1,916,964
5,795
0
Franchise Tax 3,200,000 3,350,323 2,250,000
(262,742)
-10
Intergovernmental Revenues 2,561,367 1,855,899 1,942,770
550,846
40
License & Permits 14,198,358 14,234,600 11,643,129
967,179
9
Interest & Rentals 824,000 3,392,762 603,000
(1,941,572)
-76
Fines & Forfeitures 412,020 273,083 294,000
89,188
44
Transfers -In 140,000 140,000 948,708
843,708
804
Developer Fees 0 110,876 0
(83,157)
-100
Transfers & Reimbursements 0 71,454 0
(53,591)
-100
TA REVENUES $769710,208 $72,737,874 $59,051,732
$4,498,327
8%
EXPENDITURES
Personnel Services $60,019,674 $58,991,871 $45,569,935
$1,326,032
3%
Materials & Services 17,995,626 15,610,448 12,218,297
510,461
4
Capital Outlay 11,490 45,591 13,500
(20,693)
-61
Debt Service w 118 -
(89)
-100
Transfers 2,749,000 1,249,000 1,250,000
313,250
33
Intergovernmental 15,000 _ 14,520 _
_ (0,
1_0
-00
TOTAL EXPENDITURES $80 790,790 $75 911 548 $59 051 732
9 9 9 9 ,
$2 118 071
, ,071
4O
SURPLUS/(DEFICIT) (4,080,582) (3,173,674) 0
Calculated using 3/4 of "2019-20 12 Months Actual" values and comparing to "2020-21 9 Months
Adopted" values.
(20 Positive variance indicates the Fiscal Year 2020-21 Adopted is higher than the prior year Actual.
Negative variance indicates
the
Fiscal Year 2020-21 Adopted is lower than the prior year Actual.
(3) See "—Sources of General Fund Revenues —Chevron Tax Resolution Agreement and "RISK
FACTORS —Certain
Risks
Associated with Chevron Tax Resolution Agreement."
Source: City of El Segundo
IWA
Agreement No. 6085A
Financial Management Policies
Reserves. City Council policy is to maintain reserves equal to 2W, of General Fund expenditures. For
Fiscal Year 2020-21, the amount budgeted to be reserved as of June 30, 2021 totals $15.7 million.
Additionally. the City Council lias maintained all [`,conOnlic 1,J11cel-tainty I�eservc totaling S2 nidlioll 1101-
several years. In Fiscal Year 2020-21 tile Econoillic (incertainty, Reserve totaled $1 million because
approximately $I million of the reserve was used I'()r one-time capital expenditures in Fiscal Year 2020-2 1 .
,,,Ile Fcollonlic [,111certainly lzeserve is expected to be replenished to its histolical balance of approxiniately
52.0 million 11IT011101 the Fiscal Year 202 1-22 buftvl process tish,61 funds received, under the American Rescue
plant wilich the City expects to receive in June 2021, Iliese reserVes. plus $157 million in unreserved fund
balance, equal 210/'o of budgeted expoiditures in Fiscal Year 2020-2k See - ('jeneral Economic Condition
and Outlook ofthe Ciry-Fiscal )'ear 2020-21 Xfid-)`ear Budget Update."
Invesionew Policy. The City has an investment police 011e "InVeStIlleni policy-) which establishes the
cash management and invesinnent guidelines, for tile Ch), Treasurer, The Investment Policy Pl'ovidcs that tile
Pity invests public funds in a prildent manner Nvith the primary ob�iecflves Of� in priority Ordcr� safety of
principal. adequate liquidity and investment rclunl. in conforl"lauce with State law and local statutes governing
tile investment of public, funds, '11je lilvestillent Policy provides that the City Treasurer will prepare a quarterly
report to ,Ile City council, C1tv Manager and Director of Finance lisfing investment transactions made during
the report period pursuant to State law. For niore information regarding the Investment Policy and the
investment of City funds. see the caption ------ I nvesinient of City Funds" herein.
Debt iWainigement Polict-, 'File City has also adopted a Debt Management Policy to provide
guidelines and parameters 1,01- the effective governance, management and administration of debt and other
financing obligations, issued by tile City and its related entities.
t"Infiended Actuarial lJobility Poliql% As described under the caption "PLAN OF REFINANCING —
Policies for Addressing Unfunded Retirement Costs," on March 16, 2021 the City, Council adopted the UAL
Policy.
Other Policies. The City also has adopted a Strategic Plan, an allocation policy for the revenues
expected to be generated front the Topgolf Agreements and a long term strategic plan, and is in the process of
developing as five year capital improvement lllalL
City Financial Information
Fund 7y/ws. The City maintains three Inain governmental fund types into which its revenues are
deposited: General Fund, Special Revenue Fund and Capital Prcsjects Fund.
The General FLuld is tIle general operating fund of the City. All general
revenues and outer receipts that are not allocated by law or contractual agreement to some other fund
are accounted rol- in this fluid. I.-.,xpenditures oftbis Fund include the coeneral operating expenses and
capital improvement costs which are not paid through other funds.
SqLjgI :P The Special Revenue Funds are used to account for revenues
derived from specific sources which are usually required by law or administrative regulation to be
accounted for in a separate fund.
a, jjj,Ljj_pL9j!tRy L The Capital Prolccis Fund is used to account for financial resources to
c_
be used for the acqUiSitiOn or construction of rna.jor capital facilities (other than those financed by
proprietary funds).
18
Agreement No. 6085A
Financial Statements. All governmental funds, including the General Operating Funds and, the
Capital ProJects Funds. are accounted for Using the modified accrual basis of accounting evenues are
recogniz.ed when they become ineasiffaWe and available as net current assets. "I'a xpayo-assessed taxes are
considered -nicasurable" when in the hands, of intermediary collecting governments and are recoginized as
C,
revenue at that time. Anticipated refunds of such taxes are recorded as liabilities and reductions of reventle
when they are measurable and their validity seems certain.
Expenditures are generally recognized under the modified accrual basis of accounting when the
related fund liability is incurred. Exceptions to this general rule include principal and interest on general long-
term debt which is recognized when due.
The City employs an independent certified public accounting firm to annually audit the City's
financial statements in conformity with generally accepted accounting, principles for governmental entities and
to review internal financial controls. The Comprehensive Annual Financial Report of the City has been
awarded the Certificate of Achievement for Excellence in Financial Reporting by the Government Finance
Officers Association for fiscal year 2019. The City has consistently been awarded the Certificate for sixteen
years. The annual audit report is generally available by April I of the succeeding fiscal year.
The following tables show the General Fund Statement of Revenues, Expenditures and Changes in
Fund Balance and the General Fund balance sheet for Fiscal Year 2015-16 through Fiscal Year 2019-20.
19
Agreement No. 6085A
TABLE
City of El Segundo
General Fund Statement of Revenues, Expenditures and Changes in Fund Balance
September 30, 2016 through September 30, 2020
2016 2017 2018 2019 2020
. . ..... . ...... -
Revenues
Taxes
Licenses and permits
Intergovernmental
Charges for services
Use of money and property
Fines and forfeitures
Developer Fees
Other revenues
Total revenues
Expenditures
Current
General government
Public safety
Public works
Community and cultural
Total operating expenditures
Capital outlay
Debt service
Principal retirement
Interest and fiscal charges
Total Non -Operating expenditures
Excess of revenues over expenditures
Other Financing Sources (Uses)
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund Balances, Beginning of Year
Fund Balances, End of Year
Source: City of El Segundo
$43,383,276
13.989,221
20.525
5,212,998
575,599
343,582
296,427
1,366,676
_$6_5jig,_304
$14,167,994
33,091,296
6,324,157
7.130,317
$60,713,764
$105.079
(15927,343)
S(1,822,264)
S2,652,276
$20,291126
S22,944,402
$49,956,068
13,131 ,485
7.461
5,533,202
432.685
356.142
329.474
1 ,955,143
$71,701,660
$53.092.545
13.695.476
5,744,333
555.735
451,366
262.346
2,111 ,483
$75,913,284
$54,976,589
14,547,206
5.587.521
2,171 ,633
564.631
106,723
2,588,236
$80,542,539
$47.730.729
14.234.600
4.307.599
3,392,762
273,083
110.876
2,548.226
$72,597,874
34-550.633
37.489.644
37,771,901
39,958,597
6,237,993
6,325.231
T 166,267
7,233,202
7.776.114
8,004.156
8,756,927
9,315,678
$63,441,719
$67,310,158
$71,852,475
$7494529844
$59,463
$64.673
$108.801
$15.704
47,402
50.727
54.286
39.620
143,273
139,714
59,463
151,695
302,801
209,704
$89200,478
$8,451,431
$8,3879263
$(2,064,674)
$346,446
$(2.502,345)
(3,541,121)
S(2,502,345)
S(3,194,675)
S5,698,133
S5,256,756
$22,944,402
$28,642,535
$28,642,535
S33,899,291
20
-
$140.000
$(3,350,000)
(1,249,000)
S(3,350,000)
S0,109,000)
$5,037,263
S(3,173,674)
$33ffl9,291
$38,936,554
$38,936,554
$35,762,880
Agreement No. 6085A
TABLE 6
City of E1 Segundo
General Fund Balance Sheet
September 30, 2016 through September 30, 2020
Assets:
Cash and investments
Restricted cash
Receivables:
Taxes
Accounts
Interest
Notes and loans
Due from other funds
Due from other governments
Advances to other funds
Inventories
Prepaids:
Total Assets
Liabilities, Deferred Inflows and Fund Balances:
Liabilities:
Accounts payable
Accrued payables
Retentions payable
Due to other funds
Due to other governments
Unearned revenue
Deposits payable
Total Liabilities
Deferred Inflow of Resources:
Unavailable revenues
Total deferred inflows of resources
Fund Balances (deficit)
Nonspendable
Restricted
Assigned
Unassigned
Total Fund Balances (deficits)
Total Liabilities, Deferred Inflows of
Resources and Fund Balances
2016
2017
2018
2019
2020
$19.037.738
$18,648.406
$249050.707
$27,382,430
$21110.069
-
-
1.000.000
2.643.380
4.482.363
3.689.983
5,115,526
4,578.726
5.358.485
4.566.739
910.640
350,068
532,735
680.132
552-739
129.858
176.678
270.638
343.028
290.487
48,265
40,609
46.387
46.544
17.500
1,747.532
1,182,658
1.511.964
491964
409.361
25,746
204.334
15.071
23.249
646.269
1.762.421
2,020,316
-
-
76,363
85.106
120.737
110.931
100.264
130,297
5,227,078
6.089.517
6,847,294
7,819.879
$27,558,843
$33,050,779
$38,216,482
$43,927,437
$4 0,995,670
$1,819,104 $1,843,080
1.812357
1.644.753
833
744
30,868
30,868
608.831
731.550
$4,271,793 $4,250,995
$1,577,558
$2.252.357
$1,266,119
2,036,987
2.115.542
2,265,341
15
4.382
2,336
27,181
-
-
30.868
30,868
30,868
644,582m
587,734 _.....
648.796
-........
$4,317,191
$4,990,883
$4,213,460
$3427648
$157,249
-
$1,019.330
$342,648
$157,249
-
-
$1,019,330
$2,017346
$7,373,109
$6,256,640
$7,004.769
$7.937.643
-
-
1,000,000
2.643.380
4.482.363
2,939,325
3,608,509
2,210,602
2,663,037
2,534,891
17,987,731
17,660,917
24.432.049
26,625,368
20,807,983
$22,944,402
$28,642,535
$33,899,291
$38,936,554
$35,762 880
$27,558,843
$33,050,779
$38,216,482
$43,927,437
$40,995,670
Sources of General Fund Tax Revenues
General. The City intends to make debt service payments on the Series 2021 Bonds from moneys
held in the General Fund. The General Fund accounts for resources traditionally associated with governments
which are not required to be accounted for in another fund. See APPENDIX A — "COMPREHENSIVE
ANNUAL FINANCIAL REPORT FISCAL YEAR -ENDED SEPTEMBER 30, 2020" herein. See Notes to
Financial Statements for additional obligations of the City. General Fund revenues for fiscal years ended
September 30, 2016 through 2020, are shown below, compiled from the City's audited financial statements.
21
Agreement No. 6085A
TABLE 7
City of El Segundo
General Fund Tax Revenues
September 30, 2016 through September 30, 2020
Source:
2016
.. 2017
2018
... ._..... ._.........
2019
2020
.......... ...._._
Sales Tax
$9,854,210'
$12,201,208
$10,794,018
S13,023,091
$12,006,731
Property Tax, levied for general purposes
7,467,281
7,642,088
8,816,248
9,244,457
9,771,825
Transient Occupancy Tax(')
7,597,007
12,876,631
13,885,312
14,598,200
8,283,596
Utility User Tax
6,394,482
6,173,892
7,724,282
7,421,219
6,488,837
Chevron Tax Resolution Agreement'')
5,381,035
6,589,528
6,330,422
6,171,627
5,902,063
Franchise Tax
3,063,819
2,865,581
3,823,851
2,709,760
3,350,323
Intergovernmental Revenues
1,390,099
1,423,717
1,597,050
1,705,443
1,855,899
Sales Tax in Lieu
2,235,342
-
-
-
-
Transfers & Reimbursements
-
183,422
121,361
102,792
71,454
Total Tax Revenues
$43,383,276
$49,956,068
$53,092,545
$54,976,589
$47,730,728
(') See the caption "—Transient Occupancy Tax," below.
('-) See the caption "—Chevron Tax Resolution Agreement," below,
Source: City of El Segundo
Transient Occupancy Tax. Transient occupancy tax ("TOT") accrues to the City at a rate of 12% of
room charges from the 15 hotels, inns, motels, tourists' homes or other lodging facilities within the City. TOT
has historically been the largest or second-largest General Fund tax revenue source, and has been the revenue
source most impacted by the effects of the COVID-19 pandemic due to the stay-at-home orders. Declines in
transient occupancy tax resulted from the shelter -in -place orders related to the COVID-19 pandemic, which
began in March of 2020. None of the hotels in the City are currently closed.
The City received TOT receipts of $8,283,596 in Fiscal Year 2019-20, representing approximately
11.4% of total General Fund revenues. TOT receipts were approximately 46% less than originally budgeted
amounts. The City's adopted Operating Budget for Fiscal Year 2020-21 budgeted for $7,524,570 in TOT
receipts, representing approximately 13% of total General Fund revenues. In its mid -year budget updated in
April 2021, the City reported that TOT receipts are projected to be approximately 38.9% less than budgeted
amounts.
As the U.S. population, as well as populations outside of the U.S., become more vaccinated and local,
state, and federal governments lift travel restrictions, the City expects leisure and business travel (and related
TOT receipts) will begin to see a recovery. Being in close proximity to Los Angeles World Airport and SoFi
Stadium, the City expects hotel occupancy rates will increase. The City currently anticipates TOT revenues
returning to pre-COVID levels in mid -to -late 2022. However, the City can provide no assurance that leisure
and business travel, and associated City TOT revenues, will return to levels seen prior to the impacts of
COVID-19.
Chevron Tax Resolution Agreement. In 2011, the City considered submitting a ballot measure to the
voters of the City which, if passed by the voters, could have resulted in the taxes owed by Chevron being
increased. In consideration for not submitting such a ballot measure to the voters for a certain period of time,
the City and Chevron entered into a Tax Resolution Agreement (the "Chevron Tax Resolution Agreement") in
2013. Pursuant to the Chevron Tax Resolution Agreement, Chevron makes certain payments to the City
annually (the "Resolution Payments") which consist of the difference between a base payment amount
(initially $11,100,000 in 2014, adjusted annually based on the consumer price index) and the amount of taxes
paid by Chevron which are received by the City (such as the City's share of ad valorem property taxes, the
utility users tax, business license taxes, sales and use taxes and franchise fees).
22
Agreement No. 6O85A
In fiscal year 2020, the Resolution Payments totaled approximately $5,902,063 and represented
approximately 12.4% of the City's General Fund revenues. The Chevron Tax Resolution Agreement is
currently set to expire in fiscal year 2028, and the City currently expects the Chevron Tax Resolution
Agreement will be extended into the foreseeable future under substantially similar terms. Chevron also has the
right to tenninate the Chevron Tax Resolution Agreement early under certain circumstances. If the Chevron
Tax Resolution Agreement is terminated, either by its current terms or pursuant to Chevron's early termination
rights, or if Chevron were unable or unwilling to make the Resolution Payments when due, there could be a
material adverse impact on the City's finances. See "RISK FACTORS —Certain Risks Associated with the
Chevron Tax Agreement."
City Assessed Valuation. The County assesses property values and collects and distributes secured
and unsecured property taxes to the County, cities, school districts- and other special districts within the
County area.
Set forth in the table below is a listing of the assessed valuations on taxable property in the City of El
Segundo.
TABLE 8
City of El Segundo
Net Taxable Assessed Value History
June 30, 2012 Through June 30, 2021
Fiscal Year
SE
Net Total
Ended June 30
Secured
Unsecured
Nonunitary
_...._..._
Assessed Value
_.._._ . ......
2011-12
.�
$ 8,048,755,437
�,90 .._.
$ 1,364,904,647
$ 33,916,548
9,447,576,632
2012/13
8,212,042,763
1,423,109,696
66,092,396
9,701,244,855
2013-14
8,422,193,698
1,862,068,112
24,374,386
10,308,636,196
2014-151' l
8,420,569,971
1,604,574,429
13,289,373
10,038,433,773
2015-16
8,881,342,698
1,736,530,165
37,902,192
10,655,775,055
2016-17
9,381,520,297
1,565,766,888
26,509,174
10,973,796,359
2017-18
10,734,607,722
1,480,972,901
26,412,903
12,241,993,526
2018-19
11,512,562,734
1,556,763,904
13,885,735
13,083,212,373
2019-20
12,640,966,136
1,551,504,304
8,424,647
14,200,895,087
2020-21
13,721,349,276
1,681,684,566
15,610,462
15,418,644,304
Average % Change
Percentage
Change
N/A
2.69%
6.26
-2.62
6.15
2.98
11.56
6.87
8.54
8.58
6.62
ai "*,"jvtaiwe grown in Fiscal Year 2014-15 is due to the correction of a misallocation of SpaceX unsecured value which
continued to be allocated to the City for several years after SpaceX moved to the City of Hawthorne.
Source: City of El Segundo.
Tax Levies and Delinquencies. The basic tax rate for all taxing entities within a particular tax code
area is $1 per $100 of assessed valuation in accordance with Article XIII A of the State Constitution. To this
may be added whatever tax rates are necessary to meet debt service on indebtedness approved by the voters.
The City uses the services of the County for the assessment and collection of taxes. City taxes are
collected at the same time and on the same tax rolls as are County, school district and special district taxes.
Taxes are levied for each fiscal year on taxable real and personal property which is situated in the City
as of the preceding January 1. For assessment and collection purposes, property is classified either as
"secured" or "unsecured," and is listed accordingly on separate parts of the assessment roll, The "secured roll"
is that part of the assessment roll containing State assessed property and property secured by a lien on real
property which is sufficient, in the opinion of the assessor, to secure payment of the taxes. Other property is
assessed on the "unsecured roll." Taxes on the secured roll are payable in two installments on November 1 and
23
Agreement No. 6085A
February I of each fiscal year and become delinquent after December 10 and April 10 respectively. 'faxes oil
unsecured property are assessed and payable March I and become delinquent oil August 31 it) the next Fiscal
year. A 10% penalty attaches to delinquent taxes on property (in the tulsecured roll, and an additional pen alt\
of 1- 1/2% of the delinquent taxes per month begins to accrue beginning November I of the fiscal year.
Collnn enc i in, in ,Nunn 1982. a I Vi) penalty %vas added to delinquent taxes which have been levied on
property on the secured roll (a 6% penalty is charged oil property taxes that became definqiwnt prior to .Iune
1982). In addition, property (,)it the secured roll %Ilh respect W which taxes are delintpwilt is declared to -be
tax -defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of
the delinquent taxes and the delinquency penalty, plus a redemption penalty of 1-1/2% per month to the time of
redemption. If taxes are unpaid for a pej.j()d of five years or more the tax-deflauiled prope"13, is declared to be
subJect to tile County Tax Collector's power of sale and may be subsequently sold within two years by the
County Tax Collector.
The following table shows the property tax levies and collections for the ten most recently available
fiscal years.
TABLE
City of El Segundo
Property Tax Levies and Collections
June 30, 2010 Through June 30, 2020
Fiscal
Taxes
collections
% of
Subsequent
Total
% of
YearM
Levied
Amount
Levy
Collections
Collections
Levy
�00 -� 10
_S6,345_, _0T3-
_$_6,117-,-4_16
9641%
$6,117,416
96.41%
2010-11
6,172,420
6,005,643
97.30
6,005,643
97.30
2011-12
6,006,864
5,990,455
99.73
5,990,455
99.73
2012-13
6,277,523
6,144,309
97.88
6,144,309
97.88
2013-14
6,680,795
6,558,427
98.17
6,558,427
98.17
2014-15
6,538,375
6,438,118
98.47
$55,500
6,493,618
99.32
2015-16
6,728,811
6,637,510
98.64
59,028
6,696,538
99.52
2016-17
6,853,422
6,773,927
98.84
39,950
6,813,877
99.42
2017-18
7,672,612
7,659,388
99.83
-4,958
7,654,430
99.76
2018-19
8,185,486
8,169,815
99.81
610,801
8,780,616
107.27
2019-20(21
8,929,004
8,183,987
91.66
8,183,987
91.66
(1) Fiscal Year ending June 30.
(2) Fiscal Year 2019-20 information shows delinquencies as of April 10, 2020; however, certain taxpayers did not pay property
taxes until after the April 10, 2020 deadline due to COVID- 19 and the City h,as received approximately 99'%) of its share of
Fiscal Year 20 19-20 properly laxcs.
Source: City of El Sep un(it) ('sAjj1prchovqivc Annual Financial Report for the Year Ending September 30, 2020.
Ma or Properl � Taxpqveq�,sars
'i . The following table sets, a list of the top ten principal taxye p
within the City as of Seplernber 30, 2020, the net Valuation Of then- pj'operly and the percentage which SUCIII
taxpayer's property represents a,rf tile total assessed V81Uation of tile taxable property in time City.
24
Agreement No. 6085A
TABLE 10
City of El Segundo
Principal Property Taxpayers
Fiscal Year Ending June 30, 2021
T aXITTer
Chevron USA Inc"I
Raytheon Company/Hughes
Sof-Xi Pct Two Tower Owner LLC
The Boeing Company
Aerospace Corporation
2120 Park Place Fee Owner California LLC
Northrop Grumman Systems Corporation
Sfii Flyte LLC
Pes Partners LLC
LVA5 El Segundo 777 Aviation LP
Total Top 10 Taxpayers
Total Taxable Value
Taxable Value
$ 2,599,235,317
641,014,630
631,376,670
438,918,088
331,393,318
221,747,049
209,975,482
174,299,900
174,022,673
173,400,000
$ :5..5)5.383,127
.....15* 44m ,. A
Percentage of
Total City
Taxable Value
16.86%
4.16
4.09
2.85
2.15
1.44
1.36
1.13
1.13
1.12
36.29
100.00%
See Sources Of General Fund Revenues —Chevron Tax Resolution Agreeue��t and "RISK FACTORS —Certain Risks
Associated Nvith Chevron Tax Resolution Agreement."
Source: Los Angeles County Assessor 2020-21 Combined Tax Rolls and the SBE Non Unitary Tax Roll.
The following table shows construction activity in the City for each of the last five fiscal years. The
City estimates that approximately 90% of the project valuation relates to commercial development.
TABLE 11
City of El Segundo
Large Commercial
Construction Values
September 30,
2016 Through September 30, 2020
Large Commercial
Construction
Other Projects
.,.._.
Totals
Fiscal
umber
� '
Total Project
umber Total Project
umber
Project
Total
Year
o
f
Value
of Permits Value
of Permits
Value
2016
5
$90,305,385
1080 $ 90,651,221
1085
$ 180,956,606
2017
10
75,021,210
982 169,069,044
992
244,090,254
2018
8
109,047,358
1051 179,334,432
1059
288,381,790
2019
15
202,868,692
868 150,102,568
883
352,971,260
2020
3
53,638,500
581 139,010,539
584
192,649,039
Source: City of El Segundo Development Services Department.
The following table shows the number of sales, average sales price and median sales prices for
detached single-family residential homes within the City by quarter for calendar year 2018 through the first
quarter of calendar year 2021.
►41
Agreement No. 6085A
TABLE 12
City of El Segundo
Sales Value History for Detached Single Family Homes
January 1, 2018 Through March 31, 2021
Full Value
Average
Median
Median %
Year
Sales
IT Price_
..... . Price......
Change _ .......
2018 Q1
19
$1 632,263
$1 525,000
2018 Q2
29
1,335,517
1,270,000
-16.72%
2018 Q3
27
1,436,389
1,390,000
9.45
2018 Q4
15
1,248,400
1,187,500
-14.57
2019 Q1
18
1,387,750
1,359,500
14.48
2019 Q2
28
1,379,000
1,267,000
-6.80
2019 Q3
21
1,489,667
1,445,000
14.05
2019 Q4
19
1,650,526
1,585,000
9.69
2020 Q1
20
1,302,700
1,318,750
-16.80
2020 Q2
14
1,405,143
1,319,500
0.06
2020 Q3
28
1,774,196
1,765,000
33.76
2020 Q4
26
1,828,000
1,831,000
3.74
2021 Q1
24
1,646,646
1,552,500
-15.21
Source: City of El Segundo.
Taxable Transactions
Revenues from taxable sales have ebbed and flowed with the econorny
most consistent revenue generating business types include Chevron,eof r stores,d,
taxableelectronics/appliances, and certain medical device and other manufacturers. The following table sets forth the
- City forcalendar afor data is available. •- also the caption
Sources of General Fund Tax Revenues" for a five-year history of sales tax receipts by the City.
TABLE 13
City of El Segundo
Taxable Sales
December 31, 2015 Through December 31, 2019
(In Thousands)
2015 2016
2017
2018
2019
ApparelStores
$36,695 $42,319
$38,013
$39,113
$37,460
Food
26,195 25,820
27,582
26,943
23,290
Eating and Drinking Places
146,056 162,428
172,069
184,145
183,985
Building Materials
6,154 6,422
4,752
5,092
4,667
Auto Dealers and Supplies
4,284 4,794
4,725
5,030
8,896
Other Retail Stores
. 354�4L) 381 6,1
a4.5 904
� ;,1l1.38 �
278,375
Total Retail & Food Services
573,793 623,390
593,106
570,712
536,674
All Other Outlets
538,755 695,049
549,387
577,592
699,081
Total
$1,112,548 $1,318,439
$1,142,493
$1,148,304
$1,235,755
Source: State Board of Equalization, California Department of Taxes and Fees Administration, State Controller's Office, The HdL
Companies
941
Agreement No. 6085A
Direct and Overlapping Bonded Debt. The Debt Report includes only such information as has been
reported by the issuers of the debt described therein and by others. The Debt Report is included for general
information purposes only. The City takes no responsibility for its completeness or accuracy.
TABLE 14
City of El Segundo
Direct and Overlapping Debt
(As of February 1, 2021)
CITY __OF F]
'Rig 0-21 Ase, ssed Valuation: $15.418.644.304
�Lv —EK —Jw 111�1_1 ( i —I,,\ r T 17 a1_4I SLSSkLFN'1 DEBT:
Metropolitan Water District
El Camino Community College District
El Segundo Unified School District
Manhattan Beach Unified School District
Wiseburn Unified School District
Centinela Valle), Union High School District
Centinela Valley Union High School District School Facilities Improvement District No. 2016-1
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT
jj,",�,T]z A 1 ±ILI�1) _DFAI:
Los Angeles County General Fund Obligations
Los Angeles County Superintendent of Schools Certificates of Participation
Los Angeles County Sanitation District No. 5 Authority
Los Angeles County Sanitation District South Bay Cities Authority
City of El Segundo
TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT
COMBINED DIRECT DEBT
14�,,A jj)LicaIflqDeh1 2! P21
0.472%
$ 152,126
12.141
54,499,772
100.000
84!955.859
0.002
3.774
72.617
84,067,094
35.198
79,996,591
39.704
7 ' 2.485-()08
$376,160,824
0.902%
$23.741,927
0.902
41,180
6.545
268,357
0.040
280
100.000
8,179,218 (1)
$32.230,982
(1) Excludes issue to be sold,
(2) Excludes tax and revenue anticipation notes. enterprise revenue. mortgage revenue and non -bonded capital lease
obligations.
Itatios-to 2020-21 Asse,�scd %1iLigjj7„gn:
Total Overlapping Tax and Assessment Debt ............................. 2.44%
TotalDirect Debt ....................................................................... 0.05%
CombinedTotal Debt ...................................... .......... 11 ............... 2.65%
Source: California Municipal Statistics, Inc.
27
Agreement No. 6085A
Outstanding General Fund Debt and Lease Obligations
The City currently has outstanding general fund debt and lease obligations described below. The City
has never defaulted on the payment, principal of, or interest on any of its indebtedness. Annual debt service on
the 2003 Parking Structure lease is scheduled at $194,000 annually until the final year (Fiscal Year 2037-38),
when paymems are expected to total $97,000. Annual debt service on the Douglas Street Gap Closure Project
lease are expected to be approximately $525,239 in Fiscal Yeah 2022-23 and decline annually until the final
year (Fiscal Year 2035-36), when payments are expected to total $507,005.
Following is a summary of the principal amounts of the City's outstanding long-term obligations
payable from the General Fund as of September 30, 2020.
TABLE 15
City of El Segundo
Scheduled Principal Payments of
Outstanding Long Term General Fund Obligations
(As of September 30, 2020)
2027 2022 2023 2024 2025 2026- 2031- 2036-
Toea!
2030 2035 2039
Capital Lease —200.3
Parking Structure lease $58,095 S62.,171 $66,533 $71,201 $76,196 $469-078 $.544,864 $676,765 $2,024,903
Facility Lease Douglas
Street Gap Closure Project") $.335,351 $344,975 $354,876 $365,061 $375„5.38 $2,045,683 $2,356,580 N/A S6,178,064
p yVh He this lease is a general obligation of the City, the City has historically made payments tinder this lease from traffic
mitigation fees, and expects to continue to do so in the future.
Source: City of El Segundo Comprehensive Annual Financial Report. for the Year Ending September 30, 2020,
Capital Improvements and Construction Funds
The City's adopted General Fund Fiscal Year 2020-21 Capital Improvement Program Budget totals
$5,597,057, consisting of $4,347,057 of unspent funds from prior fiscal years and $1,250,000 of new funding
from the Fiscal Year 2020-21 budget. The City's adopted General Fund Fiscal Year 2020-21 Capital
lrn'provement Program Budget contains a total of 24 projects which will either be active during Fiscal Year
2020-21 or will continue to accumulate funding for future activation.
Capital improvement projects which are paid for from funds other than the General Fund, such as the
Water Fund, the Wastewater Fund, the Golf Fund and the Solid Waste Fund, are accounted for in the budgets
for such funds.
The City is in the process of developing a 5-year Capital Improvement Program, which will be
incorporated into the City's Fiscal Year 2021-22 budget.
Potential Costs Related to Storm Water Improvements
In connection with increasing regulatory focus on mitigating storm water runoff and resulting
discharge of pollutants into the Pacific Ocean, in April 2016, the City, in cooperation with the cities of Santa
Monica and Los Angeles, and the County of Los Angeles, along with the Los Angeles County Flood Control
District (collectively, the "Jurisdictional Groups 2 and 3 of the Santa Monica Bay Watershed" or "Santa
Monica Bay JG2/JG3 Watershed") submitted an Enhanced Watershed Management Program ("EWMP") for
the Santa Monica Bay watershed portion of the City, as part of the City's compliance with the City's National
Pollution Discharge Elimination System Permit ("NPDES Permit"). Similarly, the City, in cooperation with
the cities of Los Angeles, Carson, Hawthorne, Inglewood, Lawndale and Lomita, and the County of Los
28
Agreement No. 6085A
Angeles, along with Los Angeles Counly Flood Control Disiricl (collectively, the 'Dominguez Channel
Watershed") submitted an EMWP for the Dominguez Channel watershed portion of the City.
Tile most siellificant crimpollent Of the EWM I's was the development ot, a list ol'projects that would
no les Regional Water QUalitY C0111rol
aclije\,c tile desired polilltarlt NJUC0011 level,, as required by tile Los A ge
colls1ructioll cost(for all of'Santa MonicaBoard (tire "Reoirinal Board"). Prehillinary estilliat Of jle tot,al n1p, froni $ 12.2 in i I I ioll tO
estinlated annual operatint' COSIS rallO
Bav JG11JG3 Watershed) is S649 nifflion With i
$, the total consmldi011 costs (for Dorninguez Channel Waiershed) S
_��8 njillion. preliminary estinuites Of
$1.25 billion will) estimated annual operatingeost of'"approximately $143 million.
individual contributions would be based oil their rel,,ttive pl-oportional
The watershed agencies' indiv stimated Iiiecycle construction costs 111rotiall 2035 for the City fOr the
geogj�apllic tributary area. PrelinlillarY c -aliolls and maintenance Costs
3
Santa Monica Bay JG211G3 Watershed is $22 million. With estinrated annual (:)pe . I -ought
2035 for the
esuniated lifecYcic construction Costs thr
t'ang ing front $9W000 to $ I � 100,000. plcl'lllinat`N ill, estimated annual operations arid
47, -11 -stied is $23.7 million. w
.,,ily r()r the Dominguez ClIallnel Wales
Y and
ofapproxinlatelN $210-000, Thei-efore, after combining the cost of both watershed areas in
ilia in tenance Cos $45,7 njillion, and the estimated annual operating
the City, tjje estimated construction cost f0l' tile City` is
maintenance costs "all'"ing from $ 1,1 go,000 to $1,320,000
t l�
iding tile City) do 'lot have sufficient "unds 10 "Ifiel
lienthe isted
The Watershed agencies Onch
projects'. S111ce a fundillplar, is
not, required as a NPDES Permit requirement, the development Of tile FWMP
,
funding remainsEWMa larg
cornpliance with the NPDFS PCI-Illit, 110we`e`, e issue thal
In November
in 2015 kept the City p0llLnant reduction deadlines identified ill the P
must be resolved to con'PlY Will' tile
2018, MeasUre W. tile Safe, Clean Water Program was successfully passed with Inore that' twwaa thirds of the
'file teVelhie Collected is calculated from the Los Angeles County PYOPCrtY tax.
Los An,,�Tles County vote Fiscal Year, '1020-21 is estimated to be
assessment rota:. Re allocationre of MeasuW funds to the CiiY
rovision wands
provide tile for OTY With an annual allocation to be used
$850,0K NjeasLil-e W has no sunset 1 p1 , 11:itigation efforts. The CilY estimates that the City will have to fund
for° ill1proving st(grn water clef ality and I" 0olher sources. The City is e\ ploring various grant$ and
approximatclY S340,000 to $490,000 01111U'�AIIY 1�111 projects to rijifill tile regulatory requirements.
evaluating alternative lower cost capital inll)Mve nient
, with the j��Wlyip (or potential penalties resulting, from
There can be no assurances that COnlPliallce iditures of significant amounts rj�orii the
failure to comply) and the NPDES per-tIli, will meat require expel
General Fund in the future.
Investment of CRY Funds
The City and its co"TIPOTIC"It
units are general]),, authorized under its irivcstnle'll policy and Section
al resolutions jo invest in del liand deposits
53601 of the Califorilia GOV011111cm Code, bond indentures and l,oc -11 a ell )
jancial hjsjjrrjtions�, savings accounts„
certificates or deposit', tj,S, Treasury securities' 1eder, 9 c'
with I'll s: colninercial paper, Joint Powers
SCCUl'itiCS: slate of California notes or bonds inedium terrn coi,porate note
Authoritpool, Supranational ON ions-, ad tile Local Agency Investment Fund ofthe State of Cali fornia.
I tile ill\aestrt)ern \,ellicles atilhrize od under
The ("ity's 'investment policy allows,t for thenpurchase of most of
Section 5360 1 of tile (*aflfonfla Government Code. The city and its COMPOrletit unitsith
hat7
heave 31SO established guidelines for security purchases
L,ocal agency bonds cannot exceed 100,1'� of [tic CitY's PO"trol'ofive-
investment limitations as five-year
ast Treasury and agencv obligations cannot exceed a
year maturity and must be rated at le elicy obligations cannot exceed I V� of tile
and California ag
njanlrity. Califtimia state and local obligations ,
Cityl,s total portfolio , 'olio or a five year maturity. Commercial paper may not exceed 270 days n-lawrity or of
the City's total porifolio, with all additional limit of P,14 per issuer, Negotiable certificates, of . deposits may 1101
rtfoho� Placement service deposits and placement ser"ce c""cales of
exceed 30% of Itle City's total po CityS total portfcjjoa Medil.11111 Wrin corporate tjoles may not exceed 15%
deposit nlay not exceed I W16 of tile
29
Agreement No. 6085A
of tile City's total portfolio (with an additional I inih of'3% per issuer), cannot exceed a five-yearterm and m us I
be issued by a U.S. corporatiori with assets in excess of$500 million with at least an "A" ratin-gi, Mutual funds,
and money market funds, may not exceed 5% of tile City's total 110111'OhO. Collateralized bank deposits cannot
exceed a five-vear maturivy. A joint po%vers authority pool cannot exceed 3011,'i, of [Ile ( ity*S total P01-tfolio.
:
Supranational obligations cannot exceed 10% Ofthe City's total 1) 0ri'folio or a five-year maturity and must be
rated "AAA." the City's ii'vestinent policy specifically prohibits investments in bankers' acceptances,
repurchase agreements and reverse tVpUrCI1aSC aorcenients, mortgage pass -through securities, county pooled
investment funds and the Vohnitary Investment Program Fund. Investments in the Local Agency Investment
Fund are permitted up to the legal limit.
Under the California Government Code, a financial institution is required to secure deposits made by
state or local governmental units by pledging securities held in the form of an undivided collateral pool. The
I pledging
market value of the pledged securities in the collateral pool must equal at least I IVY�� of the total amount
deposited by the public agencies. California law also allows financial institutions to secure City deposits by
pledging first trust deed tnortgage notes having a value of 150% of the secured public deposits.
As of March 31, 2021, 9.6% of the portfolio consisted of federal agency notes and U.S. Treasury
securities, 37.2% invested in liquid state investment pools, 7.2% in high grade corporate notes, 1.2% in
SUPRAS, 6.1% in Municipal Agency Bonds, 19.1% in Cash and 19.5% in certificates of deposit. The average
inaturity of tile portfolio was 350 days. As of March 31. 2021, [lie market value of the City's investment
porifolio was $106,45k322 and the hl\oesnilclit portfolio's book value was $105,005,770. The following table
Summarizes certain inforination relating to the City's investment porti'61 io as of'March 31, 2021:
Z�
TABLE 16
City of El Segundo
Investment Portfolio Summary
(as of March 31, 2021)
Type of vestment Book Value
—Cash
Local Government Fund 39,052,567
US Treasury and Agency Note 10,091,675
Medium Term Notes & Supranationals 8,856,931
Certificates of Deposit 20,472,268
Municipal Agency Bonds __L).453,022
Total $105,005,770
The portfolio represents cash and investments across several funds. The General Fund represents
approximately 2P,o of the total portfolio and the general Capital improvement Project Fund approximateiv
5�,4�; the Insurance Reserve Fund, approximately M; the Water, Stormwater and Wastewater Utility Funds
approximately 380?,,,'); and various Street and Road Funds (e.g. Gas Tax, Prop A, Prop C, and Measure R)
tovedier total about 5%. The remaining funds comprise 0% to 5% of the total..
City Employees Retirement Program
The City contributes to CaIPERS, an agent multiple -employer defined benefit pension plan for
miscellaneous employees and a cost -slia rjn p multiple-ernployer defined bellefil plan for safety ernploycM
CalPERS acts as as coninion investnieni and administrative, agent for participating public entities within tile
State of California. All pentianel-it City citiployees are eligible, to participate in CAPERS, Participants in tile
plan vest alter 5 years of employment. The City has a two -tiered ("Classic" and "New") retirement plan NOth
benefits varying, by plan, All plans provide redrenient and disability benefits, annual cost of living adjustments,
and death benefits to plan members and beneficiaries.
30
Agreement No. 6085A
1--or -classic', en1pj()N,ees. tile City has three defined benefit plans: Police i " Tier g11 50,-'Y "'O"ce
2 d I" Tier (-2'�,!6 al j-) and M iscellancous
Tier ("3% at 55), Fire C-31`0' at 55"), Miscellaneous 52`1 1 iel (-20,,6
at 60"). IsnplOyVcs rcccive annual retirement benefits calculated based on age at rethVII)CM, Ycats o"
membership service and the amount of earnings based on the highest consecutive 12 months average.
"New" members are defined by the California Public 1'niployees' pensi(ni Reform Act (PEPRA),
which took effect in January 2013. "New" members to the safety service (Police and Fire) are subJect to a
2.7%o at 57 forrtlula, while non -safety -New" ineinbens receive a 2% at 62 plan, Frilployees receive annual
retirement benefits calculated based on age at retirenlentyears of membership service and the an'lount of
earnings based on the 111glICS1 an]ILI,31 Average during a COTI&CCUtiVC three-year period. Mandatory employee
Pell S ton colitri butioi is are also included in the formulae for the "New employee tier.
Effective during fiscal year 2012-2013, City employees commenced payment of the employee portion
of pension contributions, which were previously paid by the City on the einployees' behalf. Additionally,
Classic" mernbers of the Fire f Igh, te rs Association,
Police Officers' Association and Police Management
Association commenced cost sharing 3,1,ja of they Employer portion of the pension contribution (the cost sharing
contributions are reflected in the Employer paytrients in Table 17).
Section 115 Retirement Trusts. In 2008, the City established a Section 115 trust fund through
CalPERS dedicated to prefunding OPEB costs (the -OPEB 115 Trust"). In Fiscal Year 2019-20, the City
made a voluntary contribution of 5548,000 to the OPEB 115 Trust. As of March 31, 2021, the balance in the
()P[I'B 115 "frost was approximately S31.1 million. The City's total OPEB liability was $55,862,000 as of
September 3,0, 2020. The liability is 56% funded.
The City has also established a Section 1] 5 trust fund dedicated to fund pension costs (the "Pension
1] 5 Trust"). In Fiscal Year 20 19-20, the Cite made a voluntary contribution of $1.56 million to the Pension
115 'I'ttist. The City also made; discretionary contributions to the Pension 115 Trust in the amounts of
$1,000,000 for Fiscal Year 2017-18 and $1,455,000 for Fiscal Year 2018-19. As of September 30, 2020, the
balance in the Pension 115 Trust was approximately $4.5 million.
City Contributions. The following table shows City contributions to CalPERS for Fiscal Nears 2016-
17 through 2019-20, as %ve11 as expected contributions for Fiscal Year 2020-21. The following table does not
include discretionary payinents which the City has made to CalPERS in the amount of $1,901,141 for Fiscal
Year 2017-18, $1,500,000 for Fiscal Year 2018-19. S44,831 for Fiscal Year 2019-20 and $56,757 for Fiscal
Year 2020-21.
KE
Agreement No. 6085A
TABLE 17
City of El Segundo
Historical and Projected Payments to CalPERS
Fiscal Year Ending June 30
2021
2017 2018 2019 2020 (Estimated)
Police
Employee $ 190,009 S 703.541 $ 703,355 $ 932,188 998.0337
Employer
,1()().101 �5,023�7LS _5.205.985 6� 1.58.12
__5,325.564 �—
Subtotal $ 4,350,109 S 5,727337 $ 6,028,919 $ 6,138,173 $ 7,156,160
Fire
Employee
$
490,246
517,926
$
530,598
702,816
$
717,643
Employer
--2
,6 6 7 �01 3
_4 �3308.()Q�
4392235
4
_ �201570
5.053.862
Subtotal
$
3,157,259
4,825,935
$
4,922,832
$
4,904,386
$
5,771,505
Miscellaneous
Employee
$
835,390
$
857,953
S
849.628
$
933,527
S
971376
Employer
2.371.879
J 290.3225
_33.592=N4
1583,473
3J.51336
Subtotal
$
3,207,269
$
4,148,281
$
4.442,433
$
41517,000
S
4,726,7 12
Total
$
10,714,637
$
14,701,553
$
15,394,184
$
15,559,559
$
17,654,376
Note: Includes both "Classic" and "New" tiers,
Source: City of El Segundo.
'I'llese costs have significantly increased in the past several years due to a variety of reasons, including
the investment performance of Call'[,,RS being less than the actuarially assumed rate. CalPERS recently began
implementing risk mitigation strategies that will result in large increases in annual pension Costs to public
7
agencies., due to changes in actuarial smoothing and mortality assumptions to help ensure the pension plans are
fillancially sound and that they become ILilly funded.
Funded Status and Funding Progress. The following table shows the City's historical funding
progression for 2016 through 2019, as of a June 30 actuarial valuation date.
Lire L)lan"I'lie funding history below sbows tile plan's actuarial accrued liability, share ol'the pool's
'z�
market value ofassets. share of the pool's unfunded liability, Funded ratio, and anntlal covered payroll, A
portion ol'the Series 2'021 13(mcls Nvill be used to refund 95"',) of flie City's prqjected share ofthe Unfunded
liability with respect to the classic Safety Fire Plan as of June 30, 2021. On March 29, 2021, the City prepaid
its share of tile unfunded actuarial accrued liability with respect to the PEPRA Safety Fire Plan.
IN
Agreement No. 6085A
Valuation
Date
6/5 �1201 6
6/30/2017
6/30/2018
6/30/2019
Valuation
Date
65-0—/20I C
6/30/2017
6/30/2018
6/30/2019
Accrued Liability
(AL)
$123,910,094
127,536,454
135,324,593
139,980,915
Accrued
Liability (AL)
$126
58,990
184,878
374,547
TABLE18A
Funding History — Safety Fire Plan
Share of Pool's
Market Value of
Assets (MVA)
$75,587,182
78,069,645
91,271,255
84,642,531
Plan's Share of
Pool's Unfunded
Liability
$49,322,912
49,466,809
54,053,338
55,338,384
TABLE18B
Funding History — PEPRA Safety Fire Plan
Funded
Ratio
61.00%
61.20
60.10
60.50
Share of Pool's
Plan's Share of
Market Value of
Pool's Unfunded
Funded
Assets (MVA)
Liability
.—Ratio
$1 . 17
- $9
92.70%
59,256
-266
100.50
173,752
11,126
94.00
359,546
15,001
96.00
Source: CalPERS Actuarial Valuation for the Fiscal Year ended June 30, 2019.
Annual
Covered Payroll
$5,848,307
5,135,365
5,027,033
4,635,653
Annual
Covered Payroll
$69,355
394,591
443,661
709,002
L')CILIce I last. The fundine history below for the Police Plan shows, the plan's actuarial accrued liability,
sjjaj°c of the pool's market value of assets, share of the pool's unfunded liability. funded 1,atio, and annual
covered payroll. A portion of the Series 2021 Bonds will be used to rebind 95% of the cjjy*s, projected share
of' the Infundcd Liability with respect to the classic Safety Police First Tier Plan as of June 30, 2021. On
March 29, 2021, the City prepaid its shat-e of the Linfunded actuarial accrued liability with respect to the classic
Safety Police Second Tier Plan and the PEPRA Safety Police Plan.
TABLE18C
Funding History — Safety Police First Tier Plan
Valuation
Accrued
Date
Liability (AL)
6/30/2016
$136,795,167
6/30/2017
142,685,849
6/30/2018
154,043,676
6/30/2019
159,445,368
Share of Pool's
Market Value of
Assets (MVA)
$83,442,435
88,089,481
94,231,910
98,060,383
Plan's Share of
Pool's Unfunded
Funded
Lia.b!—Tx—
-- Ratio
. ...
$53,352,732
61.00%
54,596,368
61.70
59,811,766
61.20
61,384,985
61.50
mi
Annual
Covered Payroll
$7,453,262
6,837,618
6,224,875
5,788,244
Agreement No. 6085A
Valuation
Date
6/30/ 0016
6/30/2017
6/30/2018
6/30/2019
Valuation
Date
6/30/2016
6/30/2017
6/30/2018
6/30/2019
TABLE 18D
Funding History - Safety Police Second Tier Plan
Accrued
Liability(AL)
$125,583
176,387
356,925
540,878
Accrued
Liability (AL)
$34,417
98,489
246,001
479,755
Share of Pool's
Market Value of
Assets (MVA)
$76,815
126,222
305,370
487,118
Plan's Share of
Pool's Unfunded
Funded
Liability ...... _
Ratio
$48,768
61.20%
50,165
71.60
51,555
85.60
53,760
90.10
TABLE 18E
Funding History - PEPRA Safety Police Plan
Share of Pool's
Market Value of
Assets (MVA)
$20,937
84,635
228,060
456,275
Plan's Share of
Pool's Unfunded
Liability
$13,480
13,854
17,941
23,480
Source: CaIPERS Actuarial Valuation for the Fiscal Year ended June 30. 2019.
Funded
_Ratio
60.80%
85.90
92.70
95.10
Annual
Covered Payroll
$115,461
120,719
350,252
367,441
Annual
Covered Payroll
........
$115 929
355,591
617,158
1,058,935
MiscelIgneou Plan. The table below shows the recent history of the actuarial accrued liability, the
market value of assets, Wthe funded ratio and the annual covered payroll. A portion of the Series 2021 Bonds
will be used to refund the 95% of the City's projected share of Unfunded Liability with respect to the
Miscellaneous Plan as of June 30, 2021,.
Valuation
_ Date
6/30/2011
6/30/2012
6/30/2013
6/30/2014
6/30/2015
6/30/2016
6/30/2017
6/30/2018
6/30/2019
Accrued
Liability (AL)
$85,636,534
88,576,580
92,232,744
99,490,182
102,755,845
107,397,803
112,779,110
119,367,106
122,659,578
TABLE 18F
Funding History - Miscellaneous Plan
Market Value of
Assets (MVA)
$62,932,580
61,098,674
67,308,516
77,455,103
77,033,230
74,830,156
80,505,505
85,063,117
88,083,194
Unfunded
Liability
$22,703,954
27,477,906
24,924,228
22,03 5,079
25,722,615
32,567,647
32,273,605
34,303,989
34,576,384
+�arouu'c: wll'Bat� sae°tuarial Valuation for the Fiscal Year ended June 30. 2019.
Funded
Annual
Ratio
Covered Payroll
73.50%
$12,060,572
69.00
12,893,586
73.00
12,779,651
77.90
12,746,683
75.00
12,604,956
69.70
12,628,772
71.40
12,452,471
71.30
12,689,829
71.80
13,240,098
Post Employment Benefits. The City also provides postretirement medical benefits ("OPEBs") under
an agent multiple -employer plan to employees who retire directly from the City under CaIPERS, with age and
service requirements that vary by bargaining unit. For eligible retirees, the City contributes a portion of the
premiums for the medical plans selected by retirees, generally consisting of total payments of approximately
$245,000 to $250,000 per month laid directly to the employees. Benefit provisions for Ca1PERS are
established and amended through negotiations between the City and the various bargaining units.
Wil
Agreement No. 6085A
I 'Ile cav contracts with CaIPERS to participate in the Public l-,"inployce Medical and hospital Care
e
Act [Jnder this comract, both active empfoyees, and retirees are acc ss provided , to heahlA
insurance. The City makes a Contribution to retirees "110 elect 10 pul�cha,, ,e irlst.11-arwe through (,"all?ERS, This
contribution is mandated by Assembly Bill 2544 and is adjusted annually by CaWERS, The plan is financed
via actuarially determined contributions deposited into the California Employees' Retirement Berlefil Trust
("CERBT") managed by CaIPERS.
The contribution requirements to the City's OPEB plan are established and may be amended by the
City Council, and the annual City's annual contribution is based on the actuarially determined contribution.
For the measurement period ending June 30, 2020, the City's contributions were $548,000 to the CERBT
Trust, 53,374,434 in premium payments, administrative expense of'S9,028 and the estimated implicit subsidy
was $494.25(). resulting in total payments of" S4.425,72 1.
2�
In order to comply with Government Accounting Standards Board Statenient 75, the City regularly
conducts an actuarial valuation of its OPEB obligations to determine its Net OPEB Liability. As described in
Note 9 in in APPENDIX A — "COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR -
ENDED SEPTEMBER 30, 2020," the City's Net OPEB liability as of September 30, 2020 (using a June 30,
2020 measurement date) was $29,126,015.
For a detailed description of the City's pension and OPEB obligations, see Notes 8 and 9 in
APPENDIX A — "COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR -ENDED
SEPTEMBER 30, 2020."
City Insurance Program
The City is subject to a variety of workers' compensation and liability claims from time to time. The
City maintains various insurance as described below.
The City adopted a self -insured workers' compensation prograin that is adin in isle red by a third party
administrator. The 01N, is sel f-insured for the first $500,000 on each claim (,Sel F- Insured Remit ion or "SIR"i.
Insurance coverage in excess of the self -insured amount is provided by the Independent Cities Risk
Manaaentent Authority ("ICRMA") pool for thefirst $1,500,000 in excess ofthe SIR, The amount in excess of
-
$1,500,00(� is insured by a private insurance company up to statut(!qy lijilits. 'I'lle Chy is also Self inSUredfor
the first $750.000 oil e�ich general liability claim against tile Cit,\P. Insurance covet -age III excess of tilt' self -
insured amount is provided by 111clependent Cities Risk, Managetnerit Authority ('-ICRMA") up to a finift of
$2,000,000, and by multiple private insurance companies for an additional S33,000,000, ICRMA is considered
a self-sustaining risk pool. Claims expenditures and liabilities are reporied when it is probable that a loss has
occurred and the anjoutil ()f that loss call be reasonably estinialed. 'these losses, include an estimate o'c a
that have been incurred but not reported. At September 30. 2020. the attIOUIlt, of these liabilities was
$12,926,000. The amount represents an estimate of $6,787,000 for reported claims through September 30,
2020, and$6,139,000 ofesdinaied incurred but not reported claims.
The City -rently operating as a common risk
� is a mertilber of the ICRMA. a public entity risk 'is k pool cui
nianaocnicill and insurance prograin for 16 cities, 'file City pays all annual premitin-I to tile Pool 1`017 its excess
I The Cit - all other risks of' loss,
general liability insurance coverage. y carries, commercial companies lot
including, property insurance including earthquake and flood, auto physical dainag,e ilISUrance and special
events insurance.
For inforntation conceming the City's insurance program, see Note 10 in APPENDIX A —
"COMPREHENSIVE ANNUAI,,,, FINANCIAL REPORT FISCAL YIEIAR-ENDED SEPTEMBER 30, 2020."
9si
Agreement No. 6085A
Public Safety
The City provides police and fire services to the conjilluility. There are two fire stations within the
police station serving the City with 65 sworn personnel.
City and 30 sworn J10siti011s. There is one
Street and highway maintenance is under the supervision of the City's Public Works department.
Building inspection and code enforcement services are provided by the City.
hasers o 'ihe Series 2021 Bonds shov1d cejj°e, ) - all possible fticlors that
PrvSPC,ViV(1 12M,e i � Val plij � coj?sj()ei
,)lay qt P1 d bveresl oil the Series 2021 Be.oOS, The Scwies 20'21
�'ect the abiMy ofihe Cilv to twl inc
Bonds tnav new be tj spilelble invesiwiewfbr 4)IIP)"o.vlie,iii,epurchasei-s.
,tl(pig with the other
�(flcial Staien'leni, should be
The fidloliling ing
-s in evahiating the parchase 00he StTies 2021 ftonej.s. llovvever, the.16flo),
consid,red b.y Potential inlyesiol
,t�)g-j t��) he on c jqj�jg q risk,� and other whh,',h niml, be relevant lo an
cicrcas 110, pi1q, �Yhwtslive / , (hal other risk jaclors svill not beconie
in the Series 2021 Bopu,,& and there con be 17o, qssuraiice
Inellerial in Illejulure. b, aeldition, the order ill Which fhejbllov'Jolg fi,100;%s ore provnted is not intended io
rqflecri the relaiive jp!pj1,)orwnce of an.ysuch risks,%
City Obligations
Tile city has other obligations payable l"i-oln its General Fund and other lavvfUll), available funds of tile
City, including brit not linlited to debt obligations, lease obligations and cel*taill other liabilities. "flie Trust
,
Agreement does not prohibit The CoulltY from ineurrino additional debt. lease ol other obligatioi Is payable
yable
from the City"s General Fund and other Javvfully available funds in tile future (including Additional Bonds to
finance pension I 1ability), which rilay reduce City nioneys available to pay the Series 2021 Bonds.
In addition, although tile Series 2021 Bonds are payable from all lawfully available funds of the City.
the City has no obligation to levy taxes in order to raise sufficient repay to , y the Series 2021 Bonds. See
the caption CVFY FINANCIAL INFORMATION, Other lridebtcdness" for a description of' tile City's,
current obligations.
Certain Risks Associated with Sales Tax and Other Local Tax Revenues
For the past several Fiscal Years, sales tax revenues have been the second largest source of General
Fund revenues to the City.
Sales and use tax revenues are based (,porl tile gross receipts of'retail sales, of tang6ble goods and
products by retailers vviih taxable transactions in the City. which could be impacted by a variety of factors. For
example. in Ittles ofeconomic recession, the gross teceip ts of retailers often decline. and such a decline \vould
cause the sales tax revenues received by I the City
ty to decline. An econoinic recession would also be expected to
affect hotel occupancy within the City. and consequently, ti,ie City's receipt of transient occupancy taxes. Ill
particular., the Citv'S transient Occupancy tax receipts experienced significant reductions Fiscal Year 2019-20
due to the COVID-19 outbreak. See tile cajpflons "THE CITY_COVID-let Outbreak" and "— City I"Inancial
Information."
Ill addition, changes or ainendinents in the laws applicable to tile CitY's receipt ()F sales tax revenues
or other local taxes, whether irriplemented by State legislative action or voter ' illitilltivc. including any initiative
by, City voters under Article XIHC of tile California Constitution, could have an adverse effect Oil sales, tax
reVCnUCS received by tile City, See tile captiOn "CONSTIT[JTIONAL� AND STATUTORY LIMITATIONS
ON TAXES AND APPROPRIATIONS."
36
Agreement No. 6085A
1:inany. niany cato - ories of 'transactions are, CNe"'Pt Iron, the State%N,id,e sales lax. and additional
z' I - hurtlan cOns"I"Pli011 3re
cajc,�,ories could be added in tile future, Currently. most sales of food products f6i
- s x
exempt; this excull)tion, lloweve1% does not appi to ficluoi of to le usurant meals, ]'Ile rate of la, levied
on taxable transactions it, the City or [lie fee charged by the State Board of I"qualizaflon for administering the
I -
City's sales tax could also be changed.
Certain Risk Factors Associated With Chevron Tax Resolution Agreement
As described under the caption "THE CITY —Sources of General Fund Revenues Chevron Tax
Resolution llgree)nent," in 2013 tile City entered into a Tax Resolution Agreement with Chevron pursuant to
which Chevron pays certain Resolution Payments to the City. In the past five fiscal years, the Resolution
Payments have ranged from S5.381 .035 to k,589,528 kind have averaped approximately I2.211/o of the CitN's
total General Fund revenues each year.
The Tax Resolution Agreement provides both the City and Clievi-oil with the right to terminate the
Tax Resolution Agreement early, and the Tax Resolution Agreeinem is currently scheduled to expire if' fiscal
year 2028.
If the Chevron Tax Resolution Agreement is terminated, either by its current terms or pursuant to
y
Chevron's cask termination rights. or if Chevron Were Unable or unwilling to make the Resolution Payments
when due. there Could be a material adverse impact on the City's Onallces. There is no assurance tile I ax
RCSOIL1001 Agreement will be extended under substantially sinliI31- tel-Ills. Moreover, the City, can provide no
assurance Chevron will c()jjtjnue to make the Resolution PaylnNits when due.
Assessed Value of Taxable Property
PropCrt)l taxes are the largest source of the City's General Fund revenues. Natural and econonlic
twithin Ile City. ']'he City is located in a seisinically
forces can affect the assessed value of taxable property
active region, and damage from all earthquake in or near the area could cause extensive damage to taxable
s flood, fire, wildfire, ongoing drought, to,\iic dumping,
pi,operIN I Other natural or nianinade disasters, such a 1� 11 11:
erosion or acts of terrorism, could cause a reduction in the assessed value of taxable propertN, within the City.
See the captions "—Natural Disasters" and "—Hazardous Substances."
In addition, economic and market forces, such as a downturn in the regional economy, could affect
assessed values, particularly as these forces migli reverberate in the residential housing and commercial
property markets as has been experienced in the past. In addition, the total assessed value can be reduced
tIlrouoll [Ile j-eclassificaiion of taxable property to a class exempt from taxation, whether by ownership or use
(such as exemptions for PT-OPertY Owned by State and local agencies air(] property used for qualified
educational. hospital, charitable or religious purpo!SC4
Reductions in the market values of taxable property may cause property, owners to appeal assessed
values and may, also be associated With an Increase in delinquency rates for propert)P taxes. Section 2(b) of
Article XIIIA of the State C011stitUtiOn and Section 51 of the State Revenue and Taxation Code, which were
adopted pursuant to Proposition 8, which was adopted in 1978, require the County assessor to annually enroll
either a property's adjusted base year value (tile -Proposition 13 Value") or its current market Value, whichever
is less, When, the CUrr011 market Value replaces tile higher Proposition 13 Value oil tile assessor's roll, such
lower value is referred to as the "Proposition 8 Value."
Afthoutyll the annual increase for a Proposition 11 Value is limited to no more than 2'I4,r, the same
restriction does not apply to a Proposition 8 Value. The Proposition 8 Value of' a property is reviewed
annually as of January 1; the current market value, must be enrolled as long as the; Proposition 8 Value falls
below the Proposition 13 Value. Thus, any subsequent increase Or decrease in market value is enrolled
regardless of any percentage increase or decrease. Only when a current Proposition 8 Value exceeds the
37
Agreement No. 6085A
Proposition 13 Value attributable to a piece of property (adjusted for inflation) does a county assessor reinstate
the Proposition 13 Value.
Decreases in the assessed wPaltue of taxable propertywithin the City resulting from a natural disaster or
other calautr�ity, economic recession. reclassification by ownership or use or as a results of the implementadon of
Proposition 8 all may have an adverse impact on property tax collections by the City, and consequently, the
General Fund revenues that are available to make debt service payments on the Series 2021 Bonds.
Increasing Retirement -Related Costs
The City is required to make contributions to CalPERS for City employees and retirees and made the
last annual required contribution to the OPEB Benefit plan in Fiscal Year 2019 for City employees and
retirees. The City has an OPEB trust that is 52% funded and requires no new City contributions after FY 2019.
The CaIPERS obligations are a significant financial obligation of the City and could increase in the future.
Actual contribution rates will depend on a variety of factors, including but not limited to actual investment
returns and future changes to hencfats or acmarial aSsunrpt�ions. The City notes that pension contributions in
future nears may increase as a r stint of losses in CalP RS' portfolio resultinu, from stock market declines in
Cite wake of the f.'OV'ID-19 outbreuk. See the captions "THE CITY—COVID-19 Outbreak" and "RISK
FACTORS —Impacts and Potential Impacts of COVID-19 on the City." There can be no assurances that
actual increases in required contributions will not be higher than the amounts which are currently projected by
the City. See the captions "CITY PENSION PLANS" and "CITE' I'"I'� ANCIAL INFORMATIONOther
Post -Employment Benefits."
Dependence on State for Certain Revenues
A number of the City's revenues are collected and dispersed by the State (such as sales taxes and the
VLF) or allocated in accordance with State law (most importantly, property taxes). Therefore, State budget
decisions can have an impact on City finances. In the event of a material economic downturn in the State,
including as a result of the COVID-19 outbreak that is discussed under the captions "THE CITY—COVID-19
Outbreak" and "RISK FACTORS —Impacts and Potential Impacts of COVID-19 on the City," there can be no
assurance that any resulting revenue shortfalls to the State will not reduce revenues to local governments
(including the City) or shift financial responsibility for programs to local governments as part of the State's
efforts to address any suuch related State financial difficulties.
No Reserve Fund
The City has not funded a reserve fund in connection with the issuance of the Series 2021 Bonds.
Litigation
The City may be or become a party to litigation that has an impact on the General Fund. Although the
City maintains certain 'insurance policies that provide. liability, coverage tinder- certain circumstances and with
respect to certain types or incidents (as discussed under the caption I111N CITY —Risk 'Management"), the
City cannot predict what types of liabilities may arise it) the: future. See the caption `'11 FIt: ATION."
Natural Disasters
The occurreu�ucc of any, natural disaster in the City, including, without liunitation, earthquake, wildfire,
drought, high winds. landslide or flood, which results in significant damage within the City or otherwise
significantly impacts the econouny of the City could materially adversely affect the financial condition of the
City. See the caption "THE CITY —Risk Management."
38
Agreement No. 6085A
flieoccurrence of a natural disaster �jffecting the City, such as an earthquake or tsunami, could
materially adversely effect 'lie financial condition Of the City. The City, like much olCalifornia, frequently
experiences scisinic activity. I'lle inalewood tault line is near the City.
An earthquake along`7 one of the faults u'l the vicinity of the City, cither known or unknown. could
1 s, older
cause a nutitber of casualties and extellsive property daniage, particularly to residential building
wooden or unreinforced mast ilry Iluildings and mobile homes, 'Tile el7fects, of` such all earthquake could be
aggravated by aftershocks and secondkit), effects Such as fires, landslides. dam tailure, liquefaction, floods and
other threats to public health. safely, and welfare. The potential direct and indirect consequences of a major
earthquake could easily exceed the resources of the City and would require a level of' self-help,
coordination and cooperation.
The occurrence of natural disasters in the City could result in substantial damage to the City which, in
WI -IL COUld substantially affiect the Cjjy'S CCOnOnly and reduce General Fund revenues. which could affect the
paylilellt Of tile principal of and interest on the Series 20211 Bonds, it, parliculat%, if a natural disaster %cre to
result in reduced assessed valuafioljs� ol'property, within the City, the injoUnt Ol'property IaX revenues (\VhMl
constitute the City's largest source of General Fund revenues) could be reduced. See the caption "CITY
FINANCIAL INFORMATION —Property Taxes."
,1,,Ilc cily maintains liability insurance and property casualty insurance (including limited earthquake
-rage) for City, infrastructure. See the caption "111E CITY- - Risk Management." However, there can be
cover
age)
no .1 insurance or, if covered, that claims will be paid in full by
assunwice that specific losses will be covered by
the applicable insurers.
Climate Change
The State has historically been susceptible to wildfires and hydrologic variability. As greenhouse gas
emissions continue to accumulate in the atmosphere as a result of ecollornic activity, climate change is
expected to intensiCY, increasing the firequerICYseverity and firiling of extreme weather events such as coastal
storill surges, drought. wildfires, floods and heal waves. and raising, sea levels, The future fiscal impact of
climate change on the City is difficult to predict. but it Could be significant and it could have a material adverse
effect on the General Fund by requiring greater expenditures to counteract the erfects (,)f'clirnatc change or by
changing the operations and activities of City residents and business establishments.
In 2017, the City adopted a Climate Action Plan throttglil tile South Bay. Cities Council Of
Governments to identify community -snide strategies to lower greenhouse gas emissions ti-()in a range of
sources %vithin the City. including transportatk'n), land u se. energy generation and coilsulviption, wNater and
waste.
Cybersecurity
Municipal agencies, like other business entities. face significant risks relatirjg to the use and
application of computer soffivare and hardware. Recently. there have been significant cybersecurity incidents
affiecting municipal agencies. including a fteeze affecting computer systems of the City ofAdanta. all attack oil
the City of Baltimore's 911 systeill, an attack on tile Colorado Department of 'fransportati011's coinputei-s and
an attack that resulted in the temporary Closure Of 111C Dort of Los An geles' largest tenninal. Iii July 2019., the
City experiellced a ransoinware attack . 'File, City refused to pay the ransom. and successfully restored all
SN,steyns after a limited period of disruption. 'File costs or thwarting tire attack were covered by cybersecurity
insurance maintained by the City.
file City employs a multi -level cyber protection scheme that includes net\wrk fire\valls-, server- and
personal computer- level anti -virus sofivvare,, atuti-sparn/niakvare software, Barracuda Entail Security Gateway
for email protection as well as intrusion protection and domain name systeill filtering soffivare. The City is
I
39
Agreement No. 6085A
currently in the process of developing and implementing a comprehensive Cyber Security Risk Management
Program, which is expected to be approved by the City Council in June 2021. To date, the City has not
experienced an attack on its computer operating systems. However, there can be no assurance that a future
attack or attempted attack would not result in disruption of City operations, particularly given that employee
access of City computer systems from home in light of the COVID-19 pandemic may increase the risks of
intrusion by third parties. The City employs high-level intrusions protection and expects that any such
disruptions would be temporary in nature.
Limitation on Sources of Revenues
Although the Series 2021 Bonds are payable from all lawfully available funds of the City, the City has
no obligation to levy taxes, assessments, fees or charges in order to raise sufficient revenues to pay the Series
2021 Bonds. In the event that the City were to choose to do so, the State Constitution contains significant
limitations and imposes significant procedural requirements which affect the City's ability to increase City
revenues. See the caption "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND
APPROPRIATIONS."
In addition, under the State Constitution, voters of the State have the ability to initiate legislation and
require a public vote on legislation passed by the State Legislature through the powers of initiative and
referendum, respectively. The City is unable to predict whether any such initiatives or referenda might be
submitted to or approved by the voters, the nature of such initiatives or referenda or their potential impact on
the City and its operations.
Impacts and Potential Impacts of COVID-19
On March 4, 2020, the Governor declared a state of emergency to help the state prepare and respond
to the novel coronavirus identified as COVID-19. On March 11, 2020, the World Health Organization declared
the COVID-19 outbreak a global pandemic and on March 13, 2020 the President declared a national state of
emergency. Since then, tens of millions of cases of COVID-19 have been diagnosed throughout the country,
resulting in hundreds of thousands of deaths. In response to the COVID-19 pandemic, governmental
authorities, including the State of California, the County of Los Angeles and the City, have implemented, and
revised from time to time, restrictions on mass gatherings and widespread closings and modifications of the
operations of businesses, universities and schools. The severe drop in economic activity commencing in
spring 2020 caused by the COVID-19 pandemic resulted in a recession that ended the nation's record -long
economic expansion in February 2020.
In December 2020, two vaccines were approved for emergency use in the United States and
vaccinations began in California. Health care workers and residents in long-term care facilities were initially
given priority to receive the COVID-19 vaccine, followed by essential workers and Californians based on age.
Supplies of the vaccines are currently limited and dependent on federal distribution.
The COVID-19 pandemic has disrupted, and continues to disrupt, large sectors of the state economy
and remains a significant risk. A continued spread of the COVID-19 virus, future outbreak of the COVID-19
virus or another infectious disease, or the fear of any such outbreak, and measures taken to prevent or reduce it,
could adversely impact State, national and global economic activities and, accordingly, adversely impact the
financial condition and operations of the City, and the extent of impact could be material. The City cannot
predict the duration of COVID-19, the duration or expansion of travel restrictions and warnings, whether
additional countries or destinations will be added to the travel restrictions or warnings, and what effect such
travel restrictions and warnings may have on tourism -related revenues. Additionally, the City cannot predict
what impact COVID-19 may have on the City's general financial condition or operations, or the assessed
values of property within the City.
40
Agreement No. 6085A
There are many variables that will continue to contribute to the economic impact of the COVID-19
Outbreak and the recovery therefrom, including the length of time social distancing measures are in place, the
effectiveness of State and Federal governments' relief programs and the thning', for the containment and
treatment of COVID-I 9.
Nowlthstanding the forepoing, the City (1(,)es not currently believe that the COVID-19 outbreak "vill
C,
materially adversely affect its ability it.) pay debt service earl the Series 2021 Bonds, See the captions "CITY
1"INANCIAL INI"ORMA'1'1()N----(.,()V'it)-19 Outbreak" and . . ..... . General Economic Condition and outlook of
the City" for more information with respect to the impacts of COVID-19 on the City and its finances.
Economy of City and State
A deterioration in the level of economic activity in tile City, tile State or the United States. including
as a result of the COVID-19 outbreak that is discussed under the caption "'I"HE CITY-,-- -COVID-19
Outbreak" could have a material adverse effect on the City's, .11,encral revenues and on the ability of the 0 1 ty 10
pay principal of and interest on the Series 202,1 Bonds. In particular, tile City's transient occupancy tax
receipts experienced sigM nificant reduction.",,' Fiscal Year 2019-20 due to the COVID-0 outbreak. See tile
captions "THE CITY- ---COVID-19 Outbreak'' and '—City Financial Information."
Limitation on Remedies; Bankruptcy
General. The enforcement of any remedies that are provided for in tile Trust Agreenlent could prove
both expensive and time consuming, "file rights and, remedies that are provided in the Trust Agreement may be
Z!, —
linined by and are subject to', 0) tile limitations oil legal remedies against cities in the State. including State
Constitutional limits oil expenditures and hinitations Ot, the enforcement of judgments a-linst funds that are
Deeded to serve the public welfare and interest; (ii) Federal bankruptcy kovsas now or later cliacted, as
discussed in detail under the caption .. .... -Bankruptcy" below.' (iii) applicable bankruptcy. insolvcllcy,
--
reorganisation,, moratorium. or similar laws relating to or affeCtin-= the enforcement (,)I: creditors` rights
generally, now or later in effect; Ov) equity principles which may Ijillit the specific enforcement under State
la%of certain remedies; (v) tile exercise by file United States of America ref the powers delegated to it by tile
C(lilstitutiom and (vi) the reasonable and necessary exercisein certain exceptional situationsof the police
powers that are inherent in the s0vereill,"Ity of the State and its governilletual bodies in the interest of sel a
significant and legitimate public purpose. Bankruptcy proceedings. or the exercise of powers by the federal or
State government„ if initiated., could stibjcct the Owners ofthe Series 2021 Bonds to judicial discretion and
interpretation of their rights ill bankruptcy or otherwise, and consequently may entail risks of delay, limitation
or modification of their rights.
Tile legal opinions that will be delivered concurrently with the deliveryof tile Series 2021 Bonds will
be qualified, as to the enforceability of tile Series 2021 Bonds, the Trust Agreement and other related
documents. by bankruptcy, insolvency, reorganization, Inoralorium, arrangement, fraudulent conveyance and
other laws relating to or affecting creditorsrights, to, the application ofequitable principles, to the exercise Of."
g
judicial discretion in appropriate cases, and to the linlitations on legal remedies against cities in the State.
Failure by the City to pay principal Of or interest on the Series 2021 Bonds or failure to observe and
perform any other terms, covenants or conditions ofthe Trust Agreement for a period of'60 days after written
notice of such failure and request that it be ivinedied has been given to the City by tile Trusteeconstitute
events of default under the Trust Agreement and permit the Trustee to pursue the remedies that are described
in the Trust Agreement. In tile event of a defauh, there is no right under any circumstances to accelerate
payment of the Series 2021 Bonds or otherwise declare any Series 2021 Bonds that are not then in default to be
ininiediately due and payable,
41
Agreement No. 6085A
Any suit for money damages against the City would be subject to limitations on legal remedies against
cities in the State, including a limitation on enforcement of judgments against funds needed to serve the public
welfare and interest.
Bankruptcy. Enforceability of the rights and remedies of the Owners of the Series 2021 Bonds, and
the obligations incurred by the City, may become subject to the provisions of Title 11 of the United States
Code (the "Bankruptcy Code") and applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting the enforcement of creditors' rights generally, now or later in effect, equity
principles which may limit the specific enforcement under State law of certain remedies, the exercise by the
United States of America of the powers delegated to it by the federal Constitution, the reasonable and
necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the
State and its governmental bodies in the interest of serving a significant and legitimate public purpose and the
limitations on remedies against cities in the State. Bankruptcy proceedings, or the exercise of powers by the
federal or State government, if initiated, could subject the Owners of the Series 2021 Bonds to judicial
discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of
delay, limitation or modification of their rights. Under Chapter 9 of the Bankruptcy Code, which governs the
bankruptcy proceedings for public agencies such as the City, involuntary petitions are not permitted. If the
City were to file a petition under Chapter 9 of the Bankruptcy Code, the Owners of the Series 2021 Bonds and
the Trustee could be prohibited from taking any steps to enforce their rights under the Trust Agreement or
from taking any steps to collect amounts due from the City on the Series 2021 Bonds.
In particular, if the City were to become a debtor under the Bankruptcy Code, the City would be
entitled to all of the protective provisions of the Bankruptcy Code as applicable in a Chapter 9 case. Among
the adverse effects of such a bankruptcy might be: (i) the application of the automatic stay provisions of the
Bankruptcy Code, which, until relief is granted, would prevent collection of payments from the City or the
commencement of any judicial or other action for the purpose of recovering or collecting a claim against the
City, and which could prevent the Trustee from making payments from funds in its possession; (ii) the
avoidance of preferential transfers occurring during the relevant period prior to the filing of a bankruptcy
petition; (iii) the existence of unsecured or secured debt which may have a priority of payment that is superior
to that of Owners of the Series 2021 Bonds; and (iv) the possibility of the adoption of a plan (an "Adjustment
Plan") for the adjustment of the City's various obligations over the objections of the Trustee or all of the
Owners of the Series 2021 Bonds and without their consent, which Adjustment Plan may restructure, delay,
compromise or reduce the amount of any claim of the Owners if the Bankruptcy Court finds that such
Adjustment Plan is "fair and equitable" and in the best interests of creditors.
The Series 2021 Bonds are not secured by any property other than the funds that the City has actually
deposited with the Trustee. If the City is in bankruptcy, it may not be obligated to make any further deposits
with the Trustee, it may not be obligated to make any further allocations to the Series 2021 Bonds and it may
not be obligated to turn over to the Trustee any moneys that have been allocated to the Series 2021 Bonds in
the City treasury. As a result, the Series 2021 Bonds would likely be treated as unsecured obligations of the
City in the bankruptcy case. Under such circumstances, the Owners of the Series 2021 Bonds could suffer
substantial losses.
The Adjustment Plans approved by the bankruptcy courts in connection with the bankruptcies of the
Cities of Stockton and San Bernardino, among others, resulted in significant reductions in the amounts payable
by such city under pension obligation bonds that were substantially identical or similar to the Series 2021
Bonds. Specifically, in the Stockton bankruptcy, the court held that Ca1PERS was an unsecured creditor of the
city with a claim on parity with those of other unsecured creditors. Additionally, in the San Bernardino
bankruptcy, the court held that in the event of a municipal bankruptcy, payments on pension obligation bonds,
such as the Series 2021 Bonds, were unsecured obligations and not entitled to the same priority of payments
made to CalPERS. The City can provide no assurances about the outcome of the bankruptcy cases of other
municipalities or the nature of any Adjustment Plan if it were to file for bankruptcy.
LfiJ
Agreement No. 6085A
The City may be able, without the consent and over the objection of the Trustee or the Owners of the
Series 2021 Bonds„ to alter the priorhy, interest rate, payment terms, maturity dates, payment sources,
covenants and other terms or provisions of the Trust Agreement and the Series 2021 Bonds, as long as the
bankruptcy court detennines that the alterations are fair and equitable.
There may be delays in payments on the Series 2021 Bonds while the court considers any of these
issues. There may be other possible effects of a bankruptcy of the City that could resultin delays or reductions
ill payaaaenis oil the Series 2021 Bonds. or result in posses to the Owners of tlae :Set ies 2021 Bonds. Regardless
of any specific adverse determinations in a City bankruptcy proceeding, the fact thtaNa City bankruptcy
proceeding laas occurred could have an adverse effect oil the liquidity and value of the Series 2021 Bonds.
Limitation on Trustee's Obligations
The Trustee has no obligation to advance its own funds to pursue any remedies. As a consequence,
the Trustee's willingness and ability to pursue any of the remedies provided in the Trust Agreement may be
dependent upon the availability of funds from an interested party. There can be no assurance that the Trustee
will be willing and able to perform its ditties under the Trust Agreement.
Limited Secondary Market
Investment in the Series 2021 Bonds poses certain economic risks which may not be appropriate for
certain investors, and only persons with substantial financial resources who understand the risks of investment
in the Series 2021 Bonds should consider such investment. There can be no guarantee that there will be a
seconda:rV market for purchase or sale of the Series 2021 Bonds or, if a secondary market exists, that the Series
2021.Bola ds can or could be sold for any particular price.
Occasionally, because of general market conditions or because of adverse history or economic
prospects connected with a particular issue, secondary marketing in connection with a particular issue is
suspended or terminated, Additionally, Prices of issues for which a inarket is being made will depend upon the
then prevailing caacunastaances. Such prices could be substantially different from the original purchase price.
In addition. the City will enter into a continuing disclosure undertaking pursuaant, to pule l5c2.12 in
connection Nvith the issuance o1'the Seines 2021 Bonds. Any material laplure to comply with such iindr:rtaking
and Rule 15c2-12 in the ftature may adversely affcci the hquiditY taf"the affected Series 2021 Boatels and their
market price in the secondary market. See the caption "CONTINUING DISCLOSURE."
Changes in Law
There can be no assurance that the electorate of the State will not adopt additional initiatives or that
the State Legislature will not enact legislation that will amend the laws or the Constitution of the State in a
manner that results in a reduction of General Fund revenues of the City and consequently, has an adverse effect
on the security for the Series 2021 Bonds.
Article XI11A of the State Constitution
On June 6, 1978, State voters approved an amendment (commonly known as both Proposition 13 and
the Jarvis -Gann Initiative) to the State Constitution. The amendment, which added Article XIIIA to the State
Constitution, among other things affects the valuation of real property for the pui`vse cif taxation in that it
defines the lull cash property valtw to paean "the county assessors valuation of real property as shown on the
1975/70 tax bill t.ander `full cash v«aline', or thereafter, the appraised value of real property newly, constructed.
43
Agreement No. 6085A
or when a change in ownership has occurred after the 1975 assessment." The full cash value may be adjusted
annually to reflect inflation at a rate not to exceed 2% per year, or a reduction in the consumer price index or
comparable local data at a rate not to exceed 211,,'a per year, or reduced in the event of declming property value
caused by damage, destruction or other factors including a general economic downturn. The amendment
further limits the amount of any ad valorem tax on real property to 1% of the full cash value, except that
additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to December 1,
19,78 and bonded indebtedness for the acquisition or iniprovemenn of real properly approved on or after
December 1, 1978 by twit -thirds of the votes cast by the voters votinO on the proposition („551',,,6 in the case of
certain school facilities). Property taxes that are subject to Proposition 13 are a significant source of the City's
General Fund revenues. See the caption "CITY FINANCIAL INFORMATION —Property Taxes."
Legislation enacted by the State Legislature to implement Article XIIIA provides that all taxable
property is shown at full assessed value as described above. Tax rates for voter approved bonded indebtedness
are also applied to 100% of assessed value.
Future assessed valuation growth allowed under Article XIIIA (for new construction, change of
ownership or 2% annual value growth) is allocated on the basis of "situs" among the jurisdictions that serve
the tax rate area within which the growth occurs. Local agencies and school districts share the growth of
"base" revenue from the tax rate area. Each year's growth allocation becomes part of each agency's allocation
the following year. Article XIIIA effectively prohibits the levying of any other ad valorem property tax above
the 1 % limit except for taxes to support indebtedness approved by the voters as described above.
Article XIIIA has subsequently been amended to permit reduction of the "full cash value" base in the
event of declining property values caused by damage, destruction or other factors, and to provide that there
would be no increase in the "full cash value" base in the event of reconstruction of property damaged or
destroyed in a disaster and in certain other limited circumstances.
Article XIIIB of the State Constitution
On November 6, 1979, State voters approved an initiative entitled "Limitation on Government
Appropriations," Nvltich added Article X11113 to the State Constitution. llndell Article XIIIA State and locaal.
governtttent entities have an annual -appropriations limit" which lhuttts the ability to spend certain nruoneys
% iticit ate called -appropriations sub ect to limitation" (colisisting of tax revenues and investment proceeds
thereof, certain State subventions and regulatory license fees, uses` charges and ttser fees to the extent tl't'wttrite
proceeds thereof exceed the costs ofProviding such services, together called "proceeds of taxes," and certain
other funds) in an amount higher tluln, the "appropriations limit." Article XIIIB does not affect the
appropriation of motleys which are excluded from the definition of "appropriations limit," including debt
service on indebtedness existing or authorized as of October 1, 1979 or bonded indebtedness subsequently
approved by the voters. In general terms, the "appropriations limit" is to be based on certain 1978-79
expenditures and is to be adjusted annually to reflect changes in the consumer price index, population and
services provided by these entities. Among other provisions of Article XIIIB, if those entities' revenues in any
ycar exceed the amounts permitted to be spetlt, the excess would have to be returned by revising tax rates, or
fee schedules over the subsequent two years. Increases in appropriations by, a governnlcnta,l entity are
permitted: (i) if financial responsibility for providing services is transferred to a governmental entity; or 00 for
emergencies so long as the appropriations limits for the three years following the emergency are reduced
accordingly to prevent any aggregate increase above the Constitutional limit. Decreases are required where
responsibility, for providing services is transferred from the government entity.
Article X111�14 permits any government entity to change the appropriations limit by vote of the
electorate in conlon city with statutory and Constitutional voting requirements, but any such voter -approved
change can only be effective for a maximum of four years.
44
Agreement No. 6O85A
The City's appropriations have never exceeded the limitation on appropriations under Article XIIIB of
the State Constitution.
Proposition 62
On November 4, 1986, State voters approved an initiative ("Proposition 62") which: (a) requires that
any tax for general governmental purposes imposed by local governmental entities be approved by resolution
or ordinance adopted by two-thirds vote of the governmental agency's legislative body and by a majority of the
electorate of the governmental entity; (b) requires that any special tax (defined as taxes levied for other than
general governmental purposes) imposed by a local governmental entity be approved by a two-thirds vote of
the voters within the jurisdiction; (c) restricts the use of revenues from a special tax to the purposes or for the
service for which the special tax is imposed; (d) prohibits the imposition of ad valorem taxes on real property
by local governmental entities except as pennitted by Article XIIIA; (e) prohibits the imposition of transaction
taxes and sales taxes on the sale of real property by local governmental entities; and (f) requires that any tax
that is imposed by a local governmental entity on or after August 1, 1985 be ratified by a majority vote of the
electorate within two years of the adoption of the initiative or be terminated by November 15, 1988. The
requirements imposed by Proposition 62 were upheld by the State Supreme Court in Santa Clara County Local
Transportation Authority v. Guardino, 11 CalAth 220 (1995).
Following the Guardino decision upholding Proposition 62, several actions were filed challenging
taxes imposed by public agencies since the adoption of Proposition 62. In 2001, the State Supreme Court
released its decision in one of these cases, Howard Jarvis Taxpayers Association v. Cio; of La Habra, et al., 25
CalAth 809 (2001). In La Habra, the court held that a public agency's continued imposition and collection of
a tax is an ongoing violation upon which the statute of limitations period begins anew with each collection.
The court also held that, unless another statute or constitutional rule provided differently, the statute of
limitations for challenges to taxes subject to Proposition 62 is three years. Accordingly, a challenge to a tax
subject to Proposition 62 may only be made for those taxes received within three years of the date the action is
brought.
The City believes that all of the taxes that the City currently collects comply with the requirements of
Proposition 62. However, the requirements of Proposition 62 are largely subsumed by the requirements of
Proposition 218 for the imposition of any taxes or the effecting of any tax increases after November 5, 1996.
See the caption "—Proposition 218" below.
Proposition 218
On November 5, 1996, State voters approved Proposition 218, an initiative measure entitled the
"Right to Vote on Taxes Act." Proposition 218 added Articles XIIIC and XIIID to the State Constitution,
imposing certain vote requirements and other limitations on the imposition of new or increased taxes,
assessments (meaning any levy or charge upon real property for a special benefit conferred upon the real
property) and property -related fees and charges. Proposition 218 states that all taxes which are imposed by
local governments are deemed to be either general taxes or special taxes. Special purpose districts, including
school districts, have no power to levy general taxes. No local government may impose, extend or increase
any general tax unless and until such tax is submitted to the electorate and approved by a majority vote. No
local government may impose, extend or increase any special tax unless and until such tax is submitted to the
electorate and approved by a two-thirds vote.
Proposition 218 also provides that no tax, assessment, fee or charge may be assessed by any agency
upon any parcel of property or upon any person as an incident of property ownership except: (a) the ad
valorem property tax imposed pursuant to Articles XIII and XIIIA of the State Constitution; (b) any special tax
receiving a two-thirds vote pursuant to the State Constitution; and (c) assessments, fees and charges for
property -related services as provided inProposition 218. Proposition 218 then goes on to add voter
requirements for assessments and fees and charges imposed as an incident of pro'pe+ly ownership, other than
1,
Agreement No. 6O85A
fees and charges for sewer, water, and refuse collection services. In addition, all assessments and fees and
charges imposed as an incident of property ownership, including sewer, water and refuse collection services,
are subjected to various additional procedures, such as hearings and stricter and more individualized benefit
requirements and findings. The effect of such provisions is to increase the difficulty a local agency will have
in imposing, increasing or extending such assessments, fees and charges.
In the case of assessments, fees and charges, in most instances, in the event that the City is unable to
collect revenues relating to specific programs as a consequence of Proposition 218, the City will curtail such
services rather than use amounts in the General Fund to finance such programs. However, no assurance can be
Oven that the City may or will be able to reduce or eliminate such services to avoid new costs for the City
General Fund in the event that the assessments, fees or charges which presently finance them are reduced or
repealed.
Proposition 218 also extends the initiative power to reducing or repealing any local taxes,
assessments, fees and charges. This extension of the initiative power is not limited to taxes imposed on or
after November 6, 1996, the effective date of Proposition 218, and is not limited to property -related taxes or
other charges, and could result in retroactive repeal or reduction in any existing taxes, assessments, fees and
charges, subject to overriding federal constitutional principles relating to the impairments of contracts.
Legislation implementing Proposition 218 provides that the initiative power provided for in Proposition 218
"shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before
or after (the effective date of Proposition 218) assumes the risk of, or in any way consents to, any action by
initiative measure that constitutes an impainnent of contractual rights" protected by the United States
Constitution. However, no assurance can be given that the voters of the City will not, in the future, approve an
initiative which reduces or repeals local taxes, assessments, fees or charges that currently are deposited into the
City's General Fund.
Although a portion of the City's General Fund revenues are derived from general taxes purported to
be governed by Proposition 218, as discussed under the caption "CITY FINANCIAL INFORMATION," the
City believes that all of such taxes were imposed in accordance with the requirements of Proposition 218.
Proposition IA
As part of former Governor Schwarzenegger's agreement with local jurisdictions, Senate
Constitutional Amendment No. 4 was enacted by the State Legislature and subsequently approved by the
voters as Proposition IA ("Proposition IA") at the November 2, 2004 general election. Proposition 1A
amended the State Constitution to, among other things, reduce the State Legislature's authority over local
government revenue sources by placing restrictions on the State's access to local governments' property, sales,
and VLF revenues as oh'November 3, 2004. Beginning with Fiscal Year 2009, the State was entitled to borrow
up to 8% of local property tax revenues, but only if the Governor- proclaimed that such action was necessary
due to a severe State fiscal hardship and two-thirds of both louses of the State Legislature approved the
borrowing. The amount borrowed was required to be paid hack within three years with interest. The State also
was not able to borrow from local property tax revenues for more than two Fiscal Years within a period of ten
Fiscal Years. In addition, the State could not reduce the local sales tax rate or restrict the authority of local
governments to impose or change the distribution of the Statewide local sales tax.
The Fiscal Year 2010 State budget included a Proposition IA diversion of $1.935 billion in local
property tax revenues front cities. counties, and special districts to the State to offset State General Fend
spending Such diverted revenues Nvere required to be repaid with interest, by no later than Julie 30, 2013.
Many provisions of Proposition IA were superseded by Proposition 22. 'See the caption -Proposition 22."
46
Agreement No. 6085A
On November 2, 2010, State voters approved Proposition 22, which eliminates the State's ability to
borrow or shift local revenues and certain State revenues that fund transportation programs. It restricts the
State's authority over a broad range of tax revenues, including property taxes allocated to cities (including the
City), counties and special districts, the VLF, State excise taxes on gasoline and diesel fuel, the State sales tax
on diesel fuel and the former State sales tax on gasoline. It also makes a number of significant other changes,
including restricting the State's ability to use motor vehicle fuel tax revenues to pay debt service on voter -
approved transportation bonds. Proposition 22 superseded certain provisions of Proposition IA. See the
captions "—Proposition IA" and "CITY FINANCIAL INFORMATION —Property Taxes."
Proposition 26
On November 2, 2010, State voters approved Proposition 26. Proposition 26 amended Article XIIIC
of the State Constitution to expand the definition of "tax" to include "any levy, charge, or exaction of any kind
imposed by a local government" except the following: (a) a charge imposed for a specific benefit conferred or
privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the
reasonable costs to the local government of conferring the benefit or granting the privilege; (b) a charge
imposed for a specific government service or product provided directly to the payor that is not provided to
those not charged, and which does not exceed the reasonable costs to the local government of providing the
service or product; (c) a charge imposed for the reasonable regulatory costs of a local government for issuing
licenses and permits, performing investigations, inspections and audits, enforcing agricultural marketing orders
and the administrative enforcement and adjudication thereof, (d) a charge imposed for entrance to or use of
local government property, or the purchase, rental or lease of local government property; (e) a fine, penalty or
other monetary charge imposed by the judicial branch of government or a local government as a result of a
violation of law; (f) a charge imposed as a condition of property development; and (g) assessments and
property -related fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that
the local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or
other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the
governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or
reasonable relationship to the payor's burdens on, or benefits received from, the governmental activity. The
City does not believe that Proposition 26 will adversely affect its General Fund revenues.
Future Initiatives
Articles XIIIA and XIIIB and Propositions 62, 218, ]A, 22 and 26 were each adopted as measures that
qualified for the ballot pursuant to the State's initiative process. The limitations imposed upon the City by
these provisions hinder the City's ability to raise revenues through taxes or otherwise and may therefore
prevent the City from meeting increased expenditure requirements. From time to time other initiative
measures could be adopted, further affecting the City's current revenues or its ability to raise and expend
revenues. Any such future initiatives could have a material adverse effect on the City's financial condition.
TAX MATTERS
In the opinion of Orrick, Herrington & Sutcliffe LLP, bond counsel to the City ("Bond Counsel"),
based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other
matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series
2021 Bonds is exempt from State of California personal income taxes. Bond Counsel observes that interest on
the Series 2021 Bonds is not excluded from gross income for federal income tax purposes under Section 103 of
the Code. Bond Counsel expresses no opinion regarding any other tax consequences relating to the ownership
or disposition of, or the amount, accrual, or receipt of interest on, the Series 2021 Bonds. The proposed form
of opinion of Bond Counsel is contained in Appendix C hereto.
47
Agreement No. 6085A
-I'lle following discussion sullin'Mrizes certain US, federal lax Coll siderat ions !;coeraflY applicable to
Zr quirt their Series 202 1 Bonds in tile initial offering. The discussion
holders of the Series 202 1 Bonds that ac, C,
below is based upon Wvs- rcgtdajions, rtllirios, and decisions in t,,frcci and available On the date hereof. alp Of
Z_
which are subject to change, possibly with retroactive effect. prospective investors should note that no rulings
have been or are expected to be soklsOit from the US. lilternal Revenile, Service (tic "IRS") with respect to any
of tile tJ.S. Federal tax Consequences discussed below, and no asSLIVOTICC can be given that the IRS will riot take
t�
conirary positions. FLIT111U. the 170110wing, discussion does not deal \vill, tj,S. tax consequences applicable to
-es�
any given irivestor. nor does it address the U.S,U,S, tax considerations applicable to all catcgoljes of investor
sti
some of' which may be subJecl to special taring rules (regardless Of whether or not stich investors cot I tilte
U.S. Flolders). such as certain U,S, expatriates., banks, REITs. RiCsinsurance compaa ies. tax exempt
it licies, partners trusts,
hips, S corporations, estates and
oroallizations. dealers or traders in securifles or cu-e co,river si
investors that hold their Series 2021 Bonds as part of a hedge. straddle or an integrated or , on
transaction, or investors whose-runctional currency" is not the U.S. dollar, Fultlierinoix. it does not address
' (i) alleillative illinimurn tax coil sequ ences. (ii) the net investment i0coll1c tax iMPOsed under Section 1411 of
the Code, or (00 tile indirect effects cin persons whO hold equily interests ill a holder. This summary also does
not consider the taxation of til�e Series 2021 Bonds under state, local or non-U S. tax laws. In addition. this
summary generally is limited to U.S. tax considerations applicable to investors that acquire their Series 2021
Bonds plirsLit, �r the issue price that is applicable to such Series 2021 Borlds (j,e_ the price at
,nt to this offering fo s ,o,) 1 Bonds is sold to the public') and who will hold their Series 2021
which a sLibstantiall amount ofthe Seric, - -
Bonds as "capital assets" within the meaning cif Section 1221 of the Code.
As used herein, l,,J.S. Holder" means a belleficial owner of a Series 2021 Bond that for U.S, federal
incorne tax purposes is all individual citizen or resident of the United States, a corporation, or other entity
taxable as a corporation created or org, s
anized in or under the lawof" tile United States, or any state thereof
(including the District of Colurnbia)., all estate the income of which is subject to U.S. federal income taxation
repi-diess of its source Or a trust where a court Within the United States is able 10 exercise primary supervision
over the adn linistration of tile trust and one or more United States persons (,as defined in the Code) have tile authority to control all substantial decisions of the trust (or a trust that has made as valid election under U.S.
Treasury Regulations to be treated as a clornestic trust). AS used herein, "Non-U.S. holder"' generally llleBns as
beneficial owrwr of Series 2021 Bond (other than a partllership) that is not a J.J.S. I-lolder. If a partnership
holds Series 2021 Bonds. the tax treatment ol'such partilic"shiP or -a partner ill Such partnership ,,,encrally will
depend upon the status o I fthe partner and upon tile activities of the partnership. Partnerships holdill(� Series
r
2021,Bonds, and partners in such Parttlersllips, Should consult their own lax advisors regarding the tax
conseCIlloices of all investment in the Series 2021 Bonds Oriclodirig their status as (JS. Flolders oi- Non-U.S.
Holders).
Notwithstanding the rules described below, it should be noted that certain taxpayers that are required
to prepare certified financial statements or file financial statements with certain regulatory or goverrimental
agencies may be required to recognize income, gain and loss with respect to the Series 2021 Bonds at the time
-descri
that such income, pain or loss is recognized on such financial statements instead of under the i c ties inning aftebedr
below (in the case of original issue discount, such requirements are only effiective for tax years b g
December 31, 2018).
Prospective investors should consult their own tax advisors in determining the U.S. federal, state., local
or non-U.S. tax consequences to them from the purchase, ownership and disposition of the Series 2021 Bonds
in light of their particular circumstances.
U.S. Holders
Interest. Interest on the Series 2021 Bonds generally will be taxable to a U.S. Holder as ordinary
interest income at the time such amounts are accrued or received, in accordance with the U.S. Holder's method
of accounting for U.S. federal income tax purposes.
48
Agreement No. 6085A
Series 2021 Bonds purchased for an amount in excess of the principal amount payable at maturity (or,
in some cases, at their earlier call date) will be treated as issued at a prenflum. A U.S. Holder of a Series 2021
Bond issued at a premium may make an election, applicable to all debt securities purchased at a premium by
such U.S. Holder, to amortize such premium, using a constant yield method over the term of such Series 2021
Bond.
Sale or Other Taxable Disposition of the Series 2021 Bonds. Unless a nonrecognition provision of the
Code applies, the !sale. exchange, redemption. retirement (including pursuant to an offer by the City) or other
disposition of'a Series 2021 Bond %vi [I be a taxable event for U.S. federal income tax purposes. In such event,
in o rieral, a fJ.S. I folder of" a Series 2021 Bond will recognize gain or loss eqLjal to tile difference beoveen
(j) the amount of cash plus the fair niarket value of' property received (except 10 the extent attributable 10
accrued but unpaid interest oil tile Series 202 1 Bond, which will be taxed in the manner described above) and
(ii) the U.S. Holder's ad J. usted U.S. federal income tax basis in the Series 2021 Bond (generally, the purchase
1,)rice paid by the U.S. Holder for the Series 2,021 Bond, decreased by any amortized premium. Any such gain
or loss, oencrally will be capital gain or loss. In the case of a non -corporate U.S. Holder of the Series 2021
Bonds, the maxinium marainal U.S, federal income tax rate applicable to any such gain will be lower than the
Inaximuni niaroinal U.S. federal income tax rate applicable to ordinary income if such U.S. holder's holding
period for the Series 2021 Bonds exceeds one year. The deductibility of capital losses is subject to limitations.
De easconee o 1he Series 2021 Bunds. if the City de leases any Series 2021 Bond, the Series 2021
Bond may be deemed to be retired and ",reissued" for U.S. federal income tax purposes as a result of the
clefeasance. In thai event., in general, a holder will recognize taxable gain or loss equal to the difference
between (i) the amount realized from the deemed sale. exchange or retirement (less an,), accrued qualified
stated interest which will be taxable as such) and (ii) the holder's adJusted tax basis in the Scries, 202 1 Bond.
lqfi)rmalion Reju,)rting and Rackiel) 1,Villiholding. Payments oil the Series. 2021 Bonds generally will
be subject to U.S. information reporting and possibly to "backup withholding." 1Jndcr Section 3406 of' the
Code and applicable U.S. Treasury Regulations issued thereunder, a nolj_corporate LJ,S. Holder of the Series
202 1 Bonds nlay, be subject to backup withholding at the current rate of 24% with respect to "reportable
payments.'" which include interest paid oil the Series 2021 Bonds and the gross proceeds of a sale, exchange,
redemption, retirement or other disposition of the Series 2021 Bonds. The payor will be required to deduct and
"jil,iii(fld the prescribed anlounts if the payee fails to furnish a U.S. taxpayer identification number ("TIN")
to the payol- in the manner re(jitil-ed, (ii) the IRS notifies the payor that the TIN furnished by the payee is
incorrect. (iii) there has been a "notified pa ee underreporting " described in Section 3406(c) ol"the Code or
(iv) the payee fails to certify under penalty of perjury that file payee is not su92jcct to withholding under
Section 3406(a)( 1 XQ of tile (.,ode, Amounts withheld under the, backup withholding rules may be refunded or
credited against the U.S. I lolder* s federal income tax I iability. if any, provided that the required information is
firriely furnished to mire JWS- Certain, U.S. holders (including aniono, others, corporations and certain tax-
e,\eiilpt organizations) are not subject to backup withholding, A holder's I'ailure to coMPIY With tile backup
withholding. rules illay result in tile imposition of'penalties by the IRS.
Non-U.S. Holders
Interest. Subject to the discussions below under the headings "Information Reporting and Backup
Withholding" and "Foreign Account Tax Compliance Act," payments of principal of, and interest on, any
Series 2021 Bond to a Non-U.S. Holder, other than (1) a controlled foreign corporation, a such term is defined
in the Code, which is related to the City through stock ownersliip and (2) a bank which acquires such Series
2021 Bond in consideration of"an extension ol'credit made pUrSUant to a Joan agreenilent entered into in tile
ordinary course of bl.lsilleSs, will not be subject to any U.S.Federal 1 rithholding tax provided That tile beneficial
owner of the Series 2021 Bond provides a certification completed in compliance with applicable statutory, and
reoulawry requirements, which requirements are discussed below under the heading "Information Reporting
and Backup Withholding," or an exemption is otherwise established.
49
Agreement No. 6085A
S ti 1) - he headings
Dislw.t5won of the Series 2021 Bonds. ject to the discussions below under t
111fol-niation Reportin . e ,rind Backup Whhholding" and "FATCA," any gain realized by as Non-IJ,S, holder
upon the sale, exchangerederriplion. retirement (iucjikcjitl�, pursuant to an offer by the City or a deenied
t� retirentent due to defeasance of tire Series 2021 Bond ) or other disposition, of Series 2021 Bond gene ,ralk,
will not be subject to U.S. federal income tax, unless (i) such gain is eff'ectivelrw' contlected with the conduct [%Nl
such Non-U.S. Holder of a trade or business within the [iti4ed Slates: or- 00 in tile case of any gain realized by
an individual Non-U.S. Holder, such holder is present in the United States for 183 days or more ill tile taxable
year of such sale, exchange, redemption, retirement (including pursuant to an offer by the City) or other
disposition and certain other conditions are met.
C,)'.S. Eslau,r TaxA Series 2021 Bond that is held by an individual who at the time ofdcath is
riot as citizen or resident ol'the United States will not be subject to U.S, federal estate tax as a result of such
individuaVs death. provided that, at the time of such individtwl's death, paynients, of interest with respect to
such Series 2021 Bond Would not have been el,'fectively connected Nvith the conduct by such individual of
trade or business within the United States.
In brination Reporting and Backup withholding, Subject to the discussion below kinder tile headill',"
"FATCA." under current U.S. Treasury Regulations, payments of principal and interest oil any Series 202 1
Bonds to a holder that is not a United States person will not be subject to any backup withholding tax
requirements if the beneficial owner of the Series 2021 Bond or a financial institution holding the Series 2�021
Z.
Bond on behalf of the beneficial owner in the ordinary course of its trade or business provides an appropriate
certification to the payor and the payor does not have actual knowledge that the certification is false. If a
beneficial owner provides the certification, the certification must give the narne, and address, of such owner,
state that such owner is not a United States person, or, in the case of an indiVidffill, that such owner is neither a
citizen nor a resident of the United States, and the owner must sign the certificate under penalties of perjury.
The current backup withholding tax rate is 24%.
Foreign Account Tax Compliance Act ("FATCA") — U.S. Holders and Non-U.S. Holders
Sections 1471 through 1474 of the Code impose a 30% withholding tax on certain types of payments
made to foreign financial institutions. unless the foreign, financial institution enters into ail agreement With the
U.S, Treasury to. altiong other things, undertake to identify accounts held by certain LLS, persons or U.S'.
owned cnthies, annually report certain jill'onmation about such accOunts, and withhold 30% oil payments 10
account holders whose actions prevent it from complying '\with these and other reportin-L, requirements, or
unless tile forejort fillanCial in,Stiftlflon is otherwise exempt f',-orn those requirements, In addition, I-ATCA
imposes a 30% 1. withholding tax on the same types of payments to a rion-financial foreign e , Miry' unless the
entity certifies that it does not have any substantial I.J.S. owners or the entity fur'llishes identilwing information
regardin- each substantial I.J.S.owtier, Under current guidance. failure to comply with tile additional
Z�other specified requirements irnposed under l"ATCA could restill ill the
certification, infOrulatit-Ml reporting and
30% withholding tax being imposed on payments of interest on the Series 2021 Bonds, In general,
Z�
witilliolding under fATCA currently applies to payments of tj.S. source interest (includinc, 01D) and, under
current guidance, will aIpply to certain "passthru" payments no earlier than tile dale that is two years, after
I)LIblication of final U.S. Treasury Regulations defining the terns "foreign passthru paynie'lls." Prospective
investors should consult their own tax advisors regarding FATCA and its effLet 01, tllelll.
']'he foregoing summary is included herein for general information only and does not discuss all
aspects of U.S. federal taxation that may be relevant to a particular holder of Series 202 1 Bonds in light of the
holder's partictilar Cil`CUMStances and inconic tax situation. ]"MsPectiVe investors are urged to consult Their
own lax advisors as to any tax consequences, to them 1`170111 the P1,11"ChaSXownership and disposition of" Series
2021 Bonds, including the application and effect of state, local, non-U.S., and other tax laws.
50
Agreement No. 6085A
IkWjffr• l
On February 2, 2021, the City, acting pursuant to the provisions of Section 860 el seq. of the
California Code of Civil Procedure, filed the Validation Petition in the Court seeking judicial validation of the
transactions relating to the CalPERS Contract and the Series 2021 Bonds and certain other matters. On April
12, 2021, the court entered the Validation Judgment to the effect, among other things that: (i) the Trust
Agreement will be a valid, legal and binding obligation of the City and the approval thereof was in conformity
with applicable provisions of law; and (ii) the City has the authority under State law to provide for the
refunding of its Pension Liability by issuing the Series 2021 Bonds and applying the proceeds of the Series
2021 Bonds to the retirement of its Pension Liability. Pursuant to Section 870 of the California Code of Civil
Procedure, the last day to timely file a notice of appeal to the Validation Judgment was May 12, 2021. On
May 12, 2021, the judgment became binding and conclusive in accordance with State law. The City is
unaware of any threatened challenge to the Validation Judgment. In issuing its approving opinion, Bond
Counsel will rely, among other things, upon the Validation Judgment.
FINANCIAL STATEMENTS
The City's financial statements for the fiscal year ended September 30, 2020, which are included as
Appendix A hereto, have been audited by CliftonLarsonAllen LLP, Irvine, California, an independent auditor,
as stated in their report appearing in Appendix A hereto. CliftonLarsonAllen LLP has not undertaken to update
its reports or to take any action intended or likely to elicit infonnation concerning the accuracy, completeness
or fairness of the statements made in this Official Statement, and no opinion is expressed by
CliftonLarsonAllen LLP with respect to any event subsequent to its report.
The City has covenanted for the benefit of holders and beneficial owners of the Series 2021 Bonds to
provide or cause to be provided certain financial information and operating data relating to the City (the
"Annual Report") by not later than the last day of the end of the ninth month after the end of each fiscal year of
the City (presently such fiscal year ends June 30), commencing March 31, 2022 with respect to the Annual
Report for Fiscal Year 2020-21, and to provide notices of the occurrence of certain enumerated events. The
Annual Report and notices of enumerated events will be filed by the City with the Municipal Securities
Rulemaking Board, through its Electronic Municipal Market Access ("EMMA") system. The specific nature of
the information to be contained in the Annual Report or the notices of material events is set forth under the
caption APPENDIX D - "FORM OF CONTINUING DISCLOSURE CERTIFICATE." These covenants are
made in order to assist the Underwriters in complying with Securities and Exchange Commission ("S.E.C.")
Rule 15c2-12(b)(5).
The City's obligations under the Continuing Disclosure Certificate (the "Disclosure Certificate") shall
terminate upon a legal defeasance, prior prepayment or payment in full of all of the Series 2021 Bonds. The
provisions of the Disclosure Certificate are intended to be for the benefit of the owners of the Series 2021
Bonds and in order to assist the participating Underwriters in complying with S.E.C. Rule 15c2-12(b)(5) and
shall be enforceable by the owners of Series 2021 Bonds, provided that any enforcement action by any such
person shall be limited to a right to obtain specific enforcement of the City's obligations under the Disclosure
Certificate and any failure by the City to comply with the provisions thereof shall not be an event of default
under the Trust Agreement.
The City has not been subject to a continuing disclosure undertaking pursuant to S.E.C. Rule 15c2-
12(b)(5) in the last five years.
51
Agreement No. 6085A
Standard & Poor's Global Ratings, a business unit of Standard & floor's Finaliciall Services I.LC
(,,S&,11,*') has assioned a rating of "AA," to the Series 2021 Bonds, Such racingreflects 0111Y 111C veNN's of P-
1�
and explanation of significance of sLtch rating tilay be obtained froin S&P, r1jere is tit) assurance that SLICII
rating will contiffilc for any Igivell period oftinic or that it NOH not be revised downward or withdrawn entirely
by S&p'if in theJudgment of S&Il circumstances so warrant, Any such downward revision or withdrawal of'
Mich rating nlay have ',Ill adverse effect oil tile jjjarket price of the Series 2021 Bonds.
fflyn"OKIjo
To the best knowledge of the City, except as otlj(,,,rwisc disclosed ill this Official StatenlCrit, dICIT is 110
litigation pendingo, against the City and of which the City has received service of process, nor is there threatened
litigilition, collcel•ning, tile validity of' tile Series 202 1 Bonds Or challenolng any action taken by tile City in
-jzatj(,in of the Trust Aor ill. or any other document relating to the Series 2021
conneclioll \Ajill tile ILIthol eenle
Bonds to which the City is or is to be become a party or tile performance by tile City of any of its obligations
under any of the foregoing.
From time to time the City is a party to litigation. In 2020 and 2021, three current or fornier police
officers and three current 11refighters brought s ,epajate actions against tile City alleging employment
discriniination, retaliation an&or other claims against tile City. Darnages alleged, together With cost
rehriburseniern that may be clainied, are ill excess of $7 million. Subjjecl to a self -insured retention. Ole City
maintains Certain irlsUrallce Coverage against employment clainIs. Thc C. is viz'?�0 I-O41slv defending', itself in the
matter.
IT unmiff ��C
Y
'file OIN has, retained KNN Iluillic Finance, LLC. Los Angeles, California, as municipal advisor (tile
``Municipal Adv . isor") it, connection with the delivery of the Series 2021 Bonds. The Municipal Advisoi is not
ake, all independent verification Or ISSUrlC responsibility
obligated to, undertake, and lias not Lnidertaken to im
forthe accuracYn COMPletelless,' or f'Eiii-ness ot'ithe information contained in this official Statement.
J.P, Mor.-wan Securities. 1,,I.,C (the "Representative") on behalf of itself and as representative of Stirel.
Nicolaus & Company, hic, (collectively. the -Underwriters") has agreed to purchase all of the Series 2021
'
Bonds for an aggrqgale Purchase Price of $143,823.001.29 (represertillohe principal aniount ofthe Series
2021 Bonds of S144.135,OKOO, less an Underwritersdiscount of$311.998.71) stibJect to certain conditions
set 1,0111, ill tile Purchase Contract between tile City' and the Representative, 'flee Purchase Contract provides
that tile Underwriters will purchase all of the Series 2021 Bonds ifany are purchased, the obligation to make
such a purchase beiri-gr, sutiject to certain terms and conditions set forth ill the Purchase Contract. the approval
of certain legal nialters by counsel, and certain other conditions.
Z:�
The initial ol7j.'erhia prices stated oil the inside cover of this Official Siaterneni, may be changed from
time to tinle by tile Underwriters. 'File Underwriters may offer and sell the Series 202 1 Bonds to certain dealers
(including dealers depositing Series 202 1 Bonds into investInent ti,usis). dealer bankS7 banks acting as agent
and others at prices lower than said public offering, pt-ices.
The following paragraphs have been provided by the Underwriters for inclusion in the Official
Statement.
The Underwriters and their affiliates are full service financial institutions engaged in various
activities, which may include sales and trading, commercial and investment banking, advisory, investment
52
Agreement No. 6085A
nianagement, investment research, principal investment, hedging, market brokerage and other
financial and non -financial activities and services. In the various course Of its various NlSitICSS activities the
Underwriters and their affiliates, officers, directors and employees may purchase, sell or hold a broad array of
investments and actively trade securities, derivatives, loans, coinniodi ties, currencies, credit defiault swaps and
other financial instruments for their own account and for the accounts of their customers, and such investment
and trading activities may involve or relate to assets, securities and/or instrunients of the City (directly, as
collateral securing other obligations or otherwise) and/or persons and entities with relationships with the 61`y.
The Underwrite I rs and their affiliate may also communicate independent investment recommendations, niarkel
color or trading ideas and/or publish or express independent research views it, respect Of such assets, securities
or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short
positions in such assets, securities and instruments.
J.P. Morgan Securities LLC ("JPMS"), one of the Underwriters of the Series 2021 Bonds, has entered
unto negotiated dealer agreements (each. a "Dealer A( ' , reenient-) with each of Charles Schwab & CO., Inc,
(,'C'S&Co."') arid LA, financial LLC ("l-YU) for tile retail distribution of Certain securities offerings at the
original issue prices. Pursuant to each Dealer Agreement. each of CS&CO, and LPL may purchase Series 2021
Bonds frorn JPMS at the Original isstte price less a negotiated portion of the selling concession applicable to
any Series 2021 Bonds that such firm sells.
99
Agreement No. 6085A
Any statement in this Official Statement involving matters of opinion, whether or not expressly so
stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as
a contract or agreement between the City and the purchasers or Owners of any of the Series 2021 Bonds.
Or in] qt itrized bv the Citv.
. . . . . . . . . . . . .
By: —.— /s/ Scott Mitnick
City Manager
MI
Agreement No. 6085A
APPENDIX A
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FISCAL YEAR -ENDED SEPTEMBER 30, 2020
Agreement No. 6085A
[THIS PAGE INTENTIONALLY L EFf BLANK]
Agreement No. 6085A
Agreement No. 6085A
CITY OF EL SEGUNDO, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FISCAL YEAR ENDED SEPTEMBER 30, 2020
Prepared by the City's Finance Department
Agreement No. 6085A
This page intentionally left blank
Agreement No. 6085A
City of El Segundo
Comprehensive Annual Financial Report
For the Year Ended September 30, 2020
Table of Contents
I TR0D1.,1'CTORNI SECTION Unaudited
Page
Letterof Transmittal .................. ........., ...,..... .,..,,......... .., . ......... ........ ....,,.., ......... ,........, .....-- N'
OrganizationChart ................. M.............. ,........... .. .,... ,.. .,.........,„.... , .,....... .....,... ......... .................... v
Officials of the City of El Segundo, California ........................... ...,..... ,.,................ v
Government Finance Officers Association Award ......... ......... . ..,....,.,,....,. .. vii
FINANCIAL SECTION
Independent Auditors' Report on the Financial Statements .............................. ....... ,.......... 1
Management's Discussion and Analysis (Required Supplementary Information (Unaudited) ................. 5
Financial Statements:
Government -Wide Financial Statements:
Statement of Net Position ........... ...................... ..... ......... ...... . .. .„.....,.. ,„.,.,,.. ................. 20
Statement of Activities ............. ........................ ... 22
Fund Financial Statements:
Governmental Fund Financial Statements:
BalanceSheet ......... ......... ......... ............................. ...._..., ................ ---- ............ 28
Reconciliation of the Governmental Funds Balance Sheet
to the Government -Wide Statement of Net Position............................................................... 29
Statement of Revenues, Expenditures, and Changes in Fund Balances-.. ............................. --- 30
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures, and Changes in Fund Balances to the
Government -Wide Statement of Activities and Changes in Net Position ............................... 31
Proprietary Fund Financial Statements:
Statementof Net Position ............... ... . ........ ......... ......... ........... .. .„... .......................... ,, 34
Statement of Revenues, Expenses, and Changes in Net Position........................................................ 38
Statement of Cash Flows................. .................. ...... ... ............. . ............. 40
Fiduciary Fund Financial Statements:
Statement of Fiduciary Net Position ....... .................. ......... ......... .., .,..,.... ........,......,,. 46
Index to Notes to the Basic Financial Statements........................................................................................ 49
Notes to the Basic Financial Statements ....... ......... ..... .... .„....,.....,.. .. .,....... 51
Agreement No. 6085A
City of El Segundo
Comprehensive Annual Financial Report
For the Year Ended September 30, 2020
Table of Contents (Continued)
FINANCIAL SEcrION Continued Page
Required Supplementary Information (Unaudited):
Budgetary Comparison Schedule - General Fund .... ................... ... ..... ............., 106
Note to the Budgetary Comparison Schedule .............................. .............. 107
Schedule of Changes in Net Pension Liability and Related Ratios - CalPERS
Miscellaneous Rate Plan ................... .,,-...... .,.,. ..,, ..,., 108
Schedule of Changes in Net Pension Liability and Related Ratios - Ca1PERS Safety
RatePlan .................................... ........ ......... . ............. 110
Schedule of the City's Proportionate Share of the Net Pension Liability and Related
Ratios - Ca1PERS Safety Rate Plan ............................... ,...,,.........,.. ................ 112
Schedule of Changes in Net Pension Liability and Related Ratios - Public Agency
Retirement System Defined Benefit Plan.......................................................... ..... 113
Schedule of Contributions - CaIPERS Miscellaneous Rate Plan.............................................................. 114
Schedule of Contributions - Ca1PERS Safety Rate Plan ................................„....... ,.„ ....... ..... --- ........ ..... 116
Schedule of Contributions - Public Agency Retirement System Defined Benefit Plan ..... „................... .. 118
Schedule of Changes in Total OPEB Liability and Related Ratios.................................„.,„..„„„.,...,,.„„„...,, 120
Schedule of Contributions - OPEB Plan........... .......... „ ......... ............ ............. 121
Supplementary Information:
General Funds:
Combining Balance Sheet ........................ ......... ...... ............... ..................... .........,. 124
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances ........................... 126
Nonmajor Governmental Funds:
Combining Balance Sheet ................... ......„.. .. ., ,.............., ......... ,.,....,........ 133
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .......................... 138
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual:
State Gas Tax Special Revenue Fund ..................... .................... 143
Residential Sound Insulation Special Revenue Fund-- .......,... 144
Certified Union Program Agencies Special Revenue Fund .....................................„,.............,.„.. 145
Community Development Block Grant Special Revenue Fund .................................................. 146
Asset Forfeiture Special Revenue Fund .................. ,,. ............... 147
Prop A Special Revenue Fund ..................... ...... .... ....... ... 148
Prop C Special Revenue Fund ..................... ........................ ., 149
Traffic Safety Special Revenue Fund ......... ........ „...,....,.......... .................. 150
Air Pollution Reduction Special Revenue Fund...... ...... .............. 151
SB 821 Special Revenue Fund ........ ......... ......... ........„ .,. w..... ...,...,. ................ 152
Agreement No. 6085A
City of El Segundo
Comprehensive Annual Financial Report
For the Year Ended September 30, 2020
Table of Contents
FINANCIAL SECTION Continued Page
Supplementary Information (Continued):
Nonmajor Governmental Funds (Continued):
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (Continued):
C.O.P.S. Special Revenue Fund---- ........... 153
Measure R Special Revenue Fund.... .....-- ......... 154
Federal Grants Special Revenue Fund ...................„. . , ........ ........, ..„............. 155
State Grants Special Revenue Fund ............. .....„,.. ........,......... .,................. .,..... '156
PSAF Property Tax Public Safety Special Revenue Fund ........ ........ .........„„.,,,................,.......... 157
Senior Housing Special Revenue Fund .......... ............. ................„.............. .,.,..„..„........ .......... ...,. 158
Measure M Special Revenue Fund.............................................................................................. 159
SB 1 Special Revenue Fund ........................ ......„., ,................,.. .... 160
Facility Lease Debt Service Fund.— .. ......... .......... ....... ...... ..„,.......... ,..,....., 161
Capital Improvements Capital Projects Fund ......................................... ................... ...... ........ -- 162
Internal Service Funds:
Combining Statement of Net Position ................ ..................„...„.............. ..,.......,......,................ .......... 164
Combining Statement of Revenues, Expenses and Changes in Net Position ..................................... 165
Combining Statement of Cash Flows ............................ .........„,..... . ................ 166
Fiduciary Funds:
Statement of Changes in Fiduciary Assets and Liabilities ... .,.......„. ......... ........ ...........,,,. 168
STATISTICAL SECTION Unaudited
Description of Statistical Section Contents ............................................ .......... ---- ... ..„..... ........ ............. --- 171
Financial Trends:
Net Position by Component - Last Ten Fiscal Years...................................................................................... 172
Changes in Net Position - Last Ten Fiscal Years............................................................................................ 174
Fund Balances of Governmental Funds - Last Ten Fiscal Years ......... ............. .............„...„................ ---- 176
Changes in Fund Balances - Governmental Funds - Last Ten Fiscal Years .............. .......„.,,................. ........ 178
Agreement No. 6085A
City of El Segundo
Comprehensive Annual Financial Report
For the Year Ended September 30, 2020
Table of Contents
sT I isTICAL SECTION (Unaudited) 'Continued'
Revenue Capacity:
Pate
Principal Sales Tax Producers - Current Year and Nine Years Ago............._..............,..,...._....,,................. 180
Principal Property Tax Payers - Current Year and Nine Years Ago .......... ......... ........ .......,........ 181
Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years ........................... 182
Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years............................................................. 183
Property Tax Levies and Collections - Last Ten Fiscal Years ................ ...... .... 184
Debt Capacity:
Ratio of General Bonded Debt Outstanding - Last Ten Fiscal Years............................................................. 185
Ratio of Outstanding Debt by Type - Last Ten Fiscal Years ...... ................. ......... ..... ........,...,, 186
Directand Overlapping Bonded Debt............................................................................................................. 189
Legal Debt Margin Information - Last Ten Fiscal Years .......................................... 190
Demographic and Economic Information:
Demographic and Economic Statistics - Last Ten Calendar Years................................................................. 192
Principal Employers - Current Year and Nine Years Ago ........ ......... ............ 193
Operating Information:
Full -Time and Part -Time City Employees by Function - Last Ten Fiscal Years ............................................ 194
Operating Indicators by Function - Last Ten Fiscal Years............................................................................. 196
Capital Asset Statistics by Function - Last Ten Fiscal Years.......................................................................... 198
Agreement No. 6085A
March 29, 2021
Honorable Mayor, Members of the City Council, City Manager, and citizens of El Segundo:
State law requires that every general-purpose local government publish each fiscal year a
complete set of audited financial statements. This report is published to fulfill that requirement
for the fiscal year ended September 30, 2020.
Management assumes full responsibility for the completeness and reliability of the information
contained in this report, based upon a comprehensive frame -work of internal control that it has
established for this purpose. Because the cost of internal control should not exceed anticipated
benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial
statements are free of any material misstatements.
CliftonLarsonAllen LLP (CLA), formerly White Nelson Diehl Evans LLP ("DE), an
Independent CPA Firm, has issued an unmodified ("clean") opinion on the City of El Segundo's
financial statements for the year ending September 30, 2020. The independent auditor's report is
located at the front of the financial section of this report.
Management's discussion and analysis (MD&A) immediately follow the independent auditor's
report and provides a narrative introduction, overview, and analysis of the basic financial
statements. The MD&A complements this letter of transmittal and should be read in conjunction
with it.
City of El Segundo Profile
The City of El Segundo is located 14 miles southwest of downtown Los Angeles, adjacent to the
City of Los Angeles International Airport. The City was incorporated January 18, 1917, as a
General Law city, with the Standard Oil Company of California refinery as the major industrial
taxpayer and employer. The substantial petroleum base of the local economy remains evident,
although the defense industry emerged as a major segment during World War II. Aerospace
experienced rapid growth during the early 1980's and accounted for a significant share of El
Segundo's industrial growth during those years. A downturn in the aerospace/defense industry
began in the late 1980's, and the industry's recovery took place through consolidation and
diversification into commercial endeavors. The available commercial/industrial space has been
attracting new business -to -business retail services segments, and providing opportunities to
diversify and enhance the revenue source of the City.
Agreement No. 6085A
The City has operated under the Council -Manager Form of Government since 1917. Policy -
making and legislative authority are vested in the City Council (governing body) consisting of
the Mayor and four Councilmembers, all elected on a non -partisan basis. The Council appoints
the government's City Manager, who serves as the organ ization's Chief Executive Officer
(CEO) and in turn, appoints the heads of the departments. Council members serve four-year
terms and are elected at -large. The election schedule alternates with two seats open during one
election cycle and three seats open the next election cycle. The Mayor is selected by the seated
City Council every two years.
The City provides a full range of municipal services, including police and fire protection;
highway, street and infrastructure maintenance and construction; water and wastewater
operations; library services; planning, zoning and code enforcement; recreational and cultural
activities; and general administration. This report includes all funds of the City and those
component units controlled by, and dependent on the City. Accordingly, this report incorporates
financial data for the El Segundo Senior Citizen Housing Corporation.
City Council is required to adopt a final budget by no later than the close of the previous fiscal
year. This annual budget serves as the foundation for the City's financial planning and control.
The budget is prepared by fund, function (e.g., public safety), and department (e.g., Police).
Department Heads may transfer resources within a department. Transfers between departments,
however, must be approved by the City Manager. Any transfers between funds must be approved
by the City Council.
Local economy
El Segundo celebrated its centennial anniversary in 2017, commemorating 100 years of
innovation, leadership, and growth. In 1911, Standard Oil (Chevron) opened its second refinery
in California in what is now E1 Segundo. The city was incorporated 1917 with its foundation as
home to workers in the petroleum industry. Over the last 100 years, El Segundo has become a
thriving business center, home to AT&T, Los Angeles Times, Los Angeles Lakers and Los
Angeles Kings, DaVita Healthcare, and Mattel.
Los Angeles Air Force Base and the Aerospace Corporation are located in El Segundo, and the
City has a longstanding tradition of innovation in Aerospace. Boeing, Northrop Grumman,
Lockheed Martin and Raytheon, are among the many prestigious Fortune 500 companies with
facilities in El Segundo. Over half of all satellites and vehicles in space were manufactured in El
Segundo. Global Positioning Satellite Systems, Global Hawk's unmanned aerial vehicle
surveillance aircraft, and the FA-18 were also developed and conceived in El Segundo.
In addition to aerospace and petroleum, the local economy is comprised of many high -growth
industries, including: bioscience, emerging technology, creative services, sports, entertainment,
and professional services. El Segundo is also home to inventive and growing companies that
will shape our future economy, such as Kite Pharma, JustFab, Beyond Meat, Milleneum Space
Systems, and WPromote. El Segundo has been recognized as the Most Business -Friendly City in
Los Angeles County twice, and offers low tax rates, convenient access to transportation, and a
highly skilled workforce.
it
Agreement No. 6085A
Long-term financial planning
The City's financial security is fundamental to the administration of City policies and practices.
City Council has always been and continues to take a conservative approach in maintaining a
strong financial position by limiting the growth of spending and acquiring additional debt. It has
established a General Fund Reserve, Economic Uncertainty Reserve Fund, and Capital
Improvement Fund to meet the needs of unforeseen circumstances that may occur in the future.
The City has traditionally implemented a strategy of adopting a Citywide Strategic Plan that is
reviewed and updated each year by the City's management and the City Council. Toward the end
of FY 2016-17, the City conducted a series of strategic planning sessions that resulted in the
City's first multi -year Strategic Plan. The current Strategic Plan is a three-year outlook covering
2020-2022. The Strategic Plan will be used as a guideline to set priorities and in development of
the budget.
The City also focuses closely on unfunded pension liabilities the City owes to the California
Public Employees' Retirement System (Ca1PERS). The City's total unfunded pension liability at
September 30, 2020 was about $153 million. These liabilities have been increasing over the past
several years due to:
• CalPERS Board lowering the CalPERS Discount Rate (Assumed Rate of Return) on
Investment Pool Assets from 7.5% to 7.0%;
• Poor CalPERS investment returns;
• Increased cash outflows in the CalPERS investment portfolio ($20.5 billion annually);
• Revising mortality tables and other actuarial assumptions that have negative impacts on
member agencies' rates;
• Shrinking ratio of active vs. retired employees;
• State Legislatures actions resulting in policy mandates on CalPERS to focus on "social
investment" practices that align with the Legislatures ideologies; resulting in divestment
from many market sectors that have performed well; and
• CalPERS amortization methodology on losses and assumption changes that results in
negative amortization
City Council is commended for taking a proactive approach to address the City's rising pension
costs to reduce the City's overall pension liabilities, saving millions of dollars going from City
reserves towards CalPERS pension costs.
Relevant financial policies
The City's general fund reserve policy in FY 2019-20 was increased from a funded level of 19%
(FY 2018-19 policy level) to 20% of the City's current general fund expenditures for its
operating reserves, as well as funding up to $2 million in a separate Economic Uncertainty
Reserve Fund. The goal is to maintain the reserve for the General Fund at 20%, as well as
maintain a reserve of $2 million in the Economic Uncertainty Fund, per current City Council
policy direction.
Il
Agreement No. 6085A
The City takes a conservative approach in relation to incurring debt with a "pay-as-you-go"
approach. It is currently funding 100% of the actuarial required contribution (ARC) for its other
(than pension) post -employment benefits (OPEB).
The elected City Treasurer is charged with managing and investing cash for the City along with
support from the Investment Advisory Committee.
Major initiatives
The City currently has a Capital Infrastructure Plan (CIP) that includes the following projects;
• Annual Sidewalk, ADA ramp installation, Curb and Gutter Restoration Program
• Catch basin insert installations
• City Hall security improvements
• Gateway beautification project
• Local street rehabilitation and slurry seal
• Park Place gap closure project (design phase)
• Plunge replacement scope assessment
• Richmond field renovation
• Sewer main repairs
• Water infrastructure improvements
• Water meter conversion
• Various smaller projects that have provided enhanced benefits to the community
Acknowledgements
The preparation of this report would not have been possible without the efficient and dedicated
service of the entire staff of the Finance Department. We wish to express our appreciation to all
members of the department who assisted and contributed to the preparation of this report. Credit
also must be given to the mayor and the governing council for their unfailing support for
maintaining the highest standards of professionalism in the management of the City of El
Segundo's finances.
Respectfully submitted,
Joseph Lillio
Director of Finance/Chief Financial Officer
IV
Agreement No. 6085A
CITIZENS OF
EL SEGUNDO
CITY CITY CITY
TREASURER COUNCIL CLERK
.. ................
CITY CITY
MANAGER a ATTORNEY
INFORMATION
HUMAN
SYSTEMS
RESOURCES
FINANCE
POLICE
PLANNING &
FIRE
n,a��ww
BUILDING SAFETY
�ww �r, row
......
PUBLIC
RECREATION
WORKS
& PARKS
LIBRARY
Agreement No. 6085A
Name
Drew Boyles
Chris Pimentel
Carol Pirsztuk
Lance Giroux
Scot Nicol
Scott Mitnick
Mark Hensley
Matthew Robinson
Tracy Weaver
Barbara Voss
Joseph Lillio
Rebecca Redyk
Bill Whalen
Christopher Donovan
Melissa McCollum
Sam Lee
Elias Sassoon
Charles Mallory
CITY OF EL SEGUNDO
September 30, 2020
CITY COUNCIL MEMBERS
Mayor
Mayor Pro Tern
Council Member
Council Member
Council Member
CITY OFFICIALS
CITY ADMINISTRATION
E
Term Ex ires
June 2024
June 2022
June 2024
June 2024
June 2022
City Manager
City Attorney
City Treasurer
City Clerk
Deputy City Manager
Chief Financial Officer
Director of Human Resources
Chief of Police
Fire Chief
Director of Community Services
Director of Development Services
Director of Public Works
Director of Information Systems
Agreement No. 6085A
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of El Segundo
California
For its Comprehensive Annual
Financial Report
For the Fiscal Year Ended
September 30. 2019
Executive Director CEO
vii
Agreement No. 6085A
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vnl
Agreement No. 6085A
CliftonLarsonAllen LLP
CLAconnect.com
r-
INDEPENDENT AUDITORS' REPORT
To the Honorable Mayor and
the Members of the City Council
of the City of El Segundo
El Segundo, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business -type
activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information
of the City of El Segundo, California (the "City"), as of and for the year ended September 30, 2020, and the related
notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the
table of contents.
Management's Responsibilityfor the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes 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.
Auditors' Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the
financial statements of the El Segundo Senior Citizen Housing Corporation (dba Park Vista), which represents
100% of the assets, net position, and revenues of the discretely presented component unit. Those statements for
the year ended December 31, 2019 were audited by other auditors whose report has been furnished to us, and our
opinion, insofar as it relates to the amounts included for El Segundo Senior Citizen Housing Corporation, is based
solely on the report of the other auditors. We conducted our audit in accordance with auditing standards generally
accepted in the United States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial staternents are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
basic financial statements. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditors consider internal control relevant to the City's preparation and fair
presentation of the financial statements 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, we express no such opinion. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
A member o`
Nexia
International 1
Agreement No. 6085A
Opinions
In our opinion, based on our audit and the report of other auditors, the financial statements referred to above
present fairly, in all material respects, the respective financial position of the governmental activities, the business -
type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund
infonnation of the City as of September 30, 2020, 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.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis, budgetary comparison schedule, schedules of changes in net pension liabilities and related
ratios - CalPERS miscellaneous rate plan, CalPERS safety rate plan, and public agency retirement system defined
benefit plan, schedule of the City's proportionate share of the net pension liability and related ratios - CalPERS
safety rate plan, schedule of contributions - CalPERS miscellaneous rate plan, CalPERS safety rate plan, and
public agency retirement system defined benefit plan, schedule of changes in total OPEB liability and related
ratios, and schedule of contributions — OPEB, identified as Required Supplementary Information (RSI) in the
accompanying table of contents, be presented to supplement the basic financial statements. Such information,
although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board,
who considers it to be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. We have applied certain limited procedures to the RSI 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.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise
the City's basic financial statements. The introductory section, the combining general fund financial statements,
the combining and individual nonmajor fund financial statements and budgetary comparison schedules
(supplementary information), and the statistical section are presented for purposes of additional analysis and are
not a required part of the basic financial statements.
The supplementary information is the responsibility of management and were derived from and relates directly to
the underlying accounting and other records used to prepare the basic financial statements. Such infonnation 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, supplementary infonnation is fairly stated, in all material respects, in
relation to the basic financial statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of
the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.
Agreement No. 6085A
trovisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to
testing, • no I to prov I De an R�pinlon 011 LHC III LCHIU1 URI I LI • I fue, TTFdj
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.
CfiftonLarsonAllen LLP
Irvine, California
March 29, 2021
Agreement No. 6085A
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Agreement No. 6085A
Management's Discussion and Analysis
As management of the City of El Segundo, California (City) we offer readers of the City's financial
statements this narrative overview and analysis of the financial activities of the City of El Segundo for
the fiscal year ended September 30, 2020. We encourage readers to consider the information presented
here in conjunction with additional information that we have furnished in our letter of transmittal and
the City's financial statements.
Financial Highlights
The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $33,125,282
(total net position). The City had an unrestricted net position of ($110,553,473). This negative
unrestricted net position is the result of GASB 68 implementation in FY 2014-15 that required all
government entities to place their unfunded pension liabilities onto their agencies Statement of Net
Position.
As of the close of the current fiscal year, the City's governmental funds reported combined ending
fund balances of $55,436,637. Of this amount, $27,457,932 (unrestricted fund balance per GASB 54)
is available for spending at the City's discretion.
At the end of the current year, unrestricted fund balance per GASB 54 for the general fund was
$23,342,874 which represents 28% of total general fund expenditures, net of transfer out, for fiscal
year 2019-20.
Overview of the Financial Statements
This annual report consists of four parts — management's discussion and analysis (MD&A - current
portion), the basic financial statements, optional combining statements for non -major governmental
funds, and required supplementary information. The MD&A discussion and analysis are intended to
serve as an introduction to the City's basic financial statements. The City's basic financial statements
are comprised of three components: 1) government -wide financial statements 2) fund financial
statements and 3) notes to the financial statements. This report also contains supplementary
information in addition to the basic financial statements.
5
Agreement No. 6085A
Components of the Financial Section
Management's Basic Required
Discussion Financial Supplementary
and Statements Information
Analysis
Government -wide Fund Notes
Financial Financial to the
Statements Statements Financial
Statements
Summar Detail
Y .r ........ .. _.......... ..._...
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. These statements include all assets and liabilities of the City.
The statement of net position presents information on all of the City's assets and liabilities, with the
difference between the two 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.
The statement of activities presents information showing how the City's net position changed during
the most recent fiscal year. All changes in net position are reported as soon as the underlying event
giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and
expenses are reported in this statement for some items that will only affect cash flows in future fiscal
periods (e.g., uncollected taxes and earned but unused vacation leave).
Both of the government -wide financial statements distinguish functions of the City that are principally
supported by taxes and intergovernmental revenues (governmental activities) from functions that are
intended to recover some or all of their costs through user fees and charges (business -type activities).
Governmental activities: Most of the City's basic services are reported in this category, including the
general administration (city manager, city clerk, administrative services, etc.), police and fire
protection, public works and community development. Property taxes, sales tax, transient occupancy
tax, user fees, interest income, franchise fees, state and federal grants, contributions from other
agencies, and other revenues finance these activities.
Business -type activities: The City charges a fee to customers to cover all or most of the costs of
certain services it provides. The City's Water and Sewer utilities and the Solid Waste and Golf Course
operations are reported in this category.
The government -wide financial statements can be found beginning on page 20 of this report.
Agreement No. 6085A
Fund Financial Statements: The fund financial statements provide detailed information about the
most significant funds and other funds — not the City as a whole. Some funds are required by state law
and by bond covenants. However, management has established other funds to help it control and
manage money for particular purposes or to show that it is meeting legal responsibilities for using
certain taxes, grants, and other resources. All of the funds of the City can be divided into three
categories: governmental funds, proprietary funds, and fiduciary funds.
Governmental funds: Most of the City's basic services are reported in governmental funds, which
focus on how money flows in and out of those funds and the balances left at year-end that are available
for spending. The City's governmental funds in fiscal year 2020 are General Fund and Non -major
Governmental Funds. These funds are reported using an accounting method called modified accrual
accounting, which measures cash and all other financial assets that can readily be converted to cash.
The governmental fund statements provide a detailed short-term view of the City's general government
operations and the basic services it provides. Governmental fund information helps determine whether
there are more or fewer financial resources that can be spent in the near future to finance the City's
programs. The differences between the results in the Governmental Fund financial statements to those
in the Government -Wide financial statements are explained in a reconciliation following each
Governmental Fund financial statement.
In addition to the major funds reported separately on the governmental fund balance sheet and in the
governmental fund statement of revenues, expenditures, and changes in fund balances, the City also
maintains 23 special revenue funds, one capital project fund and one debt service fund. Data from
these funds are combined into a single, aggregated presentation referred to as other gover71777ental
,funds.
Individual fund data for each of these non -major governmental funds are provided in the form of
combining statements elsewhere in this report.
The City adopts an annual appropriated budget for all of its governmental and proprietary funds. A
budgetary comparison statement has been provided for the general fund and major special revenue
funds to demonstrate compliance with this budget. This comparison can be found on pages 106 of this
report.
The basic governmental fund financial statements can be found on pages 28-31 of this report.
Proprietary funds: When the City charges customers for the services it provides, these services are
generally reported in proprietary funds. The City maintains two different types of proprietary funds.
Enterprise funds are used to report the same functions presented as business -type activities in the
government -wide financial statements. The City uses enterprise funds to account for its Water, Sewer,
Solid Waste and Golf Course activities. Internal se7•vice funds are an accounting device used to
accumulate and allocate costs internally among the City's various functions. The City uses internal
service funds to account for its equipment replacement cost and general liability and workers'
compensation cost. Because these services predominantly benefit governmental rather than business -
type functions, these funds have been included within governmental activities in the government -wide
financial statements.
7
Agreement No. 6085A
Proprietary funds provide the same type of information as the government -wide financial statements
except that more detail is presented. The proprietary fund financial statements provide separate
information for the Water, Sewer and Golf Course operations, all of which are considered major funds
of the City. The Solid Waste fund is not considered a major fund of the City. The City's internal
service fund is shown separately under the heading of governmental activities.
The basic proprietary fund financial statements can be found on pages 34-43 of this report.
Fiduciary Funds: Fiduciary funds are used to account for resources held for the benefit of parties
outside the government. Fiduciary funds are not reflected in the government -wide financial statements
because the resources of these funds are not available to support the City's own programs. The
accounting used for fiduciary funds is much like that used for proprietary funds. The City's fiduciary
activities are reported in a separate Statement of Fiduciary Assets and Liabilities.
The basic fiduciary fund financial statements can be found on page 46 of this report.
Notes to the financial statements: The notes provide additional information that is essential to a full
understanding of the data provided in the government -wide and fund financial statements. The notes
to the financial statements can be found on pages 51-102 of this report.
Other information: The combining statements referred to earlier in connection with non -major
governmental funds and internal service funds are presented immediately following the notes to the
financial statements. Combining and individual fund statements and schedules can be found on
pages 124-166 of this report.
8
Agreement No. 6085A
Government -wide Financial Analysis
As was referenced earlier, net position may serve over time as a useful indicator of a government's
financial position. In the case of the City, total assets exceeded total liabilities by $33,125,282 at the
close of 2020 fiscal year. A summary of the government -wide statement of net position follows:
Assets.
Current and other assets
Capital assets
Deferred Outflows
of Resources
f.iabibitues:
Current and either liabilities
Noncurrent liabilities
Deferred Inflows of
Resources
Net assets.
Net investment in
Capital assets
Restricted
l.lnre.stnet:ed
Governmental Business Total
Activities Activities Prinutrt' Government
2..02. 2019 210,2,9 N19 2.2N
S '77,432,2.433 `.3 '75,.338,385 S34, 33,556 S 32,193,948 S 111,965,799 10'7,532,333
id3.#.44' A3ia 1053 57,_iICE _NV6v4.6A8:'3 ai IL;73f! 1E N �" �.11 q Rt's.-1 „1 37ds,
Total assets 1 1 itl.7t'I im ik„ y> 9, 5 i till ?ft➢ t,i.� W8,t1 4 2, 'P (M, 2543 ? 1I,'b12 iCl°
12,9.`96,C; 75
'b,'-46 307°p,GU'
Total
liabilities 13e36tr,
9,080,724
t 5,192,879 195,400
13,946,.586
5,190,60.t'3�
.���,°:.
..3 b2 �0 71,v,
21thQ'7r 2,7'U9
i .715,531
6,558,059 320,258
73,885 1.5,4 72,512 15,266,704
5,168,943 18,147,.278 19,115.,529
20,11-'V b11N_.
50,371 9,400,982. 6,608,430
91,747,670
9,3,823,843
30,667,983 31,244,813
122,415,653
12.5,O68,656
21,263,102.
1 i,082.,956
21;203,102
11,082,956
Y 34,�a6,,<a�
Lim. ___
48�^�";54,"�iy"ro4
M ..
�'$,iPe)ldw"d ,.,,..,,___
� ..... *,N !85
9j, L. l it > 43 3
_ LK0, ;
Total net
position $r(21,';3 .fi3b2,b
Q iJo3),47„ti7. t
S5.4,396,..1S) 4,,,.,.,+3I79,,9,$
,;? .l �X
S :2,.V �24
It should be kept in mind while reviewing these schedules that the resources needed to repay this debt
must be provided from other sources, since the capital assets themselves cannot be used to liquidate
these liabilities. These assets are used to provide services to its citizens and are not available for future
spending.
9
Agreement No. 6085A
A summary of the government -wide statement of activities follows:
Revenues
Progirairn revenues.
Charges fair servtces
Operating graints and contrdbutions
Capital grants and contrUmbons
(wnerag revenues.
Ptoperty taxes
I'vansient Occupancy taxes
Sales taxes
LRifity user taxes
Fi[anchisetaxes
Business ficeyv�e taxes
Other taxes
Motor veH6es in heu
Use ofirroney and propeiity,
unrestrtcted
Other
TOW revenues
Expenses
General goverriment
Pubfic saf,(q.,Y
Public works
Community & cufllura➢
haerest on Iloing terror debt
Water
Sewcr
Gou Couirse
Sofid Waste
Total expenses
Excess (deficiency) before transfers
Transfers
Increase (decrease) in net position
Net position at beginning of year (as
restated)
Net position at end of year
Governmental Business
Total
Activities
Activities
Primary Government
�02j)
am 2 121.) NO 1-1)
LO-21-0
20�9
$7,221,812
S9,462,300 %32,084,264 S39,943,697
$39,306,076
T,49,405,997
2,932,3119
4,149, l 87
2,932,3 l 8
4,148187
7.691,323
2,580,996 375,000
7,69L313
2,95.5,996
l 1,8 16,366 11,138,625
8,760,763
14,598,200
112,006,73 1
13,023,091
5,458, ll 67
5,967,863
3,350,323
2,709,760
12,313,710
12,092,451
6,937,601
'7,631,885
3,420,790
1440,102
.......... 16
—1 682,,211
83,836,420
87,465,671
18.698,01 1 17,788,600
43,330,009 40,878,258
l 1,713,451 9,534,893
1 U58,912 11,32➢,339
324,830 337,350
34,125,2t3 79,860,440
-LaL!23j
(288,793) 7,605,23
t 1,8l6,366 111, 13 8,625
8,760,763
14,599,200
12,006,731
13,023,0911
5,458, � 67
5,967,863
3,350,323
2,709,760
12,3113,710
12,082,45t
6,937,601
7,631,895
2911,780 t 39,315 3,7 12,570
3,5'79,4l 7
V26
—A
...............l .706 1T73
32,376,044 41,01,938 1 ➢ 6,2 ➢ 2,464
128,947,609
25,014,971 26,525,468
4,97 8,3' .5 0 3,336,645
1,553,159 11,674,851
248.012
3 t,'794A92 3 t,536,964
581 552 _9 1) 4_4 4
581,551 9,944.974
18,698,01f
l 7,789,600
43,330,009
40,87U59
1 1,'71 3,45 li
9,534,893
W,058,912
t 1,321,339
324,830
337,350
25,014,972
26,525,468
4,978,350
3,336,645
1,553, f 59
1,674,851
248.("02
I t 5,9 l 9,706 111,397,404
—21923 •w q.2.9241 205
292,758 17,550,205
A 2(UNIM -MUE--MJ —�3 7M2,-� )� - — —
2 � D L _tt3, &,L4�624 1 —52 8 -2 11
$(,2 1 -3,5807) S(21047A'1`)) Si,3.779µ;~W98 533% 12115,2$2 S13,2 18, 311� 15,24
10
Agreement No. 6085A
Governmental Activities
The City's net position from governmental activities decreased $288,793. The decrease in net position
is attributed to a decrease in revenues and an increase in expenses in governmental funds due to the
Covid pandemic.
0 In summary:
o Grants and contributions decreased $1.2 million;
o Sales taxes decreased $l .0 million due to a decrease in volume;
o Interest and rentals increased $981 thousand due to higher cash balances and investment
returns;
o Transient Occupancy taxes decreased $5.8 million due to the Covid pandemic;
o Property taxes increased $677 thousand due to increased property values;
o Charges for services decreased $2.2 million due to the Covid pandemic;
o Business license taxes increased by $231 thousand primarily due to a CPI rate increase;
o Franchise taxes increased $641 thousand;
o Public safety expenses increased by $2.5 million primarily due to the Covid pandemic;
o General government expenses increased by $909 thousand due to the addition of new
positions;
o Community & cultural expenses decreased by $1.3 million due to the Covid pandemic;
o Public works expenses increased by $2.2 million due to the Covid pandemic;
The cost of all governmental activities for the year was $84.1 million. The taxes that ultimately
financed these activities were only $60.6 million and a portion of the costs were paid by those who
directly benefited from the programs ($7.2 million) or by other governments and organizations that
subsidized certain programs with grants and contributions ($10.6 million).
Overall, the City's governmental program revenues were $17.8 million; of the remaining "public
benefit" governmental activities, $12.3 million were paid with business license taxes, utility user taxes
of $5.5 million, sales and use taxes of $12.0 million, property taxes of $1 1.8 million, franchise taxes of
$3.4 million, transient occupancy tax of $8.8 million and other revenues and taxes of $12.3 million.
Agreement No. 6085A
GOVERNMENT ACTIVITIES
SOURCES OF REVENUE
FISCAL YEAR 2019-2020
Use of money and 011::ieiiatling:„ graints
property, 4% and aa,oirutiiflbijU�11a111 ills,
Sell vl�ces' 9%
Oflh(w towes, !:VIN,
Business
taxes,
1ropel'11v
I axes,
I IV%
Utility user tax,
7% Salf,s taxvs, 1141,14, Transient
occupancy taxes,
10%
• q
A
W�MII I
•
A : 1
Interest on
Long-term Debt
% GeiiveiraI
111Jubllllllc Salety
521N;
12
Agreement No. 6085A
Business -Type Activities
The programs for the business -type activities include the water, sewer, solid waste and the golf course
operations.
The City's net position from business -type activities increased by $581,551. The cost of all Proprietary
(Business Type) activities this year was $31,794,493.
Charges for services are the major revenue source for the City's business -type activities, accounting
for $32,084,264 of total business -type activity revenue.
The Water Utility net cost of service of $1,389,816 is attributable to a decrease in expenses due to less
potable water purchased during year.
The Sewer Utility net cost of service of ($783,720) is attributable to an increase in expenses due to
an increase in personnel costs during the year.
The Solid Waste fund net cost of service of ($248,012) is new fund and the decrease is no revenue for
the current year and an increase in contractual expenses.
The Golf Course net cost of service of ($68,313) is attributable to a decrease in revenues due to the
closure of some operations due to the Covid pandemic.
Financial Analysis of the Government's Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance -
related legal requirements.
Governmental Funds: The focus of the City's governmental funds is to provide information on near -
term inflows, outflows and balances of spendable resources. Such information is useful in assessing
the City's financing requirements. In particular, unassigned fund balance may serve as a useful
measure of a government's net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City's governmental funds reported combined ending fund
balances of $55,436,637, an increase of $2.9 million or 5% from the previous year. The increase is
primarily due to an increase in revenue from developer fees. The City's General Fund decreased $3.2
million due to a decrease in revenues and higher expenditures due to the Covid pandemic. The
remaining amount is an increase in the non -major Governmental funds of $6.0 million which is largely
due to unspent funds in the Capital Improvement fund and various grant funds. The portion of fund
balance that is unreserved, undesignated for all governmental funds is $20.8 million which represents
amounts available for spending at the government's discretion.
Additionally, there are portions of the identified combined ending fund balance that are classified to
indicate (1) it has been assigned to liquidate contracts and purchase orders of the prior period $560,379
(2) it represents nonspendable amounts for inventory, receivables and prepaid costs $8,022,692, (3) for
a variety of other restricted and assigned purposes $26,091,700. More details can be found in Note 13.
N
Agreement No. 6085A
GOVERNMENTAL FUND BALANCE
FISCAL YEAR 2019-2020
Otheii
ove ii ri r,
u xi i
1 III""'m111m 141
mII/
Major Funds: There is one major fund on the balance sheet for governmental funds. This is the
general fund, the chief operating fund of the City. At the end of the current fiscal year, the available
fund balance (assigned and unassigned) was $23,342,874 which represents 65% of total fund balance
of $35,762,880. As a measure of the general fund's available resources, it may be useful to compare
restricted and total fund balance to total fund expenditures. The available fund balance represents 28%
of total general fund expenditures, net of transfer out, while total general fund balance represents 43%
of that same amount.
Proprietmy Funds: The City's proprietary funds provide the same type of information found in the
government -wide financial statements but in greater detail.
Ending unrestricted net position for the proprietary funds is $25,469,246 for the Water Utility Fund,
$4,168,090 for the Sewer Utility Fund, a negative $248,012for the Solid Waste Fund and a negative
$5,696,167 for the Golf Course Fund. The total change in net position for the City's four proprietary
funds is as follows:
The Water Utility's net position increased by $1,632,908 or an increase of 5% over net
position of the prior year due to lower expenses;
The Sewer Utility's net position decreased $735,032 or a decrease of 5% over net
position of the prior year due to a decrease in revenues and an increase in expenses;
14
Agreement No. 6085A
The Solid Waste's net position decreased $248,012 due to contractual expenses; and
The Golf Course net position decreased $68,313 or a net decrease of 2% over the prior
year due to lower revenues.
Other factors concerning the finances of these three funds have already been addressed in the
discussion of the City's business -type activities.
General Fund Budgetary Highlights
During the year, with the recommendation from the City's staff, the City Council revised the
expenditure City budget several times. Adjustments were made as the City's staff requested additional
appropriations to cover the cost of projects that either had change orders for additional work, or the
estimated cost at the beginning of the project was underestimated. All amendments that resulted in a
net increase in appropriations are approved by the City Council.
Appropriations
Differences between the original budget and the final amended budget of the General Fund resulted in
a decrease in appropriations of $4,130,651, or a net decrease in budgetary fund balance of $4,130,651.
• General Government encumbrances decreased $1,381,209.
0 Public Safety encumbrances decreased $1,652,790.
• Public Works encumbrances decreased $219,982.
• Community & Cultural encumbrances decreased $887,221.
Over-all, the general fund was over budget when comparing budget to actual. This was due to
additional expenditures due to the Covid pandemic. The most significant savings were in General
Government. The reasons for these savings are as follows:
• The General Government Departments came in $536,119 over budget, primarily in salaries and
benefits and operation and maintenance expenditures.
• The Public Safety Departments came in $1,857,760 over budget primarily in salaries and
benefits.
• The Public Works Departments came in $653,392 under budget primarily in contractual
services and operations and maintenance expenditures.
• The Community and Cultural Departments came in $1,176,741 under budget salaries and
benefits due to unfilled vacancies and lower operations and maintenance expenditures due to
the Covid pandemic.
15
Agreement No. 6085A
Revenue
Differences between the final budget and the actual revenues resulted in an increase of $5,629,882, or
an 8.4% increase in budgeted revenues.
Some significant variances between the final budget and actual revenues are as follows:
• Interest and Rentals increased $2,588,000 due to an increase in portfolio returns,
• Sales and Use Taxes increased $1,331,000 above the final budget is mainly attributable to
increased online sales volumes.
• Utility Users Taxes increased $497,000 above the final budget is mainly attributable to an
increase in electric utility taxes.
• Property Taxes increased $585,000 above the final budget is attributable to an increase in
property values.
• Transient Occupancy Tax decreased $776,000 due to lower hotel occupancy.
For the City's general fund, amounts available for appropriation of $66,967,992 was $5,629,882 lower
than actual revenues of $72,597,874. Actual ending expenditures not including transfers out were
$74,662,548 which was $751,409 more than the final budget of $73,911,139, not including transfer
out. The net effect of these variances between actual and budgeted was an increase in budgetary fund
balance of $4,878,473. Therefore, there was an increase in ending fund balance.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets: The City's investment in capital assets for its governmental and business -type
activities as of September 30, 2019 amounts to $130,635,088 (net of accumulated depreciation). This
investment in capital assets includes land, buildings and improvements, vehicles and equipment, park
facilities, roads, highways, streets and bridges.
Governmental Business -Type Total
Activities Activities Primary Government
2020 2019 2020, IM :i�eM 8019
Capital assets not being depreciated
Land s 29,522.,040 s29,.522,040 s 5,999,980 $ 5,999,980 S 3.5„522,020 s 35,522,020
_.. - 2.� 6.93 tro Lt 43,1 461) Sro34 �i„r7 8L4
Construction in progress 1_63mm �, 227.326 ,,,.......... Im ,.,
Total capital assets not being depreciated iL6 5.9,F , 66 , L'Ld? L, 1, fa ?ldi 01 g 5 9j, „ L54 a�059384.
Ca14uitai assets being depreciated, net
Buildings and improvements
18,053,074
18,850,081
2„565,624
2,720,251
20,618,698
2S,570,332.
Vehicles and equipment
7,128,070
'7,491,667
l 5,498
67,324
7,'l43,569
7,549,491
Infrastructure
15 1t10,6'P2
A(7,4r?.996a,
'P ti1, W5,
St"SC.��43
k")hs8 12a
30a1Mgr
Total capital assets being depreciated, net
12,7tr SL4'��4
"?�T : 1 ,(()67,
' 1 ZmtlLD7ll
Sit 653,2:
Total capital assets, net
°3 `Ci:fldD
,.?1.3.SaS 132S)W+S.S77.13'.1
t7 3? _:;3tl,
all t S.d
Vim;
16
Agreement No. 6085A
Additional information on the City's capital assets can be found in Note 6 of the Notes to Financial
Statements in this report.
Long-term debt: The City's governmental activities total debt increased by $1,578,952. The City's
business -type activities total debt increased by $11,740, which is attributable to an increase in
compensated absences in the Water and Sewer Fund. City-wide, compensated absences increased by
$344,973 and Claims and Judgments increased by $1,626,000. Capital parking structure lease
decreased by $54,286 and facility lease decreased by $325,996.
Compensated atrsences
C:i,aiirns and judgrinetnts
C::ro.lruW leases rmrknng s'tr ucluire
Facil4y lease
Total long-term debt
Governmental Business -Type Total
Activities ketlyifies Primary Government
fl'r( 2y>.12 2f:'?t1 M2 M _0 9
$)J04,9) I S4,77'k,678 b2➢6,706 .i,204,966 `rr5,:321,617 $4.976,644
12.,926,000 11,300,000
2.024,903 2,079,189
➢2,926,O00
&➢,300,000
2,02.4,903
2,0719,'089
6 i 7K,t164,
Pro.1�04 6159
v �C ro _ ,a? ab 'ia 2.1 ,` Q6 1. _. ib ?? 1.tW 15i1r : 21 t y
_1 i 4 11 eta,
Additional information on the City's long-term debt can be found in Note 7 of the Notes to Financial
Statements in this report.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS
In preparing the budget for 2019-2020 the following economic factors significantly impacted the
budget process:
0 Increase cost in CaIPERS retirement benefits for employees and funding of GASB 68 liability.
0 Performance of national, state and primarily local economy and its impact on E1 Segundo's
major revenue sources.
CONTACTING THE CITY'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors
with a general overview of the City of E1 Segundo's finances and to show the City's accountability for
the money it receives. Questions concerning any of the information provided in this report or requests
for additional financial information should be addressed to the City's Finance Department at the City
of El Segundo, 350 Main Street, El Segundo, CA 90245.
17
Agreement No. 6085A
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18
Agreement No. 6085A
INANC.AL STATEMENTS
19
Agreement No. 6085A
City of El Segundo
Statement of Net Position
September 30, 2020
Primary Government
Component Unit
Park Vista
Governmental
Business -type
Senior Housing
Activities
Activities
Total
December 31, 2019
ASSETS
Current assets:
Cash and investments
$ 55,207,959
$ 36,711,853 $
91,919,812
427.887
Receivables:
'Taxes
4�566,739
-
4.566.739
Accounts
663,176
3,491548
4,156,724
Interest
290fi21
-
290,621
Notes and loans
66,905
66,905
Internal balances
5,92.3,302
(5,9231,302)
Due from other governments
970,492
-
970,482
Inventories
100,264
54,225
154,489
-
Prepaids and other assets
9,642,795
197,232
9,840,027
4,836.
Total current assets
77,432,243
34,533,556
111,965,799
432,723
Noncurrent assets:
Restricted cash
4,482,363
-
4,482,363
836,834
Capital assets, not being depreciated
29,685,938
6,296,916
35,982,854
Capital assets, net of depreciation
70v281,167
24,371,067
94,652,234
451,014
Total noncurrent assets
1104,449,468
30,667,983
135.117,451
1,287,848
Total assets
181,881,711
65,201,539
247,083,250
1,720,571
DEFERRED OUTFLOWS OF RESOURCES
Defer -red outflows of resources related to pensions 13,754-837 116,615 13,871,452
Deferred outflows of resources related to OPEB 1,522,275 78,785 1,601,060
Total deferred outflows of resources 15,277,112 195,400 15,472,512
See accompanying Notes to the Financial Statements, 20
Agreement No. 6085A
City of El Segundo
Statement of Net Position (Continued)
September 30, 2020
Current liabilities:
Accounts payable
Accrued liabilities
Retention payable
Accrued interest
Uneamed revenue
Deposits payable
Long-term liabilities - due within one year
Total current liabilities
Noncurrent liabilities:
Long-term liabilities - due in more than one year
Aggregate net pension liability
Net other postemployment benefit liability
Total noncurrent liabilities
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources related to pensions
Deferred inflows of resources related to OPEB
Total Deferred Outflows of Resources
NET POSITION
Net investment in capital assets
Restricted for:
Public safety
Public works
Community and cultural
Debt services
Pension
Total restricted
Unrestricted (deficit)
Total net position
I........ . Goverment
Com I�Tent UnitPrimHy
Park Vista
Governmental Business -type
Senior housing
Activities Activities Total
December 31. 2019
L830,343
4,749,904
6,580,247
12,441
2,338,129
116,228
2,454,357
-
16,469
16.469
29,391
29,391
-
325,086
24,908
349.994
3,317
1,494,219
96,730
1,590,949
55,892
6,923,038
202,833
T125,871
12,956,675
5,190,603
18,147,278
71,650
19,310,840
13.873
1%324,713
149353,661
4,077,830
153,431,491
27,692,790
l . -, 13 3.2 25
29,126,015
196,357,291
5,524,928
201,882,219
209,313,966
10,715,531
220,029,497 7L650
3,191,909
15,485
3,207,394
5,888,815
304,773
6,193,588
9,080.724
320,258
9,400,982
91,747.670
30,667,983
122,415,653 451.014
1,627,378 1,627,378
2,493,591 2,493,591
11,629,479 11,629,479
1,030,291 1,030,291
4,482,363 4,482,363
21,263,102 21,263,102 -
(134,246,639) 23,693,167 (110,553,472) 1.197.907
$ (21,235,867) $ 54,3361,150 $ 33,125,283 1,648,921
M
Agreement No. 6085A
City of El Segundo
Statement of Activities
Year Ended September 30, 2020
Program Revenues
Operating
Capital
Total
Charges for
Contributions
Contributions
Program
Functions/Programs
Expenses
Services
and Grants
and Grants
Revenues
Governmental activities:
General government
18fi98,011
258,538
$
$ 258,538
Public safety
43,330,009
1,545,947
114,867
411768
2,074,582
Public works
11.313,451
26,524
1427,854
1,314,068
2.368,446
Community and cultural
10.058,912
5.,39UO3
1,389,597
5.,963,487
12,743.887
Interest on long-term debt
324,830
Total governmental activities
84,125,213
7,221,812
2,932,318
7,69 J,323
17,845,453
Business -type activities:
Water
25.014,971
26,404,788
26,404,788
Sewer
4,978350
4,194,630
4,194,630
Golf Course
1,553,159
1,484,846
1,484,846
Solid waste
248,012
Total business -type activities
31,794.492
32,084,264
32,084,264
Total primary government
115,919,705
39,306,076
2,932,318
7,691,323
49,929,717
Component unit:
Park Vista Senior Housing
$ 576,442
'762,092
S
-
$ 762,092
See accompanying Notes to the Financial Statements. 22
Agreement No. 6085A
City of El Segundo
Statement of Activities (Continued)
Year Ended September 30, 2020
Net (Expense) Revenue and Changes in Net Position
Primary Government
Component Unit
Park Vista
Goverrunental
Business -Type
Senior Housing
Functions/Programs
Activities
Activities
Total
December 31, 2019
Governmental activities:
General government
9i (I 8,439A73)
S $
(18A39,473)
$
Public safety
(41,255A27)
(41,255,427)
Public works
(8,945,005)
(8.945,005)
Community and cultural
2,684,975
2,684,975
Interest on long-term debt
(324,830)
(324,830)
Total governmental activities
(66,279,760)
(66,279,760)
Business -type activities:
Water
1.389,817
1,389,817
Sewer
(783,720)
(783,720)
Golf course
(68.313)
(68,313)
Solid waste
(248,012)
(248,012)
Total business -type activities
289.772
289,772
Total primary government
(66,279,760)
289,772
(65,989,988)
-
Component unit:
Park Vista Senior Housing
185,650
General revenues:
Taxes:
Property taxes, levied for general purpose
11,816,366
11,816,366
Transient occupancy taxes
8,760,763
8,760,763
Sales taxes
12,006,731
12,006,731
Utility user taxes
5,458,167
5,458,167
Franchise taxes
3_3 50323
3,350,323
Business licenses taxes
12,313,710
12,313,710
Other taxes
6,937ffl1
6,937,601
Total taxes
60,643,661
-
60,643,661
Use ofmoney and property. unrestricted
3,420,790
291,780
3,712,570
8,268
Other
1,926516
1,926,516
Total general revenues
65,990,967
29E780
66,282,747
8,268
Changes in net position
(288,793)
581,552
292,759
193,918
Net position at beginning of year
(20,947,074)
53,7797598
32,832,524
1,455,003
Net position at end of year
$ (21,235,867)
S 54,361,150 S
33,125.283
$ 1,648,921
See accompanying Notes to the Financial Statements, 23
Agreement No. 6085A
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ll
Agreement No. 6085A
FUND FINANCIAL STATEMENTS
25
Agreement No. 6085A
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w
Agreement No. 6085A
GOVERNMENTAL UN: S
FINANCIAL, STATEMENTS
General Fund - To account for and report all financial resources not accounted for and reported in another fund.
Nonmajor Governmental Funds - To account for the aggregate of all the nonmajor governmental funds.
m
Agreement No. 6085A
City of El Segundo
Balance Sheet
Governmental Funds
September 30, 2020
ASSETS
Cash and investments
Restricted cash
Receivables:
Taxes
Accounts
Interest
Notes and loans
Due from other funds
Due from other governments
Inventories
Prepaids
Total assets
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
Liabilities:
Accounts payable
Accrued liabilities
Retentions payable
Due to other funds
Unearned revenue
Deposits payable
Total fiabillities
Deferred inflows of resources
Unavailable revenues
Total deferred inflows of resources
Fund balances:
Nonspendable
Restricted
Assigned
Unassigned (deficit)
Total fund balances
Total liabilities, deferred inflows of
resources, and fund balances
See accompanying Notes to the Financial Statements,
28
Nonmajor
Governmental
General Funds Total
S 22,110,069 $ 21,052,956 $ 43,163,025
4,482,363 4.482,363
4,566,739
4,566,739
552-739
'70,437
623,176
290,487
134
290,621
17,500
49,405
66,905
409,361
409,361
646,269
324,213
970,482
100,264
100,264
7,819,879
85,049
7,904,928.
$ 40995.670
S 21,582,194
S 62,577,864
$ 1,266,119
$ 45 1,366
$ 1,717,485
2,265,341
36,618
2,301,959
2,336
14,133
16,469
-
61969
61969
30.868
294218
325,086
648,796
845,423
1-494,219
4,213,460
1,705,727
5,919,187
1,019,330 202,710 1.222,040
1,019,330 202,710 1,222,040
7,937-643
85,049
8,022,692
4.,482,363
15,473,650
19,956,013
2,534,891
4,161,175
6,696,066
20,807,983
1 (46,117)
20,761,866
35,762,880
19,673,757
55,436,637
$ 40,995,670 $ 21,582,194 $ 62,577,864
Agreement No. 6085A
City of El Segundo
Reconciliation of the Governmental Funds Balance Sheet
to the Government -Wide Statement of Net Position
September 30, 2020
Total Fund Balances -Total Governmental Funds 55,436.637
Amounts reported for governmental activities in the Statement of Net Position are different because:
Capital assets used in governmental activities are not Imancial resources and are not reported in the
funds:
Amount reported in government -wide statement of position:
Capital assets, nondepreciable 29,685,938
Capital assets, depreciable., net (net of $4,476,493 reported in ISF) 65,804,674 95,490,612
Interest is recognized when due, and therefore, interest payable is not reported in the governmental
funds. (29,3391)
Long-term liabilities were not due and payable in the current period. Therefore, they were not
reported in the Governmental Funds' Balance Sheet
Capital lease and facility lease (8,202,966)
Compensated absences (5. 104,912)
Net OPEB liability is not due and payable in the current period and therefore is not reported in the
governmental funds (net of $135,233 reported in ISF) (27,557,557)
OPEB related deferred outflows of resources are not reported in the governmental funds but are
reported in the government -wide financial statements. (net of $7,434 reported in ISF) 1,514,841
OPEB related deferred inflows of resources are not reported in the governmental funds but are
reported in government- wide financial statements (net of$28,757 reported in ISF) (5M0,058)
Aggregate net pension liability is not due and payable in the current period and therefore is not
reported in the governmental funds, (net of $494,468 reported in ISF) (148,859,193)
Pensions related deferred outflows of resources are not reported in the governmental funds but are
reported in the government -wide financial statements. (net of $14,140 reported in ISF)
13,740,697
Pensions related deferred inflows of` resources are not reported in the governmental funds but are
reported in government -wide financial statements (net of $1,878 reported in ISF)
(3,190,031)
Certain revenues in the governmental funds are unavailable because they are not collected
within the prescribed time period after year-end. Those revenues are recognized on the
accrual basis in the government -wide statements.
1,222,040
Internal service funds are used by management to charge the costs of general liability, workers'
compensation and health benefit claims to individual funds. The assets and liabilities of the internal
service fiords are included in the governmental activities in the Government -Wide Statement of Net
Position.
10,163,414
Net position of governmental activities
$ (21,235,867)
See accompanying Notes to the Financial Statements,
29
Agreement No. 6085A
City of El Segundo
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
For the Year Ended September 30, 2020
REVENUES:
Taxes
Licenses and permits
Intergovernmental
Charges for services
Use of money and property
Fines and forfeitures
Developer Fees
Miscellaneous
Total revenues
EXPENDri-iiRES:
Current:
General government
Public safety
Public works
Community and cultural
Capital outlay
Debt Service:
Principal retirement
Interest
Total expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)a
Transfers in
Transfers out
Total other financing sources (uses)
NET CHANGE IN FUND BALANCES
FUND BALANCES..
Beginning of year
End of year
See accompanying Notes to the Financial Statements,
30
Nonmajor
Governmental
General Funds Total
$ 47,730.728
37,055
$ 47,767,783
14.234.600
3,123
14,237,723
-
239L795
2,391 .795
4307.599
509,952
4,817,551
3,392,762
79,494
3,472,256
271083
93,962
367,045
110.876
6,183,080
6,293,956
2,548,226
811,325
3,359,551
72,597,874
10,109,786
82,70T660
18,945,367
19.513
18,964,880
39,958,597
166,081
40,124,678
7,233,202
149,289
7,382,491
8,315,678
1,183,557
9,499,235
15.704
3,146,559
1162,263
54.286 325,995 380281
139.714 186,666 326,380
74,662,548 5,177,660 79,840,208
(2,064.674) 4,932,126 2,867,452
140,000 1,249.000 1,389,000
(1,249,000) (140,000) (1,389,000)
(1,109,000) 1,109,000
(3373-674) 6,041,126 2,867,452
38,936,554 13,632,631 52,569,185
$ 35,762,880 $ 19„673,757 $ 55,436fi3'7_
Agreement No. 6085A
City of El Segundo
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes
in Fund Balances to the Government -Wide Statement of Activities and Changes in Net Position
For the Year Ended September 30, 2020
Net change in fund balances - total governmental funds
Amounts reported for governmental activities in the Statement ol'Activities are different because:
Acquisition of capital assets was reported as expenditures in the governmental funds. However,
in the Government -Wide Statement of Activities, the cost of those assets was allocated over the
estimated useful lives as depreciation expense The following was the amount of capital assets
recorded in the current period:
Capital outlay (net of $530,736 reported in Internal Service Funds)
Depreciation expense on capital assets was reported in the Government -Wide Statement of
Activities, but they did not require the use of current financial resources. Therefore, depreciation
expense was not reported as an expenditure in the g0VCMMemaI funds. (net of $873,996 reported
in Internal Service Funds)
Long-term compensated absences expense was reported in the Government -Wide Statement of
Activities, but it did not require the use of current financial resources Therefore, the change in
long-term compensated absences was not reported in the governmental funds,
Other postemployment benefits and pension expenses were reported in the Government -Wide
Statement of Activities, but it did not require the use of current financial resources. Therefore,
the increase in other postemployment benefits liability and net pension liabilities were not
reported as an expenditure in the governmental funds.
OPEB credit (expense) net of reporting contribution made after measurement date reported in
deferred outflows of resources in the Govemment-Wide Statement of Net Position but
reported as OPEB expense in the governmental fund.
Pension credit (expense) net of reporting contribution made after measurement date reported
in deferred outflows of resources in the Government -Wide Statement of Net Position but
reported as pension expense in the governmental fund,
MUMM
(3,781,273)
Exam
(1849,003) (1,86L588)
Proceeds from long-term debt provided current financial resources to governmental funds, but
issuing debt increased long-term liabilities in the Government -Wide Statement of Net Position,
Principal repayment of leases was an expenditure in the governmental funds, but the repayment
reduced long-term liabilities in the Government -Wide Statement of Net Position.
Principal repayments of long-term debt 380,281
Interest accrual on capital lease and facility lease 1,550 381,831
Certain revenues in the governmental funds are unavailable if they are not collected within
the prescribed time period after year-end. Those revenues are recognized on the accrual
basis in the government -wide statements, 1,128,760
Internal service funds were used by management to charge the costs of certain activities, such as
insurance, to individual funds. The net revenue of the internal service funds was reported with
governmental activities, (2,732)
Change in net position of governmental activities (288,793)
See accompanying Notes to the Financial Statements. 31
Agreement No. 6085A
This page intentionally left blank
32
Agreement No. 6085A
Water Fund - To account for water utility revenues, including service fees and installation charges, and all
expenses related to the construction and maintenance of the City's water distribution system.
Sewer Fund - To account for user charges, fees and all operating costs associated with the operation, maintenance,
upgrade and periodic reconstructions of the City's wastewater collection system.
Golf Course Fund - To account for revenues from user fees and expenses incurred for the operation and
maintenance of "The Lakes at El Segundo" golf facility.
Internal Service Funds - To account for financing of goods and services provided by one department to other
departments of the City on a cost -reimbursement basis.
33
Agreement No. 6085A
City of El Segundo
Statement of Net Position
Proprietary Funds
September 30, 2020
ASSETS
Current assets:
Cash and investments
Accounts Receivable
Inventories
Prepaid items
Total current assets
Noncurrent assets:
Advances to other funds
Capital assets, not being depreciated
Capital assets, being depreciated
Total noncurrent assets
Total assets
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources related to pension
Deferred outflows of resources related to OPEB
Total deferred outflows of resources
See accompanying Notes to the Financial Statements. 34
Nonmajor
Enterprise
Golf Fund
Water Sewer Course Solid Waste
$ 30,318,947
$ 6,394,899
$ 8,007
2,994,618
447,650
51,280
28,803
-
25,422
121,897
75,335
33.464,265
6,907,884
84,709
148,468
148A68
5,999,980
10,000.447
10,245,113
4,125,507
10,148,915
10,393,581
10,125,487_
43,613,180
17,301,465
10,210,196
79,449
37,166
44,366
34,419
123,815
71,585
Agreement No. 6085A
City of El Segundo
Statement of Net Position (Continued)
Proprietary Funds
September 30, 2020
Business® Type
Activities -
Governmental
Enterprise
Activities -
Funds
Internal
Total
Service Funds
ASSETS
Current assets:
Cash and investments
S 36,711,853
S 12.044,934
Accounts Receivable
3,493,548
40,000
Inventories
54,225
-
Prepaid items
197,232
1,737,867
Total current assets
40,456,858
13,822,901
Noncurrent assets -
Advances to other funds
-
5,577,910
Capital assets, not being depreciated
6,296,916
Capital assets, being depreciated
24,371,067
4,476,493
Total noncurrent assets
30,667,983
10,054,403
Total assets
71,124,841
23.877,204
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources related to pension
116,615
14.140
Deferred outflows of resources related to OPEB
78,785
7,434
Total deferred outflows of resources
195,400
21,574
Ma=M
M
Agreement No. 6085A
City of El Segundo
Statement of Net Position (Continued)
Proprietary Funds
September 30, 2020
IWITHTWIM
Current liabilities -
Accounts payable
Accrued liabilities
Retentions payable
Unearned revenue
Deposits payable
Due to other funds
Claims and judgments, current portion
Compensated absences, current portion
Total current liabilities
]Noncurrent liabilities®
Advances from other funds
Claims and judgments, net of current
Compensated absences, net of current
Aggregate net pension liability
Total other postemployment benefit liability
Total noncurrent liabilities
Total liabilities
DEFERRED INFLOWS OF REOSURCES
Deferred inflows of resources related to pensions
Deferred inflows of resources related to OPEB
Total deferred inflows of resources
NET POSITION
Net investment in capital assets
Unrestricted (deficit)
Total net position
See accompanying Notes to the Financial Statements.
36
Nonmajor
Enterprise
Golf Fund
Water Sewer Course Solid Waste
$ 4,077,104
$ 609-748
$ - $
6.3.052
61.443
37.159
117,626
24.908
96,7:30
160,432
184.960
102,969
99,864
4,338,246
746,771
202,966
248,012
-
5.577.9I0
-
13,127
746
2.778.195
1,299,635
807,089
626.136
3,598,411
1,926,517
.5„577,910
7,936,6.57
2,673,288
5,780,876
248,012
10,550
4,935
171,626
133,147
182,176
138.082 -
10,148.915
10,393,581 10,125,487
25,469,247
4,168,099 (5,696,167) (248,012)
$ 35,618,162
$ 4,429,320 $ (248.1112
$ 14,561,680 )
Agreement No. 6085A
City of El Segundo
Statement of Net Position (Continued)
Proprietary Funds
September 30, 2020
Business -Type
Activities -
Governmental
Enterprise
Activities -
Funds
internal
Total
Service Funds
LIABILITIES
Current liabilities:
Accounts payable
4,749,904
$ 112,858
Accrued liabilities
116228
36,170
Retentions payable
Unearned revenue
24.908
Deposits payable
96,730
Due to other funds
345,392
Claims and judgments, current portion
2,502,181
Compensated absences, current portion
202,833
Total current liabilities
5,535,995
2,651,209
Noncurrent liabilities:
Advances from other funds
5,577,910
Claims and judgments, net of current
10,423,819
Compensated absences, net of current
13.873
-
Aggregate net pension liability
4,077,830
494,468
Total other postemployment benefit liability
1-431225
135,233
Total noncurrent liabilities
11,102,838
11,053,520
Total liabilities
16,638,833
13,704,729
DEFERRED INFLOWS OF REOSURCES
Deferred inflows of resources related to pensions
15,485
1,878
Deferred inflows of resources related to OPEB
304,773
28,757
Total deferred inflows of resources
320,258
30,635
Net investment in capital assets
Unrestricted (deficit)
Total net position
37
30,667,983 4,476,493
23,693,167 5,686,921
$ 54,361,150 $ 10,163,414
MEMMM
Agreement No. 6085A
City of El Segundo
Statement of Revenues, Expenses and Changes in Net Position
Proprietary Funds
For the Year Ended September 30, 2020
Business-1-y2e Activities - I.-.site-Trise Funds
Nonmqjor
Enterprise
Golf' Fund
Water Sewer Course Solid Waste
OPERATING REVENUES:
Sales and service charges $ 26,308,717 $ 4,194,630 $ 1,479,846
Interdepartmental charges - - -
Miscellaneous 96..071 - 5,000
Total operating revenues 26.404,788 4,194,630 1,484,846
OPERATING EXPENSES:
Personnel services
2,298,047
1,425,382
624,198
Materials and supplies
128,834
98,888
111,694
Purchased water/utilities
20,326,510
156,949
Insurance and claims
996,300
308,100
53,220
Contractual services
113-560
1,884,461
9,700
248,012
Repairs and maintenance
249,658
219,001
160,210
Administrative cost
714,085
397,875
232.296
Depreciation
187,977
644,643
204,892_
Total operating expenses
25,014,971
4,978,350
I,553,159
248,012
OPERATING INCOME (LOSS)
1,389,817
(783,720)
(68,313)
(248,012)
NONOPERATING REVENUES (EXPENSES)
Interest revenue
243,092
48,688
Loss on disposal of capital assets
Total nonoperating revenues (expenses)
243,092
48.688
INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS
1,632,909
(735,032)
(68,313)
(248,012)
CAPITAL CONTRIBUTIONS
CHANGES IN NET POSITION
1 fi32,909
(735,032)
(68,313)
(248,012)
NEI' POSITION:
Beginning of the year
End of year
See accompanying Notes to the Financial Staternents 38
33,985,253 15,296,712 4,497,633
35,618,162 S 14,561,680 S 4,429,320 S (248,012)
Agreement No. 6085A
City of El Segundo
Statement of Revenues, Expenses and Changes in Net Position
Proprietary Funds
For the Year Ended September 30, 2020
Business-'fype
Activities
Governmental
Enterprise
Activities -
Funds
Internal
Total
Service Funds
OPERATING REVENUES:
Sales and service charges
$ 31,983,193
$
Interdepartmental charges
7,417,158
Miscellaneous
101,071
642,539
Total operating revenues
32,094,264
8.059,697
OPERATING EXPENSES:
Personnel services
4,347,627
517,101
Materials and supplies
339,416
132,101
Purchased water/utilities
20,483,459
Insurance and claims
1,357,620
6.804,820
Contractual services
2,255,733
Repairs and maintenance
628,869
Administrative cost
L344,256
-
Depreciation
1,037,512
873,996
Total operating expenses
31,794,492
8,328,018
OPERATING INCOME (LOSS)
NONOPERATING REVENUES (EXPENSES)
Interest revenue
Loss on disposal of capital assets
Total nonoperating revenues (expenses)
CONTRIBUTIONS
CAPITAL CONTRIBUTIONS
NET POSITION:
Beginning of the year
End of year
39
289,772_
(268,321)
29L780
291.780
-
581,552
(268321)
-
265,589
581,552
(2,732)
53,779,598
10,166,146
$ 54,361,150
$ 10,163,414
Agreement No. 6085A
City of El Segundo
Statement of Cash Flows
Proprietary Funds
For the Year Ended September 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers and users
Payments for insurance claims
Payments to suppliers
Payments to employees
Net cash provided by operating activities
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:
Cash receipts (payments) from (to) other funds
Advance from other funds
Due to other funds
Net cash provided (used) by noncapital
financing activities
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Acquisition and construction of capital assets
Proceeds from sale of assets
Net cash used by capital and
related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest received
Net cash provided by investing activities
Net change in cash and cash equivalents
CASH AND CASH EQUIVALENTS
Beginning of year
End of year
See accompanying Notes to the Financial Statements
40
Business -Type Activities - Enterprise Funds
Norrmaaor
Enterprise
Golf' Fund
Water Sewer Course Solid Waste
$ 26„664,925 $ 4,149,436 $ 1,428,165 $
(2.2,854.350) (2.589,769) (753,986) (248,012)
(1,585,877) (1,026,279) (624,198)
2,224,698 533,388 49,981 (248.012)
248,012
43,568
(99,913)
(56,345) 248,012
(230,291)
(148,468)
(230,291)
(148,468)
243.092
48,688 -
243,092
48,688
2,237,499
433,608 (6,364)
28,091,448 5,951,291 14,371
S 303 l &947 $ 6� $ 8,007 $
Agreement No. 6085A
City of El Segundo
Statement of Cash Flows
Proprietary Funds
For the Year Ended September 30 2020
Business -Type
Activities -
Governmental
Enterprise
Activities
Funds
Internal
Total
Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers and users
$ 32,242,526
$ 8,020,266
Payments for insurance claims
-
(5,117,591)
Payments to suppliers
(26,446,117)
(1,427,1.32.)
Payments to employees
(:.3„2.36,354)
(260,249).
Net cash provided by operating activities
2,560,0.5.5
1,215,294
CASH FLOWS FROM N'ONCAPITAL
FINANCING ACTIVITIES:
Cash receipts (payments) from (to) other funds
248,012
(43,568)
Advance from other funds
43,568
Due to other funds
(99,913)
Net cash provided (used) by noncapital
financing activities
191,667
(43,568)
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Acquisition and construction of capital assets (.378,7.59) (530,.'136)
Proceeds from sale of assets
Net cash used by capital and
related financing activities (:378,759) t50(1,736)
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest received 291,780
Net cash provided by investing activities 291,780
Net change in cash and cash equivalents 2,664,743 640,990
CASH AND CASH EQUIVALENTS
Beginning of year 34,047,110 11,403,944
End of year $ 36,711,853 $ tl104 i 93�1
(Continued)
41
Agreement No. 6085A
City of El Segundo
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended September 30, 2020
RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Operating income (loss)
Adjustments to reconcile operating income (loss) to net
cash provided by operating activities:
Depreciation
(Increase) decrease in:
Accounts receivable
Inventory
Prepaid items
Deferred outflows of resources - pension
Deferred outflows of resources - OPEB
Increase (decrease) in:
Accounts payable
Accrued liabilities
Retentions payable
Uneamed revenue
Deposits payable
Claims andjudgements
Compensated absences payable
Net pension liability
Net other postemployment liability
Deferred inflows of resources - pension
Deferred inflows of resources - OPEB
Total adjustments
Net cash provided by operating activities
Non -Cash Investing, Capital, and Financing Activities
Capital assets contributed by other funds
See accompanying Notes to the Financial Statements, 42
Business -Type Activities - Enterprise Funds
Nonmajor
Enterprise
Golf Fund
Water Sewer Course Solid Waste
$ 1,389.817 $ ('783,720) S (69,313) S (248,012)
187.977
644,643 204,892
260.137
(45J94) (50,741)
(646)
20,388
2.2...453
(9,876)
(60,464)
(27,838)
(16,636)
(16,577)
(258,613)
324,113
(26,338)
17,908
4,319
(7�846)
(81,923)
-
(5,940)
(24,581)
(16,121)
4,659
7.081
891,759
372,792
(255,714)
(57,677)
(21,440)
(10,782)
170.005
132,104
834,881
1,317,108
118.294
$ 2,224J598
$ 533,388 $
49,991 $ (248,012)
Agreement No. 6085A
City of El Segundo
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended September 30, 2020
Business - Type
Activities -
Governmental
Enterprise
Activities
Funds
Internal
Total
Service Funds
RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Operating income (loss)
S 289.772
$ (268,321)
Adjustments to reconcile operating income (loss) to net
cash provided by operating activities:
Depreciation
1-037,512
873,996
(Increase) decrease in:
Accounts receivable
164,202
(39,431)
Inventory
19,742
Prepaid items
12,577
(42,617)
Deferred outflows of resources - pension
(88,302)
(11,998)
Deferred outflows of resources - OPEB
(33,213)
(2,952)
Increase (decrease) in:
Accounts payable
39,162
(1,057,673)
Accrued liabilities
14,381
(133,512)
Retentions payable
(81,923)
Unearned revenue
(5,940)
Deposits payable
(40;702)
Claims and judgements
-
1,626,000
Compensated absences payable
11.740
-
Net pension liability
1,264,551
281,589
Net other posternployment liability
(313,391)
(36,550)
Deferred inflows of resources - pension
(31222)
(1,732)
Deferred inflows of resources - OPEB
302,109
28-495
Total adjustments
2,270,283
1,483,615
Net cash provided by operating activities
$ 2,560,055
S 1,215,294
Non -Cash Investing, Capital, and Financing Activities
Capital assets contributed by other funds
S 265,589
(Concluded)
W
Agreement No. 6085A
This page intentionally left blank
Agreement No. 6085A
CM?M01
FINANCIAL STATEMENTS
Agency Fund
Project Deposits Fund (Refundable) - Accounts for project deposits from developers which will be refundable
after the projects are done.
45
Agreement No. 6085A
City of El Segundo
Statement of Fiduciary Net Position
Agency Fund
September 30, 2020
,,%SSE'1"S:
cash and investments
'Accounis receivable
Total assets
LIABILITIES:
Accounts payable
Deposits payable
Total liabilities
See accompanying Notes to the Financial Statements 46
Agency
Funds
$
426,363
617.00
$
426.980
$
34.131
392.849
426,980
Agreement No. 6085A
NOTES TO THE
FINANCIAL STATEMENTS
Mi
Agreement No. 6085A
This page intentionally left blank
48
Agreement No. 6085A
City of El Segundo
Index to the Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Page
Note I - Organization and Summary of Significant Accounting Policies ...... ........ 51
A.
Financial Reporting Entity..... ........ ..................... .........
,.,..„.. .................. . ......,.. .....,, 51
B.
Basis of Accounting and Measurement Focus ........................................ .... ..... ......... .................. 52
C.
Cash and Investments ......... ......„........... ......... .......,.
........... ......,.. ......,.. ............ .... 55
D.
Fair Value Measurement ................ ...... „.. ....„.,...., ......
....... ............ 56
E.
Interfund Transactions ...................... ......... ......... ...... .....
....... ......... ................. . ............... 56
F.
Inventories and Prepaid Items ......... .... ......... .........
............ ..... ......... ................. ......... 56
G.
Capital Assets... --- ... ......... ............. ..... .........
......... .............................. .................. 56
H.
Interest Payable..........--, . ........................... .. ....... ...............
. ......... ..................... .........,...„., 57
I.
Unearned Revenue ................ ........................ ............
........... ....,w.., .,.,.......,...... 57
J.
Compensated Absences... ....
.............. .,,....., ,........„.,.,...57
K.
Pensions ........ .........a....,,.. .....,.. ....,...,..,....., . .....,..
....., ,,,,.. ....., ........ ............ ., ........,.,,.... 58
L.
Other Postemployment Benefits ("OPEB") Plan...... .,...................„
.............,. 59
M.
Claims Payable .......................................... ......... ......... .........
.., , ......... ....... 59
N.
Lang -Tenn Debt....,.,,...., ................ .................. , ..........
....... ..,.., ,....... ,...,.,.,...,..... 59
O.
Property Taxes .......... .....................
....... 60
P.
Net Position and Fund Balances ................... ......... .........
......,... ......... ..............,. , .,,................... 60
Q.
Use of Estimates ........ ........ .............. ............. ........a,.
.. ,,..., .......... 61
R.
New Accounting Pronouncements—, ......... ......... .........
..........,..... ...,..,.. ......... „..,,....,........ 62
Note
2 - Budgetary Compliance and Deficit Fund Balances.......................................................................
65
A.
Excess of Expenditures over Appropriations ......... ...„.....
............ 65
B.
Deficit Net Positions and Fund Balances...................................................................................................
66
Note
3 - Cash and Investments .................. .............. . ......
......... ......... ....... ................ 66
A.
Deposits .............. ......... ........ ................. .. ......... ..................
......... ......... .....,.., „,...,....,.,.... 67
B.
Investments..... ....... .... ..... .................. . ..........._.......
............. ... 68
C.
Fair Value Measurement ........ . ...... .............................
....,.... ,.,....,.,........ ....... .....,...„....... 69
D.
Risk Disclosures —.., ..... ... ......... ... ......
......... .......„_. ......... .,....,.... .....,,........„.. 69
Note
4 - Notes and Loans Receivables ... ................ .... .....
....... .... ..... . ... ........... 71
A.
Loans to Employees ... ---- ...... ....... .......„.....,.... ,.. ...,..,
...,..,, ........„.......... ......... ........,,........ 71
B.
Residential Rehabilitation Program- ................... .....................
....... ................. 71
Note 5 - Interfund Activities ............................................... ..... ......... ........ ... ....... 71
A. Fund Financial Statements ................. ......... „.........,........ ..,,..... .......,.....,. ... ......,...,,..,..,, 71
49
Agreement No. 6085A
City of E1 Segundo
Index to the Notes to the Basic Financial Statements (Continued)
For the Year Ended September 30, 2020
Pate
Note6 - Capital Assets ................................................... ...... ...„
.„.,....„... ...... .,.... ,........ w........ ......, 73
A. Governmental Activities..„„,„„, ... ,.... ...,....... ____ ........ ..............
............... . ..... ................„ 73
B. Business -Type Activities................„,,...... ...,.....
........... ......... .........„.,,. „ ............. 74
C. Discretely Presented Component Unit ......... .....„................ ....
..,............ ................., ..,..... ..,....„......... 75
Note 7 - Long -Term Liabilities .......... . ........ .........
., . ......... ......... ......,.. ................ 75
A. Governmental Activities ..................................„. ,„ ..., ......
........................, 75
B. Business -Type Activities ............... ......... ..........„..... ..
....... ,....,... .....,„.,....,...,..... ..............,.77
Note8 - Retirement Plans.,„„ ................. ............... ..... .......
...........„,.„ .. .............. ......... ,...,..,...,...... 78
A. Summary...,,,....„ . .... ......... ................... ......... .....„....„..
„ ,.., .,.......... ........„....,.. ,.. ..............,.. 78
B. California Public Employees' Retirement System ...................
.... .... 79
C. Public Agency Retirement System ............... ....„ ,„., .....,...
....,.... ..... ,. , ... ...„..,..,.... 88
Note 9 - Other Post -Employment Health Benefits,_ .........
......... ........... 94
Note10 - Risk Management „.... ......... ......... ......„..... .....
............,,.,.,,...... ...... ........ ..,...........,„„, 99
Note11 -Joint Venture................................................................................................................................. 100
Note 12 - Commitments and Contingencies ................. .........
.......... „........ _ ..,.... ... 101
Note 13 - Classification of Fund Balances. ...... ............. .............
........ ....... ....................,„.. 103
50
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 1 — Organization and Summary of Significant Accounting Policies
The basic financial statements of the City of El Segundo, 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 following
is a summary of the significant policies:
A. Financial Reporting Entity
The City was incorporated on January 18, 1917, under the laws of the State of California and enjoys all the
rights and privileges applicable to a general law city. The City is governed by an elected five -member board.
In evaluating how to define the City for financial reporting purposes, management has considered all
potential component units. The primary criteria for including a potential component unit within the reporting
entity are the governing body's financial accountability and a financial benefit or burden relationship and
whether it is misleading to exclude. A primary government is financially accountable and shares a financial
benefit or burden relationship, if it appoints a voting majority of an organization's governing body and it is
able to impose its will on the organization, or if there is a potential for the organization to provide specific
financial benefits to, or impose specific financial burdens on the primary government. A primary
government may also be financially accountable if an organization is fiscally dependent on the primary
government regardless of whether the organization has a separately elected governing board, a governing
board appointed by a higher level of government, or a jointly appointed board, and there is a potential for
the organization to provide specific financial benefits to, or impose specific financial burdens on the primary
government. The City has no blended component units.
Dise,relet , Presented vented lent tt �a��il
Discretely presented component units are entities that are legally separate from the primary government but
for which omission would cause the primary government's financial statements to be misleading or
incomplete. The component units below do not meet the criteria for blended presentation and therefore, they
are reported separately from the primary government.
The El Segundo Senior Citizen Housing Corporation, dba Park Vista ("the Corporation"), is a California
nonprofit public benefit corporation created by the City of El Segundo in 1984 to operate a low income
senior apartment complex. The apartment complex was built and funded by the City. In 1987, the complex
was ready for occupancy. Rather than operate the complex as a fund of the City, the City elected to form the
Corporation to facilitate better communication with the residents who live there. The Corporation is
managed by a seven -member Board of Directors, which is appointed by the City Council. The City is
financially accountable and has the ability to impose its will on the Corporation which has the potential to
provide specific financial benefits to, or impose specific financial burdens on, the City. As a result, the
activities of the Corporation have been discretely presented. All members of the Board of Directors are
unpaid volunteers.
51
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 1 —Organization and Summary of Significant Accounting Policies (Continued)
A. Financial Reporting Entity (Continued)
DiscreIeN Pr esenled 0,,nytreanew Unit if."rryfir a d
The Corporation's fiscal year end is December 31, which is different than the City's fiscal year end.
Additionally, the financial statements are audited by other independent auditors. Separate financial
statements may be obtained at City Hall, City of El Segundo, 350 Main Street, El Segundo, CA 90245.
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. City resources are allocated to and accounted for in individual funds based upon the purposes
for which they are to be spent and the means by which spending activities are controlled.
The statement of net position reports separate sections for Deferred Outflows of Resources and Deferred
Inflows of Resources, when applicable.
Deterred Ow lour v o ' Resources represent outflows of resources (consumption of net position) that
apply to future periods and that, therefore, will not be recognized as an expense until that time. The City
has items related to pensions and OPEB that qualify for reporting in this category. See Notes 1K, 1L, 8,
and 9 for details on these balances.
De erred hi iows o `Resourcev represent inflows of resources (acquisition of net position) that apply to
future periods and that, therefore, are not recognized as revenue until that time. The City has items
related to pensions and OPEB that qualify for reporting in this category. See Notes 1 K, 1 L, 8, and 9 for
details on these balances.
Lr"rrvernrneni Wide F r'aacrrra aryl y�rrrPr�rra���rFs
The Government -Wide Financial Statements are presented on an "economic resources" measurement focus
and the accrual basis of accounting. Accordingly, all of the City's assets, deferred outflows of resources,
liabilities, and deferred inflows of resources, 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. Fiduciary activities are not included in these statements.
52
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note f — Organization and Summary of Significant Accounting Policies (Continued)
B. Basis of Accounting and Measurement Focus (Continued)
taover ullew @l hIe financial Stateaa ent (Cointinued)
Certain types of transactions are reported as program revenues for the City in three categories:
Charges for services
Operating grants and contributions
Capital grants and contributions
Certain eliminations have been made in regards to interfund activities, payables and receivables. All internal
balances in the Statement of Net Position have been eliminated except those representing balances between
the governmental activities and the business -type activities, which are presented as internal balances and
eliminated in the total primary government column. In the Statement of Activities, internal service 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 from and to other funds
• Transfers in and out
tloveraara enled hund Financial Slaate�ine),ats
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 Sheet. 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 recognized as soon as they are both "measurable" and "available". Revenues are considered
to be available when they are collectible within the current period or soon enough thereafter to pay liabilities
of the current period. For these purposes, the City considers revenues to be available if they are collected
within 60 days of the end of the current fiscal period. The primary revenue sources, which have been treated
as susceptible to accrual by the City, are property taxes, 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.
Reconciliations of the fund financial statements to the Government -Wide Financial Statements are provided
to explain the differences.
Certain indirect costs are included as part of the program expenses reported for individual functions and
activities.
m
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 1 — Organization and Summary of Significant Accounting Policies (Continued)
B. Basis of Accounting and Measurement Focus (Continued)
GovernmentalFundFinancial Stem`McWs 't'"o11m'al—e�D
The City reports the following major governmental fund:
General Fund - The General Fund is used to account for and report all financial resources not
accounted for and reported in another fund.
The City's fund structure also includes the following fund types:
SpcciaY_ li.+w gillie Funds are used to account for proceeds of specific revenue sources that are legally
restricted or otherwise assigned for specific purposes.
Q!p taI P faj cts Funds are used to account for resources restricted or assigned for capital improvements.
Debt Service Funds are used to account for resources restricted or assigned for expenditure of principal and
interest.
11roprie y y,,1° tend FirrqncLr,: ,w, stttments
Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual
basis of accounting. Accordingly, all assets, deferred outflows of resources, liabilities, and deferred inflows
of resources (whether current or noncurrent) are included on the Statement of Net Position. The Statement
of Revenues, Expenses and Changes in 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.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues
and expenses generally result from providing services and producing and delivering goods in connection
with a proprietary fund's principal ongoing operations. The principal operating revenues of the proprietary
funds are charges to customers for sales and services. Operating expenses for the proprietary funds include
the costs of sales and services, administrative expenses and depreciation on capital assets. All revenues and
expenses not meeting this definition are reported as nonoperating revenues and expenses.
A separate column representing internal service funds is also presented in these statements. However,
internal service balances and activities have been combined with the governmental activities and business -
type activities in the Government -Wide Financial Statements. The City's internal service funds include three
individual funds which provide services directly to other City funds. These areas of service include general
liability, workers' compensation, and equipment replacement.
54
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 1 — Organization and Summary of Significant Accounting Policies (Continued)
B. Basis of Accounting and Measurement Focus (Continued)
d'rtV,)r ewrar Fund Fin n a j Saile arc nis (Co atrrr�rsed)
The City reports the following proprietary funds:
,Lntrier,rise Funds
Water Fund - The Water Fund, which is reported as a major fund, accounts for water utility
revenues, including service fees and installation charges, and all expenses related to the construction
and maintenance of the City's water distribution system.
➢ Sewer Fund - The Sewer Fund, which is reported as a major fund, accounts for user charges, fees
and all operating costs associated with the operation, maintenance, upgrade and periodic
reconstructions of the City's wastewater collection system.
Golf Course Fund — The Golf Course Fund, which is reported as a major fund, accounts for
revenues from user fees and expenses incurred for the operation and maintenance of "The Lakes at
El Segundo" golf facility.
> Solid Waste Fund — The Solid Waste Fund, which is reported as a nonmajor fund, accounts for
revenues and expenses related to solid waste.
Internal Service Funds
The Internal Service Funds account for financing of goods and services provided by one department to other
departments of the City on a cost -reimbursement basis.
FUtei ar;t lL'iy111_Fh2gn r d StatcNrrients
Fiduciary fund financial statements include a Statement of Fiduciary Net Position. The City's fiduciary fund
is an agency fund, which is custodial in nature (assets equal liabilities) and does not involve measurement of
results of operations. The agency fund is accounted for using the accrual basis of accounting.
C. Cash and Investments
The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term
investments with original maturity of three months or less from the date of acquisition. All cash and
investments of proprietary funds are held in the City's investment pool. These cash pools have the general
characteristics of a demand deposit account, therefore, all cash and investments in the proprietary funds are
considered cash and cash equivalents for Statement of Cash Flows purposes.
Investments are stated at fair value (quoted market price or best available estimate thereof).
55
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 1 — Organization and Summary of Significant Accounting Policies (Continued)
D. Fair Value Measurement
U.S. GAAP defines fair value, establishes a frarnework for measuring fair value and establishes disclosure
about fair value measurement. Investments, unless otherwise specified at fair value in the financial
statements, are categorized based upon the level of judgment associated with the inputs used to measure
their fair value. Levels of inputs are as follows:
➢ Level 1 — Inputs are unadjusted, quoted prices for identical assets or liabilities in active
markets at the measurement date.
➢ Level 2 — Inputs, other than quoted prices included in Level 1, that are observable for the assets or
liabilities through corroboration with market data at the measurement date.
➢ Level 3 — Unobservable inputs that reflect management's best estimate of what market
participants would use in pricing the assets or liabilities at the measurement date.
E. 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 from/to 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 Government -Wide Financial Statements as "internal balances".
F. Inventories and Prepaid Items
Inventories within the various fund types consist of materials and supplies which are valued at cost on a
first -in, first -out basis. Reported expenditures reflect the consumption method of recognizing inventory -
related expenditures.
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as
prepaid items in both the government -wide and fund financial statements by using purchase method.
A nonspendable fund balance has been reported in the governmental funds to show that inventories and
prepaid items do not constitute "available spendable resources", even though they are a component of
current assets.
G. Capital Assets
In the Govemment-Wide Financial Statements, capital assets are recorded at cost where historical records
are available and at an estimated original cost where no historical records exist. Donated capital assets are
valued at their acquisition value. City policy has set the capitalization threshold for reporting capital assets
at $5,000.
1,
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note I — Organization and Summary of Significant Accounting Policies (Continued)
G. Capital Assets (Continued)
The City defines infrastructure assets as the basic physical assets that allow the City to function. The 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 were not
delineated in the basic financial statements. The appropriate operating department maintains information
regarding the subsystems.
Major outlays for capital assets and improvements are capitalized as projects are constructed. Capital assets
acquired under capital lease are capitalized at the net present value of the total lease payments.
For all infrastructure systems, the City elected to use the "Basic Approach".
Capital assets used in operations are depreciated over their estimated useful lives using the straight-line
method. The lives used for depreciation purposes are as follows:
Buildings/structures and improvements 50 years
Vehicles and equipment 5-50 years
Infrastructure 25-100 years
H. Interest Payable
In the Government -Wide Financial Statements, interest payable on long-term debt is recognized as the
liability is incurred for governmental activities and business -type activities.
In the Fund Financial Statements, only proprietary fund types recognize the interest payable when the
liability is incurred.
L Unearned Revenue
Unearned revenue is recognized for transactions for which revenue has not yet been earned. Typical
transactions recorded as unearned revenues are prepaid charges for services and grants received but not yet
earned.
J. Compensated Absences
It is the City's policy to accrue annual leave when incurred in the Government -Wide Financial Statements
and the proprietary funds. In governmental funds, the costs for annual leave that are expected to be
liquidated with expendable available financial resources are reported as an expenditure and reported as a
liability of the governmental fund only if they have matured.
57
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 1 — Organization and Summary of Significant Accounting Policies (Continued)
J. Compensated Absences (Continued)
A liability is recorded for unused sick leave balances only to the extent that it is probable that the unused
balances will result in termination payments. This is estimated by including in the liability the unused
balances of employees currently entitled to receive termination benefits, as well as those who are expected
to become eligible to receive termination benefits as a result of continuing their employment with the City.
Other amounts of unused sick leave are excluded from the liability since their payment is contingent solely
upon the occurrence of a future event (illness) which is outside the control of the City and the employee.
K. 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 plans' fiduciary net position have been determined on the same basis
as they are reported by the plans (Note 8). For this purpose, benefit payments (including refunds of
employee contributions) are recognized when due and payable in accordance with benefit terns.
Investments are reported at fair value.
The following timeframes are used for pension reporting:
C a PER..,
Valuation Date
Measurement Date
Measurement Period
PARS
Valuation Date
Measurement Date
Measurement Period
June 30, 2019
June 30, 2020
July 1, 2019 to June 30, 2020
June 30, 2018
September 30, 2019
October 1, 2018 to September 30, 2019
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 earnings is amortized straight-line over 5 years. All other amounts are amortized straight-line
over the average expected remaining service lives of all members that are provided with benefits (active,
inactive, and retired) as of the beginning of the measurement period.
58
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 1 — Organization and Summary of Significant Accounting Policies (Continued)
L. Other Postemployment Benefits ("OPEB") Plan
For the purpose of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of
resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City's
OPEB Plan and additions to/deductions from the OPEB Plan's fiduciary net position have been determined
on the same basis as they are reported by the Plan (Note 9). For this purpose, the OPEB Plan recognizes
benefit payments when due and payable in accordance with the benefit terms. Investments are reported at
fair value, except for money market investments, which are reported at amortized cost.
The following timeframes are reported OPEB reporting.
OPEB
Valuation Date June 30, 2019
Measurement Date June 30, 2020
Measurement Period July 1, 2019 to June 30, 2020
Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in
OPEB expense systematically over time. The first amortized amounts are recognized in OPEB expense for
the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred
inflows of resources related to OPEB and are to be recognized in future OPEB expense. The amortization
period differs depending on the sources of gain or loss. The difference between projected and actual
earnings is amortized on a straight-line basis over 5 years. All other amounts are amortized on a straight-line
basis over the average expected remaining service lives of all members that are provided with benefits
(active, inactive, and retired) at the beginning of the measurement period.
M. Claims Payable
Claims payable in the Internal Service Fund represents estimates of claims against the City. The estimated
claims payable represents the City's best estimate of the amount to be paid on workers' compensation and
general liability claims. Losses for claims incurred but not reported are also recorded if the probable amount
of loss can be reasonably estimated.
N. Long -Term Debt
In the Government -Wide Financial Statements and Proprietary Fund Financial Statements, long-term debt
and other long-term obligations are reported as liabilities in the appropriate activities. Bond premium and
discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds
payable are reported net of the applicable bond premium or discount. Bond issuance costs are expensed
when incurred.
The governmental fund financial statements do not present long-term liabilities. Consequently, long-term
debt is shown as a reconciling item in the Reconciliation of the Governmental Funds Balance Sheet to the
Government -Wide Statement of Net Position.
M
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note l — Organization and Summary of Significant Accounting Policies (Continued)
O. Property Taxes
Property taxes are attached as an enforceable lien on property at January 1. Taxes are levied on July 1 and
are payable in two installments on December 10 and April 10. Any unpaid amounts at the end of the fiscal
year are recorded as accounts receivable. The County of Los Angeles bills and collects the property taxes
and substantially remits the amount due to the City in installments during the year. Historically, the City has
received substantially all of the taxes levied within two years from the date they are levied. The County is
permitted by state law (Article XIIIA of the California Constitution) to levy taxes at one percent (1 %) of full
market value (at time of purchase) and can increase the property's value no more than two percent (2%) per
year.
P. Net Position and Fund Balances
In the Government -Wide Financial Statements and proprietary fund financial statements, net position is
classified as follows:
Nel hmestment ira C�eat,��strt _ as — 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.
Rewricied — This component of net position consists of restricted assets reduced by liabilities and
deferred outflows and inflows of resources related to those assets.
t4 estr•icie — 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.
In the Governmental Fund Financial Statements, fund balances are classified as follows;
N'rrLi, — Nonspendable fund balances are items that cannot be spent because they are not in
spendable form, such as prepaid items and inventories, or items that are legally or contractually required
to be maintained intact, such as principal of an endowment or revolving loan funds.
Resetrricied — 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, contributors, laws or regulations of other governments, as well as restrictions
imposed by law through constitutional provisions or enabling legislation.
Crrr unitled — 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, nonnally the governing body, and that remain binding unless removed in the same manner. The
City Council is considered the highest authority for the City. Adoption of a resolution by the City
Council is required to commit resources or to rescind the commitment.
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 1 — Organization and Summary of Significant Accounting Policies (Continued)
P. Net Position and Fund Balances (Continued)
'lasti ne4 — 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 by resolution the City Finance Officer for that purpose.
t,d'raxl::— This amount is for any portion of the fund balances that do not fall into one of the above
categories. The General Fund is the only fund that reports a positive unassigned fund balance amount. In
other governmental funds, it is not appropriate to report a positive unassigned fund balance amount.
However, in governmental funds other than General Fund, if expenditures incurred for specific purposes
exceed the amounts that are restricted, committed or assigned to those purposes, it may be necessary to
report a negative unassigned fund balance in that fund.
Spending Policy
Gow,,r°nme rrt-11'rde rincin as-d Statements astcl the Pr oryietur v Fund
When expenses are incurred for purposes for which both restricted and unrestricted components of net
position are available, the City's policy is to apply the restricted component of net position first, then the
unrestricted component of net position as needed.
Governmental f-und l rrrerra��i�rrf etrtL�rrr�rat.�
When expenditures are incurred for purposes for which all restricted, committed, assigned and unassigned
fund balances are available, the City's policy is to apply in the following order, except for instances wherein
an ordinance specifies the fund balance:
➢ Restricted
Committed
Assigned
➢ Unassigned
Q. 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 certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
61
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 1 — Organization and Summary of Significant Accounting Policies (Continued)
R. New Accounting Pronouncements
Current Year Standards
In May 2020, GASB issued Statement No. 95, Postponement of the Effective Dates of Certain Authority
Guidance, which was effective immediately. This statement provided temporary relief to governments and
other stakeholders in light of the COVID-19 pandemic and postponed the effective dates of certain
provisions in Statements and Implementation Guides that first became effective or are scheduled to become
effective for periods beginning after June 15, 2018, and later.
In June 2020, GASB issued Statement No. 97, Certain Component Unit Criteria, and Accounting and
Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans —an amendment
of GASB Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32. Paragraph 4 of this
statement requires that for purposes of detennining whether a primary government is financially accountable
for a potential component unit, except for a potential component unit that is a defined contribution pension
plan, a defined contribution OPEB plan, or an other employee benefit plan (for example, certain Section 457
plans), the absence of a governing board should be treated the same as the appointment of a voting majority
of a governing board if the primary government performs the duties that a governing board typically would
perform.
Paragraph 5 of this statement also requires that the financial burden criterion in paragraph 7 of Statement
No. 84, Fiduciary Activities, be applicable to only defined benefit pension plans and defined benefit OPEB
plans that are administered through trusts that meet the criteria in paragraph 3 of Statement No.
67, Financial Reporting for Pension Plans, or paragraph 3 of Statement No. 74, Financial Reporting for
Postemployment Benefit Plans Other Than Pension Plans, respectively.
The requirements of these paragraphs did not impact the City.
PendingAAccounting Accounting
GASB has issued the following statements, which may impact the City's financial reporting requirements in
the future:
In January 2017, GASB issued Statement No. 84, Fiduciary Activities. This statement establishes criteria for
identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on
(1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with
whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units
and postemployment benefit arrangements that are fiduciary activities. An activity meeting the criteria
should be reported in a fiduciary fund in the financial statements.
This statement also provides for recognition of a liability to the beneficiaries in a fiduciary fund when an
event has occurred that compels the government to disburse fiduciary resources. Events that compel a
government to disburse fiduciary resources occur when a demand for the resources has been made or when
no further action, approval, or condition is required to be taken or met by the beneficiary to release the
assets. The requirements of this statement are effective for reporting periods beginning after December 15,
2019, and early application is encouraged.
Agreement No. 6085A
City of E1 Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note l — Organization and Summary of Significant Accounting Policies (Continued)
R. New Accounting Pronouncements (Continued)
Pendino Accounfing Standards (CpnL
In June 2017, GASB issued Statement No. 87, Leases. This statement requires recognition of certain lease
assets and liabilities for leases that previously were classified as operating leases and recognized as inflows
of resources or outflows of resources based on the payment provisions of the contract. It establishes a single
model for lease accounting based on the foundational principle that leases are financings of the right to use
an underlying asset for leases with a tenn of more than 12 months. Under this statement, a lessee 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, thereby enhancing the relevance and consistency of
information about governments' leasing activities. For leases with a term of 12 months or less, lessees and
lessors should recognize short-term lease payments as outflows of resources or inflows of resources,
respectively, based on the payment provisions of the lease contract. The requirements of this statement are
effective for reporting periods beginning after June 15, 2021, and early application is encouraged.
In August 2018, GASB issued Statement No. 90, Majority Equity Interests — an amendment of GASB
Statements No. 14 and No. 61. This statement defines a majority equity interest and specifies that a majority
equity interest in a legally separate organization should be reported as an investment if a government's
holding of the equity interest meets the definition of an investment. A majority equity interest that meets the
definition of an investment should be measured using the equity method, unless it is held by a special-
purpose government engaged only in fiduciary activities, a fiduciary fund, or an endowment (including
permanent and term endowments) or permanent fund. Those governments and funds should measure the
majority equity interest at fair value. For all other holdings of a majority equity interest in a legally separate
organization, a government should report the legally separate organization as a component unit, and the
government or fund that holds the equity interest should report an asset related to the majority equity
interest using the equity method. This statement also requires that a component unit in which a government
has a 100% equity interest account for its assets, deferred outflows of resources, liabilities, and deferred
inflows of resources at acquisition value at the date the government acquired a 100% equity interest in the
component unit.
The requirements of this statement are effective for reporting periods beginning after December 15, 2019,
and early application is encouraged. The requirements should be applied retroactively, except for the
provisions related to (1) reporting a majority equity interest in a component unit and (2) reporting a
component unit if the government acquires a 100% equity interest. Those provisions should be applied on a
prospective basis.
In May 2020, GASB issued Statement No. 96, Subscription -Based Information Technology Arrangements.
This statement provides guidance on the accounting and financial reporting for subscription -based
information technology arrangements (SBITAs) for government end users (governments). This statement
(1) defines a SBITA; (2) establishes that a SBITA results in a right -to -use subscription asset —an intangible
asset —and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other
than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures
regarding a SBITA.
R
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 1 — Organization and Summary of Significant Accounting Policies (Continued)
R. New Accounting Pronouncements (Continued)
Pendine Accounting...St ndji:ds Contintied"
The requirements of this statement are effective for fiscal years beginning after June 15, 2022, and all
reporting periods thereafter. Early application is encouraged. Assets and liabilities resulting from SBITAs
should be recognized and measured using the facts and circumstances that existed at the beginning of the
fiscal year in which this statement is implemented.
In June 2020, GAS13 issued Statement No. 97, Certain Component Unit Criteria, and Accounting and
Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans —an amendment
of GASB Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32. Paragraph 6
through 9 of this statement requires that a Section 457 plan be classified as either a pension plan or an other
employee benefit plan depending on whether the plan meets the definition of a pension plan and clarifies
that Statement 84, as amended, should be applied to all arrangements organized under IRC Section 457 to
determine whether those arrangements should be reported as fiduciary activities. The requirements of
paragraph 6 through 9 of this statement are effective for fiscal years beginning after June 15, 2021. Earlier
application of these requirements is encouraged and permitted.
This statement supersedes the remaining provisions of Statement No. 32, Accounting and Financial
Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, as amended, regarding
investment valuation requirements for Section 457 plans. As a result, investments of all Section 457 plans
should be measured as of the end of the plan's reporting period in all circumstances. The requirements of
paragraph 3 of this statement are effective for reporting periods beginning after June 15, 2021. Earlier
application of those requirements is encouraged and permitted.
4
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 2 — Budgetary Compliance and Deficit Fund Balances
A. Excess of Expenditures Over Appropriations
The following funds had expenditures in excess of appropriations:
Excess of
Expenditures over
Appropriations Expenditures Appropriation.
Major Governmental Funds:
General Fund
General government:
City council
308,432
308,625
(193)
City attorney
585,450
753,433
(167,983)
Planning
1,076.748
1,11%803
(43.055)
Non -departmental
6,352,948
7,213,349
(860,401)
Public Safety:
Police
20,490,344
21,275,768
(785,424)
Fire
15,848,044
17ffl5,210
(1,237,166)
Public works:
Solid waste
378,937
465,356
(86,419)
Debt service:
Principal retirement
-
54,286
(54,286)
Interest
139314
(139,714)
Nonmajor Governmental Funds:
Residential Sound Insulation Special Revenue Fund
Community and cultural
-
465
(465)
State Grants Special Revenue Fund
Community and cultural
40,000
53.734
(13,734)
Senior Housing
Community and culture
14,113
78,444
(64,331)
Facility Lease Debt Service Fund
Debt service:
Principal retirement
320,000
325,995
(5,995)
The excess expenditures were covered by carryover
funds from the
prior year, sufficient revenues, and/or
transfers from other available funds.
65
Agreement No. 6085A
City of E1 Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 2 — Budgetary Compliance and Deficit Fund Balances (Continued)
B. Deficit Net Positions and Fund Balance
Funds with deficit fund balances and net position at September 30, 2020 are as follows:
Deficit
Federal Grants Special Revenue Fund $ (46,117)
Solid Waste Enterprise Fund (nonmajor fund) (248,012)
Liabilty Insurance Internal Service Fund (425,063)
Workers' Compensation Internal Service Fund (4,490,440)
The City expects to eliminate the Special Revenue Fund deficits when future reimbursements are received
from granting agencies. The Solid Waste Enterprise Fund expects to eliminate the deficit from future user
charges. The Workers' Compensation Internal Service Fund deficit is expected to be eliminated through
future interdepartmental charges.
For the fiscal year ended September 30, 2020, the Governmental Activities of the City reported a deficit
unrestricted net position of $(134,246,639). This deficit is largely a result of the implementation of GASB
Statement No. 68 in 2015 and GASB Statement No. 75 in 2018 that required the City to report aggregate net
pension liabilities and net OPEB liability on the financial statements. The City's aggregate net pension
liability at September 30, 2020 is $153,431,492, of which $149,353,661 is payable from Governmental
Activities. The City's net OPEB liability at September 30, 2020 is $29,126,015, of which $27,692,790 is
payable from Governmental Activities.
Note 3 — Cash and Investments
The City maintains a cash and investment pool, which includes cash balances and authorized investments of all
funds.
l,r.imar 1, Government
The City had the following cash and investments at September 30, 2020:
Government -Wide Statement
of Net Position
Governmental Business -Type
Activities Activities
Fiduciary
Fund Statement
of Net Position Total
Cash and investments $ 55,207,959 $ 36,711,853 $ 426,363
Resitricted cash 4.482.363 -
Total cash and investments $ 59.690.322 $ 36,711,853 $ 426,363
4,482,363
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 3 — Cash and Investments (Continued)
iarinwr~ Glwkt^erntAmm7„ew1(.'onlirrtru.O
The City's cash and investments at September 30, 2020, in more detail:
Cash and cash equivalents:
Petty cash
Demand deposits
Cash with custodial agent
Restricted cash in PARS 1 ] 5 Trust
Total cash and cash equivalents
Investments:
CAMP
Corporate notes
Negotiable certificates of deposit.
Local Agency Investment Fund
State obligations
Supranational obligations
U.S. Government sponsored enterprise securities
Total investments
Total cash and investments
13,810
5,104,845
249,177
4.482,363
9,850,195
84,351
8,450,847
23,139,906
35,893,104
6,674,397
1276,653
11,459,085
86,978,343
$ 96,828,538
Cash and investments of the discretely presented component unit as of December 31, 2019 consist of the
following:
Deposits with financial institutions $1,264,721
A. Deposits
The carrying amounts of the City's demand deposits were $5,104,845 at September 30, 2020. Bank balances
at that date were $6,201,967, the total amount of which was collateralized or insured with accounts 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,
deposits, which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation ("FDIC").
The City did not waive the collateral requirement for deposits insured by FDIC.
The City follows the practice of pooling cash and investments of all funds. 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.
67
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 3 — Cash and Investments (Continued)
B. Investments
Under the provision of the City's investment policy, and in accordance with California Government Code,
the following investments are authorized:
Authorized Investment Type
Maximum
Maturity
United States Treasury Obligations
5 years
U.S. Government Sponsored Enterprise Securities
5 years
State and Local Agency Bonds
5 years
Bankers' Acceptances
180 days
Commercial paper
270 days
Negotiable certificates of deposit
5 years
Local Agency Investment Fund ("LAIF")
N/A
Non-negotiable certificates of deposits
5 years
Medium -term notes
5 years
Mutual funds
N/A
Money market mutual funds
N/A
Supranational obligations
5 years
Joint Powers Authority Pool
N/A
N/A - Not Applicable
Maximum
Percentage
of Portfolio *
Maximum
Investment in
One Issuer
No Limit
No Limit
No Limit
No Limit
10%
No Limit
40%
No Limit
10%
3%
30%
No Limit
No Limit
$65M
No Limit
No Limit
15%
3%
5%
10%
5%
10%
10%
No Limit
30%
No Limit
The City is a participant in LAIF which is regulated by California Government Code Section 16429 under
the oversight of the Treasurer of the State of California. The City's investments with LAIF at September 30,
2020, included a portion of the pool funds invested in Structured Notes and Asset -Backed Securities:
Structured Notes; debt securities (other than asset -backed securities) whose cash flow characteristics
(coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have
embedded forwards or options.
Asset -Backed ec:u ilies: generally mortgage -backed securities that entitle their purchasers to receive a
share of the cash flows from a pool of assets such as principal and interest repayments from a pool of
mortgages (for example, Collateralized Mortgage Obligations) or credit card receivables.
As of September 30, 2020, the City had $35,893,104 invested in LAIF, which had invested 1.58% of the
pool investment funds in Structured Notes and Asset -Backed Securities. The fair value of the City's portion
in the pool is the same as the value of the pool shares.
Investment in Section 115 Pension Trust - The City established a trust account with Public Agency
Retirement Services (PARS) to hold assets that are legally restricted for use in administering the City's
Ca1PERS pension plans. The Section 115 Pension Trust's specific cash and investments are managed by a
third -party portfolio manager under guidelines approved by the City.
68
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 3 — Cash and Investments (Continued)
B. Investments (Continued)
Irat°evr ient in t"crrtsl'rnrnia Asset hlaarr(z 92n ew Pro era ni ((""IMP)
The City is a voluntary participant in the California Asset Management Program (CAMP) that is regulated
by the California Government Code. 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 CAMP for the entire CAMP portfolio (in relation to the amortized cost of that portfolio). The
balance available for withdrawal is based on the accounting records maintained by CAMP, which are
recorded on an amortized cost basis.
C. Fair Value Measurement
As of September 30, 2020, investments are reported at fair value. The following table presents the fair value
measurements of investments on a recurring basis and the levels with GASB 72 fair value hierarchy in
which the fair value measurements fall at September 30, 2020:
Measurement Input
Significant
Other Observable
Investment T e
lflt 1i:tls dl erel' w
l.lneai� cd
Total
CAMP
$
$ 84,351
84,351
Corporate notes ti}
8,450,847
8,.450,847
Negotiable certificates of deposit t11
23,139,906
23„139,906
Local Agency Investment Fund
35,89.3,104
3.5„893,104
State obligations (1)
6,674,397
6,674,.397
Supranational obligations t`I
1,276,653
1,276,65.3
U.S. Crovemnient sponsored enterprise securities tit
11,459.085'
1.1,459,085
Total
$ 51.,000,888
$ 35,977,45.5
$ 86,978,343
(1) Pricing based on Interactive Data Corporation
All investments classified in Level 2 of the fair value hierarchy are valued using specified fair market value
factors or institutional bond quotes.
D. Risk Disclosures
Interest Rate Risk - As a means of limiting its exposure to fair value losses arising from rising interest rates,
the City's investment policy limits investments to a maximum maturity of five years. At September 30,
2020, the City had the following investment maturities:
Investment 'F e
Fair Value
CAMP
s 84,35P
Corporate notes
8,450,947
Neptiable certificates oCdeposit
73,1139,906
Local Agency Investment Fund
3.5.,993„104
State obligations
6,674,,397
supranational obligations
,276,6:33
U S, Government sponsored enterprise .securaies
I gA5ei A5,
Tenet
"x iwt2 978 h 1 x
Investment Maturities (irr Years)
Less 'Clean 1 Year
I to 2 Years
2 to 3 Years
..............m
3 to 4 Years
.................................................
4 to 5Years
84,351
S
s' -
2,027,925
1.,5.55.060
3,288,5➢2
1,057,.570
.521,790
5,957,804
.5,769,026
4,616„409
5,241,423
➢,,555,244
35,89:3, V 04
2,132,492
317,995
4,224,0t0
504.,880
771;773
2,015915
2Ab 2,640
1109,1S (t
5 2W.670
5 46r4&3779
4 12,2+7091 I
s 1tL13106
s 15,91 tr73
s 2,077,R;14
Z
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 3 — Cash and Investments (Continued)
A Risk Disclosures (Continued)
Cus,fodial Credit RAk - For deposits, custodial credit risk is the risk that, in the event of the failure of a
depository financial institution, the City will not be able to recover its deposits or will not be able to recover
collateral securities that are in the possession of an outside party. For an investment, custodial credit risk is
the risk that, in the event of the failure of the counterparty (e.g., broker -dealer), the City will not be able to
recover the value of its investments or collateral securities that are in the possession of an outside party.
Concenfralion of'Ci,,edil Risk - The City did not have any investments in any one issuer that represent 5% or
more of the City's total investments as of September 30, 2020.
Credit Risk - Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to
the bolder of the investment. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization. Presented below is the minimum rating required by (where applicable) the
California Government Code or the City's investment policy and the actual rating (by Standard & Poor's) as
of year-end for each investment type:
Investment Type
CAMP
Corporate notes
Negotiable certificates ordeposit
Local Agency Investment Fund
State obligations
Supranational obligations
U.S. Government sponsored
enterprise securities
Total
Investment Type
Corporate notes
State obligations
U. S. Government sponsored
enterprise securities
TOW
Investment Type
Money market mutual fund
Corporate notes
State obligations
`Total
Minimum
Legal
Rating
Total
AAA
AA- to AA+
1313131 to A-+
Unrated
N/A
84.351
$ 842351
S .
$
$
A
8,450,847
2,763,127
5,687,720
A
23j 39,906
23,139,906
N/A
35,893,104
-
35,893.104
N/A
6,674,397
536,265
4,001607
1,602.240
532285
AA
L276,653
1.276,653
N/A
l 1,459,085
-
10,938,430
-
520,655
86,978,343
$ 1017269
$ 17,705, l 64
$ 7289,960
S 60,085.950
AA+ AA AA- Total
1,042,650 S 1,048,290 672..187 S 2,761127
2,960,247 1,043,360 4,003,607
10,938,430 - 10,938,430
$ 11,981,080 4,008,537 $ 1,715,547 $ 17,705,164
A � A A- BBB I Total
$ 2,079,975 $ 2,055,000 $ 530,025 S 1,022,720 $ 5,687,720
1,602,240 - 1,602,240
$ 2,079,975 $ 3,657,240 $ 530,025 $ 1,022,720 7,289,960
70
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 4 — Notes and Loans Receivables
A. Loans to Employees
The balance of notes receivable in the General Fund consists of loans made to employees for computer
purchases. Participants in the computer loan program is eligible for an initial, interest free loan in the
amount of $4,000. Subsequent loans or amount in excess of the above maximum interest free loan, would be
at the currently interest rate of 3%. All loans would include a 36-month repayment term. The balance at
September 30, 2020 was $17,500.
B. Residential Rehabilitation Program
The balance of notes receivable in the other governmental funds consists of minor home repair loans made
to qualifying homeowners residing within the City. The balance at September 30, 2020 was $49,405.
Residential Rehabilitation Program
CDBG Loans
1
Note 5 — Interfund Activities
A. Fund Financial Statements
Balance
October 1. 2019 additions
$ 54,405 $
Balance
Deletions p
$ (5,000) S
M
$ 54,405 $ $ (5,000) $ 49.405
Due From/To Other Funds - At September 30, 2020, the City had the following due from/to other funds:
Due From Other Funds
Due To Other Funds
General Fund
Nonmajor Governmental Funds
$ 63,969
Golf Course Enterprise Fund
160.432
Nonmajor Enterprise Fund
184,960
ilk
$ 409.361
The interfund amounts from the General Fund to the Nonmajor Governmental Funds and Golf Course
Enterprise Fund are for short-term loans to cover operations.
Advance From/To Other Funds - At September 30, 2020, the City has the following advance
from/advance to other funds, which represents the advance to the Golf Course Enterprise Fund to address
negative cash:
Advance To Other Funds
Equipment Replacement
Internal Service Fund
71
Advance FromOther Funds
Golf Course
Enter rise Fund
Agreement No. 6085A
City of E1 Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 5 — Interfund Activities (Continued)
A. Fund Financial Statements (Continued)
Transfers In/Out - At September 30, 2020, the City had the following transfers in/out, which arise in the
normal course of operations:
Transfers Out
Governmental Funds:
Major Funds:
General Fund
Nonmajor Governmental Funds
Total
Transfers In
Governmental Funds
Nonmajor
General Governmental
Fund Funds Total
$ $ 1,249,000 $ 1249,000
140,000 140,000
I40,000 $ 1.249,000 $ 1,389,000
Administratively, resources may be transferred from one City fund to another. The purpose of the
$1,249,000 of transfers was for subsidizing other funds with the City Council's approvals, such as capital
projects. The $140,000 transfer from the Traffic Safety Nonmajor Special Revenue Fund to the General
Fund provides reimbursement for eligible expenditures.
72
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 6 — Capital Assets
A. Governmental Activities
A summary of changes in capital assets for the governmental activities for the year ended
September 30, 2020 was as follows:
Capital assets, not being depreciated:
Land and rights of way
Construction in progress
Total capital assets, not being depreciated
Capital assets, being depreciated:
Buildings and improvements
Vehicles and equipment
Infrastructure
Total capital assets, being depreciated
Less accumulated depreciation:
Buildings and improvements
Vehicles and equipment
Infrastructure
Total accumulated depreciation
Total capital assets, being depreciated, net
Governmental Activities
Balance Balance
September 30, 2019 Additions Deletions Stember 30, 2020
29,522,040 29,522,040
227,326 1214,123 (1,277,551) t 63,898
29,749,366 1,214,123 (1,277,551) 29,695,938
38,548,209
38,548,209
23,088,565
1,018,782
24,107347
92-740,737
1,152,960
93.893,697
154,377,511
2,171,742
156�549,253
(19,698,128)
(797,007)
(20,495,135)
(15,606,898)
(1,372,379)
(16,979,277)
(46,307391)
(2,485,883)
148,793.674 �
11, 118171
(4-655,269)
6 8(M26&086)
71764,694
(2,483,527)
70,281,167
Governmental activities
capital assets, net $ 102.514.060 1,269,404) (1,277,551) $ 99,967,105
Depreciation expenses were charged to function s/programs of the governmental activities for the fiscal year
ended September 30, 2020 as follows:
General government $ 63,378
Public safety 224,765
Public works 2.670.362
Corrutiunity and cultural 822.768
Internal service funds 873,996_
Total depreciation expense $ 4.655,269
73
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 6 — Capital Assets (Continued)
B. Business -Type Activities
A summary of changes in capital assets for the business -type activities for the year ended
September 30, 2020 was as follows:
Capital assets, not being depreciated:
Land
Construction in progress
Total capital assets, not being depreciated
Capital assets, being depreciated:
Buildings and improvements
Improvements other than buildings
Vehicles and equipment
Infrastructure
Business-]'� lie, Activities
Balance Balance
September 30, 2019 Additions Deletions September 30, 2020
$ 5.999,980 $ - $ - 5,999,980
610,038 394,331 (707,433) 296,936
6,610,018 394.331 (707,433) 6296,916
8.755,787
8,755,787
418,161
418,161
1,095,337
1.095,337
63,494.190 691,861 (13,221)
64,172.830
Total capital assets, being depreciated 73,763,475 691,861 (13,221) 74,441115
Less accumulated depreciation:
Buildings and improvements
(6,300,725)
(133,719)
(6,434,444)
Improvements other than buildings
(152,972)
(20,908)
(173,880)
Vehicles and equipment
(1,027,513)
(52,326)
(lff79,839)
Infrastructure
41-56",47)
(830.559) 13,221
(42,392,985)
Total accumulated depreciation . . .................
(49,046,757)
-
1,03 7,512) 11221 . . . . .
(50,071.048)
...... (50,071.048)
Total capital assets, being depreciated, net
24,716,718
(345,651)
24,371,067
Business -type activities
capital assets, net Si 313X736 $ 48.680 J707,433, 30,66T983
Construction in progress deletions exceed additions to total capital assets, being depreciated, by $15,572 due
to a project that was capitalized in the prior year but was determined to not be capitalizable in the current
year.
Depreciation expenses for business -type activities for the fiscal year ended September 30, 2020 was charged
as follows:
Water
Sewer
Golf course
Total depreciation expense
74
$ 187,977
644,643
204,892
$ 1,037,512
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 6 — Capital Assets (Continued)
C. Discretely Presented Component Unit
A summary of changes in capital assets for the discretely presented component unit for the year ended
December 31, 2019 was as follows:
Capital assets, being depreciated:
Buildings and improvements
Furniture and equipment
Total capital assets, being depreciated
Less accumulated depreciation:
Discretely Presented Component Unit
Balance Balance
January 1., 2019 Additions Deletions December 31, 2019
$ 1,046,041 $ $ $ ],046,041
_298-1542 298,542
1,344,583 1344,583
Buildings and improvements
(576,069)
(35,124)
(611,193)
Furniture and equipment
(276,491)
(5,885)
(282,376)
Total accumulated depreciation
(852,560)
(41,009)
(893,569)
Total capital assets.. being depreciated- net
492..023
(41,009)
451,014
Total capital assets, net
492.023
14 1.009) S
$ 451.014
Depreciation expenses for the discretely presented
component unit for the fiscal
year ended December 31,
2019 was $ 41,009.
Note 7 — Long -Term Liabilities
A. Governmental Activities
A summary of changes in long-term liabilities for governmental activities for the year ended September 30,
2020 was as follows:
Balance Balance Due within Due in rnore
Ocfobcr 1 2019 Additions Deletions Se )ternl)er 30.,' One Year than One Year
Dircct horrowinK.e:
Capital Lease Obligation:
2003 Parking Structure Lease S 2,079,189 S S (54,286) S 2,024.9)03 Si 58,095 S 1,966,808
Facility Lease Obligation:
M05 Douglas ,Street Cap Closure Project 6,50d,059 (325,995) 6,178,064 335,351 5,FA2,713
Other long lerny debt:
Claims payable 11,300,000 4,43.7,996 (2,811,986) 2,926j)(M 2,502, l 8 l W,423,M
Compensated absences 4,77 1#i 9 364,889 (31,6%) 5JO4,91 1 4,027,411 1,077,500
ToW S 24,654926 S IX)2,875 S (3223,923!1 S 2623.3 78 S 6,921038 S R310,841i
Typically, the General Fund has been used to liquidate the liability for compensated absences, claims
payable, and the capital lease obligation. The Norimajor Facility Lease Debt Service Fund has been used to
liquidate the facility lease obligation.
75
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 7 — Long -Term Liabilities (Continued)
A. Governmental Activities (Continued)
Capital i'tal Lease ObliLyation
2003 Parkins ,SLT Ltlag Lease
On June 18, 2002, the City entered into a capital lease agreement with 612 Twin Holdings, LLC to acquire a
two story, three level parking structure and certain retail space. The terms of the lease include an initial
payment of $1,100,000, monthly lease payments of $16,167 with an imputed interest rate of 6.80% for 408
months, and a purchase option for $200,000 due on January 1, 2039. The capital asset acquired had a
present value of $3,688,222 ($1,659,700 and $2,028,522 for the building structure and the land,
respectively) with an annual depreciation of $33,194 and accumulated depreciation totaling $555,907 as of
September 30, 2020.
The amount outstanding at September 30, 2020 totaled $2,024,903. The annual debt service requirements on
the capital lease is as follows:
Iis=
2021
2022
2023
2024
2025
2026-2030
2031-2035
2036-2039
Facility Lease Obli ation
ICI
$ 58,095 $
62.171
66.533
71.201
76.196
469,078
544.864
676,765
Interest
135.905
131,829
127.467
122.799
117.804
500,922
279.636
91.071
Total
$ 194,000
194,000
194,000
194.000
194,000
970.000
824,500
76T836
$ 2,024,903 $ 1.507.433 $ 3.532,336
2005 Douglas Street,,,,,G.gp_Qpsure Project
On September 1, 2005, the City entered into a facility lease agreement with the California Infrastructure and
Economic Development Bank ("CIEDB") whereby CIEDB issued bonds in the amount of $10,000,000 to
finance the Douglas Street Gap Closure Project. The City will make rental lease payments over a 30-year
period starting on February 1, 2006, at an interest rate of 2.87% per annum, for annual amounts ranging
from $514,156 to $533,124. Interest payments on the lease obligation are due on February 1 and August 1 of
each year. Base rental payment billing statements will be mailed to the City reflecting the actual amount
owed prior to each base rental payment due date.
76
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 7 — Long -Term Liabilities (Continued)
A. Governmental Activities (Continued)
The amount outstanding at September 30, 2020 totaled $6,178,064. The annual debt service requirements on
the capital lease is as follows:
Fiscal Year
2021
2022
2023
2024
2025
2026-2030
2031-2035
B. Business -Type Activities
Princi al
Interest
Total
$ 335,351
177,310 $
512,661
344,975
167,686
512.661
354.876
157,785
512.661
365,061
147,600
512,661
375.538
137.123
512.661
2,045,683
517.624
2,563,307
2,356,580
206,728
2,563,308
6,178,064
$ 1,511 ,856 $
7,689920
The following is a summary of changes in long-term liabilities for business -type activities for the year ended
September 30, 2020:
Balance Balance Due within Due in more
October 1. 2019 Additions Deletions September 30, 2020 One Year than One Year
Compensated absences $ 204,966 33,629 $ (21,889) $ 216,706 $ 202.833 $ 13.873
Compensated absences are typically liquidated by the Water and Sewer Enterprise Funds,
VA
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 8 — Retirement Plans
A. Summary
The following is the summary of net pension liability and related deferred outflows of resources and
deferred inflows of resources at September 30, 2020 and pension expense for the year then ended.
Governmental Business -Type
Activities Activities Total
Deferred outflows of resources:
Miscellaneous
$
862.975
$
116,615
979,590
Safety
12,685,161
-
12,685,161
PARS
206.701
206.701
Total deferred outflows of resources
S
13.754.837
$
116,615
$
13,871,452
Aggregate net pension liabilities:
Miscellaneous
$
30,176,801
$
4,077,830
$
34,254,631
Safety
118,102,353
-
118,102,353
PARS
1074,507
1.074,507
Total aggregate net pension liabilities
$
149,353,661
$
44T930
$
153,431,491
Deferred inflows of resources:
Miscellaneous
$
114,595
$
15,485
$
130,080
Safety
3,046,383
3,046,393
PARS
30.931
-
30,931
Total deferred inflows of resources
$
3.191,909
S
15.48.5
$
3,207.,.394
Pension Expense:
Miscellaneous
$
2,904,0.57
$
1,144,028
$
4,048,085
Safety
22,464,644
22,464,644
PARS
154.404
154,404
Total pension expense
$
25.521105
$
1 144028
$
26,667,133
The City elected to join PARS as a means to provide additional funding for the CalPERS Miscellaneous and
Safety defined benefit pension plans. The General Fund contains the Section 115 Trust balance restricted
cash balance of $4,482,363 as of September 30, 2020.
78
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 8 — Retirement Plans (Continued)
B. California Public Employees' Retirement System ("CaIPERS")
General Information about the Pension Plan
The City contribution to the California Public Employees Retirement System ("CalPERS"), an agent
multiple -employer defined benefit pension plan for miscellaneous employees and a cost -sharing multiple -
employer defined benefit plan for safety employees. Ca1PERS acts as a common investment and
administrative agent for participating public entities within the State of California. Benefit provisions and all
other requirements are established by state statute and City ordinance. 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 June 30, 2019 Annual Actuarial Valuation Report.
This report and Ca1PERS' audited financial statements are publicly available reports that can be obtained at
Ca1PERS' website under Forms and Publications.
Benefits Provided
Ca1PERS provides retirement and disability benefits, annual cost -of -living adjustments, and death benefits
to plan members and beneficiaries. A classic Ca1PERS member or PEPRA Safety member becomes eligible
for service retirement upon attainment of age 50 with at least 5 years of credited service. During the year
ended June 30, 2013, the California's Public Employees' Pension Reform Act ("PEPRA") went into effect.
Employees hired after January 1, 2013 who are new to the Ca1PERS system are part of the PEPRA plan.
PEPRA miscellaneous members become eligible for service retirement upon attainment of age 52 with at
least 5 years of service. The service retirement benefit is a monthly allowance equal to the product of the
benefit factor, years of service, and final compensation. The final compensation is the monthly average of
the member's highest 36 or 12 consecutive months' full-time equivalent monthly pay. Retirement benefits
for classic miscellaneous employees are calculated as 2% of average final 12 months compensation.
Retirement benefit for PEPRA miscellaneous employees are calculated as 2% of the average final 36
months compensation. Retirement benefits for classic safety employees are calculated as 3% of the average
final 12 months compensation. Retirement benefits for PEPRA safety employees are calculated as 2.7% of
average final 36 months.
m
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 8 — Retirement Plans (Continued)
B. California Public Employees' Retirement System ("CalPERS') (Continued)
General Information about the Pension Plan
&(2LejLLL_ l
Following are the benefit provision for each plan:
Benefit payments
Retirement age
Benefit formula
Benefit vesting schedule
Benefit payments
Retirement age
Miscellaneous
Miscellaneous
Miscellaneous Second Tier
Rate Plan Rate Plan
Prior to
January 1, 2013
2% Oa. 55
5 years service
monthly for life
minimum 50 yrs
Prior to
January 1, 2013
Classic Member
2% Ca), 60
5 years service
monthly for life
minimum 50 yrs
PEPRA
Miscellaneous
Rate Plan
On or after
January 1, 2013
New Member
2% (a,) 62
5 years service
monthly for life
minimum 52 yrs
Safety
PEPRA
Safety
Second Tier
Safety
Rate Plan
Rate Plan
Rate Plan
Between
October 6. 2012 to
On or after
Prior to
December 31. 2012
January 1, 2013
October 6. 2012
Classic Member
New Member
Police - 3% @ 50
Police - 3% Ca,) 55
2. 7 % Ca,) 57
Fire - 3% (a,) 55
5 years service
5 years service
5 years service
monthly for life
monthly for fife
monthly for life
minimum 50 yrs
minimum 50 yrs
minimum 50 yrs
Participants are eligible for non -industrial disability retirement if the participant becomes disabled and has at
least 5 years of credited service. There is no special age requirement. The standard non -industrial disability
retirement benefit is a monthly allowance equal to 1.8% of final compensation, multiplied by service.
Industrial disability benefits are not offered to miscellaneous employees. The City provides industrial
disability retirement benefit to safety employees. The industrial disability retirement benefit is a monthly
allowance equal to 50 percent of final compensation.
80
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 8 — Retirement Plans (Continued)
B. California Public Employees' Retirement System ("CaIPERS") (Continued)
General Information about the Pension Plan(Continued)'
llaaDsL'rt��sic�i 't'"vrsr�.aaMl
An employee's beneficiary may receive the basic death benefit if the employee becomes deceased while
actively employed. The employee must be actively employed with the City to be eligible for this benefit. An
employee's survivor who is eligible for any other pre -retirement death benefit may choose to receive that
death benefit instead of this basic death benefit. The basic death benefit is a lump sum in the amount of the
employee's accumulated contributions, where interest is currently credited at 7.5% per year, plus a lump
sum in the amount of one month's salary for each completed year of current service, up to a maximum of six
months' salary. For purposes of this benefit, one month's salary is defined as the member's average monthly
full-time rate of compensation during the 12 months preceding death. Upon the death of a retiree, a one-time
lump sum payment of $500 will be made to the retiree's designated survivor(s), or to the retiree's estate.
Benefit terms provide for annual cost -of -living adjustments to each employee's retirement allowance.
Beginning the second calendar year after the year of retirement, retirement and survivor allowances will be
annually adjusted on a compound basis by 2%.
Eviolowe Owerecibi,IT IT kaa a 7°c,)-Ins
At June 30, 2020, the measurement date, the following employees were covered by the benefit terms under
the miscellaneous plans:
Miscellaneous
Plans
Active employees 176
Transferred and terminated employees 312
Retired Employees and Beneficiaries 359
Total _ 847
e
Section 20814(c) of the California Public Employees' Retirement Law 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 Ca1PERS' 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 City is required to contribute the difference between
the actuarially determined rate and the contribution rate of employees. City contribution rates may change if
plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are
identified in the pension plan terns as plan member contribution requirements are classified as plan member
contributions.
81
Agreement No. 6085A
City of E1 Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 8 — Retirement Plans (Continued)
B. California Public Employees' Retirement System ("CaIPERS') (Continued)
General Information about the Pension Plan 'Continued)
Contribulio ns Wonl'i�Lke�_h.
The required contribution rates are as follows:
Measurement Period Ended June 30, 2019
Miscellaneous Plans
Employer Contribution Rate
Employer Payment of Unfunded Liability
Employee Contribution Rate
Employer Contribution Rate
Employer Payment of Unfunded Liability
Employee Contribution Rate
Net Pension Liabil tv
Classic PEPRA
9395% 9.395%
2.418.040 -
7.000% 6.250%
Measurement Period Ended June 30, 2019
Safety Plans
Police -Tier 1
Police - Tier 2
Police PEPRA
Fire - Tier 1
25.829%
21558%
13.884%
21.757%
3.862.287
5,366
2.482
3.491.080
9.000%
9.000%
13.75%
9.000%
The City's net pension liability for each Plan is measured as the total pension liability, less the pension
plans' fiduciary net position. The net pension liability of each of the Plans is measured as of June 30, 2020,
using an annual actuarial valuation as of June 30, 2019 rolled forward to June 30, 2020 using standard
update procedures.
Ac,owl ied rlfelliods a) id ssuiall,firnimUsed iol Deler°niine Tiwol ('er1shm Lr"abiliti,
A summary of principal assumptions and methods used to determine the net pension liability are as follows:
Actuarial Cost Method
Entry Age Normal
Actuarial Assumptions:
Discount Rate
7.15%
Inflation
2.50%
Salary Increases
Varies by Entry Age and Service
Investment Rate of Return
7.25% includes inflation
Mortality Rate Table
The probabilities of mortality are based on the 2017 Ca1PERS
Experience Study for the period from 1997 to 2015.
Pre -retirement and Post -retirement mortality rates include 20 years
of projected mortality improvement using Scale BB published by the
Society of Actuaries.
Retirement Age
The probabilities of Retirement are based on the 2017 CaIPERS
Experience Study for the period from 1997 to 2015,
Post Retirement Benefit Increase
Contract COLA up to 2.0% until Purchasing Power Protection
Allowance Floor on Purchasing Power applies, 2.50% thereafter.
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 8 — Retirement Plans (Continued)
B. California Public Employees' Retirement System ("CalPERS') (Continued)
Net Pension Liability (Continued')
Loin-
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, CaIPERS 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 of the funds' asset classes, expected
compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (I I+
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. The expected rate of return was set by
calculating the rounded single equivalent expected return that arrived at the same present value of benefits
for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return
was then set equal to the single equivalent rate calculated above and adjusted to account for assumed
administrative expenses. The expected real rates of return by asset class are as followed:
Asset Class'
Global Equity
Fixed Income
Inflation Assets
Private Equity
Real Assets
Liquidity
New Strategic
Real Return
Real Return
Allocation
Years 1 -10 2
Years 11+ 2
50.00%
4.80%
5.98%
28.00%
1.00%
2.62%
0.00%
0.77%
1.81%
8.00%
6.30%
7.23%
13.00%
3.75%
4.92%
1.00%
0.00%
-0.92%
100.00%
' In the System's CAM, Fixed Income is included in Global Debt Securities: Liquidity is included in
Short-term Investments: Inflation Assets are included in both Global Equity Securities and Global Debt Securities.
An expected inflation of 2.0% and 2.92% used for years 1-10 and years 11+. respectively.
Discount Rate
The discount rate used to measure the total pension liability was 7.15%. 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 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 investments was applied to all periods of projected benefit payments to
determine the total pension liability.
Subsequent Ei°gm
There were no subsequent events that would materially affect the results in this disclosure.
83
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 8 — Retirement Plans (Continued)
B. California Public Employees' Retirement System ("Ca1PERS') (Continued)
Chan es in the Net Pension Liability
The following table shows the changes in net pension liability for the City's Miscellaneous Plan recognized
over the measurement period.
Miscellaneous Plan
Balance at June 30, 2019 (Valuation Date)
Changes recognized for the measurement period:
Service Cost
Interest on the total pension liability
Differences between expected and actual experience
Plan to plan resource movement
Contributions from the employer
Contributions from employee
Net investment income
Benefit payments, including refunds of employee
contributions
Administrative expense
Other ntiscellaneous (income)/expense
Net changes during July 1, 2019 to June 30, 2020
Balance at June 30, 2020 (Measurement Date)
Increase (Decrease)
Total Pension
Plan Fiduciary Net
Net Pension
Liability
Position
Liability/(Asset)
(a)
(b)
(c) = (a) - (b)
120.807.009
$ 88,056,385
$ 32,750,624
2,088,245
-
2.088.245
8.447.044
8-447.044
(221.184)
(221 J 84)
3,966
(3,966)
1584,857
(3.584,857)
946,546
(946.546)
4.398.867
(4,398,867)
(6,9M924)
(6978,924)
-
(124,138)
124,138
").335,181
1,831,174
1.504.007
$ 124,142.190 $ 89.887.559 $ 34,254,631
The following table shows the City's safety plan's proportionate share of the risk pool collective net pension
liability over the measure period.
Safety Plan
Proportionate
Share of Net
Pension Liability
Balance at June 30, 2020 (Measurement Date) 118,102,353
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 8 — Retirement Plans (Continued)
B. California Public Employees' Retirement System ("CalPERS') (Continued)
Changes in the, Nat.Pension LialAlity jContinued)
L!i ()j,Z(rfionyfe Sheire ol'Alet Pension Liabild v and Pension
The following is the approach established by the plan actuary to allocate the net pension liability and
pension expense to the individual employers within the risk pool.
(1) In determining a cost -sharing plan's proportionate share, total amounts of liabilities and assets are
first calculated for the risk pool as a whole on the valuation date (June 30, 2019). The risk pool's
fiduciary net position ("FNP") subtracted from its total pension liability ("TPL") determines the net
pension liability ("NPL") at the valuation date.
(2) Using standard actuarial roll forward methods, the risk pool TPL is then computed at the
measurement date (June 30, 2020). Risk pool FNP at the measurement date is then subtracted from
this number to compute the NPL for the risk pool at the measurement date. For purposes of FNP in
this step and any later reference thereto, the risk pool's FNP at the measurement date denotes the
aggregate risk pool's FNP at June 30, 2020 less the sum of all additional side fund (or unfunded
liability) contributions made by all employers during the measurement period (2019-2020).
(3) The individual plan's TPL, FNP and NPL are also calculated at the valuation date. TPL is allocated
based on the rate plan's share of the actuarial accrued liability. FNP is allocated based on the rate
plan's share of market value assets.
(4) Two ratios are created by dividing the plan's individual TPL and FNP as of the valuation date from
(3) by the amounts in step (1), the risk pool's total TPL and FNP, respectively.
(5) The plan's TPL as of the Measurement Date is equal to the risk pool TPL generated in
(2) multiplied by the TPL ratio generated in (4). The plan's FNP as of the Measurement Date is
equal to the FNP generated in (2) multiplied by the FNP ratio generated in (4) plus any additional
side fund (or unfunded liability) contributions made by the employer on behalf of the plan during
the measurement period.
(6) The plan's NPL at the Measurement Date is the difference between the TPL and FNP calculated in
(5).
Deferred outflows of resources, deferred inflows of resources, and pension expense are allocated based on
the City's NPL as a percentage of the total plan's NPL.
The City's proportionate share of the net pension liability was as follows:
Safety Plan
June 30, 2019 1.7839%
June 30, 2020 1.7727%
Change - Increase (Decrease) 0.0112%
85
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 8 — Retirement Plans (Continued)
B. California Public Employees' Retirement System ("CalPERS') (Continued)
Changes in the Net Pension Liability (Continued')
Sensith*L o `Ll?e Alet Pension in the Discount Rate
The following presents the net pension liability of the plans as of the measurement date, calculated using the
discount rate of 7.15%, as well as what the net pension liability would be if it were calculated using a
discount rate that is I percentage -point lower (6.15%) or I percentage -point higher (8.15%) than the current
rate:
Plan's Net Pension Liability/(Asset)
Discount Rate - I% Current Discount Discount Rate + I%
(6.15%) Rate (7.15%) (8.15 %) _
Miscellaneous Plan $ 49,708,803 $ 34 54 631 $ 21,450,265
Safety Plan $ 159,830,180 $ 118102353 $ 83,860.722
Pension Plan Fiduckir), Net Position
Detailed information about the plan's fiduciary net position is available in the separately issued CaIPERS
financial report.
Pension Exoense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions
For the year ended September 30, 2020, the City recognized pension expense in the amounts of $4,048,085
and $22,464,644 for the miscellaneous plans and safety plans, respectively.
As of measurement date of June 30, 2020, the City has defer -red outflows and deferred inflows of resources
related to pensions as follows:
Miscellaneous Plan
Pension contribution made after measurement date
Difference between expected and actual experience
Changes of assumptions
Net difference between projected and actual earning on
pension plan investments
Total
M.
Deferred outflows Deferred inflows
of Resources of Resources
$ 363370 $
(130,080)
616,220
979.590 $ (130.080)
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 8 — Retirement Plans (Continued)
B. California Public Employees' Retirement System ("Ca1PERS') (Continued)
Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions
(Continued)
Safe I v Plan
Pension contribution made after measurement date
Difference between expected and actual experience
Changes of assumptions
Difference between projected and actual earnings on
pension plan investments
Change in employer's proportion and differences
between the employer's contributions and the
employer's proportionate share of contributions
Deferred outflows
of Resources
$ 714,613
9,158,238
Deferred inflows
of Resources
245,449 (2,652,982)
The amounts above are net of outflows and inflows recognized in the 2019-2020 measurement period
expense.
The expected average remaining service lifetime ("EARSL") is calculated by dividing the total future
service years by the total number of plan participants (active, inactive, and retired). The EARSL for the
miscellaneous plan and the safety risk pool for the 2019-2020 measurement period is 2.3 and 3.8 years,
respectively, which was obtained by dividing the total service years of 1,920 and 548,581 (the sum of
remaining service lifetimes of the active employees) by 847 and 145,663 (the total number of participants:
active, inactive, and retired), respectively.
$363,370 and $714,613 reported as deferred outflows of resources related to pensions for miscellaneous
plan and safety plan, respectively, resulting from the City's contributions subsequent to the measurement
date will be recognized as a reduction of the net pension liability in the year ending September 30, 2021.
Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be
recognized in the future pension expense as follows:
Measurement Period
Ended June 30
2021
2022
2023
2024
2025
Thereafter
Deferred Outflows/
(Inflows) of Resources
Miscellaneous Plan
(499,109)
181,017
445,771
358.461
Deferred Outflows/
(Inflows) of Resources
Safety Plan
$ 1,028,864
3.783.776
2.825.384
1286,141
$ 486.140 S 8,924165
87
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 8 — Retirement Plans (Continued)
B. California Public Employees' Retirement System ("CaIPERS") (Continued)
Pavable to the Pension Plan
At September 30, 2020, the City had no outstanding amount of contributions to the pension plan required for
the year ended September 30, 2020.
C. Public Agency Retirement System ("PARS")
General Information about the Pension Plan
Plan lmm cc, s°crhwion
On September 1, 2008, the City approved the establishment of a Retirement Enhancement Plan (the "Plan")
for eligible employees of the Supervisory and Professional Employees' Association of the City, effective
October 1, 2008. Effective November 3, 2015 ("Freeze Date"), both benefits service and final pay are
frozen. The Plan provides a supplemental retirement benefit in addition to the employees' current Ca1PERS
retirement plan. The Plan is an agent multiple -employer defined benefit plan. The Plan will provide for
0.5% at age 55 for employees who retire from the City under Ca1PERS on or after September 30, 2008 and
have 15 years of continuous City service.
The City's Finance Director is the Plan Administrator and is responsible for taking the necessary actions to
implement and administer the Plan in compliance with the Plan Document and applicable legal
requirements. Public Agency Retirement Services ("PARS") is the Trust Administrator and is responsible
for Plan accounting, coordinating benefit distributions with the Trustee, and communicating Plan provisions.
Union Bank of California is the Trustee and is responsible for receiving and investing Plan contributions,
safeguarding Plan assets, and distributing benefits to eligible Plan participants or beneficiaries at the
direction of the Plan Administrator and pursuant to the Plan Document.
The amounts of the benefit payments are calculated by the Trust Administrator and all accounting and
reporting functions are performed by the Trust Administrator. Plan assets are considered to be held by the
third -party administrator on behalf of the employees and are therefore excluded from the accompanying
financial statements. The City's responsibilities for this Plan are not sufficient administrative involvement to
constitute a "holding of assets" by the City in a pension trust fund. The year ended September 30, 2009, was
the first year of the Plan.
The Plan issues a publicly available financial report that includes financial statements and required
supplementary information. The report may be obtained by contacting the Trust Administrator at the
following address or telephone number:
Public Agency Retirement Services,
PARS Trust Administrator
PO Box 12919
Newport Beach, CA 92658-2919
(800)540-6369
88
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 1 2020
Note 8 — Retirement Plans (Continued)
C. Public Agency Retirement System ("PARS") (Continued)
General Inforniation about Ilse Pension Plan Continued
Retie I. !'rery>raded
Below is the benefits summary provided by the Plan.
Eligibility
Supervisory and Professional employees
Full-time employees in the group between August 5, 2008
and October 1, 2012
Before Plan Freeze:
a Retire from City under CalPERS on or after September 30, 2008
• Age 55 with 15 years continuous City service
After Plan Freeze:
o Retire from CalPERS
o Age 55
9 Does not need to retire directly from the City
Retirement Benefit
Target of 2.5% @ 55 less CalPERS 2%@55
City service from hire date through Freeze Date
Final Pay
Highest consecutive 12-month pay as of Freeze Date
PERSable pay including EPMC
COLA
2% after retirement
Normal Form of Benefit
Single life annuity
Termination/Disability/
100% vesting as of Freeze Date
Pre -Retirement Death Benefit
Greater of the following:
• Refund of employee contributions with 4.25% interest
• Deferred retirement benefit
At September 30, 2019, the measurement date, the following employees were covered by the benefit terms:
Active employees 9
Terminated employees 7
Retired Employees and Beneficiaries 11
Total 27
M.
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 8 — Retirement Plans (Continued)
C. Public Agency Retirement System ("PARS") (Continued)
General Information about the Pension Plan continued
The City's funding policy is to make the contribution as determined by the Plan's actuary. There was no
employee contribution after Freeze Date. Members may elect to receive lump sum refund of employee
contributions with 4.25% interest in lieu of annuity upon tennination / retirement / disability / death.
Employer contributions are determined by actuarial study performed at least every two years. The Plan's
annual pension contribution for the measurement date ended September 30, 2019, was based on an actuarial
valuation as of June 30, 2016. For the measurement date ended September 30, 2019, the City made
contributions of $158,000 to the Plan, which was a contribution to the PARS trust.
Net 'Pension Liability
1eneo�rITh d rWetizotisgnd dPs.� rvnl2l^ions Used to DeleritlirreITIT7�)I:rl Pension Liabilifir
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 September 30, 2019, using an
actuarial valuation as of June 30, 2018, rolled forward to September 30, 2019 using standard update
procedures. A summary of principal assumptions and methods used to determine the net pension liability is
as follows:
Actuarial Cost Method
Entry Age Normal
Actuarial Assumptions:
Discount Rate
5 75%
Investment Return
5, 75%
Inflation
2.75%
Mortality, Disability, and Termination
C:alPERS 1997-2015 experience study
Projected fully generational with Scale MP-2018
Service Retirement
CaIPERS 1997-2015 Experience Study Benefit: Modified 2.5`%® C) 55
Adding 1/3 of'sum of the rates for ages 50-54 to the rate for age 55
Post Retirement Cost of Living Adjustment
2.00%
a
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 8 — Retirement Plans (Continued)
C. Public Agency Retirement System ("PARS") (Continued)
Net Pension Liability Continued
The discount rate used to measure the total pension liability was 5.75%. The projection of cash flows
utilized to determine the discount rate assumed that contributions from the City would be made at the
actuarially determined contribution amount. 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 investments was applied to all periods of projected
benefit payments to determine the total pension liability.
According to Paragraph 30 of Statement 68, the long-term discount rate should be determined without
reduction for pension plan administrative expense. The 5.75% investment return assumption used in this
accounting valuation is net of administrative expenses. Administrative expenses are assumed to be 50 basis
points. An investment return excluding administrative expenses would have been 6.25%. Using this lower
discount rate has resulted in a slightly higher total pension liability and net pension liability.
The table below reflects target allocation and expected real rate of return by asset classes for the moderate
portfolio selected by the City:
Target Expected Real
Asset Class Allocation Rate of Return
Global Equity 58.00% 4.82%
Fixed Income 35.00% 1.47%
REITs 2.00% 3.76%
Cash 5.00% 0.06%
100.00%
Assumed Long -Term Rate of Inflation 2.75%
Expected Long -Term Net Rate of Return, Rounded 5.75%
The City elected to use 5.75% investment return assumption.
Confidence Level
Net Return after Expenses
Plan Non -Investment Expense
50%
l
6.25% 6.00%
-0.50% -0.50%
Net Return 5.75% 5.50%
Based on expected long term non -investment expenses
M
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 8 — Retirement Plans (Continued)
C Public Agency Retirement System ("PARS") (Continued)
Net Pension Liabilit ° "Contintued'.
Clicing s in jmuffl dlom
The discount rate and long-term expected rate of return on assets utilized in the actuarial valuation as of
June 30, 2016 and 2018 was 5.50% and 5.75%, respectively, which was updated based on the asset
allocation change. The actuarial valuation inflation rate as of June 30, 2016 and 2018 was 3.00% and 2.75%,
respectively. Also, the mortality, retirement, disability, and tennination assumptions in the June 30, 2018
actuarial valuation were updated from the Ca1PERS 1997-2011 Experience Study used in the June 30, 2016
actuarial valuation to the CalPERS 1997-2015 Experience Study. In addition, the mortality improvement
scale utilized in the June 30, 2018 actuarial valuation was updated from the Scale MP-2014 used in the June
30, 2016 actuarial valuation to the Scale MP-2018.
S'ubse uerar t Events
There were no subsequent events that would materially affect the results in this disclosure.
Changes in Net Pension Liability
The table on the following page shows the changes in net pension liability recognized over the measurement
period:
Balance at September 30, 2018
Changes recognized for the measurement period:
Interest on the total pension liability
Differences between expected and actual experience
Changes of assumptions
Contributions from the employer
Net investment income
Benefit payments, including refunds of employee
contributions
Administrative expense
Net changes during October 1, 2018 to September 30, 2019
Balance at September 30, 2019 (Measurement Date)
Increase (Decrease)
Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability/(Asset)
(a) (b) (c) = (a) - (b)
$ 2,241,998 $ 1,08T687 $ 1,154,311
126.122 126,122
158,000 (158,000)
53,443 (53,443)
(97,156) (97J56)
(5,517) 5,517
28,966 108,770 (79,804)
2270,964 $ 1.196,457 $ 1,074,507
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 8 — Retirement Plans (Continued)
C. Public Agency Retirement System ("PARS") (Continued)
Changes in Net Pension Liability(Continued)
Seysifivill� oj'N l Pension L igbilif w10 t &?r a�.� sra t �� Discount Rate
The following presents the net pension liability of the Plan as of the measurement date, calculated using the
discount rate of 5.75%, as well as what the net pension liability would be if it were calculated using a
discount rate that is 1 percentage -point lower (4.75%) or 1 percentage- point higher (6.75%) than the current
rate:
Discount Rate - 1% Current Discount Discount Rate + 1%
(4.75%) Rate (5.75%) (6.75%)
Plan's Net Pension Liability $ 1.364.158 $ 1.074.507 $ 835.725
Pension Plan / khiciuri,, Nel Posilion
Detailed information about the plan's fiduciary net position is available upon request.
Pension Extlense. Deferred Outflows and Deferred Inflows of Resources Related to Pensions
For the measurement period ended September 30, 2019, the City incurred a pension expense of $154,404
and reported deferred outflows of resources and deferred inflows of resources related to pensions from the
following sources:
Pension contribution made after measurement date
Difference between expected and actual experience
Changes of assumptions
Net difference between projected and actual earning on
pension plan investments
[ram]
Deferred Outflows Deferred Inflows
of Resources of Resources
{
14,817
$ 21t¢o.70l S V, ,22.'111
The $158,000 reported as deferred outflows of resources related to pension resulting from the City's
contribution subsequent to the measurement date during the year ended September 30, 2020 will be
recognized as a reduction of the net pension liability in the year ending September 30, 2021.
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 8 — Retirement Plans (Continued)
C. Public Agency Retirement System ("PARS") (Continued)
Pension Expense, Deferred Outflows and Deferred Inflows of Resources Related to Pensions
lContinued)
Amounts reported as deferred outflows and deferred inflows of resources related to pensions will be
recognized in future pension expense as follows:
Measurement Period
Ended September 30
2020
2021
2022
2023
2024
Thereafter
Pavable to the Pension Plan
Deferred Outflows/
(Inflows) of Resources
$ 19.997
(&590)
1.410
1953
$ 17.770
At September 30, 2020, the City had no outstanding amount of contributions to the pension plan required for
the year ended September 30, 2020.
Note 9 — Other Post -Employment Health Benefits
At September 30, 2020, net OPEB liability and related deferred outflows of resources and deferred inflows of
resources are as follows:
Deferred outflows of resources
Net other postemployment benefit liability
Deferred inflows of Resources
OPEB expense
Governmental Business -Type
Activities Activities Total
$
1,522,275
$
78,785
$
1,601,060
$
27,692,790
$
1,433,225
$
29,126,015
$
5,888,815
$
304,773
$
.6.193,588
$
2,458,080
$
(44,495)
$
2,413,585
M
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 9 — Other Post -Employment Health Benefits (Continued)
General Information About the OPEB Plan
Plan est3 rt)[hera.
The City provides postretirement medical benefits to employees under an agent multiple -employer plan who
retire directly from the City under CalPERS, with age and service requirements that vary by bargaining unit. For
eligible retirees, the City contributes a portion of the premium for the medical plan selected by the retiree.
Benefit provisions for Ca1PERS are established and amended through negotiations between the city and the
respective unions. The plan issues a publicly available financial report that includes financial statements and
required supplementary information for that plan. Those reports may be obtained by writing or calling the plans
at the following address or telephone number:
Ca1PERS Member Services Division
P.O. Box 942704 Sacramento, CA 94229-2704
1-888-225-7377
The City has entered into an agreement with California Employers' Retiree Benefit Trust (CERBT) to prefund
the City's net OPEB liability.
Fundino Poficu'..and C ontribution,s
The contribution requirements of plan members and the City are established and may be amended by City
Council. The annual contribution is based on the actuarially determined contribution. For the measurement
period ended June 30, 2020, the City's contributions were $548,000 to the Ca1PERS CERBT Trust, $3,374,34 in
premium payments, administrative expense of $9,028 and the estimated implicit subsidy was $494,250,
resulting in total payments of $4,425,712
At June 30, 2020, the measurement date, membership in the Plan consisted of the followings
Inactive plan member currently receiving benefits 336
Inactive plan mernbers entitled to but not yet
receiving benefits 24
Active plan members 252
Total 612
Net OPEB Liability
The City's total OPEB liability was measured as of June 30, 2020, and was determined by an actuarial valuation
as of June 30, 2019, rolled forward to June 30, 2020 using standard update procedures. A summary of the
principal assumptions and methods used to determine the total OPEB liability is shown below.
95
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 9 — Other Post -Employment Health Benefits (Continued)
General Information About the OP'EB Plan (Continued)
Net OPEB Liability (Continued)
.1clayrial Mohr Oy and il sstyn vions
The total OPEB liability was determined using the following actuarial assumptions, applied to all periods
included in the measurement, unless otherwise specified:
Actuarial Cost method Entry Age Method
Actuarial Assumption:
Discount Rate 6.75% - Pre -funded through CalPERS CERBT
Asset Strategy #I
Inflation 2.75%
Salary Increases 3.00% per year
Mortality Improvement Post -retirement mortality projected fully generational with
Scale MP-2019
Medical Trend Non -Medicare: 7.25% for 2021. decreasing to an ultimate rate of 4.0% in 2076.
Medicare: 6.3% for 2021- decreasing to an ultimate rate of 4.0% to 2076.
The actuarial assumptions used in the June 30, 2019 valuation were based on a standard set of assumptions the
actuary has used for similar valuations, modified as appropriate for the City.
The long-term expected rate of return was determined using a building-block method in which best -estimate
ranges of expected future real rates of return (expected returns, net of OPEB plan investment expense and
inflation) are developed for each major asset class. The asset class percentages are taken from the current
composition of CERBT, and the expected yields are taken farm a recent CaIRERS publication for the pension
fund:
Long -Term
Compound
Asset Class Allocation
Return
CERBT:
Global Equity
59.00%
4.82%
Fixed Income
25.00%
1.47%
TIPS
5.00%
1.29%
REITs
8.00%
3.76%
Commodities
3.00%
84.00%
Total
100.00%
Assurned Long -Term Rate of Inflation
2.75%
Expected Long -Term Net Rate of Return,
Rounded
6.75%
M,
Agreement No. 6085A
City of E1 Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 9 — Other Post -Employment Health Benefits (Continued)
Net OPE13 Liability(Continued
Discount Rate
The discount rate used to measure the total OPEB liability is 6.75%. This is the expected long-term rate of
return on City assets using investment strategy 1 within the California Employers' Retiree Benefit Trust
(CERBT). The projection of cash flows used to determine the discount rate assumed that the City contribution
will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the
OPEB plan's fiduciary net position is projected to cover all future OPEB payments. Therefore, the discount rate
was set equal to the long-term expected rate of return.
Changes in Net OPEB Liability
Balance at September 30, 2019 (Valuation Date June 30, 2019)
Changes recognized for the measurement period:
Service Cost
Interest on the net OPEB liability
Differences bew,een expected and actual experience
Changes of assumptions
Contributions fiom the employer
Net investment income
Benefit payments, including refunds of employee contributions
Administrative expense
Net changes during October I, 2019 to September 30, 2020
Balance at September 30, 2020(Measurernent Date June 30, 2020)
Increase (Decrease)
Total Pension Plan Fiducian' Net Net OPEB
Liability Position Liability/(Asset)
(a) (h) (c) = (a) - (b)
$ 61,302.,549 $ 24,641,464 $ 36,661,085
1,325,398
1,32.5,398
4,096,818
4,096,818
(6,345,201)
(6,345,201)
(1,32.3,05I)
- (17323,051)
4,425,712 (4.425,712.)
884.584 (884,584)
(3,868;684) (3,868,684) -
(2.1,2.62.) 2.1,262
(6,114,720) 1,420,350 (7535070)
$ 55,187.$29 $ 2.6,061,814 $ 2�9,126>
For measurement date June 30, 2019, to June 30, 2020, the mortality scale was updated to Scale MP-2019 from
MP-2017 and the healthcare trend changed from 7.50% non -medicare and 6.50% medicare to 7.25%
non -medicare and 6.30% medicare.
(',;"han e o Bene 'lt ie n s
There were no changes of benefit terms.
M
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 9 — Other Post -Employment Health Benefits (Continued)
Changes in Net OPEB Liability Continued'
Subsequent I'wnts
There were no subsequent events that would materially affect the results presented in this disclosure.
Sensttt's^in, o ter¢ Ve t 0i"''E8 i is ifiI ii to (,Vu rr Hers in they .Discount Rate
The following presents the net OPEB liability, as well as what the net OPEB liability would be if it were
calculated using a discount rate that is I -percentage point lower (5.75 percent) or 1-percentage-point higher
(7.75 percent) than the current discount rate:
Plan's Net OPEB Liability (Assets)
Discount Rate 4% Current Discount Discount Rate +1%
(5.75%) Rate (6.75%) (7.75%)
$ 35,694,473 $ 29,126.015 $ 23,671,045
ay sitty ily o fheei 0PE LLcLt rrMy to Changes the Healrhc;are Cost Trend Rute.s'
The following presents the net OPEB liability, as well as what the net OPEB liability would be if it were
calculated using healthcare cost trend rates that are 1-percentage-point lower (6.25% and 5.30% for 2021 for
Non -Medicare and Medicare, respectively, decreasing to an ultimate rate of 4.0% in 2076) or 1-percentage-point
higher (8.25% and 7.3% for 2021 for Non -Medicare and Medicare, respectively, decreasing to an ultimate rate
of 4.0% in 2076) than the current healthcare cost trend rates:
Plan's Net OPEB Liability (Assets)
Healthcare Cost Healthcare Cost
Trend Rate -1% Current Rate Trend Rate +1%
$ 26184 542 $ 29.126,015 $ 31.990.395
98
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 9 — Other Post -Employment Health Benefits (Continued)
O'VEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
For the year ended September 30, 2020, the City' recognized OPEB expense of $2,413,585. At September 30,
2020, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from
the following sources:
Contribution made after measurement date
Difference between expected and actual experience
Change of assumptions
Net difference between projected and actual earning on
pension plan investments
Total
Deferred outflows Deferred inflows
of Resources of Resources
014.720
1,601.060
An amount of $986,340, which is reported as deferred outflows of resources related to contributions subsequent
to the measurement date, will be recognized as reduction of the net OPEB liability in the year ended
September 30, 2021. The amounts reported as deferred inflows of resources related to OPEB will be recognized
as future OPEB expense as follows:
Measurement Period
Ended June 30
2021
2022
2023
2024
2025
Payable to the OPEB Plan
Deferred Outflows/
nflows) of Resources
OPEB Plan
a� (1,339,634)
(1,339,633)
(1,291,140)
(1,313,529)
(294,932)
At September 30, 2020, the City had no outstanding amount of contributions to the OPEB plan required.
Note 10 —Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors
and omissions; injuries to employees; and natural disasters. The City maintains self-insurance programs for
workers' compensation and general liability up to a maximum of $500,000 and $750,000 per occurrence,
respectively. General liability claims, which exceed the limit, are insured through Independent Cities Risk
Management Authority ("ICRMA") up to $30,000,000 with a maximum per incident of $3,000,000. Workers
compensation claims that exceed the limit are insured by ICRMA up to the California statutory limits for
workers' compensation.
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 10 —Risk Management (Continued)
The City is a member of the ICRMA, a public entity risk pool currently operating as a common risk
management and insurance program for 15 California cities. The City pays an annual premium to the pool for its
excess general liability insurance coverage. The agreement for information of the ICRMA provides that the pool
will be self-sustaining through member premiums. The City continues to carry commercial companies for all
other risks of loss, which include property insurance, and cyber liability insurance.
Estimates for all liabilities, up to the self -insured levels, have been accrued in the Workers' Compensation and
the General Liability Self -Insurance Internal Service Funds including an estimate for incurred but not reported
claims. Estimates are based on recommended reserves established by the City's third -party administrators who
administer the City's claims and insurance programs. There have been no significant changes in insurance
coverage as compared to last year and settlements have not exceeded coverage in each of the past three fiscal
years.
The ICRMA has published its own financial report for the year ended June 30, 2020, which can be obtained
from Independent Cities Risk Management Authority, 14156 Magnolia Park, Sherman Oaks, California.
Changes in the balances of claims liabilities for the current and the last two fiscal years follow:
Fiscal Year
Ended
September 30, 2018
September 30, 2019
September 30s 2020
_
Claims Payable
Annual
Current Year
Current Year
Claims Payable
Claims and Changes
Claims
October]
in Estimates
Payments
S 11,398,232
1.801303
S (922,529)
12.27T006
1.693.379
(1670 385)
11.300.000
4-437.986
(2,811.986)
Note 11 —Joint Venture
Balance
Due within
Se to ber 30
One Year
$ 12.277.006
S 2.069.000
11.300A00
1.887.705
12.926.000
2.502.181
Los Angeles Interagency Metropolitan Police Apprehension Crime Task Force
The City is a member of the Los Angeles Interagency Metropolitan Police Apprehension Crime Task Force
(L.A. IMPACT), a joint powers authority of the police departments of cities and other institutions in Los
Angeles County. L.A. Impact was formed July 1, 1991, with the mission to promote coordinated law
enforcement efforts and to address emerging criminal justice issues, mainly in the areas of drug trafficking and
money laundering. The Executive Council consists of 14 police chiefs and other various police officers. All
financial decisions were made by the Executive Council. The members received monetary distributions from
asset seizures based on their respective resource contribution to the effort. The City does not have a measurable
equity interest in LA IMPACT. The net position of LA IMPACT represents a temporary holding of funds to be
distributed to various law enforcement jurisdictions. The distribution of these funds is not determinable until
action has been taken by the courts or the LA IMPACT board of directors with respect to the use of these funds.
100
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For c September 30, 2020
Note I —Joint Venture (Continued)
Los Angeles Interagency Metropolitan Police Apprehension Crime Task Force (Continued)
L.A. IMPACT's latest summary financial information as of June 30, 2020 is as follows:
Total assets $ 12,217,792
Total liabilities $ 5,083,504
L.A. IMPACT net position 7,134,288
Total liabilities and L.A. IMPACT net position $ 12,217,792
Total revenues $ 3,077,333
Total expenses (5,340,102)
Change in net position $ (2,262,7691
Complete financial statements for L.A. IMPACT may be obtained at its administrative office:
L.A. IMPACT
5700 South Eastern Avenue
Commerce, CA
90040-2924
Note 12 — Commitments and Contingencies
L.atr",�r titer
The City is currently a party to various claims and legal proceedings. In management's opinion, the ultimate
liabilities, if any, resulting from such claims and proceedings, will not materially affect the City's financial
position.
Federal and State Grants
The City participates in a number of federal and state assisted grant programs, which are subject to program
compliance audits by the grantors or their representatives. Final closeout audits of these programs have not yet
been completed. Accordingly, the City's ultimate compliance with applicable grant requirements will be
established at some future date. Expenditures, if any, which may be disallowed by the granting agencies cannot
be determined at this time, although the City expects such amounts, if any, to be immaterial.
101
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 12 — Commitments and Contingencies
Uncertainties
On January 30, 2020, the World Health Organization ("WHO") announced a global health emergency because
of a new strain of coronavirus (the "COVID-19 outbreak") and the risks to the international community as the
virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as
a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak
continues to evolve as of the date of this report. As such, it is uncertain as to the full magnitude that the
pandemic will have on the City's financial condition. Management is actively monitoring the impact of the
global situation on its financial condition.
102
Agreement No. 6085A
City of El Segundo
Notes to the Basic Financial Statements
For the Year Ended September 30, 2020
Note 13 — Classification of Fund Balances
At September 30, 2020, fund balances are classified in the governmental funds as follows:
Non ajar
Total
General
Governmental
Govenunental
Fund
Funds
Funds
Nonspendable:
Notes and loans receivable
$ 17,500
$
$ 17.500
Inventories
100264
-
100,264
Prepaids
7,819,879
85,049
7,904,928
Total nonspendable
7,937,643
85,049
8,022,692
Restricted:
Police
-
1,153,341
1,153,341
Fire
400,040
400,040
Public works
2,482,539
2,482,539
Economic development
242,267
241267
Community and cultural
I O, 165,172
10,165,172
Debt service
1030,291
1,030,291
Pension
4,482,363
4,482,363
Total restricted
4,482,363
15,473,650
19,956,01.33
Assigned:
Police
265,093
265,093
Fire
276,394
276,394
Public works
56,926
56.926
Tobacco License
33,573
33-573
Economic development
1,315,897
1,315.897
Parks and recreation
169,548
169,548
Library
60,166
60,166
Computer refresh
357,294
-
357,294
Encumbrances
-
560,379
560,379
Capital outlay
............
3,600,796
3,600,796
Total assigned
2,534,891
4,161,175
6,696,066
Unassigned:
20,807,983
(46,117)
20,761,866
Total fund balance
$ 35,762,880
$ 19,673,757
$ 55,436,637
103
Agreement No. 6085A
This page intentionally left blank
104
Agreement No. 6085A
RE QUIRED SUPPLEMENTARY
INFORMATION (UNAUDITED)
105
Agreement No. 6085A
City of El Segundo
Required Supplementary Information
Budgetary Comparison Schedule - General Fund
For the Year Ended September 30, 2020
Variance with
1-inal Budget
Budgeted
Amounts
Positive
Oriinal
Final
. . . . . ................ . . ........... -
Actual -
(NeZative)___
REVENUES::
Taxes
S 53,327,867
$ 46,065,652
47730,728
S 1,665,076
Licenses and permits
14,198,358
13,798,358
147234,600
436,242
Charges for services
5,307,168
3,807,167
4,307,599
500,432
Use of money and property
824,000
804,000
3.391762
2,588,762
Fines and forfeitures
412,020
192,020
273,093
81,063
Developer fees
110,876
110,976
Miscellaneous
2,300.795
1548,226
247,431
Total revenues
76,570,208
66,967,992
72,597,874
5,629,882_
EXPIENDHTURES:
Current:
General government:
City Council
319,432
308,432
308,625
(193)
City Treasurer
345,375
341,375
325153
16,222
City Clerk
722,939
634,238
534,170
100,068
City Manager
2,264,431
1,973,726
1,777,642
196,084
Cav Ationiev
585,450
585450
753,433
(167,983)
Planning
1,170,039
1076,748
1,119,803
(43,055)
Building and Safety
1,635,631
1,586,086
1,453,529
132,557
Administrative Services
6,113,978
5,550,245
5,459,663
90,582
Non -departmental
6,633,283
6,352,948
7,213,349
(860,401)
Public safety:
Police
21,357,303
20,490,344
21,2757768
(785,424)
Fire
16,577,834
15,848,044
17,085,210
(1,237,166)
Animal Control
251420
171,579
48,253
123,326
Communications Center
1,565,070
1,590,870
1,549,366
41,504
Public Works:
Administration
390,299
266,299
138,859
127,441
Government Buildings
2,213,572
2,045,802
2,023,035
22,767
Engineering
756,477
1,026,351
926,624
99,727
Streets
2,276,687
2,102,066
2,079,720
22,346
Solid Waste
363,937
378,937
465,356
(86,419)
Storm drain
522,105
610,479
398,547
211,932
Equipment Maintenance
1,583499
1,456,660
1,201,062
255,599
Community and cultural:
Recreation and Parks
7,890,395
7,098,278
6,023,865
1,074,413
Library
2,499,245
2,394,141
2,291,813
102,328
Capital outlay
11,490
22,041
15,704
6,337
Debt service:
Principal retirement
54,286
(54,286)
Interest
-
139.714
(139,714)
Total expenditures
78,041,790
73,911,139
74,662,548
(751,409)
Excess (deficiency) of revenues over expenditures
(1,471,582)
(6,943,147)
(2,064,674)
4,878,4'73_
OTHER FINANCING USES.
Transfers in
140,000
140,000
140,000
Transfers out
(2,749,000)
(1,249,000)
(1,249,000)
Total) other finanding uses
(2,609,000)
(1,109,000)
(1,109,000)
Net change in fund balances
S (4,090,582)
(8,052,14-7)
(3,173,674) S
4,878,473
FUND BAI,ANCEr
Beginning of Year
38,936,554
End of Year
S
35,762,880_
106
Agreement No. 6085A
City of El Segundo
Required Supplementary Information (Unaudited)
Note to the Budgetary Comparison Schedule
For the Year Ended September 30, 2020
Note 1 — Budgetary Control and Accounting Policy
Budgets are adopted on a basis consistent with accounting principles generally accepted in the United
States of America and are used as a management control device. Annual budgets are adopted for the
General Fund, Special Revenue Funds, Debt Service Funds and the Capital Projects Funds except for the
following Special Revenue Funds: MTA Grant, Certified Access Specialist Program, Affordable
Housing, Cultural and Development, and Special Revenues/Donations.
The City Council approves each year's budget submitted by the City Manager prior to the beginning of
the new fiscal year. Public hearings are conducted prior to its adoption by the City Council. Budgets and
adopted supplemental appropriations, where required during the period, are also approved by the City
Council. Intradepartmental budget changes are approved by the City Manager. The legal level of control,
that is defined as the level at which City Council approval is required for changes, is at the department
level for the General Fund and functional level for all other funds. During the year, several supplementary
appropriations were necessary. All operating budget appropriations lapse at year-end.
107
Agreement No. 6085A
City of El Segundo
Required Supplementary Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios
September 30, 2020
Last Ten Fiscal A'cars
California Public Employees' Retirement system ("CalPERS") - Miscellaneous Rate Plan
Measurement period and fiscal year
Total pension Iliiabiliity
Service cost
Interest on total pension liability
Changes of'benefit terms
Changes of assumptions
Differences between expected and actual experience
Benefit payments, including refunds of employee contributions
Net change in total pensibin fialtHity
Total pension liability - beginning
Total pension liability - ending (a)
2019-20 2018-19
$ 1088,245 $ 2,026,099
8,447,044 8,219,352
(221,184) (39,811)
(6,978,924) (6,762,739)
3,335,181 3,443,901
120ffl7,009 117,363,108
S 124,142,190 S 120,807,009
Pension fiduciary net posifion
Contributions - employer
3,584,857 $
3,597,197
Contributions - employee
946,546
878,016
Net investment income
4,398,867
5,537,029
Benefit payments, including refunds of employee contributions
(6,978,924)
(6.762,739)
Net plan to plan resource movement
3,966
(127,504)
Administrative expense
(I24,138)
(60,654)
Other miscellaneous expense
198
Net change in plan fiduciary net poshfon
1,83 1,174
3,061.,543
Plan fiduciary net position - beginning
Plan fiduciary net position - ending (b)
Plan net pension liability - ending (a) - (b)
88,056,385 94,904,842
$ 89,887,559 S 88,00,385
S 34,254,631 S 32,750,624
Plan fiduciary net position as a percentage
of the total pension liability 7241% '72 99%
Covered payroll 14,212,445 $ 12,85 1,i08
Plan net pension liability as a percentage of covered payroll 241 02% 254.84%
1 Ifistoxical information is presented for measurement periods for which GAS13 68 is applicable. Additional years' information will be displayed as it becomes
available
Notes to Schedule:
Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which Occurred after the 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 of' Assumptions: There were no significant changes in assumptions in 2019 In 2018, demographic assumptions and inflation rate were changed in
accordance to the CaIPERS Experience Study and Review of Actuarial Assumptions December 2017 There were no changes in the discount rate In 2017, the
discount rate was reduced from 7,65 percent to 7,15 percent In 2016, there were no changes In 2015, amounts reported reflect an adjustment of the discount fate
from 7 5 percent (net of administrative expense) to 7 65 percent (without a reduction for pension plan administrative expense,) In 2014, amounts reported were based
on the 7 5 percent discount rate
108
Agreement No. 6085A
City of El Segundo
Required Supplementary Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios (Continued)
September 30, 2020
Last Ten Fiscal Years'
California Public Employees' Retirement System ("CalPERS") - Miscellaneous Rate Plan
Measurement period and fiscal year
Totall pension Haltifity
Service cost
Interest on total pension liability
Changes of'benefit terms
Changes Of assumptions
Differences between expected and actual experience
Benefit payments, including refunds of employee contributions
Net change in total penMon liability
Total pension liability - beginning
Total pension liability - ending (a)
Pension fiduciary net position
Contributions - employer
Contributions - ernplovee
Net investment income
Benefit: payments, including refunds of employee contributions
Net plan to plan resource movement
Administrative expense
Other miscellaneous expense
Net change In plan fidudary flict position
Plan fiduciary net position - beginning
Plan fiduciary net position - ending (b)
Plan net pension liability - ending (a) - (b)
2017-19 2016 17 2015-16 2014 15 20B-➢4
S 2.002,276 S 2,022,687 S l,936,590 Si 1,991820 S 1,992,358
7,976,930 7;747,566 7,5 84, 2 l 4 7,355,288 707,756
(464,769) 6, l 99,889 ( 0,728,307)
8,203 (813ffl2) (999,552) (1 A00,892)
(6,360,824) (5,830,361) (5,534,415) (5,12 ➢,477) (4,825,890)
3,16 L816 9,325,949 2,986,837 997,432 4304.234
114,20 ➢,292 104,875,343 10 1,898,506 100,89 ➢,074 96,586,8,10
S 1➢7,363.108 S 1➢4,2ffl,292 S l04,875,343 $ 101,888,506 S 100,89➢,074
$ 3,29➢215
905,313
6,939,662
(6360,824)
(198)
l 25,728)
(238,760)
4,310,690
S 2,381,409 S
2,189,606 $
1,990,762
S 2,229,759
975,818
850,845
883,340
1,27 1,008
8,294,674
375,088
ll,743,059
11,605,7 17
(5,830,36➢)
(5,534,4 15)
(5, 121,477)
(4,825,880)
(31,27 1 )
(256)
1 M,952
l 10.73 9)
(47,032)
(86,704)
5,679,530 (2,166,164) (429,068) 1 O,290,604
80,684, l 62 75,004fi32 77,170,796 77,599,864 67,3 19,260
S 84,994,842 $ 80,6&4� 162 S 75,004,632 $ 77, 170,796 S 77,599,864
S 32,368,266 S 33,5 17, l 30 S 29,870,711 $ 24,7 17,710 S 23,29 �,210
Plan fiduciary net position as a percentage
of the total pension liability '72 42%, 70 65% 71 52% 75,741X, 7691%
Covered payroll S 12,875,891 $ 13,007,635 $ 112,983,105 S 13,1129,083 S 13,163,041
Plan net pension liability as a percentage of covered payroll 251 39% 25767% 230 07% 18827% 17694%
1 1 listorical information is presented for measurement periods lor which GASB 68 is applicable Additional years' information will be displayed as it becomes
available
Notes to Schedulez
Benefit Changes: The figures above do not include any liability impact that: may have resulted from plan changes which occun-ed after the 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 I landshakes)
Changes of Assumptions: There were no significant changes in assumptions in 2019 In 2018, demographic assumptions and inflation rate were changed in
accordance to the CaIPERS Experience Study and Review of Actuarial Assumptions December 2017, There were no changes in the discount rate In 2017, the
discount rate was reduced from 7 65 percent to 7 15 percent In 2016, there were no changes In 2015, amounts reported reflect an adjustment of the discount rate
from 7,5 percent (riot of administrative expense) to 7 65 percent (without a reduction for pension plan administrative expense,) In 2014, amounts reported were based
on the 7.5 percent discount rate
ME
Agreement No. 6085A
City of El Segundo
Required Supplementary Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios
September 30, 2020
Last Ten Fiscal Years'
California Public Employees' Retirement System ("CalPERS") - Safety Rate Plan
Measurement period and fiscal year
Totall pension liability
Service cost
Interest
Changes of benefit terms
Changes of assumptions
Differences between expected and actual experience
Benefit payments, including refunds of employee contributions
Net change in total) jpcnsion habdity
2015-16 2014-15 2013-14
S 3,906,1 52 S 4,017,009 S 4,084,900
l 8.561,546 118,050,364 17,643,39.5
(4,336,l 87)
(2,593,008) (4,610,542)
3,146,807) (12,326,946) 11353.968)
6,727,883 793,798 9.974,327
Total pension liability - beginning
249,847,921
249,054,123
239,079,796_
Total pension liability - ending (a)
$
256,575,804
$
249,847,921
S
249,054,123_
Pension fiduciary net position
Contributions - employer
$
6,497,421
$
6.155,214
$
5,466,181
Contributions - employee
1,288,776
1697.612
1,556,189
Net investment income
'792,070
3,716,152
25,110,451
Benefit payments, including refunds ofemployee contributions
(13,146,807)
(12,326,846)
(11,751968)
Net. plan to plan resource movement
256
568
Administrative expense
(101,008)
(186,524)
Net change in plani fiduciary net position
(4,669,292)
(943,824)
20,378853
Plan fiduciary net position - beginning
165,737083
166,680,907
146,302,054
Plan fiduciary net position - ending (b)
$
161,067,791
$
165,737,083
S
166,680,907
Plan net pension liability - ending (a) - (b)
S
95,508,013
$
84,110,938
S
82,373,216
Plan fiduciary net position as a percentage
of the total pension liability
6278%
6634%
6693%
Covered payroll
$
14,438355
S
14,977,101
$
14,757,054
Plan net pension liability as a percentage of covered payroll
66149%
561 60%
55820%
1 The City's Safety Plan was converted from an Agent Multiple Employer Defined
Plan to a Cost Sharing
Multiple Employer
Defined Benefit
Plan starting from the
measurement period jure 30, 2017 Information is only displayed for years GA.SB 68 were in effect and prior to the conversion of the plan
Notes to Schedulle:
Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after the June 30, 2015 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 of'Assumptions: In 2016, there Were no changes In 2015, amounts reported reflect an adjustment of the discount rate from 7 5 percent (net of administrative
expense) to 7.65 percent (Without a reduction for pension plan administrative expense ) In 2014, arnounts reported were based on the 7 5 percent discount rate,
110
Agreement No. 6085A
City of El Segundo
Required Supplementary Information (Unaudited)
Schedule of the City's Proportionate Share of the Net Pension Liability and Related Ratios
September 30, 2020
Last Ten Fiscal Years'
California Public Employees' Retirement System ("CalPERS") - Safety Rate Plan
Mca,surcynent period and fiscal year
City Proportion ofthe Net Pension Liability
City's Proportionate Share or
the net Pension Liability
City's Covered Payroll
City's Proportionate Share ofthe Net Pension
Liability as a Percentage of Its (..,.overed Payroll
Plan's Proportionate Share ofthe Fiduciary Net Position
as a Percentage of theTotal Pension Liability
2019-20 2018-19 2017-18 2016 17
1 7727% 1 7839% 1 1091%. 1 0764X,
S 118,102,353 S 111,360,318 S 106,775,573 S 106,751,685
$ 13,583,547 S 12,490,385 l 2,742,792 $ 12,697,81 8
86945% 991 57% 83793% 840 '71%
75 10% 7526% '75 26% '73 31%
The City's Safety Plan was converted fiorn an Agent Multiple Ernplover Defined Plan to a Cost Sharing Multiple Employer Defined Benefit Plan starting from the
measurement period June 30, 2017 Information is only displayed fear years the plan was converted to a cost sharing plan
Changes in Assummpfions.
Fyorn measurement period and fiscal year 2016 17 to 2017 19: The discount rate was reduced from 7 65% to 7,15%
From measurement period and fiscal year 2017 19 to 2018 19- There were no significant changes in assumptions
Agreement No. 6085A
City of El Segundo
Required Supplementary Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios
September 30, 2020
Last Ten Fiscal Years'
Public Agency Retirement System Defined Benefit Plan
.fiscal year
2019-20
2018-19
Measurement period
2018-719
2017-18
Total) pension fiabifity
Service cost
S
Interest
126,122
115,441
Changes of assumptions
(62,152)
Differences between expected and actual experience
-
187,949
Benefit payments, including refunds of employee contributions
(9'T, 156)
(196,140)
Net change in tartan pension habifity
28,966
44,998
Total pension liability- beginning
2,24 p,998
2,197,000
Total pension liability - ending (a)
S
2,270,964.
S
2,241,998
Pension fiduciary net position
Contributions - employer
S
158,000
S
158,000
Contributions - employee
-
-
Net investment income
53,443
69,282
Benefit payments, including refunds of employee contributions
(97,1156)
(196,140)
Administrative expense
(5,5 n'7)
(5,455)
Net change in pban fiduciary net position
108,770
25,687
Plan fiduciary net position - beginn ing2
1,087,687
1,062,000
Plan fiduciary net position - ending (b)
S
1,196,457
S
1,087,687
Plan net pension liability - ending (a) - (b)
S
1 074,507
1,154,311
Plan fiduciary net position as a percentage
of the total pension liability
52,68%
48 51 %
Covered payroll
N/A
N/A
Plan net pension liability as a percentage of covered payroll
N/A
N/A
I Historical information is presorted only for measurement periods for which GA.SB 68 is applicable Additional years' information will be displayed as it becomes available
Opanges in Asseamptions:
Actuarial valuation date
June 30, 2016
Fiscal year
2017-18 and 2016-17
Measurement period
2016-17 and 2015 -16
Discount rate
5 50%
Rate of return on assets
5,50%
Inflation rate
5,50%
Mortality, retirement, disability, and termination
CalPERS 1997-2011
Mortality improvement scale
112
Experience Study
Scale MP-2014
Agreement No. 6085A
City of El Segundo
Required Supplementary Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios
September 30, 2020
Last Ten Fiscal Fears'
Public Agency Retirement System Defined Benefit Plan
Fiscal year
Measurement period
Total pension liability,
Service cost
Interest
Changes of assumptions
Differences between expected and actual experience
Benefit payments, including refunds of employee contributions
Net change in total pension liability
Total pension liability - beginning
Total pension liability - ending (a)
Pension fiduciary net position
Contributions - employer
Contributions - employee
Net investment income
Benefit payments, including refunds of employee contributions
Administrative expense
Net change in plan fiduciary net position
2017-18
'M 6-17
2015-16
2014-15
2016-17
015 16
2014-15
2013-14
S
S
S
54.000
119.000
121,000
113,000
110,000
40,000
93,000
(174,000)
(141,000)
(8 i'wo)
(37,000)
(51'.5,000)
Q0,000)
265.000
127,000
2,252,000
2,272,000
2,007,000
1,880000
S 2,197,000
S 2,252,000
S 2,272,000
S 2,007,000
$ 236,000
1
167,000
193,000
91,000
'72,000
(11,(100)
52,000
(174,000)
14 1,000)
(81,000)
(37,000)
(5,000)
(5'0w)
(5'0(x:�)
(5,000)
148,000
(58,000)
70,000
203,000
Plan fiduciary net position - beginning"
914,000
972,000
902,000
699,000
Plan fiduciary net position - ending (b)
$ 1,062,000 S
914,000
S 972.000
S 902,000
Plan net pension liability - ending (a) - (b)
$ 1,135,000 S
1,338,000
$ 1,300,000
S 1,105,()00
Plan fiduciary net position as a percentage
of the total pension liability
4834%
40,59%
42 7801/a,
44941,a
Covered payroll
\UA,
N;/A
Plan net pension liability as a percentage of covered payroll
Y,,;/A
INI /A
`VA,
N/A
' Hisladcall niforination, is pT.r,,,se.racd only for micasurinneril per�ods for which GASB 68 is apphcaWc AddifioraI years' indbrinahon will be displayed as it becounes avaflable
113
Agreement No. 6085A
City of El Segundo
Required Supplementary Information (Unaudited)
Schedule of Contributions
For the Year Ended September 30, 2020
Last Ten Fiscal Years 1
California Public Employees' Retirement System ("CalPERS") - Miscellaneous Rate Plan
Fiscal year
Actuarially determined contribution'
Contributions in relation to
the actuarially determined contribution2
Contribution deficiency (excess)
Covered payroll
Contributions as a percentage of covered payroll
2019-20 2018 19
$ 3,695,146 S 3.42l,223
(3,695,146) (3,728,014)
$ (306,79 l)
$ 14,446,483 $ 13,136,731
2558% 28 3 89/6
I Historical information is presented for measurement periods for which GASB 68 is applicable Additional years' information will be displayed as it becomes
available
2 Employers are assumed to make contributions equal to the actuarially determined contributions However, some employers may choose to make additional
contributions towards their unfunded liability Employer contributions for such plans exceed the actuarially determined contributions
Notes to Schedule;
Valuation date
6/30/20 18
6/30/2.017
Methods and Assumptions Used to Determine Cont6bution Rates
Actuarial cost method
Entry age
Lnkry age
Amortization method
(1)
M
Asset valuation method
Fair value
Faiv value
Inflation
Salary increases
(2)
(2)
Investment rate ofreturn
725%(3)
725%(3)
Retirement age
(4)
(4)
Mortality
(5)
(5)
(9) Level percentage of payroll, closed
(2) Depending on age, service, and type of employment
(3) Net of pension plan investment expense, including inflation
(4) The probabilities of Retirement are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011
(5) Mortality assumptions are based on mortality rates resulting firorn the most recent CalPERS Experience Study
adopted by the CalPERS Board
114
Agreement No. 6085A
City of El Segundo
Required Supplementary Information (Unaudited)
Schedule of Contributions (Continued)
For the Year Ended September 30, 2020
Last Ten Fiscal Years'
California Public Employees' Retirement System ("CAPERS") - Miscellaneous Rate Plan
Fiscal year
Actuarially determined contribution'
Contributions in relation to
the actuarially determined contribution'
Contribution deficiency (excess)
Covered payroll
Contributions as a percentage of covered payroll
2017 18
S 2,712,223
2016-17 2015-16 2014-15 2013-14
S 2,360,497 S 2,267,956 S 2,047,988 9i 2,6311,370
(3,291.215) (2,360,497) (2,267,9.56) (2;047,988) (2,631,370)
S (578,992) $ $ $ S
. . . .......
S 12,842,526 S 11,980,872 S 1'2A4558 S 12279,995 S 12,'782,090_
25,63% 1970% 18 17% 1669% 2059%
I Historical infornsation is presented for measurement periods for which GASB 68 is applicable Additional years' information will be displayed as it becomes
available
2 Employers are assumed to make contributions equal to the actuarially determined contributions However, some employers may choose to make additional
contributions towards their unfunded liability Employer contributions for Such plans exceed the actuarially determined contributions
Notes to Schedule -
Valuation date
6/30/20 16
Methods and Assumptions Used
to Deternfine Contribution Rates.
Actuarial cost method
Entry age
Amortization method
(1)
Asset valuation method
Fair val Lie
Inflation
Salary increases
(2)
Investment rate of return
7375%(3)
Retirement age
(4)
Mortality
(5)
6/30/2015
6/30/2014
6/30/2013
6/30/2012
Entry age
Entry age
Entry age
)
Entry age
01
(1)
Fair value
(1)
Fair value
(1
Fair value
Market value
2,75%
275%
2 75%
2,75%
(2)
(2)
(2)
(2)
750%(3)
7 50% (3)
7 50*1�, (3)
750%(3)
(4)
(4)
(4)
(4)
Of
(5)
(5)
(5)
(1) Level percentage of payroll, closed
(2) Depending on age,, service, and type of employment
(3) Net of pension plan investment expense, including inflation
(4) The probabilities of'Retivement are based on the 2014 CalPERS Experience Study For the period from 1997 to 2011
(5) Mortality assumptions are based on mortality rates resulting from the most recent CaIPERS Experience Study
adopted by the CalPERS Board
WR
Agreement No. 6085A
City of El Segundo
Required Supplementary Information (Unaudited)
Schedule of Contributions
For the Year Ended September 30, 2020
Last Ten Fiscal Years'
California Public Employees' Retirement System ("CalPERS") - Safety Rate Plan
Fiscal year
Actuarially determined contribution
Contributions in relation to the
actuarially determined contribution
Contribution deficiency (excess)
Covered payroll
Contributions as a percentage of covered
payroll
2019 20 2018-19
S 10,830,665 S 9,1 86,753
(10,830,665) (10,424 853�
S S (1,,138,100)
S 13,606,529 S 12,668,674
7960% 8229%
I Historical information is presented for measurement periods for which GASB 69 is applicable Additional years' information will be displayed as it becomes
available
Notes to Schedule -
Valuation date
6/30/20 8
6/30/2017
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial cost method
Entyy age
ETAT)l ege
Amortization method
0)
(1)
Asset valuation method
Faiy vaWe
Fair value
Inflation
Salary increases
(2)
(2)
Investment rate ofreturn
725%(3)
'7 25% (3)
Retirement age
(4)
(4)
Mortality
(5)
(5)
�(8) Level percentage of payroll, closed
,(2) Depending on age, service, and type of employment
�(3) Net oftsension plan investment expense, including inflation
�(4) The probabilities of'Retirement are based on the 2014 CaIPERS Experience Study for the period from 1997 to 2011
(5) Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study
adopted by the CalPERS Board
116
Agreement No. 6085A
City of El Segundo
Required Supplementary Information (Unaudited)
Schedule of Contributions (Continued)
For the Year Ended September 30, 2020
Last Ten Fiscal Years'
California Public Employees' Retirement System ("CAPERS") - Safety Rate Plan
Fiscal year
Actuarially determined contribution
Contributions in relation to the
actuarially determined contribution
Contribution deficiency (excess)
Covered payroll
Contributions as a percentage ofcovered
payroll
2014-15 2013-14
. . ....................
9,480,050 S 5,292,029 S 6,581,713 $ 6,355,099 S 6,316,752
(8,500,586) (5,282,029) (6,581,713) (6355.099) (6,3 16,752)
S (20,536) S S
S 12,614,944 $ 12,41 O;252 S 13,711,733 S 13,863,160 S 14,420,062
. . . .. .. .. . . ................. -
67,39% 4256% 4900% 45 84X. 4381%
I Historical information is presented for measurement periods for which GASB 68 is applicable Additional years' information will be displayed as it becomes
available
Notes to Schedule,
Valuation date
6/30/2016
Methods and Assunripfions Used
to Determune Contribuflon Rates:
Actuarial cost method
Entry age
Amortization method
(1)
Asset valuation method
Fair value
Inflation
Salary increases
(2)
Investment rate of return
7375% (3)
Retirement age
(4)
Mortality
(5)
6/30/20 l 5
6/30/20 14
6/30/20113
6/30/20 12
Entry age
Entry age
Entry age
Enn-V age
(1)
(1)
(1)
(1)
Fair value
Fair value
Fair value
Market value
275%
275%
2 '75%
2 75%
(2)
(2)
(2)
(2)
750%(3)
750%(3)
750%(3)
7 50V. (3)
(4)
(4)
(4)
(4)
(5)
(5)
(5)
(5)
(1) Level percentage of payroll, closed
(2) Depending on age, service, and type of employment
(3) Net of pension plan investment expense, including inflation
(4) The probabilities of'Retirement are based on the 2014 CaIPERS Experience Study for the period from 1997 to 2011
(5) Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study
adopted by the CaIPERS Board
117
Agreement No. 6085A
City of El Segundo
Required Supplementary Information (Unaudited)
Schedule of Contributions
For the Year Ended September 30, 2020
Fiscal year
Acurarially determined contribution
Contributions in relation to
the actuarially determined contribution
Contribution deficiency (excess,)
Covered payroll
Contributions as a percentage of covered payroll
Last Ten Fiscal Years'
Public Agency Retirement System Defined Benefit Plan
2019-20 2018-19 20 17 18
S 158,000 S 158,000 S r8,0(lo
(1158,000) (1 58,wo) (1158,0w)
S S S
N/A N/A
WA NIA,
I I listorical information is presented fbi measi.ffernent periods for which GASB 68 is applicable Additional years' information will be displayed as it becornes
available
Notes to Scheduk�
Methods and assumptions used to detertnine contribution rates:
Fiscal year
Actuarial valuation date
Actuarial cost method
Arnoi tization method
Asset valuation method
Inflation
Cost of Living Adjustment
Investment rate of return
Mortality, retirement, disability, and WITniriatiOn
Mortality improvement scale
118
201920
2018 19
2017-18
6/30/16
6/30/16
6/30/16
Enny Age Normal
I-evel Dollar, Closed
Market value
300%
3,00%
300%
2,00%
200%
200%
5 50%
550%
550%
CalPER.S 1997 2011. Experience Study
Scale M11 20 l 4
Agreement No. 6085A
City of El Segundo
Required Supplementary Information (Unaudited)
Schedule of Contributions
For the Year Ended September 30, 2020
Last Ten Fiscal Years'
F&al year
Actuwiafly demimined contrilnition
Contibutions in relation to
the actuanafly dewrniried contribufion
Contdbution deficiency (excess)
Covered payroll
Contributions as as pCTCOntage of covered payroll
Public Agency Retirement System Defined Benefit Plan
2016-17
11 8"NO
2015-16 2014-15
(236,000)
(I t 8,000) $ 118,000 $
N/A NO, N/A.
NIA 1,VA NI/A
I t fisloricM anformalton is presenied for rnewwrement periods fw which GASB 68 is applicable Additionall years' inf'ormarren Tripp be chsphayed as it becomes
avaflaMe.
119
Agreement No. 6085A
City of El Segundo
Required Supplementary Information (Unaudited)
Schedule of Changes in Total OPEB Liability and Related Ratios
September 30, 2020
Last Ten Fiscal Years
Other Postemployment Benefits ("OPEB") Plan
Measuremeni period and fiscal year
I otall OPEB liability
Service cost
Interest
Changes ofbenefit tenns
Changes ol'assumptions
Differences between expected and actual experience
Benefit payments, including refunds
Net change in total OPEB liability
Total OPEB liability - beginning
Total OPEB liability - ending (a)
OPEB fiduciary net position
Contributions - employer
Contributions - employee
Net investment income
Benefit payments, including refunds of employee contributions
Administrative expense
Net change in plan fiduciary net position
Plan fiduciary net position - beginning
Plan fiduciary net position - ending (b)
Plan net OPEB liability - ending (a) - (b)
Plan fiduciary net position as a percentage of the total OPEB liability
Covered payroll'
Plan net OPEB liability as a percentage of covered payroll
' For the 12-monih period ended on June 30, 2018 (Measurement Date),
2019-20
2018 19
2017 18
S 1,325,398
S
1,428,884
S
1,397,266
4,096,818
4,265,776
4,137,853
(4,289,232)
(1,323,0511)
(6,345201)
(3,868,684)
(3,74 1,351)
(3,601,811)
(6,114,720)
(2,335,923)
1,923,308
61302,549
63,63 8,d'72
61,715,164
S 55,187,829
S
61,302,549
S
63,63 8,472
S 4.425,712
S
4.399,351
$
4,026,811
884,584
1,431,779
1,634,752
(3,868A4)
(3,741,35 1)
(1601,811)
(21,262)
(4,901)
(38,164)
1,420,350
1084,978
2,021,589
24,641,464
21556,586
20,534,998
S 26,061.,814
_S
24,641,464
$
22,556,586
S 29,126,015
S
36,661,085
S
41,081,886
47 22%
4020%
3544%
S 32,938,247
S
25,506,339
S
25,512,342
88,43%
14173%
161,03%
Chanpes he Bene fit Terna;.
From mocrsiip-cirpentperiod ended .lidne 30, 2018 toJune .30,2019:
-Management and Conf. Monthly cap and maximum cap changed from S1,20051,600 to S7825585
-Fxecutive: Monthly cap and maximurn cap changed from $1,20051,600 to S782/$782
-PMA- Monthly Cap changed from S1,200 to average HMO family piernium but no more than active cap ($1,575 for 2020, $1,650 for 2021) Maximum cap
increased from S 1,200 to S1,650
-PSSEA: Monthly Cap changed from S 1,200 to average HMO family prernfirm but no morn than active cap (SI,450 2019, S1,500 for 2020, S1,600 for 2021,
$1,650 for 2022) Maximum cap increased from S1,200 to S 1,650
6PEA: Monthly Cap changed front S1,200 to average HMO farnily prernium but no more than active cap (S1,500 for 2019, S1,550 for 2020, S1,600 for
2021, $1,650 for 2022) Maximum cap increased from S 1,200 to Sl fi50,
-CEA.- Monthly Cap changed from S1,115.67 to average I IMO family piernium but no more than active cap (S1,500 for 2020, S1,550 for 2022, S1 600 fim
2023)
-Police & Fite: Monthly Cap (Average HMO family) but no more than active cap (S 1,500 for 2019, S1,575 for 2020, S1,650 for 2021); Fire Maximum Cap
increased from $1,600 to S 1,800
Chanpes in Assumptions
From mccffurcinent period ended June 30, 2019 foJune .30,20.20:
The mortality improvement scale was updated to Scale MP-.2019 from MP 2017 'The healthcare trend changed from 7 50% non -medicare and 6,50%
medicare to 7 25% non medicate and 6 311/. rnedicare
120
Agreement No. 6085A
City of El Segundo
Required Supplementary Information (Unaudited)
Schedule of Contributions
For the Year Ended September 30, 2020
Fiscal ),cars
Acniarially determined contribution
Contributions in relation to
the actuarially determined contribution
Contribution deficiency (excess)
Covered payroll'
Contributions as a percentage of covered payroll'"
Last Ten Fiscal Years
Other Postemployment Benefits ("OPEB") Plan
201920 2018-19 2017-18
SD 4,436,000 i 4,306,000 $ 3,876,00
(4,45.15,1502) (4,435,351) (4,044,912)
S (19,502) S (129,351) S (168,912)
$ 34J 51,544 $ 26,049,352 S 2 5,3 92,6 l 0
1305% 17,03% 1594%
I Historical information is presented for measurement periods for which GAS13 75 is applicable, Additional years' information will be displayed as it becornes
available
2 Determined for the 12 month period ending on September' 30, 2018 (fiscal year end)
Noges, eo,Vehedule,r
The acluarial methods and assumptions used to set the actuarially determined contributions are as follows:
Methods and assumptions used t.o determine contribution rates:
Date of actuarial valuation report
Actuarial cost method
Arnortization irrethod
Amortization period
Asset valuation method
Discount rate
General inflation
Medical trend
Mortality, withdrawal, disability
(1) 6 5% (Non -Medicare) and 6 79/6 (Medicare) for 20l 8, decreasing to an ultimate rate of 0% in 2021
(2)'7 5% (Non Medicare) and 6 5% (Medicare) For 2019, decreasing to an ultimate rate of 0% in 2076
(3) CalPERS 1997 2011 experience study Mortality Improvement Scale MP,2014
(4) Cal} ERS 1997-2015 experience study Mortality Improvement Scale MP 2017
121
6/30/2017 6/30/2017 6/30/2015
Entry Age Normal
Level percentage of payroll
22 years 23 years 25 years
Investment gains and losses spread over 5 year rolling
period
675% 675% T50%
275% 2 75% 300%
(2) (2) (1)
(4) (4) (3)
Agreement No. 6085A
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Agreement No. 6085A
SUPPLEMENTARY INFORMATION
123
Agreement No. 6085A
ASSETS
Cash and investments
Restricted cash
Receivables:
Taxes
Accounts
Interest
Notes and loans
Due from other flinds
Due from Other gOVCMMeDtS
Inverfl-OrieS
Prepaids
Total assets
City of El Segundo
Combining Schedule - Balance Sheet
General Funds
September 30, 2020
Economic Hyperion
Uncertainty Mitigation
General Fund Fund
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
Liabilities:
Accounts payable
Accrued liabilities
Retentions payable
Unearned revenue
Deposits payable
Total liabilities
Deferred inflows of resources
Unavailable revenues
Total deferred inflows of resources
Fund balances:
Nonspendable
Restricted
Assigned
Unassigned
Total fund balances
Total liabilities, deferred inflows of
resources, and fund balances
124
$ 18-04T477 2,000,004 $ 106A44
4A82,363
4.566,739
552,739
290,487
17,500
409,361
646,269
1 00,264
7,819,879 -
$ 36,931078 $ 2,000,004 106.444
$ 1,163,214
2;265,341
2,336
30,868
583,426
4,045J85
1,019,330
1,0➢9,330
7,937,643
4,482,363 -
1,218,994
18,229,563 2,000,004 106,444
31,868,563 2,000,004 106,444
36.,.933.,078 S 2.000.004 $ I 06A44
Agreement No. 6085A
City of El Segundo
Combining Schedule - Balance Sheet (Continued)
General Funds
September 30, 2020
Cash and investments
Restricted cash
Receivables:
Taxes
Accounts
Interest
Notes and loans
Due from other fiends
Due from other governments
Inventories
Prepaids
Total assets
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
Liabilities:
Accounts payable
Accrued liabilities
Retentions payable
Unearned revenue
Deposits payable
Total liabilities
Deferred inflows of resources
Unavailable revenues
Total deferred inflows of resources
Fund balances:
Nonspendable
Restricted
Assigned
Unassigned
Total fund balances
Total liabilities and fund balances
125
Facilities Project
Maintenance Deposits
Fund Fund Total
$ 1,956.,144 $ 22,110,069
4..482.363
4,566.739
552.739
290-487
17,500
409,361
646,269
100.264
7,819,879
$ _ $ 1,956,144 $ 40.995.670
$ 102,905 $ 1,266,1 19
2,265,341
2,336
30,868
65,370 648,796
168,275 4,213,460
1,019,330
1-019,330
7,937,643
- 4„482,363
1,315,897 2,534.891
471,972 20,807,98.3
1,787,869 35,762,880
$ $ 1,956,144 140,995,670
Agreement No. 6085A
City of El Segundo
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances
General Funds
For the Year Ended September 30, 2020
REVENUES -
Taxes
Licenses and permits
Intergovernmental
Charges for services
Use of money and property
Fines and forfeitures
Developer Fees
Miscellaneous
Total revenues
EXPENDITURES:
Current:
General government
Public satery
Public works
Community and cultural
Capital outlay
Debt service:
Principal retirement
Interest and fiscal charges
Total expenditures
EXCESS (DEFICIENCY) OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING USES:
Transfers in
Transfers out
Total other financing uses
NET CHANGE IN FUND BALANCES
FUND BALANCES:
Beginning of year
End of year
126
Economic Hyperion
Uncertainty Mitigation
General Fund Fund
47,7330,728
14,234,600
4.073,968
3391,924 838
273,083 -
110,876
2,548,226 -
72,363,405 838
18,915,481
39,958,597
7,226,521 6,681
8,315,678
15.704
54,286
139,714 -
74,625,981 6,681
(2,262,576) (5,843)
140,000
(1,249,000)
(1,10%000)
(3,371,576) (5,843)
35,240,139 2,000,004 112,287_
$ 31,868,563 S 2,000,004 S 106,444
Agreement No. 6085A
City of El Segundo
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances (Continued)
General Funds
For the Year Ended September 30, 2020
REVENUES:
Taxes
Licenses and permits
Intergovernmental
Charges for services
Use ofmoney and property
Fines and forfeitures
Developer Fees
Miscellaneous
Total revenues
EXPENDITURES:
Current:
General government
Public safety
Public works
Community and cultural
Capital outlay
Debt service:
Principal retirement
Interest and fiscal charges
Total expenditures
EXCESS (DEFICIENCY) OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING USES:
Transfers in
Transfers out
Total other financing uses
NET CHANGE IN FUND BALANCES
FUND BALANCES:
Beginning of year
End of year
127
Facilities Project
Maintenance Deposits
Fund Fund Total
47.730,728
14,234,600
231631
4.307.599
-
3,392.762
273,083
110,876
2,548,226
2316.331
72,597,874
29,886
18,945367
39,958,597
7,233,202
8,315,678
15,704
54,286
-
139,714
29,886
74,662,548
203,745 (2,064,674)
140,000
(1,249,000)
(1.109'000)
203,745 (3,173,674)
1,584,124 38,936,554
$ 1,797,869 $ 35,762,880
Agreement No. 6085A
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128
Agreement No. 6085A
Special Revenue Funds:
State Gas Tax Fund - Accounts for a share of revenues derived from the State Highway Users' Tax under
Sections 2105, 2106, 2107, and 2107.5. The revenue is derived from a share of the gasoline taxes and is used
for the construction and maintenance of the road network system of the City.
Residential Sound Insulation Program Fund - Accounts for the grants received from the Federal Aviation
Administration (FAA) and the Los Angeles World Airports (LAWA). The fund is used to provide acoustical
treatment of homes in El Segundo that are within the extreme airport noise impact zone, in order to create a
better sound environment inside the home.
Certified Union Program Agencies - Accounts for revenues and expenditures for the Endorsement and
Emergency Response Program (EERP), a consolidation of six environmental programs at the local level.
Community Development Block Grant (CDBG) - Accounts for revenues received from the Department of
Housing & Urban Development (HUD). These revenues must be expended to accomplish one of the following
objectives: elimination of slum or blight to low and moderate income persons; or, to meet certain urgent
community development needs. The City of El Segundo uses this revenue to fund eligible senior activities
such as in -home care; art classes; counseling; and home delivered meals, administered by the Planning &
Building Safety Department. (Note: Beginning in fiscal year 2015-2016, the City decided to fund urgent
community development needs such as senior in -home care, delivered meals, etc. from the General Fund at
to solely use CDBG funds to build access ramps to comply with the Americans with Disabilities Act (ADA).
Asset Forfeiture Fund - Accounts for receipt and disbursement of narcotic forfeitures received from the
County, State, and Federal agencies pursuant to Section 1 ] 470 of State Health & Safety Code and Federal
Statute 21 USC Section 881.
Prop "A" Transportation Fund - Accounts for the one-half (1/2) cent Sales Tax approved by the voters of
Los Angeles County to be used for local transportation purposes. These revenues are collected by the State
and a portion is funneled to the City through the Los Angeles County Transportation Commission. The City
of El Segundo uses this fund to participate in CTIP/MAX, a regional commuter service and to provide Dial -
a -Ride; beach shuttles; and various transportation services.
Prop "C" Transportation Fund - Accounts for the one-half (1/2) cent Sales Tax approved by the voters of
Los Angeles County in November 1990. Collection of the tax began in April 1991. Proceeds are to be used to
improve transit services and operations; reduce traffic congestion; improve air quality; operate and improve
the condition of the streets and freeways utilized by public transit; and reduce foreign oil dependence.
Traffic Safety Fund - Accounts for a portion of the Vehicle Code violation fines and penalties collected by
the Los Angeles County Municipal Court. By State law, this money must be used for traffic safety related
expenditures including traffic enforcement and capital projects.
ID
Agreement No. 6085A
Special Revenue Funds (Continued):
Air Pollution Reduction Fund - Accounts for the City's share of funds received under the Health & Safety
Code Section 44223 (AB 2766) to finance mobile source air pollution reduction programs consistent with the
California Clean Air Act of 1988. The fund, derived from additional vehicle registration fee, is used to support
the South Coast Air Quality Management District's (SCAQMD) program to reduce air pollution from motor
vehicles.
TDA Article 31SB 821 Bikeway Fund - Accounts for the monies the City receives from the Transportation
Development Act Article 3 which are to be specifically used for construction or repair of bikeways, sidewalks,
or handicapped accesses.
COPS Fund - Accounts for receipt and disbursement of funds received under the State Citizens' Option for
Public Safety (COPS) program allocated pursuant to Government Code Section 30061 enacted by AB 3229,
Chapter 134 of the 1996 Statues. This fund, also known as the Supplemental Law Enforcement Services Fund
(SLESF), is allocated based on population and can only be spent for "front line municipal police services"
such as local crime prevention and community -oriented policing, per Government Code Section 30061 (c)(2).
MTA Grant Fund - Accounts for receipt and disbursement of funds received from the exchange of Federal
Surface Transportation Program - Local Funds for Local Transportation Funds from Los Angeles County
Metropolitan Transportation Authority.
Measure R Fund - Accounts for the one-half (1/2) Sales Tax approved by the voters of Los Angeles County
to be used for local transportation needs. These revenues are received by the State and a portion is funneled
to the City through the Los Angeles County Metropolitan Transportation Authority. The City of El Segundo
uses these funds for street improvements.
Federal Grants Fund - Accounts for revenues and expenditures for each Federal grant awarded to the City..
State & County Grants Fund - Accounts for revenues and expenditures for each State or County grant
awarded to the City.
PSAF Property Tax Public Safety Fund - Accounts for the one-half (1/2) cent Sales Tax approved by the
voters in November 1993 under Prop 172. These revenues must be spent for public safety (police and fire
services) purposes only.
Senior Housing Fund - Accounts for the revenues and expenditures from the El Segundo Senior Citizen
Housing Corporation.
Measure M Fund - Accounts for the one-half (1 /2) cent Sales Tax approved by the voters in November 2016.
These revenues must be spent to ease traffic congestion.
130
Agreement No. 6085A
Special Revenue Funds (Continued):
SB I Fund - Accounts for the revenues and expenditures from the Road Repair and Accountability Act of
2017. These revenues must be spent for local streets and roads.
Certified Access Specialist Program ("CASP") - Accounts for the fees collected to increase disability access
and compliance with construction related accessibility requirements.
Affordable Housing - Accounts for the revenue and expenditures related to the construction and purchase of
affordable housing.
Cultural Development - Accounts for the 1 percent in -lieu fee imposed on new developments over $2 million
to meet the public art requirement. These revenues must be spent on design, acquisition, commission,
installation, improvement, maintenance and insurance of artwork or sponsoring and supporting artistic and
cultural services in the City.
Special Revenue/Donations Special Revenue Fund - To account for donations received from private
individuals or entities that are to be spent on specific activities or programs not funded by the City.
Debt Service Fund:
Facility Lease Fund - Accounts for the lease agreement with the California Infrastructure and Economic
Development Bank (CIEDB) whereby CIEDB issued bonds in the amount of $10 million to finance the
Douglas Street Gap Closure Project. The City will make rental lease payments over a 30-year period starting
February 1, 2006, at an interest rate of 2.87% per annum. Interest payments on the lease obligation are due on
February 1 and August 1 of each year. Base rental payments will be mailed to the City reflecting the actual
amount owed prior to each base rental payment due date.
Capital Projects Fund:
Capital Improvement Fund - Accounts for construction of capital facilities typically financed by the City's
General Fund and any grant not accounted for in a special revenue fund.
131
Agreement No. 6085A
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um
Agreement No. 6085A
City of El Segundo
Combining Balance Sheet
Nonmajor Governmental Funds
September 30, 2020
Cash and investments
Receivables:
Accounts
Interest
Notes and loans
Due frorn other governments
Prepaids
Total assets
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
Liabilities:
Accounts payable
Accrued liabilities
Retentions payable
Due to other funds
Unearned revenue
Deposits payable
Total fiabifitles
Deferred inflows of resources:
Unavailable revenue
Total deferred inflows of resources
Fund balances:
Nonspenclable
Restricted
Assigned
Unassigned (deficit)
Total fund balances
Total liabilities, deferred inflows of
resources, and fund balances
Slxxujl Revimue 1111uds
Certified
Residential Union Community
State Sound Prograrn Development Asset
Gas �Tax hisnlaiioui �A �wixjes � Rlot:k Grant
S 128634 S 453,493 S 278,994 742,104
41.,852
1,34 -
49.405
11,052 73,997
394,9,r, S 0.403 S 74 2. 104
S 80 S 'S 53,97 l S S 16,856
6,892 2 1 788 21
M,664
-- - -----------------
6,972 75,759 10,664 16,877
133
11,052 73,997
121,662 453,627 245,087 38,741 725,227
132,714 453,627 19,0811 38,741 725,227_
U,9,646 S 453-627 S, l,i$41 S_ -19 -10 742104
1 _.
Agreement No. 6085A
City of El Segundo
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
September 30, 2020
Cash and investments
Receivables:
Accounts
Interest
Notes and loans
Due from other governments
PTepajds
Total assets
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
Liabillties:
Accounts payable
Accrued liabilities
Retentions payable
Due to other funds
Unearned revenue
Deposits payable
Total liabilities
Deferred inflows of resources:
Unavailable revenue
Total deferred inflows of resources
Fund balances:
Nonspendable
Restricted
Assigned
Unassigned (deficit)
Total fund balances
Total liabilities, deferred inflows of
resources, and fund balances
Revenue F unds
An
Traffic. Pollution SB 821
Prop A Prop C Safety Reduction bike%%ak
S 902,12..4 S 865,992 S 44,519 S 96,906 $ 58 697
24,815 1.770
�902.1�24 1 ............. 822.j �O7 46,288 S 96,9(ki S' 58 (r47
.......................................... . . . ........................................
S 863 S 8,446 $ S S
324
1,197 8,446
.................. . ..... . ..... . ................................................
900,937
882,36t
46,288
96,906
58,697
900,937
............. . ........................
882,361
. ........................
96,906
. ...............
58,697
. . . .... -
46,288
. .......................................
_j_22211L S
...............................................
890,807 $
41,288 S
96 906 S
58,(07
134
Agreement No. 6085A
City of El Segundo
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
September 30, 2020
Cash and investnien(s
Receivables
Accounis
Interest
Notes and loans
Due frorn other governments
Prepaids
Total assets
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
Liabilities:
Accounts payable
Accrued liabilities
Retentions payable
Due to other funds
Unearned revenue
Deposits payable
Total liabilities
Deferred inflows of resources:
Unavailable revenue
Total deferred inflows of resources
Fund balances:
Nonspendable
Restricted
Assigned
Unassigned (deficit)
Total fund balances
Total liabilities, deferred inflows of
resources, and fund balances
Revenue Funds
MTA federal State
C 0 1) S Giant Measure R Giants Grants
S 275774 7 S 308,314 S 879,942 S S 101,244
56.327 209,898
S 332 474 S 309 3H S 879942 S 209,89K S 10 V244
S S S S
53,305
294,218
294-2 N 53,305
202.710
202,710
332,474 14,096 979,942 101,244
(46,1172
332,474 14,096 879,942 (46,117) 101,244
........................................ . .................. ......................................
S 2A 74 S ... 30 9,31-1 S _87 9 9, 12 5 209,898 5 101.244
................ -
M
Agreement No. 6085A
City of El Segundo
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
September 30, 2020
Cash and investments
Receivables:
Accounts
Interest
Notes and loans
Due from other governments
Prepaids
Total assets
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
Liabilities:
Accounts payable
Accrued liabilities
Retentions payable
Due to other funds
Unearned revenue
Deposits payable
Total liabilities
Deferred inflows of resources:
Unavailable revenue
Total deferred inflows of resources
Fund balances:
Nonspendable
Restricted
Assigned
Unassigned (deficit)
Total fund balances
Total liabilities, deferred inflows of
resources, and fund balances
Revenue Funds
Certified
PSAF Access
Property Tax Senior Spemahst
l"oblk, SA'o% F,taausin mmm Mvasurc M SB I Pro'-Talll
134,092 S 1,831,242 S '740,529 S 625,813 S 72,190
- 3,585 -
2,591 29,412
S 136,6li.l S 1,834,827 S 740,321) _rr, 4 225 S 72 190
S S 1,694 S
'7,498
845,423
854,605
...................................... . ..... . ..
S
105
105
136,683
990,222
'740,529
654,225
72,085
136,683
.................................. .
654,225 ........................
72,085
. . . ..................
980,222
. ...............................................
'740,529 ................................................
S 13 6,6 $3
................................................
$ 1,834 827
...................... . . . . . . ..... . ...............................................
7 Hl�. 5-19 S
.................................................
65,L225 S
....................
72, 190
--
136
Agreement No. 6085A
Ca,sh and invesimenis
Receivables:
Accounts
interest
Notes and loans
Due from other governments
Prepnids
Tow assets
City of El Segundo
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
September 30, 2020
Debt Capital
Special Revenue Funds SenIce Fund Projects Fund
Special
Affbydable Cultural Revenues Facility Capital
—L={c`r;apraett't Donations 1'ease, 1pturtsrweatpant total
S 5,3007000 S 529,056 S 1.1 lM15 S 1,030,291 S 4,533,119 S 2 1,052,956
25,000 70,437
134
49,405
324,21 3
- 85,049
5,300,0019
S _5219 056 S l _W .1 1 _00 291 S 13;;.119 S ?I _5811) 1
Liabififim
Accounts payable S 2,250 S S 9,395 S S 357,911 S 451,366
Accrued fiaNifies - 36,618
Retentions payable l4,133 14,133
Due to other funds 63,969
Lhicamed revenue 294,21 8
Deposits payable 845..423
. ................................................................
Totall liabilities 2,250 9,395 371,944 1,705,727
................................................................ . ..................................... . . ......... . ............................................................... . . ............
Deferred inflows of resources:
Unavailable revenue 202,710
Total deferred inflows of resources 202,710
. .............................................. —
Fund balances:
Nonspendable 85,049
Restricted 5,297,7SO 529,056 1,135,520 l.030,291 15,473,650
Assigned - - 4,161,175 4,161,1'75
Unassigned (deficit) (46,117)
. ............. . .............................................. —
Total fund balances 5,...297,750 529,056 1,135,520 0R530,2q� 4� lj 75 19,673357
............................................ I . .................................. . ...................................
Total liabilities, deferred inflows of
resources, and fund balances S 13'00,000 5 529,056 'S 144,915 S U30-M $ u533,1 N S 21.592 194
................................................................ I ..................... . . ................................................................ .......... . ..... . .. . .... . ................................................................ .......................... —
137
Agreement No. 6085A
City of El Segundo
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended September 30, 2020
Special Rcrvenuc Funds
Certified
Residential
Union
Connuuniti
State
Sound
Program
Development
Asset
Gas Tax.
Insulation
Agencies Fund
Block Grant
ForfeAure
REVENUES::
Taxes
S
S r
S 5,140
S
Licenses and permits
3,123
Intergovernmental
393,523
99,808
64,248
Charges for services
487,882
-
Use of money and property
607
5,137
1,393
4,931
Fines and forfeitures
61,650
Developer fees
Miscellaneous
Total revenues
394, M
5,137
559,188
99,808
69,179
EXPENDITURES:
Current
General government
Public safety
-
166,081
Public works
149,289
Community and cultural
-
465
608,659
-
Capital outlay
11 04�808
343,172
Debi Service:
Principal retirement
Interest
Total expenditures
W9,289
465
608,659
104,808
509,253
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
244,84
4,672
(49,471)
(500())
(440,074)
OTHER FINANCING SOURCES (USES)
Transfers in
Transfiers out
TotaI other financing sources (uses)
NETCHANGE IN FUND BALANCES
244,84
4,672
(49,47 l)
(5,000)
(440,074)
FUND BALANCES:
Beginning ofycay
(I12,127)
448,955
368,555
43,741
1,165,301
End of.year
S 132,714
S 453.627
S 3➢9,084
S 39,741
S 725,227
138
Agreement No. 6085A
City of El Segundo
Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Continued)
Nonmajor Governmental Funds
For the Year Ended September 30, 2020
SpeoW Revenne 1:'unds
Air
'I raffic
Pollution
SB 821
Prop A
Safety
Reduction
Rikeway
REVENUES:
Taxes
5
S
S S
Licenses and per -rifts
InteTgOVeMmental
324,653
268.797
21,492
12,i37
Charges for services
Use ofrnoncy and property
7,033
8,020
555
405
Fines and forfeitures
-
32,312
Developer fees
-
Miscellaneous
-
Total revenues
33,686
276,8l7
32,312
22,047
l2,542
EXPENDITURES::
Current:
General government
Public safety
Public works
-
Community and cultural
231,839
22,634
Capital outlay
159,052
28.398
Debt Service:
Principal retirement
Interest
Total expenditures
231,839
181,686
28,798
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
99,847
95,131
32;3 ➢2
(6,751)
12.542
OTHER FINANCING SOURCES (USES):
Transfers in
Transfers out
jl40,000)
Totall other financing sources (uses)
(llo'000)
NET CHANGE IN FUND BALANCES
99,847
95,l 31
(MfiM)
(6,751)
12,542
FUND HALANCES�
Beginning of year
80 '090
787,230
153,976
103,657
46,155
End of year
$ 900,937
S 882,36l
S 46,288 S
96,906
S58,697
139
Agreement No. 6085A
City of El Segundo
Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Continued)
Nonmajor Governmental Funds
For the Year Ended September 30,2020
Special Revenue Funds
M T'A 1, cdcral State
C OY S- Grant Measure R Grants Grants
REVENUES:
I axes S S S S
Licenses and perrnits
firtergoVCMI'liental 156,727 382,738 12,305 135,467
Charges for services
Use ofinorey and Property 2,582 2,421) 8,065
Fines and forfeitures
Developer fees
Miscellaneous
Total revenues
EXPENDIIMRES:
Ornent:
General f..,ovemrncnt
Public safety
Public works
Community and cultural
Capital outlay
Debi Service:
Principal retirement:
Interest
Total expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES):
Transfers in
Transfers out
Total other financing sources (uses)
NET CHANGE IN FUND BALANCES
FUND BALANCES:
Begfirninf..,, ofyeai
End of year
159,309
43,471
2,429 390,803 12,305 135,467
1,525
53,'734
43,471 1,525 53,734
115,838
2,479 389,278 12,305 81,733
115,838
2,d29
389,278
12,305
81,733
7-16,636
11,667
490,664
(58,422)
19,511,
S 332,474 S
14,096 S
879,942 $
(46,117) $
101,244
140
Agreement No. 6085A
City of El Segundo
Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Continued)
Nonmajor Governmental Funds
For the Year Ended September 30, 2020
SDe.Val Povenue 1-undrs
REVENUES:
Taxes
Licenses and permits
Intergovernmental
Charges for services
Use of money and property
Fines and forfeitures
Developer fees
Miscellaneous
Total revenues
EXPENDITURES:
Current:
General government
Public safety
Public works
Community and cultural
Capital outlay
Debt Service:
Principal retirement
Interest
Total expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES):
Transfers in
Transfers out
Total other financing sources (uses)
NET CHANGE IN FUND BALANCES
FUND BALANCES:
Beginning of year
End of year
Ce,EIifie,d
PSAF
Access
Properly Tax.
Sernor
Specialist
lltjiMc Safety
l luaausi g
Measure M
SB I Plowarn
. . . ...... .
-----
31'915
S
S
227,495
292,405
2 2,0 70
1,104
24,852
6.356
5,330 695
—
---------------------
33,W9
24,852
—
233,851
297,735 22,765
78,444
1,007
78,444 1,007
33,019
(53,592)
233,851
296,728
22.765
33,019
(53,592)
233,851
296,728
22,765
103,664 1,033,814 506,678 357,497 49,320
136,683 S 980,222 S 740,529 S 654,225 S 72,095
141
Agreement No. 6085A
City of El Segundo
Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Continued)
Nonmajor Governmental Funds
For the Year Ended September 30, 2020
Debt
Capital
Special Revenue Funds SCINWC I Lind
Projects Fund
Special
Aftbydablc Cultural Revenues/ Facility
Capital
!2us �119 Donations Lease
Total
REVENU'M
Taxes 5 S S S S S 37,055
t icenseF and peirnits 3,123
Irater govemmental 2,391,795
Changes 'for services 509,952
Use ofnioney and property 79,494
Fines and forfeitures 93,962
Developer fees 5,300,000 529,056 - 354,024 6,183,080
Misceflaneous 723,722 87,603 81 1,325
Totaill revenues 5,300,000 529,056 '723,722 354,024 87,603 10,109,786
EXPENDITURE&
Current:
General goveninwnt
Public safety
Public works
Cominunily and cultural
Capital outlay
DeW Seivice
Principal retirement
Interest
Total expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES):
Transfers in
Transfers out
Total other financing sources (uses)
NET (MANGE IN FUND BALANCES
FUND BALANCES:
Beginning of'yeaT
End of
19,513 19,513
166,081
- 149,289
2,250 195,532 1, l 83,557
2,464,726 3,146,559
325,995 325,995
186,666 186,666
2,250
l 85,532
532,174
2,464,726
5,177,660
5,297,750 529,056
.......................................... .
538,t90
(178,l50)
(2,377,123)
4,932,126
1,249,000 1,249,000
- (W0,000)
0,249,000 1,109,000
5,297,750 529,056 539,190 (178,150) (1, 129, l 23) 6,041,126
597,330 1,208,44l 5,289,298 13,632,631
5,297,750 S 529,056 S 1,135_520 1,030,29P S 4,161,175 $ 19,673,757
142
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - State Gas Tax Special Revenue Fund
For the Year Ended September 30, 2020
Variance with
Final Budget
Budgeted
Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
REVENUES:
Intergovernmental
S 378,684
378,684
S 393,523
$ 14,839
Use of money and property
6,120
6,120
607
(5,513)
Total revenues
384,804
384,804
394,130
9,326_
EXPENDITURES:
Current:
Public Works
406,681
406,681
149.289
257.392
Capital outlay
10,470
10,470
Total expenditures
406,681
417,151
149,289
267,862_
Net change in fund balances
$ (21,877)
(32,347)
244,841
$ 277,188
FUND BALANCE (DEFICIT):
Beginning of year
& 112,127)
End of year
132,714
143
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - Residential Sound Insulation Special Revenue Fund
For the Year Ended September 30, 2020
REVENUES:
Use of money and property
Miscellaneous
Total revenues
EXPENDITURES:
Current:
Community and cultural
Total expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES:
Transfers in
Total other financing sources
Net change in fund balances
FUND BALANCE:
Beginning of year
End of year
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
$ 510 $ 510 $ 5,137 $ 4,627
510 510 5,137 4.627
465 (465)
465 (46.5)
510 510 4,672 4.162
$ 510 $ 510
4,672 $ 4,16.2
4411,95.5
$ 453,627
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - Certified Union Program Agencies Special Revenue Fund
For the Year Ended September 30, 2020
REVENUES:
Taxes
Licesnes and permits
Charges for services
Use of money and property
Fines and ffirfbitures
Total revenues
EXPENDITURES:
Current:
Community and cultural
Total expenditures
Net change in fund balances
VI
Beginning of 3,
year 7End 7of 71
Budgeted Amounts
Original Final
W
Variance with
Final Budget
Positive
(Negative)
9,105 9,105 $ 5.140 (3,965)
- - 3,123 3,123
425.365 425,765 487.882 62,117
1,393 1,393
61,650 61,650
434,870 4.334,870 559.188 124,318
641,065 641,065 608,659 32,406
641,065 641,065 608,659 32,406_
S (206,195) $ (206,195)
145
(49A71) $ 156.724
368.555
319-084
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - Community Development Block Grant Special Revenue Fund
For the Year Ended September 30, 2020
Variance with
Final Budget
Budgeted
Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
REVENUES:
Integovernmental
$ 51,000
$ 51,000
$ 99,808
$ 48,808
Total revenues
51,000
51,000
99,808
48,808
EXPENDITURES:
Capital outlay
152,556
152,556
104,808
47,748
Total expenditures
152,556
152,556
104,808
47748
Net change in fund balances
$ (101,556)
$ (101,556)
$ (5,000)
$ 96,556
FUND BALANCE -
Beginning of year
43,741
End of year
$ 38,741
146
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - Asset Forfeiture Special Revenue Fund
For the Year Ended September 30, 2020
Variance with
Final Budget
Budgeted
Amounts
Actual
Positive
Orj�inal
Final
Amounts
(Negative)
REVENUES:
Intergovernmental
$
64,248
$ 64,248
Use of money and property
4,931
4,931
Total revenues
69,179
69,179
EXPENDITURES:
Current:
Public safety
375,500
375,500
166,081
209,419
Capital outlay
370,000
621,977
343.172
2'N,805_
Total expenditures
745,500
997,477
509,253
488,224_
Net change in fund balances
$ (745.500)
$ (997,477)
$ (440,074)
$ 557,403
FUND BALANCE:
Beginning of year
1,165,301
End of year
$ 725,227
fla
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - Prop A Special Revenue Fund
For the Year Ended September 30, 2020
Variance with
Final Budget
Budgeted Amounts
Actual
Positive
Original Final
Amounts
(Negative)
REVENUES:
Intergovernmental
325,008 $ 325,008
324,653
$ (355)
Use of money and property
5,100 5,100
7,033
1,933
Total revenues
330,108 330,108
331,686
1,578_
EXPENDITURES:
Current:
Community and cultural 390,356 390,356 231,839 158,517
Total expenditures 390,356 390,356 231,839 158,517_
Net change in fund balances (60,248) $ (60,248) 99-847 $ 160,095
FUND BALANCE:
Beginning of year 801,090
End of year $ 900,937
148
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - Prop C Special Revenue Fund
For the Year Ended September 30, 2020
Variance with
Final Budget
Budgeted Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
REVENUES:
Intergovernmental
$ 267,174
267,174
268,797
1.623
Use of money and property
6,120
6,120
8,020
1'900
Total revenues
273,294
273,294
276,817
3,523
EXPENDITURES:
Current:
Community and cultural
107,053
107.053
21634
84,419
Capital outlay
240-000
463,500
159,052
304,448
Total expenditures
347,053
570,553
181,686
388,867
Net change in fund balances
$ (73,759)
(297,259)
95,131
392,390
FUND BALANM
Beginning of year
787,230
End of year
$ 882,361
149
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - Traffic Safety Special Revenue Fund
For the Year Ended September 30, 2020
Variance with
Final Budget
Budgeted
Amounts
Actual
Positive
06gini'd
Final
Amounts
(Negative)
REVENUES:
Use of money and property
82
82
$ -
$ (82)
Fines and forfeitures
30.600
30,600
32312
1,712
Total revenues
30,682
30,682
32,312
1,630
OTHER FINANCING SOURCES:
Transfer out
(140,000)
(140,000)
(140,000)
Net change in fund balances
$ (109318)
$ (109,318)
(107,689)
1,630
FUND BALANCE -
Beginning of year
153,976
End of year
46,288
150
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - Air Polluction Reduction Special Revenue Fund
For the Year Ended September 30, 2020
REVENUES:
Intergovernmental
Use of money and property
Total revenues
EXPENDITURES:
Capital outlay
Total expenditures
Net change in fund balances
FUND BALANCE.
Beginning of year
End of year
Variance with
Final Budget
Budgeted Amounts
Actual
Positive
Original Final
Amounts
(Negative)
15,300 5
15,300
S 21,492
6,192
510
510
555
45
15.810
15,810
22,047
6,237
63,000
91,666
28,798
61868
63,000
91,666
28,798
62,868_
(47,190)
(75,856)
(6,75 1)
69,105
151
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - SB 821 Special Revenue Fund
For the Year Ended September 30, 2020
Variance with
Final Budget
Budgeted Amounts
Actual
Positive
Original Final
Amounts
(Negative)
REVENUES:
Integovernmental
$ 11,071
11,071
12,137
1,066
Use of money and property
459
459
405
(54)
Total revenues
I1.530
11,530
12,542
1,012_
EXPENDITURES:
Capital outlay
50,000
58,137
58,137
Total expenditures
50,000
58,137
-
58„137_
Net change in fund balances
¢ (38,470) $
(46,607)
$ 12,542
59,149
FUND BALANCE:
Beginning of year
46,155
End of year
$ 58,697
152
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - C.O.P.S. Special Revenue Fund
For the Year Ended September 30, 2020
Variance with
Final Budget
Budgeted
Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
REVENUES:
Intergovenimental
102,000
$ 102,000
156,727
54,727
Use of money and property
1,530
1,530
2,582
1,052
Total revenues
103,530
103,530
159,309
55,779_
EXPENDITURES:
Capital outlay
175,000
175,000
43,471
131,529_
Total expenditures
175,000
175,000
41471
131.529_
Net change in fund balances
$ (71 ,470)
$ (71,470)
$ 115,838
$ 187,308
FUND BALANCE -
Beginning of year
216,636
End of year
$ 332,474
153
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - Measure R Special Revenue Fund
For the Year Ended September 30, 2020
Vadance with
Final Budget
Budgeted
Amounts
Actual
Positive
Origirufl
Final
Amounts
(Negative)
REVENUES -
Intergovernmental
11 200,384
S 200,384
382,738
$ 182,354
Use of money and property
5,100
5.100
8,065
2,965
Total revenues
205,484
205,484
390,803
185319
EXPENDITURES:
Capital outlay
563,866
597,218
1,525
595,693
Total expenditures
563,866
597,218
1.525
595,693_
Net change in fund balances
E (358,382)
(391,734)
389,278
S 781,012
FUND BALANCE:
Beginning of year
490,664
End of year
879,942
154
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - Federal Grants Special Revenue Fund
For the Year Ended September 30,2020
REVENUES:
Intergovernmental
Total revenues
EXPENDITURES:
Current:
Community and cultural
Total expenditures
Net change in fund balances
FUND BALANCE -
Beginning ofycar
End of year
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
$ 233,748 $ 233.748 12,305 $ (221,443)
233,748 233.748 12,305 (221,443)
150,000 373,845
150,000 373,845
$ 83,748 (140,097)
155
373.845
373,845_
12,305 $ 152,402
(58,422)
S (46� 117)
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - State Grants Special Revenue Fund
For the Year Ended September 30, 2020
Variance with
Final Budget
Budgeted
Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
REVENUES:
Intergovernmental
n 240,000
S 230,000
$ 135,467
$ (94,533)
Total revenues
240,000
230,000
➢35,467
(94,533)
EXPENDITURES:
Current:
Community and cultural
40,000
40,000
53 '734
(13,734)
Total expenditures
40,000
40,000
53,734
(13,734)
Net change in fund balances
S 200,000
S 190,000
$ 81,733
$ (108,267)
FUND BALANCE:
Beginning of year
19,511
End of year
$ 101,244
156
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - PSAF Property Tax Public Safety Special Revenue Fund
For the Year Ended September 30, 2020
Variance with
Final Budget
Budgeted
Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
REVENUES:
Taxes
25,500
$ 25,500
31,915
6,415
Use of money and property
-
1,104
1,104
Total revenues
25,500
25,500
33,019
7.519
EXPENDITURES:
Current:
Public safety
100,000
100,000
-
100,000
Total expenditures
100,000
100,000
100,000
Net change in fund balances
(74,500)
(74,500)
$ 33,019
$ 107,519
FUND BALANCE:
Beginning of year
103,664
End of year
S 136M3
157
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - Senior Housing Special Revenue Fund
For the Year Ended September 30, 2020
REVENUES:
Use of money and property
Total revenues
EXPENDITURES:
Current:
Community and cultural
Total expenditures
Net change in fund balances
FUND BALANCE:
Beginning of year
End of year
Budgeted Amounts
Original Final
2,714
2,714
2,714 $
Variance with
Final Budget
Actual Positive
Amounts (Negative)
24,852 $ 22,138
24,852 22,138_
14,113
14,113
78,444
(64,331)
14,113
14,113
78,444
(64,331)
$ (11,399) $
(11,399) $
(53,592)
(42,193)
158
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - Measure M Special Revenue Fund
For the Year Ended September 30, 2020
Variance with
Final Budget
Budgeted
Amounts
Actual
Positive
Qrll;nral
Final
Amounts
(Negative)
RFNIEN[IES:
Intergovernmental
$ 246,330
246,330
227,495
$ (18,835)
Use of money and property
6,356
6,356
Total revenues
246,330
246,330
233,851
(12,479)
EXPENDITURES:
Capital outlay
241,500
241,500
241,500
Total expenditures
241-500
241,500
241,500
Net change in fund balances
$ 4.830
. .. . . ......
4,830
233,851
$ 229,021
FUND BALANCE:
Beginning of year
506,678
End of year
740.529
159
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - SB 1 Special Revenue Fund
For the Year Ended September 30, 2020
REVENUES:
Intergovernmental
Use of money and property
Total revenues
EXPENDITURES:
Capital outlay
Total expenditures
Net change in fund balances
FUND BALANCE:
Beginning of year
End of year
Variance with
Final Budget
Budgeted
Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
127,704
$ 127,704
292,405
$ 164,701
-
-
5,330
5-330
127,704
127,704
297,735
170,031
285,071
285,071
1,007
284,064_
285,071
285,071
1,007
284,064_
$ (157,367)
S (157,367)
296,728
454,095
160
357,497
$ 65 4 < 2 2.)
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - Facility Lease Debt Service Fund
For the Year Ended September 30, 2020
Variance with
Final Budget
Budgeted
Amounts
Actual
Positive
Original
Final
Amounts
(Negat➢ve)
REVENUES:
Developer fees
$ 183,600
$ 183,600
$ 354,024
170,424
Total revenues
183,600
183,600
354,024
170,424
EXPENDITURES:
Current:
General government
30,000
30,000
19.513
I0A87
Debt Service:
Principal retirement
320,000
320,000
325,995
(5,995)
Interest
195,000
195,000
186,666
8334
Total expenditures
545,000
545,000
532,174
12,826_
Net change in fund balances
$ (361,400)
$ (361,400)
$ (178,150)
$ 183,250
FUND BALANCE -
Beginning of year
1,208,441
End of year
$ 1,030.291
161
Agreement No. 6085A
City of El Segundo
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - Capital Improvemets Capital Projects Fund
For the Year Ended September 30, 2020
Variance,with
Final Budget
Budgeted
Amounts
Actual
Positive
Original
Final
Amounts
(Negative} -
REVENUES
Miscellaneous
87,603
$ 87,603-
Total revenues
87,603
87.603
EXPENDITURES:
Capital outlay
2,749,000
7,086,282
2.464,726
4,621,556
Total expenditures
2,749,000
7,086,282
2,464,726
4,621,556
DEFICIENCY OF REVENUES
UNDER EXPENDITURES
(2:,'749,000)
(7,086,282)
(2,377,123)
(4,533,953)
OTHER FINANCING SOURCES:
Transfers in
2,749,000
2,749,000
1,249,000
1,500,000
Total other financing sources
2,749,000
2,749,000
1,249,000
1,500,000
Net change in fund balances
$
$ (4,337,282)
$ (1J28,123)
$ (3,033,953)
FUND BALANCE:
Beginning of year
5,289,298
End of year
$ 4.161,175
162
Agreement No. 6085A
11LIBIBIORMAMIENTAIN
Internal Service Funds:
Equipment Replacement Fund - Accounts for in-house charges to City departments to accumulate funding
for future replacement of equipment used by the departments. The Fund also accounts for the proceeds from
sale of surplus equipment.
Liability Insurance Fund - Accounts for charges to departments for their share of general liability claims and
the administration cost of the self-insurance program.
Workers' Compensation Insurance Fund - Accounts for charges to the departments for their share of
workers' compensation claims and administrative costs of the self-insurance program.
U
Agreement No. 6085A
City of El Segundo
Combining Statement of Net Position
Internal Service Funds
September 30, 2020
Current Assets:
Cash and investments
Accounts receivable
Prepaid items
Total current assets
Noncurrent assets:
Advance to other fbnds
Capital assets, being depreciated
Total noncurrent assets
Total assets
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources related to pension
Defer -red outflows of resources related to OPEB
Total deferred outflows of resources
LIABILITIES
Current liabilities:
Accounts payable
Accrued liabilities
Claims and judgments, current portion
Total current liabilities
Noncurrent liabilities:
Claims and judgments, net of current
Aggregate net pension liability
Total other postemployment benefit liability
Total noncurrent liabilities
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources related to pensions
Deferred inflows of resources related to OPEB
Total deferred inflows of resources
NET POSITION (DEFICIT)
Investment in capital assets
Unrestricted (deficit)
Total net position (deficit)
Equipment Liability Workers'
Replacement Insurance Compensation
Fund Fund Fund Total
5,085,284
$ 349A08
$ 6,610,242
12,044.934
40,000
40.000
-
882,106
855,761
1,737,867
51125,284
1,23L514
7,466,003
13,822,801
5,577,910
5,577,910
4,476,493
4,476,493
10,054,403
-
10,054,403
15,179,687
1,231,514
7,466,003
23-877.204
6,715
7,425
14.140
3,871
3,563
7,434
-
10.586
10,988
21,574_
100-770
12,043
45
112.858
36.170
36.170
484,157
2,01 K024
2,502,181
100.770
496,200
2,054,239
2,651,209
849,843
9,571976
10,423,819
234,830
259..638
494.468
70,423
64,810
135,233_
-
1,155,096
9,898A24
11,053,520
100,770
1,651,296
11,952,663
13,704,729
892
986
1.878
14,975
11782
28,757
15,867
14.768
3 0,63 5_
4,476,493
-
-
4,476,493
10,602,424
(425,063)
(4,490,440)
5,686�921
$ 15,078,917
$ 425,063)
$ (4,490,440)
10,163,414
164
Agreement No. 6085A
City of El Segundo
Combining Statement of Revenues, Expenses and Changes in Fund Net Position
Internal Service Funds
For the Year Ended September 30, 2020
OPERATING REVENUES:
Interdepartmental charges
Miscellaneous
Total operating revenues
OPERATING EXPENSES:
Personnel services
Materials and supplies
Insurance and claims
Depreciation
Total operating expenses
OPERATING INCOME
NONOPERATING EXPENSES:
Loss on disposal of capital assets
Total nonoperating expenses
Equipment Liability Workers'
Replacement Insurance Compensation
Fund Fund Fund Total
$ 2,129,441
1,893,779
3,393,938
7-417,158
161,833
480,706
642,539
2,291,274
1,893,779
3,874,644
8,059,697
254,345
262,756
517,101
131,785
316
132,101
2,488,549
4,316,271
6.804,820
873,996
-
-
873,996
1,005,781
2,742,894
4,579,343
8,328,018
1,285,493
(849,115)
(704,699)
(268,321)
INCOME BEFORE CAPITAL CONTRIBUTIONS
1,285,493
(849, 115)
(704,699)
(268,321)
CAPITAL CONTRIBUTIONS
265,589
265.589
CHANGES IN NET POSITION
1,551,082
(849,115)
(704,699)
(2,732)
NET POSITION:
Beginning of the year
13,527,835
424,052
(3,785,741)
10,166,146
End of the year
$ 15,078,917
(425,063)
S (4.490,440'1
S 10.163.414
165
Agreement No. 6085A
City of El Segundo
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended September 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from users
Payments for insurance claims
Payments to suppliers
Payments to employees
Net cash provided (used) by operating activities
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:
Cash paid to other funds
Net cash provided by noncapital financing activities
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Acquisition and construction of capital assets
Net cash used by capital and related
financing activities
Net increase/(decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS:
Beginning, of year
End of year
RECONCILIATION OF OPERATING INCOME
TO NET CASH PROVIDED BY (USED) BY
OPERATING ACTIYITES:
Operating income
Adjustments to reconcile operating income to
net cash provided (used) by operating activities:
Depreciation
(increase) decrease in:
Accounts receivable
Prepaid items
Deferred outflows of resources - pension
Deferred outflows of resources - OPEB
Increase (decrease) in:
Accounts payable
Accrued liabilities
Claims and judgments
Net pension liability
Net other postemployment liability
Deferred inflows of resources - pension
Deferred inflows of resources - OPEB
Total adjustments
Net cash provided (used) by operating activities
Non -Cash Investing, Capital, and Financing Activities
Capital assets contributed by other funds
Equipment Liability Workers'
Replacement Insurance Compensation
Fund Fund Fund Total
$ 2,251,274 $ 1,893,779 $ 3,875,213 $ 8,020,266
(1,736,320) (3,381,271) (5,117,591)
(I ,251,740) (175,392) (1,427J32)
(159,139) (101,110) (260,249)
999,534 (1fi80) 217,440 1,215,294
(43,568) (43,568)
(43,568) (43,568)
- (530,736) (530,736)_
(530,736) (530,736)
425,230 (1,680) 217,440 640,990
4,660,054 351088 6,392,802 11,403,944
$ 5.085,284 S 349.408 $ 6,610,242 $ 12,044,934
$ 1,285,493 $ (849,115) $ (704,699) $ (268.321)
873,996
(40,000) 569
(39,431)
57,946 (100,563)
(42,617)
(5,463) (6,535)
(11,998)
(1,463) (1,489)
(2,952)
(1,119,955) 62,544
(262)
(1,057,673)
(59,261)
(74,251)
(133,512)
691,000
935,000
1,626,000
110,378
171,211
281,589
(21,862)
(14,688)
(36,550)
(1,218)
(514)
(1,732)
14,834
13,661
28,495_
(285,959) 847,435
922.139
1,491615
$ 999,534 $ (1,680) $
217,440
$ 1,215,294
$ 265,589 $ - $ -_ _L 265,589
166
Agreement No. 6085A
[111RIME174i I F1 �_
Project Deposits Fund (Refundable) -Accounts for project deposits from developers which will be refundable
after the projects are done.
167
Agreement No. 6085A
City of El Segundo
Statement of Changes in Fiduciary Assets and Liabilities
Agency Funds
For the Year Ended September 30, 2020
Balance
Balance
October 1, 2019
Additions
Deductions
September 30, 2020
ASSETS
Cash and investments
$
409,727
$
338,532
$
(321,896)
$
426,363
Accounts receivable
-
617
617
Total assets
$
409,727
$
339,149
$
(321,896)
$
426,980
LIABILITIES
Accounts payable
$
42,599
$
252,735
$
(261,203)
$
34,131
Deposits payable
36T129
342,738
(317,017)
392,849_
Total liabilities
$
409,727
S
595,473
(578,220)
$
426,980_
M
Agreement No. 6085A
STATISTICAL SECTION
M
Agreement No. 6085A
This page intentionally left blank
170
Agreement No. 6085A
City of El Segundo
Statistical Section
This part of the City's comprehensive annual financial report presents detailed information as a context for
understanding what the information in the financial statements, note disclosures, and required supplementary
information says about the City's overall financial health.
Contents
Page
Financial Trends 172
These schedules contain trend information to help the reader understand how the
city' financial performance and well-being have changed over time.
Revenue Capacity 180
These schedules contain infbi,mation to help the reader assess the city' most
significant local revenue source, the property tax.
Debt Capacity 185
These schedules present information to help the reader assess the affordability of'
the city' current levels of outstanding debt and the city s ability to issue additional
debt in the future.
Demographic and Economic Information 192
These schedules offer demographic and economic indicators to help the reader
understand the environment within which the city' financial activities take place.
Operating Information 194
These schedules contain service and infrastructure data to help the reader
understand how the information in the city' financial report relates to the services
the city provides and the activities it performs.
Sources: Unless otherwise noted, the infbrination in these schedules is derivedfrom the comprehensive annual
financial reportsfbr the relevant year. The city implemented GASB Statement 34 in 2003; schedules presenting
government -wide information include infbrmation beginning in that year.
171
Agreement No. 6085A
CITY OF EL SEGUNDO
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
Governmental activities:
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total governmental activities net position
Business -type activities:
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total business -type activities net position
Primary government:
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total primary government net position
Fiscal Year
......_...........m......... .................._.............. ............._.............
_ .
2011 2012 2013 2014 2015
94,655,626
92,822,442
94,098,755
93,534,776
90,783,595
8,055,325
10,941,373
6,276,645
8,054,083
8,922,448
22,462,477
14,728,936
15,050,409
22,170,866
(89,732,982)
125,173,428 »�
118,492,751
115,425,809
mm mm 123,759,725
9,973,061»»»»»»
21,360,061
21,009,889
20,675,297
21,771,266
22,657,797
1,113.161
3,362,263
7,484,917
11,652,989
12,247,482
22,473,222
24,372,152
28,160,214
33,424,255
34,905,279
116,015,687
113,832, 331
114,774, 052
115,306, 042
113,441, 392
8,055,325
10,941,373
6,276,645
8,054,083
8,922,448
23,575,638
18,091,199
22,535,326
33,823,855
(77,485,500)
147,646,650
142,864,903
143,586,023
157,183,980
44,878,340
172
Agreement No. 6085A
CITY OF EL SEGUNDO
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
Governmental activities:
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total governmental activities net position
Business -type activities:
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total business -type activities net position
Primary government:
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total primary government net position
Fiscal Year
2016 2017 2018 2019 2020
90,014,262
92,615,618
93,775,527
93,823,843
91,747,670
8,562,915
7,372,369
7,882,394
11,082,956
21,263,102
(86,756,004)
(91,119,511)
(129,410,242)
(125,853,873)
(134,246,639)
11,821,173
8,868,476
(27,752,321
20947074� rv„
21,235,867�
25,387,562
27,679,609
30,800,645
31,244,813
30,667,983
12,855,184
15.808,634
10.485,483
22,534,785
23.693,166
38,242,746
43,488,243
41,286,128
53,779,598
54,361,149
115,401, 824
120,295,227
124,576,172
125,068,656
122,415,653
8,562,915
7,372,369
7,882,394
11,082,956
21,263,102
(73,900,820)
(75,310,877)
(118,924,759)
(103,319,088
(110,553,473)
50,063,919
52,356,719
13,533,807
32,832,524
33,125,282
173
Agreement No. 6085A
CITY OF EL SEGUNDO
Changes in Net Position
Last Ten Fiseal Years
(acrual basis of ae ccounting)
Fiscal Year
I'_xpensesf
Governmental activities'.
General governmeni
11,6132,856
12,537,230
12,048,465
11,813,797
14,984,299
Public safety
31,636,027
32,236,620
:32,790,37'r:3
31,891,47B
41,422,188
Public works
7,903,942
7,988,435
9,123,850
8,459,550
9,150,452
Cormxunitydeveloprereill'.
9,115,175
13,877,615
15,681,1i968
12,065,582
21,038,253
Interest. on long-term debt
258,581
..16,182
a,914
457,655
457,994
Total governmental activities expenses
80,798,1i61
66 658 282 -.
69,628 642
.............................._--_.
64,fi88,06?
87,053,186
Business-l.ype activities:
tnt,rater
19,811,233
22,452,371
21,986,089
23,946,676
25,035,801
Wastewater
2,847,527
2,528,639
2,908,241
2,980,026
3,484,104
Solid Waste
Golf Course
2,043,141
1 Jl -712 ^^^^^
... 2,017,716
2091,413
2,,1901 5
.
1 erot,al Ixusineras-type activlBio., uugrwnses
24�,7f19 501
.. --.2
1Fr Ju4 J?2
26,914,046
29,018,115
30,7101100
Total primary I' a.➢vernmerr9. expenses
p
85,1Y00,482
93,613,204,
96 '.r42,588
1 3,706, 177
11776 5 286
R .gram revenue,,,
Governmental Isrtl v9Iie s:
Charges for services:
General government.
457,671
581,798
419,008
421 649
635,350
I::'ublic safety
1,743,941
1.561:3,107
'1,663,:384
1,522,081
1,946,464
Public vvorlas
32,'102
15,190
14,262
50,469
267,748
Community development
3,941,316
5,081,685
5,17;:S0,CbC.Yfi
5,796,983
6,733,395
Operating grants and contributions
2,101,494
1,508,499
2,699,324
2,629,490
2,052,527
(::;apitral grants artd oorrkribi.atians
5J5,80'7
7,815,456 .............�
7,646,118
'
7,469,"236
94,487,769
._ITITITITITITITIT....
Total governmental activities
ram revenues
program 4
......._..._ .. ._.�
1E",7G,C1^.�a7
IY,47?,102
1(,k'969,9,_8
28 ,
26,125,267
Business type activities:
Charges for services:
.
Water
22,800,787
23,344,919
25,048,713
28,032,902
29,304,012
Wastewater
4,274,392
3,236,359
3,574,272
3,:.3139,450
3,568,04.2
Solid Waste
..
,.
..
Golf Course
1,945,415
1,919,435
2,111,93Z
2,045,652
1,939,165
Operating grants and c:nnlribuGons
-
-
-
(,spite[ grants and contributions
...
.
Total business4ype activities
aio9'arn revenues
29,020,594
.. ....,
2Fww3„..,,,..
.....................
30,'754,922
33,4...68,0,04,^,,,,,,,,,,,.............................34,811,219
,
l otal primary govenunent,
io, ruin revenues ..a1,3
p q " ..............m,,,.,
f 47,l59.7,!:D:l,r
4Er,071,:i 70,
m..W..486
46,207,024
...........................,:.
�... .:xay.. g3uiJ'..r
, .. .
Net. revenues (exl enses):
Governmental activities
(61,92'S,250a
(50,067,425)
(52,156,540)
(46,798,134)
(50,927,919)
k:.vusines�, ¢ ➢e activities
` yp .............,
4,t49 P5 Q�ae)`S.
1 �r4!ir,791
d 8?6J.8lfs, ..
------....,�................76
4,449,889
4,101,'119
1"otal nut revenues, (expenses)
(4(G07.0`il)
(46,541,634)
(48 33.s G64i
(42? 346.24, .�
i*56;en l3CF{"3)
General rowenues and other changes in net. assets'
Governmental activities:
Taxes:
F:aroperty Uxes
7,549.4153
7,365,3Hi;:3
7,910,980
8,452,120
8,3130,064
Sales tax
'11,383,167
10,623,237
9,099,745
10,297,709
11,442,632
1"ransie^nt oca.psncy taxes
4,301,696
4,735,585
5,156,080
5,€64,403
5,423,972
Other taxes
'18,559,063
16,587,682
25,314,387
28,809,018
27,765,133
IVlotor vehicle in lieu, unrestricted
73,736
H,754
7,245
6,996
Investn'rent incorne
925,388
393,719
113,'t 73
324,825
331,238
Other general revenues
2,532.872
'1,692,208
1,487,988
1,277,597
813,211
Transfers
-........
Tolal governmental activities
45,325,405
43,406,748 ..
49,089,5913
55 132,670
54,15b 27Y1
Business type aclivitles:
Investment income
,.
99,690
21,378
152,674
254,662
Other
33, 136
63,'795
35,600
42,379
19,730
T'ai isfers
..
,.
Total bulsiness 1'.Ye activities
33,136
163,485
e6,976
95,2r3
Jaz
274,392
pinmy goverrtit _.........
45,358541a
2Total
43 7f,%1 m...IT_.ITITITIT.....ITITm4
tlhr , 76. ^
155,327,923
54,4 &rFi2
Changes in net posil:ion:
Governmental activities
(6,600,645)
(6,680,677)
(I3,066,942)
8,::34,536
(6,771,6349
Business type tact'.ivibes
4,335,1 829
........ ......
'1 7f19 276
3,677,854
4
142
.......... 645 ...................
4 375,511
1-otal primary government �.
(2,249 01
_L4 97'1�4CH
810,912
12,979 676 �
(2396,138)
w
Agreement No. 6085A
CITY OF EL SEGUNDO
Changes in Net Position
Last Ten Fiscal Years
am (accrual basis .1 : ... ntin2)
2212
2017
2018
2019
2020
Expenses:
Govennarenlat adhaLies
General govenirneril
14,165,449
14,869,930
16,215,039
17,788,600
16,698,011
Public safety
35,612,555
42,691,455
44,84 7, 122
40,1378,258
43,330,009
Public works
7,440438
7,474,391
9,413,340
9,534,893
11,713451
Community development
9,298,275
11,407,811
10,442,811
11,321,339
10,058,912
Interest on long �enm debt
4 1,712
361,470 ...............................242,
�50
337,350
____324,6,110
Total governmental activilies expenses
66,958,439, . . . ......
77,005,057
B1,161,128 ...............
. . . ..... 79,860,440
84,125213
Business type activities:
Wa1w
25,454,732
26,500,256
27,907,911
26,525,468
25,014,9 72
Wastewater
3,517,640
4r()48,104
4,164,437
3,336645
4,978,350
Solid Waste
-
248,012
GoIr Course .
................. LIM
2,017,104
1,990,092
............ . .........................
1,674,851
. .
1,553,159
. ........... . . . . . ... .
Total business type activities expenses
I 108,82B
32,573,464
34,062440
......... . . . . . .
31,530,964
31,794,493
. ...... .
total primary government expenses .
. ........... -21MIZE
'109,578,521
1 15,223,56B
111,397,404
115 919 706
Prograin revenues:
Governmental activities:
Charges for services:
General government
631,274
445,394
371,345
364,4136
258,53B
Pubis saVey
1,637,884
1,523,519
2,058,688
1,624,716
1,545,947
::Yubic works
11,191.)
16,643
1,201
26,524
Community developmenl.
5,706,772
6,516,792
6,477,503
7,473,096
5,390,803
Operating grant,,; and contributions
1,808,463
1,189,900
1,858,256
4,148,187
2,932,318
Capil:al grants and contributions
2,1 74,89B
. ...........
1,737,376
1,197,981
. .................. .. ... . . . .....................
2,580,996
7 $91 323
"rota) governmental ac livilies
prograin revenues
11,972,�490
11,429,624
- - -
11,965"174
-- -- --------
16,191,483 . . . .. . .
..................... 17,845,453
Business type activities,
Charges foi seivices
Wal.e�r
26,281456
31,626,637
27,779,828
33,824,119
26,404,788
Wastewater
4,090,187
4,2�75,254
4,348,849
4,475,896
4,194,630
Solid Waste
Goff Course
1,628,549
1,604,258
1,650,376
1,643,662
1,484,CA6
Operating grants and conbibutions
Capital grants and cantiNbUtiOnS
375,000
Total business type activities
piograin revenues
206,15
053
40,316,697
:32,084,264
Total pi immy government
prograin revenues
11929, M
Net revenues (expenses):
Governmental activities
(fi4,965,949)
(65,575,433)
(69,195,954)
(63,668,W
(66,279,760)
Business type activities
3,097,364
4,932,695
l283 387I
. ................ _8 781 7
... . . .....33.
289 771
Total net remwas (expenses)
. .......................
60,642,738)
169 47V 341
................
jo, a
. .............. (�
Genes al revenues and other changes in net assets:
Goveinmental activities:
I axes
Property taxes
6,884,423
9,093,795
10,444,931
11,138,625
11,8 16,366
Sales tax
12,069,552
12,201,208
10,636,769
13,023,091
12,006,731
Transient occupancy taxes
7,597,007
12,876,631
13,885,312
14,598,200
8,760,763
Other taxes
26,730,933
27,021,575
29,496,067
28,391,959
28,059,801
Motor vehicle in lieu, unrestricted
6,659
7,461
Investment income
646,336
532,728
760,596
2,440,102
3,420,790
Other general revenues
1,396,608
869,337
1,954,399
1,682,211
1,926,516
Transfers
L
----
Total goverrunental aclivitres
57,351,720
. ..... ........ ..
62,622,735
67,1B0,076
. ....................
71,274,188
65,990,967
Business type activities"
I i westment i nc orne
222,346
170,178
176,212
1,139,315
291 760
Other
23,755
142,624
16,929
23,926
Transfem
Total business -type acbvilbes
246,103
312 B02
193,141
1,163,241
291,780
Total primmy govei ninent
57,597,823
62,935,537
67,373,217
72437,429
66,262,747
Changes in net position:
Governmental activities
2,365,771
(2,9!!j2,69B)
(2,015,878)
7,605,231
(288,793)
Business type a0vities
3,337,467. .......___...
. v 4°ti „_..__ �
,,, ,,�_1
9944,974
581,551
mmm292,758
"Dotal primary government
5,703,238
2,292,799
(2,106,124)
17,550,205
175
Agreement No. 6085A
CITY OF EL SEGUNDO
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
General fund:
Reserved
Unreserved
Nonspendable
Restricted
Assigned
Unassigned
Total general fund
All other governmental funds:
Reserved
Unreserved, reported in:
Special revenue funds
Debt Service funds
Capital projects funds
Nonspendable
Restricted
Assigned
Unassigned
Total all other governmental funds
Fiscal Year
2011� 2012 2013 2014 2015
6,421,009
1,884,602
1,873,812
3,380,264
2,575,497
892,810
445,114
2,049,483
2,876,450
3,129,606
5,315,133
7,839,124
12,664,755
14,075,307
14,587,023
12,628,9952
1n0 168,840
16,588,050
20,332,021
20 292,126
80
5,772
6,091,731
5,798,068
4,196,184
7,373,435 5,005,452
4,858,234
3,690.657
1,548,572
1,416,473 5,031,396
(2,091)
2,752,409)
3,779,255)
1,577,594) (78,071)
10,947,874
6,736,316
w .........
1,965,581
7,218,086 9,958,777
��wawwwwµ
Notes: ' The City of El Segundo implemented GASB Statement No. 54 during the fiscal year ended September 30, 2011, This
statement eliminated the previous fund balance categories (reserved and unreserved) and replaced them with for new
categories (nonspendable, restricted, assigned, unassigned). Fund balance amounts as of September 30, 2011 are
stated to present the new categories; however, all previous fiscal years are presented using the old categories.
176
Agreement No. 6O85A
CITY OF EL SEGUNDO
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
2016
2017
2018
2019
2020
General fund:
Reserved
Unreserved
-
Nonspendable
2,017,346
7,373,109
6,256,640
7,004,769
7,937,643
Restricted
-
-
1,000,000
2,643,380
4,482,363
Assigned
2,939,325
3,608,509
2,210,602
2,663,037
2,534,891
Unassigned
17,987,731
17,660,917
24,432,049
26,625,368
20,807,983
Total general fund
22,944,402
28,642,535
33,899,291
38,936,554
35,762,880
All other governmental funds:
Reserved
Unreserved, reported in:
Special revenue funds
-
Debt Service funds
Capital projects funds
-
Nonspendable
115,844
85,049
Restricted
6,963,441
6,312,687
6,882,394
8,404,718
15,473,650
Assigned
3,301,813
3,159,860
3,231,083
5,289,298
4,161,175
Unassigned
1,326,041)
(971,152)
(333,731)
(177,229) (46,117)
Total all other governmental funds
8,939,213
8,501,395
9,779,746
13,632,631
19,673,757
177
Agreement No. 6085A
CITY OF EL SEGUNDO
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting
l Ye
ar
....... ... . .......
2011 2012 2013 2014 2015
Revenues:
Taxes
Licenses and permits
Intergovernmental
Charges for services
Use of money and property
Fines and forfeitures
Developers Fees
Other
Total revenues
Expenditures
Current:
General government
Public safety
Public works
Community and cultural
Capital outlay
Debt service:
Principal retirement
Interest and fiscal charges
Total expenditures
Excess (deficiency) of
revenues over (under)
expenditures
Other financing sources (uses):
Transfers in
Transfers out
Proceeds from loans
Capital leases issued
Long-term debt issued
Total other financing
sources (uses)
Net change in fund balances
Debt service as a percentage of
noncapital expenditures
32,094,475
31,218,273
37.452,888
42,638,899
42,132,274
10,936.873
11,855.052
11,624,026
12,725.503
12.973,204
4,048.295
4,596,724
9,811,864
11,931,067
8,919,841
4,320.364
5,220,234
4,958,310
5.172,579
6,197,552
898,711
452.022
133,291
590,605
615,862
1,201.110
1.050,832
791,650
914,036
903,172
432,810
3,349,096
1.826.973
2,074,386
1,877,562
2,960,332
56,848,924
56,220,110
66,846,415
75,850,251
75,135,047
12,456,304
12,575,953
11,724,215
12,677,731
14,523.141
31,359,158
31,291,236
31.145,703
33.576.082
33,694,064
4.991,382
5.126.634
6,300,670
5,676,244
5.574,118
7,748.804
13,190,255
14,451,893
12,277,418
19,523,563
2,040.497
1.607,702
2,015,459
2,133,639
1,021,033
275.092000
282.987
237,569000
229,674
58,596.145
63.791,780
65,637,940
66,853,775
74.848,580
. . ......(7eEI-.670)
1.208.475
.....8,,996,476
286.467
3,167.231
3,163.394
8,455,512
3,048,087
10.138,836
(1,767.231)
(2.263.394)
(8,015,512)
(3,048,087)
(10.336,840)
1,400,000
900,000
(200,004
440,000
____L347.221) �6.671,670)
1,648,475
8,996,476
86,463
000%
000%
000%
079%
069%
am
Agreement No. 6085A
CITY OF EL SEGUNDO
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Revenues:
Taxes
Licenses and permits
Intergovernmental
Charges for services
Use of money and property
Fines and forfeitures
Developers Fees
Other
Total revenues
Expenditures
Current:
General government
Public safety
Public works
Community and cultural
Capital outlay
Debt service,
Principal retirement
Interest and fiscal charges
Total expenditures
Excess (deficiency) of
revenues over (under)
expenditures
Otherfinancing sources (uses):
Transfers in
Transfers out
Proceeds from loans
Capital leases issued
Long-term debt issued
Total other financing
sources (uses)
Net change in fund balances
Debt service as a percentage of
nonGapital expenditures
Fiscal Year
2016 2017 2018 2019 2020
43,410,318
49,986.183
53,125,853
55,018,471
47,767,783
13,989.221
13,131,485
13,695,476
14,559,036
14,237,723
7,751.363
2,805,424
2.400.010
3,635,668
2,391,795
5,214,048
5,811,835
6,053,614
6,179,231
4,817,551
682,140
552.662
781.402
2,465,235
3.472,256
1,249,820
444,188
831.067
659,653
367,045
296,427
329,474
262,346
824,075
6,293,956
1,729.917
2,785,946
2,541,114
4.031,022
3,359,551
74,323,254
75,847.197
79,690,882
87.372,391
82,707,660
14,200,855
14,905,246
15.738,556
18,177,843
18,964.880
33,166,579
34.682,695
37.595,758
38,014,581
40,124,678
6,325.541
6,296,743
6,533,963
7,331,278
7,382.491
8,951,898
10,259,037
9.274.383
10,923,487
9,499,235
3.389,585
3,930,500
3.426.202
3.328,392
3,162,263
291,109
299,464
355.461
367,627
380,281
---------- 221,552
213,197
244,223
339.035
. . . . ................. 326,380
66.547,119
70,586,,882
73,168.546
78,482,243
79,840,208
7,776.135
5,260,315 .
6,522,336
........................ - . ......
8.890.148
2,867,452
2.687,843
2.668,046
3.556,821
4,490,751
1.389.000
(2,887,847)
(2,668,046)
(3.556.821)
(4,490,751)
(1.389.000)
(200,004
7,576,131 5,260,315 6.522,336 8.890.148 2,1367,452
............
081% 0,77% 086% 0-94% 092%
Mai
Agreement No. 6085A
CITY OF EL SEGUNDO
Principal Sales Tax Producers
Current Fiscal Year and Nine Years Ago
2019-20 2010-11
Taxpayer
Business Type
T
Business Type
-
Aerospace Corporation
Misc. Vehicle Sales
Accuvant
Office Equipment
Best Buy Stores
Furniture/Appliance
Aerospace Corporation
Misc. Vehicle Sales
Calportland Company
BIdg.MatIs-WhsIe
Best Buy Stores
Furniture/Appliance
Chevron Service Stations
Service Stations
Chevron Service Stations
Service Stations
Circle K Food Stores
Food Markets
Chevron USA Refinery
Energy Sales
Dick's Sporting Goods
Recreation Products
Computer Sciences Corporation
Office Equipment
En Pointe Technologies Sales
Miscellaneous Other
Dick's Sporting Goods
Apparel Stores
Fleming's Prime Steakhouse
Restaurants
Directv
Leasing
Homegoods
Furniture/Appliance
Karl Storz Endoscopy
Office Equipment
Impex Technologies
Office Equipment
Learned Lumber Supply
Bldg.Matls-Whsle
In-N-Out Burgers
Restaurants
Mobil Service Stations
Service Stations
Insight Direct USA
I.T. Infrastructure
Network Appliance Corporation
Office Equipment
Jim and Jacks
Auto Parts/Repair
Northrop Grumman Systems
Auto Parts/Repair
Karl Storz Encloscopy
Office Equipment
P.F.Changs's China Bistro
Restaurants
Los Angeles Times Communications
Light Industry
Patterson Dental Supply
Light Industry
Meaningful Beauty
Miscellaneous Retail
Primary Color Systems
Light Industry
North
Restaurants
Ralph's Grocery Company
Food Markets
Patterson Dental Supply
Light Industry
Raytheon Company
Electronic Equipment
PCM Gov
Office Equipment
Sensa Products
Miscellaneous Retail
Ralph's Grocery Company
Food Markets
Sun Microsystems
Electronic Equipment
Raytheon Company
Electronic Equipment
The Boeing Company
Misc. Vehicle Sales
The Boeing Company
Misc. Vehicle Sales
Trace 3
Light Industry
The Container Store
Furniture/Appliance
Union 76 Service Stations
Service Stations
Trace 3
Light Industry
Whole Foods Market
Food Markets
Whole Foods Market
Food Markets
World Wide Technology
Office Equipment
Source: Avenu Insights & Analytics
ME
Agreement No. 6085A
CITY OF EL SEGUNDO
Principal Property Tax Payers
Current Year and Nine Years Ago
2019-20 2010-11
Percent of Total City
Percent of Total City
Taxpayer
Taxable Value
Taxable Value
Taxable Value
Taxable Value (%)
Chevron Us@ Inc
2,438,217,568
1719%
2,222,629,945
23,16%
Sof Xi Pct Two Tower Owner Llc
617,569,200
435%
Raytheon Company
503,574,153
155%
307,600,150
3.21%
Aerospace Corporation
312,004,836
120%
283,451,637
295%
The Boeing Company
205,896,680
145%
Northrop Grumman Systems Corp
198,158,017
140%
255,818,371
2,67%
Boeing Co
180,369,627
127%
345,116,660
360%
Pas Partners Us
170,610,488
1,20%
147,763,178
1,54%
2121 Park Place Fee Owner Ca Llc
152,973,133
1,08%
Gateway El Segundo Fee Owner Llc
124,848,000
0.88%
Sfii Flyte Llc
123,628,231
0.87%
Kilroy Realty Finance Ptnshp
122,644,584
0,86%
Rar2 Campus 2100 Llc
119,442,000
0.84%
800 Apollo Fee Owner Ca Llc
119,322,227
0.84%
Street Retail Inc
112,725,742
0.79%
Arcis Ofc El Segundo Ca Lp
105,584,358
0.74%
La4 Llc
91,731,592
0,65%
118,980,071
1,24%
400 Cg Owner Llc
89,043,400
063%
Bsrep li Grand Avenue Llc
88,843,244
0.63%
Hughes Aircraft Co
87,440,721
0,62%
303,089,368
3,16%
He Hornet Way Llc
84,792,600
0.60%
300 Cg Owner Llc
84,516,220
0.60%
Plaza Cp Llc
80,672,332
0.57%
69,716,235
073%
Bre El Segundo Property Owner B
77,254,902
0.54%
Continental Atrium Corporation
75,972,393
0.54%
282,797,671
2,95%
Kilroy Realty Corporation
167,140,410
1.74%
Pacific Corp Towers Llc
160,608,395
167%
Hines Reit El Segundo Lp
122,109,910
1,27%
Continental Grand Lp
108,500,000
1.13%
Mattel Inc.
107,855,276
1.12%
Air Liquidelarge Industries U
79,508,519
083%
300 N Sepulveda Assoc Llc
65,078,473
0.68%
101 Continental Partners Llc
52,515,547
0.55%
Grand Avenue Parking L P
49,750,000
052%
Brcp 2160 Grand Avenue Llc
48,170,528
0.50%
Lax Granada Assoc
41,482,132
0.43%
Intl Rectifier Corp
41,337,074
0.43%
Time Warner Ny Cable Uc Time
36,503,185
038%
Douglas Property Holdings Co L
35,949,775
0.37%
W2007 Equity Inns Realty Llc
35,308,720
0.37%
Total Top 25 Taxpayers
6,367,836,248
44.99%
5,488,781,230
57,20%
Total Taxable Value
14,185,553,887
100,00%
9,595,689,307
10000%
Source: County Assessor data, Avanu Insights & Analytics
Unitary value is included in the total taxbale value,
181
Agreement No. 6085A
CITY OF EL SEGUNDO
Assessed Value and Estimated Actual Value of Taxable Property'
Last Ten Fiscal Years
Assessed
Factor of
Value as a
Less Tax-
Taxable
Percentag
Fiscal
Residential
Commercial
Industrial
Other Property
Unsecured
Exempt
Taxable Assessed
Total Direct Estimated Actual
Assessed
e of Actual
YearEnd
................... .. . . . .................
Property
. . . . . . . . .
Property
Property
(1)
. ..........
Property
--- —
Property
Value
Tax Rate (2) Taxable Value (3)
Value (3)
Value
201011
8,187,752
1,423,531
9,611,28.3
1,115400
2011-12
8,082,672
1,241,746
9,324,418
1115400
201213
8,278,135
1,423,110
9,701,245
1,115200
2013 14
8,446,568
1,862,068
10,308,636
1,115200
2014-15
81433,859
1,604,574
10,038,433
1,115200
201516
8,9.19,245
1., 736,530
10,655,775
1,115200
2016-17
9,408,029
1,565,767
10,973,796
1115200
20.1718
2,695,443,946
4,056,923,408
1,526,293,700
2,501,109,520
1,480,982,133
34,490,981
12,226,261,726
1,202225 17,863,020,753
1461037
68,44%
201819
2,901,889,931
4,452,614,029
1,785,769,246
2,418,895,212
1,556,962,904
48,412,749
13,067,718,573
1,205652 22,816,281,059
1,746003
57,27%
2019-20
3,059,827,370
5,145,402,602
2,011,925,385
2,466,641,048
1,552,1.23,561
50,.366,079
14,185,553,887
1,202446 22,800,483,319
L607303
62,22%
Source: County Assessor data, Avenu Insights & Analyticj
Source: 2017 and Prior Published CAFR Reports
State unitary property of $8,424,647 is included in other property,
I ) Other property for 2016 17 and prior represent the Secured Values,
1) Total direct tax rate is represented by TRA 09 849
3.) Estimated Actual Value is derived from a series of calculations comparing median assessed values frorn 1940 to current median sale prices, Based on these calculations a
multiplier value was extrapolated and applied to current assessed values
MIMEEMMMMM
182
Agreement No. 6085A
CITY OF EL SEGUNDO
Direct and Overlapping Property Tax Rates
(Rate per $100 of taxable value)
Last Ten Fiscal Years
General
COUNTY OF LOS ANGELES
CITY OF EL SEGUNDO
TOTAL
Override Assessments
Metropolitan Water District
County Flood Control
El Segundo Unified School District
Community College
TOTAL
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
O936812 0.936812 0.936812 0.936812 0.936812 0.936812 0.936812 0.936812 &936812 0.936812
0.063188 0.063188 0.063188 0,063188 0.063188 0,063188 0.063188 0,063188 0.063188 0.063188
0.003700 0.003700 0.003500 0.003500 0.003500 0.003500 0.003500 0.003500 0.003500 0.003500
0.000000 0.000000 0.000000 0,000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000
0.111700 0.111700 0.111700 0.111700 0.111700 0.111700 0.111700 0.177526 0179923 0.177391
0.021199 0.022229 0.021555
0,115400 0.115400 0.115200 0.115200 0.115200 0.115200 0.115200 0202225 0.205652 0.202446
TOTAL TAX RATE 1,115400 1.115400 1.115200 1.115200 1.115200 1115200 1.115200 1.202225 1.205652 1.202446
Source: County Auditor/Controller data, Avenu Insights& Analytics
Source: 2017 and prior, previous published CAFR
Tax Rate as represented by TRA 09-849
ME
Agreement No. 6085A
CITY OF EL SEGUNDO
Property Tax Levies and Collections
Last Ten Fiscal Years
Fiscal
Year Ended
June 30
Taxes Levied
forthe
Fiscal Year
Amount
Percent
of Levy
2010
6,345,073
6,117,416
96.41%
2011
6,172,420
6,005,643
97.30%
2012
6,006,864
5,990,455
99.73%
2013
6,277,523
6,144,309
97.88%
2014
6,680,795
6,558,427
98.17%
2015
6,538,375
6,438,118
98.47%
2016
6,728,811
6,637,510
98.64%
2017
6,853,422
6,773,927
98.84%
2018
7,672,612
7,659,388
99.83%
2019
8,185,486
8,169,815
99.81%
2020
8,929,004
8,183,987
91.66%
Collections in
Subsequent
Years
Source: Los Angeles County Auditor Controller's Office
184
55,500
59,028
39,950
(4,958)
610,801
Percent
Amount
of Levy
6,117,416
96.41%
6,005,643
97.30%
5,990,455
99.73%
6,144,309
97.88%
6,558,427
98.17%
6,493,618
99.32%
6,696,538
99.52%
6,813,877
99.42%
7,654,430
99.76%
8,780,616
107.27%
8,183,987
91.66%
Agreement No. 6085A
CITY OF EL SEGUNDO
Ratio of General Bonded Debt Outstanding
Last Ten Fiscal Years
(In Thousands, except Per Capita)
Outstanding General Bonded Debt
Fiscal Year
General Tax
Percent of
Ended 1
Obligation Allocation Certificates of
Assessed Per
September 30
Bonds Bonds Participation Total
Value Z Capita
2011
0.000%
2012
0.000%
2013
0.000%
2014
0.000%
2015
0.000%
2016
0.000%
2017
0.000%
2018
0.000%
2019
0.000%
2020 0.000%
General bonded debt is debt payable with governmental fund resources and general
obligation bonds recorded in enterprise funds (of which, the City has none).
1 Fiscal Years 2000 - current are 12 month reporting periods ending on September 30,.
2 Assessed value has been used because the actual value of taxable property is not
readily available in the State of California.
185
Agreement No. 6085A
CITY OF EL SEGUNDO
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
_.
Governmental Activities
................
Fiscal Year General
Tax
Total
Ended Obligation
Allocation Certificates of Leases/
Governmental
September 30 Bonds
Bonds Participation Loans
Activities
2011
11,208,191
11,208,191
2012
- 10,916,677
10,916,677
2013
10,615,488
10,615,488
2014
10,303,635
10,303,635
2015
9,982,592
9,982,592
2016
9,650,093
9,650,093
2017
9,306,335
9,306,335
2018
8,950,875
8,950,875
2019
8,583,247
8,583,247
2020 -
8,202,967
8,202,967
Note: Details regarding the City's outstanding debt can be found in the notes to
the financial statements.
1 Office of Economic Development (data shown is for Los Angeles County)
186
Agreement No. 6085A
CITY OF EL SEGUNDO
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Business -type Activities
Fiscal Year
Total
Total
Percentage
Debt
Ended
Leases/ Certificates of Business -type
Primary
of Personal
Per
September 30
Loans Participation Activities
Government
Income 1
Capita
2011
285,586 285,586
11,493,777
1.6%
280
2012
10,916,677
1.5%
254
2013
10,615,488
1.4%
239
2014
10,303,635
1.4%
227
2015
- -
9,982,592
1.3%
214
2016
9,650,093
1.2%
203
2017
-
9,306,335
1.1%
187
2018
8,950,875
1.0%
169
2019
8,583,247
0.9%
154
2020
8,202,967
0.8%
141
Note: Details regarding the City's outstanding debt can be found in the notes to
the financial statements.
' Office of Economic Development (data shown is for Los Angeles County)
187
Agreement No. 6085A
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188
Agreement No. 6085A
CITY OF EL SEGUNDO
Direct and Overlapping Debt
September 30, 2020
,?-I LJmLn_2AY_Lkksmw_PA _vMM's a
DIRECT DEBT:
City of El Segundo: Capital Lease - 2003 Parking Structure Lease
City of El Segundo: Facility Lease Obligation - 2005 Douglas Street Gap Closure
TOTAL DIRECT DEBT
$14,200,895,0137
Percentage Total
Applicable' Debt 9130120
1010000% 5 2,024,903 $
100 000%, 3,178,064
S 8,202,967 S
WMAMM
Eslimaled
Share of
Direct and
Overlapping
Debt
S 2,024,903
6,178,064
5 8,202,967
OVERLAPPING DEBT:
Metropolitan Water District
0 4591Y. $
32,230,000 $
32,082,064
S 147,936
El Camino Community College District
11 8961%
388,425,306
342,218,232
46,207,074
El Segundo Unified School District
100 000%
84,9!55,859
84,955,859
Manhattan Beach (.1nified School District
00021,
193,766,414
193,762,539
3,875
Vviseburn School District
72 528%
115,767,787
31,803,726
83,964,061
Canrinela Valley Union High School District
34 656%
229,200,955
149,769,072
79,431,883
Centinela Valley Union High School District,15chool Facilities Inipiovernent District No 20I,
36 9991%
182,565,000
111,366,476
71,198,524
101 Al.- OVERI APPING TAX AND ASSESSIMENI DEBF
$
1,726,g11,321 S
861,002,109
$ 365,909,212
DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT:
. ..................
Los Angeles County General Fund Obligations
Los Angeles County Superintendent of Schools COPS
L A County Sanitation District No 5 Authority
L A County Sanitation District South Bay Cities Authority
0860% 5 2,303,502,723 S 2,283,231,B99 S 20,270,824
0880% 4,565,373 4,525,198 40,175
6349% 9,233,499 8,647,264 586,235
0042% 1,573,880 1,573,219 6131
i o -AL DIRECI AND OVERI APPING GENERAL FUM DEBT S 2,318,875,475 S 2,297,977,580 S 20,897,895
Nel Combined Total Debt $ 3,553,989,763 $ 3,158,979,689 S 395,010,074 (2)
I lie percentage of overlapping debt applicable to the city is estimated using taxable assessed property value Applicable percentages were estimated by del,ermining
the portion of the overlapping district's assessed value [net is within the boundaries of me city divided by the district's total taxable assessed value
2 Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non -bonded capital lease obligations Also excludes accreted value of
capital appreciation bonds
Ratios to Assessed Valuation:
Total Overlapping Tax and Assessment Debt 258%
Total Direct Debt .............. ....................... 0.00%
Net Combined Total Debt .. 272%
Source:
: Avwiu Insights & Analytics
189
Agreement No. 6085A
CITY OF ELSEGUNDO
Legal Debt Margin information
Last Ten Fiscal Years
Assessed valuation
Conversion percentage
Assessed valuation
Debt limit percentage
Debt limit
Total net debt applicable to limit:
General obligation bonds
Legal debt margin
Total debt applicable to the limit
as a percentage of debt limit
Fiscal Year
2010-11
2011-12
2012-13
2013-14
2014-15
9,611,283,541 $
9,324,417,663 $
9,701,244,855 $
10,308,636,196 $
10,038,433,763
25%
25%
25%
25%
25%
2,402,820,885
2,331,104,416
2,425,311,214
2,577,159,049
2,509,608,441
15%
15%
15%
15%
15%
360,423,133 349,665,662.36 363,796,682 386,573,857 376,441,266.11
360,423,133 $ 349,665,662 $ 363,796,682 $ 386,573,857 $ 376,441,2M-
0.0% 0.0% 00% 0.0% 0.0%
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). Although the statutory debt limit has not been amended by the State since this
change, the percentages presented in the above computations have been proportionately
modified to 3.75% (25% of 15%) for the purpose of this calculation in order to be consistent
with the computational effect of the debt limit at the time of the state's establishment of the limit.
Source: California Municipal Statistics, Inc.
Los Angeles County Tax Assessor's Office
190
Agreement No. 6085A
CITY OF EL SEGUNDO
Legal Debt Margin Information
Last Ten Fiscal Years
Assessed valuation
Conversion percentage
Assessed valuation
Debt limit percentage
Debt limit
Total net debt applicable to limit:
General obligation bonds
Legal debt margin
Total debt applicable to the limit
as a percentage of debt limit
IMMIM
2015-16
2016-17
2017-18
2018-19
2019-20
$ 10,655,775,000 $
10,973,796,359 $
12,226,261,726 $
13,067,718,573 $
14,185,553,887
25%
25%
25%
25%
25%
2,663,943,750
2,743,449,090
3,056,565,432
3,266,929,643
3,546,388,472
15%
15%
15%
15%
15%
399,591,563
411,517,363
458,484,815
490,039,446
531,958,270.76
399,591,563
MW
411,517,363 $ 458,484,815 $ 490,039,446 $ 531,958,271
191
0.0% 0.0% 0.0% 0.0%
Agreement No. 6O85A
CITY OF EL SEGUNDO
Demographic and Economic Statistics
Last Ten Calendar Years
Fiscal Year
City Population (1)
Personal Income
(in thousands) (2)
Per Capita
Personal Income (2)
Median Age (3)
Unemployment
Rate (%) (4)
2010-11
17,049
700,936
41,113
12.6%
2011-12
16,708
717,659
42,953
12.3%
2012-13
16,720
743,605
44,474
11.0%
2013-14
16,815
761,888
45,310
9.9%
2014-15
16,897
787,958
46,633
-
8.2%
2015-16
16,646
790,452
47,486
38.9
3.7%
2016-17
16,717
832,029
49,771
38.9
2.9%
2017-18
16,784
888,503
52,938
39.0
3.3%
2018-19
17,066
952,927
55,838
38.7
3.2%
2019-20
16,777
974,307
58,074
38.7
23.5%
Source: Avenu Insights & Analytics
Source: 2014 and prior, previously published CAFR Report
The California Department of Finance demographics estimates now incorporate 2010 Census counts as the benchmark.
1.) Population Projections are provided by the California Department of Finance Projections.
2.) Income Data is provided by the U.S. Census Bureau, 2010 American Community Survey.
3.) Median Age is provided by US Census data.
4.) Unemployment Data is provided by the EDD's Bureau of Labor Statistics Department.
192
Agreement No. 6085A
CITY OF EL SEGUNDO
Principal Employers
Current Year and Nine Years Ago
2019-20
2009-10
Number of
Percent of Total
Number of
Business Name
Employees
Employment (%)
Employees
Boeing Satellite Systems*
13,441
149.34%
5,167
Raytheon Space & Airborne Syst
6,000
66.67%
7,268
Aerospace Corporation
3,400
37.78%
3,002
Northrop Grumman Corporation (1)
2,539
28.21%
5,219
Mattel Inc
1,545
17.17%
1,635
Chevron Products Company/USA inc
1,252
13.91%
1,179
Internet Brands Inc
582
6.47%
Karl Storz Encloscopy America Inc
447
4.97%
Infineon Technologies Americas Corp (formerly international Rectifier)
423
4.70%
Big 5 Sporting Goods"
289
3.21%
DirecTV Operations Inc
0.00%
1,866
Accenture (2)
0.00%
713
Rhythm & Hues
0.00%
703
International Rectifier Corporation
0.00%
537
Total Top 10 Employers 29,918 332.43% 27,289
Total City Labor Force (3) 9,000
Source: Avenu Insights & Analytics
2010-11 based on previously published CAFR
Results based on direct correspondence with city's local businesses.
*Employee Count is statewide, employment levels are not available by site.
** Includes Corporate office and retail store.
(1) Accenture no longer has office space in El Segundo.
(2) Total City Labor Force provided by EDD Labor Force Data.
on
Agreement No. 6085A
CITY OF EL SEGUNDO
Full-time and Part-time City Employees By Function
Last Ten' Fiscal Years
Full-time and Part-time Employees as of September 30
Fiscal Year
2011
2012 2013 2014
2015
Function
General Government
51
51 52 60
69
Public Safety
157
150 153 138
137
Niblic Work�,
is
17 18 27
30
Community & coftoral
81
83 77 81
80
Water
11
9 9 11
11
sewpr
5
6 5 6
6
Total
323
316 314 323
333
Source: City of El Segundo Payroll Division
W
Agreement No. 6085A
CITY OF EL SEGUNDO
Full-time and Part-time City Employees By Function
Last Ten' Fiscal Years
Full-time and Part-time Employees as of September 30
Fiscal Year
2016
2017 2018 2019
2020
Function
General Government
51
57 53 71
73
Public Safety
123
126 130 143
144
Public Works
31
30 29 26
40
Community & Cultural
76
74 115 106
93
Water
10
10 9 18
15
Sewer
6
10 6 6
7
Total
297
307 342 370
372
195
Agreement No. 6085A
CITY OF CITY OF EL SEGUNDO
Operating Indicators by Function
Last Ten Fiscal Years
Fiscal Year
2011
2012
2013
2014
2015
Police:
Arrests
810
826
795
1,468
1,057
Parking citations issued
7,792
8,698
10,900
11,764
9,404
Fire:
Number of emergency calls
2,314
2,403
2,208
2,485
2,568
Inspections
1,985
2,445
2,411
2,326
2,203
Medical Responses
1,533
1,547
1,441
1,564
1,644
Public Works:
Street resurfacing (miles)
0.83
1.87
Reconstruction (miles)
-
New Street (miles)
Electronic Recycling (pounds)
N/A
N/A
N/A
N/A
N/A
Paper Shred Recycling (pounds)
N/A
N/A
17,950
9,220
10,080
Parks and recreation:
Number of recreation classes
1,362
1,228
1,191
1,365
1,389
Class registrations
8,809
8,026
7,950
7,905
8,021
Recreation Trips participants
840
1,185
1,480
1,560
1,535
Number offacility, rentals
262
365
411
496
Number of Reservations
9,969
9,971
9,041
9,238
9,342
Shuttles transported (riders)
33,990
30,976
27,472
29,789
30,052
Dial -A -Ride residents
7,693
9,085
11,258
11,090
11,206
Homebound Meals
5,935
5,794
5,007
4,957
4,926
Finance:
Business Licenses processed:
6,917
7,024
6,686
6,758
5,812
Purchase Orders processed
159
341
428
447
427
Purchase Change Orders processed
21
74
139
129
118
Invoices processed
10,772
9,855
10,008
10,367
10,189
Checks processed
5,068
5,010
5,262
5,529
5,326
Cash Receipts processed (excluding Water)
36,665
36,432
34,120
35,461
35,143
Source: City of El Segundo
Agreement No. 6085A
CITY OF CITY OF EL SEGUNDO
Operating Indicators by Function
Last Ten Fiscal Years
2016
Police:
Arrests
721
Parking citations issued
7,200
Fire:
Number of emergency calls
2,632
Inspections
1,531
Medical Responses
1,661
Public Works:
Street resurfacing (miles)
0.3
Reconstruction (miles)
-
New Street (miles)
Electronic Recycling (pounds)
N/A
Paper Shred Recycling (pounds)
23,000
Parks and recreation:
Number of recreation classes
1,056
Class registrations
6,657
Recreation Trips participants
89
Number of facility rentals
Number of Reservations
4,779
Shuttles transported (riders)
7,320
Dial -A -Ride residents
6,841
Homebound Meals
5,061
Finance:
Business Licenses processed:
7,172
Purchase Orders processed
476
Purchase Change Orders processed
103
Invoices processed
10,230
Checks processed
5,849
Cash Receipts processed (excluding Water)
33,075
Source: City of El Segundo
un
Fiscal Year
2017 2018 2019 2020
592
568
953
1,009
8,955
10,227
12,247
9,537
2,807
2,895
893
2,558
1,209
1,919
905
512
1,847
1,930
502
1,621
1
2
5.5
0.5
N/A
1,480
1,480
23,000
20,000
15,400
17,340
833
997
1,019
980
6,615
7,574
4,098
5,387
20
926
1,784
762
5,624
5,397
5,563
23,841
4,781
6,252
5,532
1,968
5,108
5,189
4,474
2,194
5,497
6,080
6,840
7,285
7,236
6,610
6,992
6,391
547
464
416
411
136
174
141
167
9,566
9,762
6,805
10,501
5,248
5,258
3,790
5,611
31,559
27,722
54,264
37,273
Agreement No. 6085A
CITY OF EL SEGUNDO
Capital Asset Statistics
by Function
Last Ten Fiscal Years
2011
2012
2013
2014
2015
Police:
Stations
1
1
1
1
1
Fire:
Fire stations
2
2
2
2
2
Public works:
Streets (miles)
55
55
55
55
55
Streetlights
1,718
1,718
1,718
1,718
1,718
Traffic signals
55
55
55
55
55
Parks and recreation:
Parks
22
22
22
22
22
Recreation Facilities
13
13
13
13
13
Number of Acres
91
91
91
91
91
Source: City of El Segundo
198
Agreement No. 6O85A
CITY OF EL SEGUNDO
Capital Asset Statistics
by Function
Last Ten Fiscal Years
2016
2017
2018
2019
2020
Police:
Stations
1
1
1
1
1
Fire:
Fire stations
2
2
2
2
2
Public works:
Streets (miles)
55
55
55
55
55
Streetlights
1,718
1,718
1,718
1,718
1,718
Traffic signals
55
55
55
55
55
Parks and recreation:
Parks
22
22
22
22
22
Recreation Facilities
13
13
14
14
14
Number of Acres
91
91
91
91
91
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Agreement No. 6085A
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Agreement No. 6085A
SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT
Thef6llowing summary discussion of'selected provisions of the Trust Agreement is made subject to all of
the provisions of1he Trust Agreement. This surntnaiy discussion does not purport to be a complete statement ofsaid
provisions and prospective purchasers of'1he Series 2021 Bonds are ref�rred to the coniplete text of the Trust
Agreement, a copy of'which is available upon request sent to the Trustee.
"Act" means Articles 10 and 11 (commencing with Section 53570) of Chapter 3 of Division 2 of Title 5 of
the California Government Code.
"Additional Bonds" means Bonds other than Series 2021 Bonds issued under the Trust Agreement. in
accordance with the provisions thereof.
"Authorized Denominations" means (a) $5,000 principal amount or any integral multiple thereof, and (b)
any other principal amount or integral multiple thereof as provided in a Supplemental Trust Agreement.
"Authorized Officer" means, with respect to the City, the Mayor, the City Manager, the Deputy City
Manager and the Chief Financial Officer and any other person designated as an Authorized Officer of the City in a
Written Certificate of the City filed with the Trustee.
"Beneficial Owner" means the beneficial owner of a Bond, determined under the rules of DTC.
"Bond Fund" means the fund by that name established and held by the Trustee pursuant to the Trust
Agreement.
"Bond Insurer" means any issuer or issuers of a policy or policies of municipal bond insurance obtained
by the City to insure the payment of principal of and interest on a Series of Bonds issued under the Trust Agreement,
when due otherwise than by acceleration, and which, in fact, are at any time insuring such Series of Bonds. For the
purposes of this definition, all consents, approvals or actions required by the Bond Insurer shall be by action of a
majority of all Bond Insurers (based upon the aggregate principal amount of Outstanding Bonds insured by each
such Bond Insurer) if there is more than a single Bond Insurer.
"Bonds" means the Series 2021 Bonds and all Additional Bonds.
"Business Day" means any day other than (a) a Saturday or a Sunday, (b) a day on which banking
institutions in the city in which the Corporate Trust Office of the Trustee is located or banking institutions in New
York, New York, are authorized or required by law to be closed, or (c) a day on which the New York Stock Exchange
is closed.
"City" means the City of El Segundo, a municipal corporation and general law city duly organized and
existing under and by virtue of the Constitution and laws of the State.
"Closing Date" means the date on which the Series 2021 Bonds are delivered to the original purchaser of
the Series 2021 Bonds.
"Continuing Disclosure Certificate" means, as applicable, the Continuing Disclosure Certificate of the
City, dated the Closing Date, as originally executed and as it may be amended from time to time in accordance with
the terms thereof.
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Agreement No. 6085A
"Corporate Trust Office" means the corporate trust office of the Trustee, which at the date of execution
of the Trust Agreement is that specified in the Trust Agreement, provided, however, that for transfer, registration,
exchange, payment and surrender of Bonds such term means the office or agency of the Trustee at which, at any
particular time, its corporate trust operations business shall be conducted, or such other office designated by the
Trustee from time to time.
"Costs of Issuance" means all items of expense directly or indirectly payable by or reimbursable to the
City relating to the authorization, issuance, sale and delivery of the Bonds, including but not limited to printing
expenses, rating agency fees, bond insurance premiums, filing and recording fees, initial fees, expenses and charges
of the Trustee and its counsel (including the Trustee's first annual administrative fee), fees, charges and
disbursements of attorneys, municipal advisors, actuaries, accounting firms, consultants and other professionals, fees
and charges for preparation, execution and safekeeping of the Bonds and any other cost, charge or fee in connection
with the original issuance of the Bonds.
"Costs of Issuance Fund" means the fund by that name established and held by the Trustee pursuant to the
Trust Agreement.
" County" means the County of Los Angeles,
" Defeasance Securities" means any of the following to the extent then permitted by applicable laws of the
State:
(a) U.S. Treasury Certificates, Notes and Bonds (including State and Local Government Series --
"SLGS").
(b) Direct obligations of the Treasury of the United States which have been stripped by the Treasury
itself, CATS, TIGRS and similar securities
(c) Resolution Funding Corp. (REFCORP). Only the interest component of REFCORP strips which
have been stripped by request to the Federal Reserve Bank of New York in book entry form are
acceptable.
(d) Pre -refunded municipal bonds rated "Aaa" by Moody's or "AAA" by S&P. If however, the issue
is only rated by S&P (i.e., there is no Moody's rating), then the pre -refunded bonds must have been
pre -refunded with cash, direct U.S. or U.S. guaranteed obligations, or AAA rated pre -refunded
municipals to satisfy this condition.
(e) Obligations issued by the following agencies which are backed by the full faith and credit of the
U.S.
(i) U.S. Export -Import Bank (Eximbank)
Direct obligations or fully guaranteed certificates of beneficial ownership
(ji) Farmers Home Administration (FmHA)
Certificates of beneficial ownership
(iii) Federal Financing Bank
(iv) General Services Administration
Participation certificates
(v) U.S. Maritime Administration
Guaranteed Title XI financing
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Agreement No. 6085A
(vi) U.S. Department of Housing and Urban Development (HUD)
Project Notes
Local Authority Bonds
New Communities Debentures - U.S. government guaranteed debentures
U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing
notes and bonds
"DTC" means The Depository Trust Company and any successor thereto or any nominee thereof.
"Event of Default" means an event described as such in the Trust Agreement.
"Fiscal Year" means the twelve-month period ending on June 30 of each year, or any other annual
accounting period hereafter selected and designated by the City as its Fiscal Year in accordance with applicable law.
"Fitch" means Fitch, Inc., a corporation organized and existing under the laws of the State of New York,
and its successors and assigns, except that if such entity shall be dissolved or liquidated or shall no longer perform
the services of a municipal securities rating agency, then the term "Fitch" shall be deemed to refer to any other
nationally recognized municipal securities rating agency selected by the City.
"Interest Payment Date" (a) with respect to the Series 2021 Bonds, means January 1 and July 1 of each
year, commencing January 1, 2022, and (b) with respect to any Additional Bonds, the dates specified in the
Supplemental Trust Agreement pursuant to which such Additional Bonds are issued.
"Moody's" means Moody's Investors Service, a corporation organized and existing under the laws of the
State of Delaware, and its successors and assigns, except that if such entity shall be dissolved or liquidated or shall
no longer perform the services of a municipal securities rating agency, then the term "Moody's" shall be deemed to
refer to any other nationally recognized municipal securities rating agency selected by the City.
"Opinion of Counsel" means a written opinion of counsel of recognized national standing in the field of
law relating to municipal bonds, appointed and paid by the City.
"Outstanding" means, when used as of any particular time with reference to Bonds (subject to the
provisions of the Trust Agreement), all Bonds theretofore or thereupon executed by the City and authenticated by
the Trustee, except (a) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation in
accordance with the Trust Agreement, (b) Bonds paid or deemed to have been paid within the meaning of the Trust
Agreement, and (c) Bonds in lieu of or in substitution for which other Bonds shall have been executed, issued and
delivered by the City pursuant to the Trust Agreement.
"Owner" means, with respect to any Bond, the registered owner thereof, as shown on the registration books
maintained by the Trustee under the Trust Agreement.
" Participant" means any entity which is recognized as a participant by DTC in the book -entry system of
maintaining records with respect to book -entry bonds.
• Participating Underwriters" has the meaning ascribed thereto in the Continuing Disclosure Certificate.
• Permitted Investments" means any of the following to the extent then pennitted by applicable laws of
the State;.
(a) Direct obligations of the United States of America (including obligations issued or held in book -
entry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations
the principal of and interest on which are unconditionally guaranteed by the United States of
America.
Agreement No. 6085A
(b) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the
following federal agencies and provided such obligations are backed by the full faith and credit of
the United States of America (stripped securities are only permitted if they have been stripped by
the agency itself):
(i) U.S. Export -Import Bank (Eximbank)
Direct obligations or fully guaranteed certificates of beneficial ownership
(ii) Farmers Home Administration (FmHA)
Certificates of beneficial ownership
(iii) Federal Financing Bank
(iv) Federal Housing Administration Debentures (FHA)
(v) General Services Administration
Participation certificates
(vi) Government National Mortgage Association (GNMA or "Ginnie Mae")
GNMA - guaranteed mortgage -backed bonds
GNMA - guaranteed pass -through obligations
(vii) U.S. Maritime Administration
Guaranteed Title XI financing
(viii) U.S. Department of Housing and Urban Development (HUD)
Project Notes
Local Authority Bonds
New Communities Debentures - U.S. government guaranteed debentures
U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing
notes and bonds
(c) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the
following non -full faith and credit U.S. government agencies (stripped securities are only
pennitted if they have been stripped by the agency itself):
(i) Federal Home Loan Bank System
Senior debt obligations
(ii) Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac")
Participation Certificates
Senior debt obligations
(iii) Federal National Mortgage Association (FNMA or "Fannie Mae")
Mortgage -backed securities and senior debt obligations
(iv) Student Loan Marketing Association (SLMA or "Sallie Mae")
Senior debt obligations
(v) Resolution Funding Corp. (REFCORP) obligations
(vi) Farm Credit System
Consolidated systemwide bonds and notes
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Agreement No. 6085A
(d) Money market funds registered under the Federal Investment Company Act of 1940, whose shares
are registered under the Federal Securities Act of 1933, and having a rating if rated by S&P of
AAArn-G; AAA-m; or AA-rn and if rated by Moody's of Aaa, Aal or Aa2, including funds for
which the Trustee, its parent holding company, if any, or any affiliates or subsidiaries of the Trustee
or such holding company provide investment advisory or other management services.
(e) Certificates of deposit secured at all times by collateral described in (a) and/or (b) above. Such
certificates must be issued by commercial banks, savings and loan associations or mutual savings
banks, which may include the Trustee and its affiliates. The collateral must be held by a third party
and the bondholders must have a perfected first security interest in the collateral.
(1) Certificates of deposit, savings accounts, deposit accounts or money market deposits which are
fully insured by FDIC, including BIF and SAIF, which may include those of the Trustee and its
affiliates.
(g) Commercial paper rated, at the time of purchase, "Prime - 1" by Moody's and "A -I" or better by
S&P.
(h) Bonds or notes issued by any state or municipality which are rated by Moody's and S&P in one of
the two highest rating categories assigned by such agencies.
(i) Federal funds, bank money market deposit accounts, and bankers acceptances with a maximum
term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation
rating of"Prime - 1" or "A3" or better by Moody's and "A-1" or "A" or better by S&P, which may
include the Trustee and its affiliates.
(j) Any state administered pooled investment fund in which the City is statutorily permitted or
required to invest including, but not limited to, the Local Agency Investment Fund in the treasury
of the State.
(k) Investment Trust of California (CaITRUST).
(1) Repurchase agreements which have a maximum maturity of 30 days and are fully secured at or
greater than 102% of the market value plus accrued interest by obligations of the United States
Government, its agencies and instrumentalities, including limited to the following: (i) the Federal
Home Loan Bank Board ("FHLB"); (ii) the Federal Home Loan Mortgage Corporation
("FHLMC"); (iii) the Federal National Mortgage Association (FNMA); (iv) Federal Farm Credit
Bank ("FFCB"); and (v) guaranteed portions of Small Business Administration ("SBA")
(m) Investment agreements and guaranteed investment contracts with issuers having a long-term debt
rating of at least "AA-" or "Aa3" by S&P or Moody's, respectively.
(n) Deposits with the Local Agency Investment Fund (LAIF) of the State.
(o) Corporate obligations issued by corporations organized and operating within the United States or
by depository institutions licensed by the United States or any state and operating within the United
States having a long-term debt rating of at least "AA-" or "Aa3" by S&P or Moody's, respectively.
"Principal Amount" means, with respect to Bonds, the principal amount thereof.
"Principal Payment Date" means each July 1 on which principal is due on the Bonds.
Agreement No. 6085A
"Rating Agencies" means Fitch, Moody's and S&P, but in each case only to the extent that such Rating
Agency is then rating the Bonds at the request of the City.
"Record Date" means the 151 calendar day of the month preceding each Interest Payment Date, whether
or not such day is a Business Day.
"Redemption Fund" means the fund by that name established and held by the Trustee pursuant to the Trust
Agreement.
"Refunding Fund" means the fund by that name established and held by the Trustee pursuant to the Trust
Agreement.
"Representation Letter" means the Letter of Representations from the City to DTC, or any successor
Securities Depository for the Bonds, in which the City makes certain representations with respect to issues of its
securities for deposit by DTC or such successor depository.
"Retirement Law" means the Public Employees' Retirement Law, commencing with Section 20000 of the
California Government Code.
"S&P" means S&P Global Ratings, a division of Standard & Poor's Financial Services LLC, a corporation
organized and existing under the laws of the State of New York, and its successors or assigns, except that if such
entity shall be dissolved or liquidated or shall no longer perform the functions of a municipal securities rating agency,
then the teen "Standard & Poor's" shall be deemed to refer to any other nationally recognized municipal securities
rating agency selected by the City.
"Securities Depository" means DTC and its successors and assigns or any other securities depository
selected by the City which agrees to follow the procedures required to be followed by such securities depository in
connection with the Bonds that are in book -entry form.
"Series" means all of the Bonds designated as being within a certain series, regardless of variations in
maturity date, interest rate, redemption and other provisions, and any Bonds thereafter issued in transfer or exchange
for such Bonds pursuant to the Trust Agreement.
"Series 2021 Bonds" means the City of El Segundo Taxable Pension Obligation Bonds, Series 2021, issued
under the Trust Agreement.
"State" means the State of California.
"Supplemental Trust Agreement" means any supplemental trust agreement amendatory of or
supplemental to the Trust Agreement, but only if and to the extent that such supplemental trust agreement is
specifically authorized under the Trust Agreement.
"System" means the California Public Employees' Retirement System,
"Term Bonds" means Bonds which are payable on or before their specified maturity dates from sinking
fund payments established for that purpose and calculated to retire such Bonds on or before their specified maturity
dates.
"Trust Agreement" means the Trust Agreement, dated as of June 1, 2021, by and between the City and
the Trustee, as originally executed and as it may from time to time be amended or supplemented by one or more
Supplemental Trust Agreements.
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"Trustee" means U.S. Bank National Association, a national banking association organized and existing
under the laws of the United States of America, or any successor thereto as Trustee under the Trust Agreement,
appointed as provided in the Trust Agreement.
"Written Certificate" and "Written Request" of the City mean, respectively, a written certificate or
written request signed in the name of the City by an Authorized Officer. Any such certificate or request may, but
need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or
more so combined shall be read and construed as a single instrument.
Trust Aizreement Constitutes Contract
In consideration of the acceptance of the Bonds by the Owners thereof, the Trust Agreement shall be deemed
to be and shall constitute a contract among the City, the Trustee and the Owners from time to time of all Bonds
authorized, executed, issued and delivered under the Trust Agreement and then Outstanding to provide for the
payment of the interest on and principal of and redemption premiums, if any, on all Bonds which may from time to
time be authorized, executed, issued and delivered under the Trust Agreement, subject to the agreements, conditions,
covenants and provisions contained therein; and all agreements and covenants set forth in the Trust Agreement to be
performed by or on behalf of the City shall be for the equal and proportionate benefit, protection and security of all
Owners of the Bonds without distinction, preference or priority as to security or otherwise of any Bonds over any
other Bonds by reason of the number or date thereof or the time of authorization, sale, execution, issuance or delivery
thereof or for any cause whatsoever, except as expressly provided therein.
i r ansfer of Boards. Any Bond may, in accordance with its terns, be transferred in the books required to be
kept pursuant to the provisions of the Trust Agreement by the person in whose name it is registered, in person or by
such person's duly authorized attorney, upon surrender of such Bond for cancellation at the Corporate Trust Office
of the Trustee accompanied by delivery of a duly executed written instrument of transfer in a form acceptable to the
Trustee; provided, however, that the Trustee shall require the payment by the Owner requesting such transfer of any
tax or other governmental charge required to be paid with respect to such transfer as a condition precedent to the
exercise of such privilege; and provided further, that the Trustee may refuse to transfer any Bonds during the 15 day
period prior to the date established by the Trustee for the selection of Bonds for redemption, or to transfer any Bonds
selected by the Trustee for redemption. Whenever any Bond shall be surrendered for transfer, the City shall execute
and the Trustee shall authenticate and deliver to the transferee a new Bond or Bonds of the same Series of Bonds
and maturity of Authorized Denominations equal to the Principal Amount.
The City and the Trustee may deem and treat the Owner of any Bond as the absolute owner of such Bond
for the purpose of receiving payment thereof and for all other purposes, whether such Bond shall be overdue or not,
and neither the City nor the Trustee shall be affected by any notice or knowledge to the contrary; and payment of the
principal or redemption price of and the interest due on such Bond shall be made only to such Owner, which
payments shall be valid and effectual to satisfy and discharge liability on such Bond to the extent of the sum or sums
so paid. The cost of preparing the Bonds and any services rendered or expenses incurred by the Trustee in connection
with any transfer of the Bonds shall be paid by the City.
F xchangg of Bonds. Any Bond may, in accordance with its tenns, be exchanged at the Corporate Trust
Office of the Trustee for a new Bond or Bonds of the same Series of Bonds and maturity of Authorized
Denominations equal to the Principal Amount of the Bond surrendered; provided, however, that the Trustee shall
require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be
paid with respect to such exchange as a condition precedent to the exercise of such privilege; and provided, further,
that the Trustee may refuse to exchange any Bonds during the 15 day period prior to the date established by the
Trustee for the selection of Bonds for redemption, or to exchange any Bonds selected by the Trustee for redemption.
The cost of preparing the Bonds and any services rendered or expenses incurred by the Trustee in connection with
any exchange shall be paid by the City.
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Agreement No. 6085A
Bond I�egistmiion Books. The Trustee shall keep at its Corporate Trust Office sufficient books for the
registration and transfer of the Bonds which shall during normal business hours with reasonable notice be open to
inspection by the City, and upon presentation for such purpose the Trustee shall, under such reasonable regulations
as it may prescribe, register or transfer the Bonds in such books as provided in the Trust Agreement.
My"0"IITat sl I ps"tdo�red ' tolen + r, Los9 Bonds. If any Bond shall become mutilated, the Trustee, at the expense
of the Owner, shall thereupon authenticate and deliver a new Bond or Bonds of the same Series of Bonds and
maturity of Authorized Denominations equal in aggregate Principal Amount to the Bond so mutilated in exchange
and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated, and
every mutilated Bond so surrendered to the Trustee shall be cancelled.
If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted
to the Trustee and, if such evidence be satisfactory to the Trustee and indemnity satisfactory to the Trustee shall be
given, the Trustee, at the expense of the Owner, shall thereupon authenticate and deliver a new Bond of the same
Series of Bonds and maturity of Authorized Denominations equal in aggregate Principal Amount to the Bond so lost,
destroyed or stolen in lieu of and in substitution for the Bond so lost, destroyed or stolen.
The Trustee may require payment of a reasonable sum for each new Bond delivered under the provisions
of the Trust Agreement described under the heading "GENERAL BOND PROVISIONS; SERIES 2021 BONDS —
Mutilated, Destroyed, Stolen or Lost Bonds," and of the expenses which may be incurred by the City and the Trustee
in the premises. Any Bond delivered under the provisions of the Trust Agreement described under the heading
"GENERAL BOND PROVISIONS; SERIES 2021 BONDS — Mutilated, Destroyed, Stolen or Lost Bonds," in lieu
of any Bond alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the benefits of the
Trust Agreement with all other Bonds secured by the Trust Agreement, and neither the City nor the Trustee shall be
required to treat both the original Bond and any replacement Bond as being Outstanding for the purpose of
detennining the principal amount of Bonds which may be issued under the Trust Agreement or for the purpose of
determining any percentage of Bonds Outstanding under the Trust Agreement, but both the original and replacement
Bond shall be treated as one and the same.
T;rnty, IorLds. The Bonds issued under the Trust Agreement may be initially issued in temporary form
exchangeable for definitive Bonds when ready for delivery, which temporary Bonds may be printed, lithographed
or typewritten, shall be of such denominations as may be determined by the City, shall be in fully registered form
and may contain such reference to any of the provisions of the Trust Agreement as may be appropriate. Every
temporary Bond shall be executed and authenticated as authorized by the City in accordance with the terms of the
Trust Agreement. If the City issues temporary Bonds it will execute and furnish definitive Bonds without delay and
thereupon the temporary Bonds may be surrendered, for cancellation, in exchange therefor at the Corporate Trust
Office of the Trustee, and the Trustee shall deliver in exchange for such temporary Bonds definitive Bonds. Until
so exchanged, the temporary Bonds shall be entitled to the same benefits under the Trust Agreement as definitive
Bonds delivered under the Trust Agreement.
Validity of Bonds. The recital contained in the Bonds that the same are issued pursuant to the Act and
pursuant to the Trust Agreement shall be conclusive evidence of their validity and of the regularity of their issuance,
and all Bonds shall be incontestable from and after their issuance. The Bonds shall be deemed to be issued, within
the meaning of the Trust Agreement, upon delivery of the definitive Bonds (or any temporary Bonds exchangeable
therefor) and the proceeds of sale thereof received.
Conditions for the Issuance of Additional Bonds. The City may at any time issue Additional Bonds on a
parity with the Series 2021 Bonds, but only subject to the following specific conditions, which are made conditions
precedent to the issuance of any such Additional Bonds:
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Agreement No. 6085A
(a) The City shall be in compliance with all agreements and covenants contained in the Trust
Agreement.
(b) The issuance of such Additional Bonds shall have been authorized pursuant to the Act and shall
have been provided for by a Supplemental Trust Agreement which shall specify the following:
(i) The purpose for which such Additional Bonds are to be issued; provided that such
Additional Bonds shall be applied solely for (i) the purpose of satisfying any obligation of the City to make
payments to the System pursuant to the Retirement Law relating to pension benefits accruing to the
System's members, and/or for payment of all costs incidental to or connected with the issuance of
Additional Bonds for such purpose, and/or (ii) the purpose of refunding any Bonds then Outstanding,
including payment of all costs incidental to or connected with such refunding;
(ii) The authorized principal amount and designation of such Additional Bonds;
(iii) The date and the maturity dates of and the sinking fund payment dates, if any, for such
Additional Bonds;
(iv) The interest payment dates and principal payment dates for such Additional Bonds;
(v) The denomination or denominations of and method of numbering such Additional Bonds;
(vi) The redemption premiums, if any, and the redemption terms, if any, for such Additional
Bonds;
(vii) The amount, if any, to be deposited from the proceeds of sale of such Additional Bonds
in the Bond Fund;
(viii) Any repayment provisions including, without limitation, for reasonable expenses,
including attorneys' fees and expenses, and proportionate consent rights, proportionate or Series specific
rights with respect to the direction of remedies, rights of subrogation to the rights of such Owners to receive
the amount of principal of and interest on such Additional Bonds from the City, and notice provisions
required in order to secure municipal bond insurance for such Additional Bonds as the City determines will
be advantageous to the City; and
(ix) Such other provisions (including the requirements of a book -entry Bond registration
system, if any) as are necessary or appropriate and not inconsistent with the Trust Agreement.
Procedure for the Issuance of Additional Bonds. At any time after the sale of any Additional Bonds in
accordance with the Act, the City shall execute such Additional Bonds for issuance under the Trust Agreement and
shall deliver them to the Trustee, and thereupon such Additional Bonds shall be delivered by the Trustee to the
purchaser thereof upon the Written Request of the City, but only upon receipt by the Trustee of the following
documents or money or securities, all of such documents dated or certified, as the case may be, as of the date of
delivery of such Additional Bonds by the Trustee:
(a) An executed copy of the Supplemental Trust Agreement authorizing the issuance of such
Additional Bonds;
(b) A Written Request of the City as to the delivery of such Additional Bonds;
(c) An Opinion of Counsel to the effect that (i) the City has executed and delivered the Supplemental
Trust Agreement, and the Supplemental Trust Agreement is valid and binding upon the City, and (ii) such Additional
Bonds are valid and binding obligations of the City;
Agreement No. 6085A
(d) A Written Certificate of the City stating that all requirements of the provisions of the Trust
Agreement described under the heading "ADDITIONAL BONDS" have been complied with and containing any
other such statements as may be reasonably necessary to show compliance with the conditions for the issuance of
such Additional Bonds contained in the Trust Agreement; and
(e) Such further documents, money or securities as are required by the provisions of the Supplemental
Trust Agreement providing for the issuance of such Additional Bonds.
fled ig a9m,�r �aountsirl��Bond mC�Und. In order to meet the City's obligations under the Retirement Law, the
City shall deposit or cause to be deposited with the Trustee for deposit into the Bond Fund on or before the dates
specified in the Trust Agreement described under the heading "PLEDGE; FUNDS — Bond Fund" (or such other
dates as provided in a Supplemental Trust Agreement) the amount which, together with moneys transferred and
deposited pursuant to the provisions of the Trust Agreement described in paragraph (c) under the heading "PLEDGE;
FUNDS — Redemption Fund," is sufficient to pay the City's debt service obligations on the Bonds. Subject only to
the provisions of the Trust Agreement pennitting the application thereof for the purposes and on the terms and
conditions set forth in the Trust Agreement, all of the amounts held in the Bond Fund are pledged by the City to
secure the payment of the principal or redemption price of and interest on the Bonds in accordance with their teens,
the provisions of the Trust Agreement and the Act. Said pledge shall constitute a first lien on such assets.
Bond Fund. The Trustee shall establish and maintain in trust a special fund designated the "Bond Fund."
The City agrees and covenants that, not later than five Business Days prior to each Interest Payment Date,
it will transfer to the Trustee an amount which, together with amount simultaneously transferred to the Trustee for
deposit in the Bond Fund pursuant to the provisions of the Trust Agreement described in paragraph (c) under the
heading "PLEDGE; FUNDS — Redemption Fund" and the amount then on deposit in the Bond Fund, will equal the
amount of the principal of and interest on the Bonds coming due on such Interest Payment Date. The Trustee shall,
upon receipt of the amount required to be transferred by the City pursuant to the provisions of the Trust Agreement
described under the heading "PLEDGE; FUNDS — Bond Fund," deposit such amount in the Bond Fund.
In the event that, on the fourth Business Day prior to each Interest Payment Date, amounts in the Bond Fund
are insufficient to pay the principal, if any, of and interest on the Bonds due and payable on such Interest Payment
Date, the Trustee shall immediately notify the City and the Bond Insurer, if any, of the amount of such insufficiency.
Upon being so notified, the City shall, prior to the close of business on the Business Day immediately preceding
such Interest Payment Date, deliver or cause to be delivered to the Trustee immediately available funds in an amount
equal to the amount of such insufficiency. Immediately upon receipt thereof, the Trustee shall deposit such funds in
the Bond Fund.
On each Interest Payment Date, the Trustee shall withdraw from the Bond Fund for payment to the Owners
of the Bonds the principal, if any, of and interest on the Bonds then due and payable. If there are insufficient funds
in the Bond Fund to pay the principal, if any, of and interest on the Bonds, the Trustee shall apply the available funds
first to the payment of interest on the Bonds, then to the payment of principal of the Bonds.
RedgMp ion Fund. The Trustee shall establish and maintain in trust a special fund designated the
"Redemption Fund."
The Trustee shall deposit in the Redemption Fund amounts received from the City in connection with the
City's exercise of its rights to optionally redeem Bonds pursuant to the provisions of the Trust Agreement.
Amounts in the Redemption Fund shall be disbursed therefrom for the payment of the redemption price of
Bonds redeemed pursuant to the provisions of the Trust Agreement.
LISME1
Agreement No. 6085A
Deposit and lnvcstaients of Monev in ]mmk;lnds. All money held by the Trustee in any of the funds established
by the Trustee pursuant to the Trust Agreement shall be invested in Permitted Investments at the Written Request of
the City. If no Written Request of the City is received, the Trustee shall invest funds held by it in Permitted
Investments described in paragraph (d) of the definition thereof. Such investments shall, as nearly as practicable,
mature on or before the dates on which such money is anticipated to be needed for disbursement under the Trust
Agreement. All interest, profits and other income received from any money so invested shall be deposited in the
Bond Fund. The Trustee shall have no liability or responsibility for any loss resulting from any investment made or
sold in accordance with the provisions of the Trust Agreement described under the heading "PLEDGE; FUNDS,"
except for any loss due to the negligence or willful misconduct of the Trustee. The Trustee may act as principal or
agent in the acquisition or disposition of any investment and may impose its customary charge therefor.
The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable
regulatory entity grant the City the right to receive brokerage confirmations of security transactions as they occur,
the City specifically waive receipt of such confirmations to the extent permitted by law. The Trustee will furnish
the City periodic cash transaction statements which shall include detail for all investment transactions made by the
Trustee under the Trust Agreement.
F'unctual,l 63bLrnent and Performance. The City shall punctually pay the principal or redemption price of and
interest on every Bond issued under the Trust Agreement in strict conformity with the terms of the Trust Agreement
and of the Bonds, and will faithfully observe and perform all the agreements and covenants to be observed or
performed by the City contained in the Trust Agreement and in the Bonds.
Exterasion of Pavnient of Bonds. The City shall not directly or indirectly extend or assent to the extension
of the maturity of any of the Bonds or the time of payment of any claims for interest on the Bonds, and in case the
maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds
or claims for interest shall not be entitled, in case of any default under the Trust Agreement, to the benefits of the
Trust Agreement, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding
and of all claims for interest thereon which shall not have been so extended. Nothing in this paragraph shall be
deemed to limit the right of the City to issue bonds for the purpose of refunding any Outstanding Bonds, and such
issuance shall not be deemed to constitute an extension of maturity of the Bonds.
Additional Debt. The City expressly reserves the right to enter into one or more other agreements, trust
agreements or indentures for any of its purposes, and reserves the right to issue other obligations for such purposes.
Power to Issue Bonds. The City is duly authorized pursuant to law to issue the Bonds and to enter into the
Trust Agreement. The Bonds and the provisions of the Trust Agreement are the legal, valid and binding obligations
of the City in accordance with their terms. The Bonds constitute obligations imposed by law.
Accounting records and Repots. The City shall keep or cause to be kept proper books of record and
accounts in which complete and correct entries shall be made of all transactions relating to the receipts,
disbursements, allocation and application of moneys on deposit in the funds and accounts established under the Trust
Agreement and such books of record and accounts shall be available for inspection by the Trustee at reasonable
hours and under reasonable conditions.
„Pll OseCLiti�)ii and l elense ofStaits. The City shall defend against every suit, action or proceeding at anytime
brought against the Trustee upon any claim to the extent involving the failure of the City to fulfill its obligations
under the Trust Agreement; provided that the Trustee or any affected Owner at its election may appear in and defend
any such suit, action or proceeding.
Ccsnitinu.ina Disclosure. The City shall comply with and carry out all of the provisions of the Continuing
Disclosure Certificate. Notwithstanding any other provision of the Trust Agreement, failure of the City to comply
am
Agreement No. 6085A
with the Continuing Disclosure Certificate shall not be considered an Event of Default; provided, however, that the
Trustee may (and, at the written direction of any Participating Underwriter or the holders of at least 25% aggregate
principal amount of Outstanding Series 2021 Bonds, and upon indemnification of the Trustee to its reasonable
satisfaction, shall) or any holder or beneficial owner of the Series 2021 Bonds may, take such actions as may be
necessary and appropriate to compel performance, including seeking mandate or specific performance by court
order.
%klaiver of Laws. The City shall not at any time insist upon or plead in any manner whatsoever, or claim or
take the benefit or advantage of, any stay or extension law now or at any time in force that may affect the covenants
and agreements contained in the Trust Agreement or in the Bonds, and all benefit or advantage of any such law or
laws is expressly waived by the City to the extent permitted by law.
Further Assurances. Whenever and so often as reasonably requested to do so by the Trustee or any Owner,
the City will promptly execute and deliver or cause to be executed and delivered all such other and further assurances,
documents or instruments, and promptly do or cause to be done all such other and further things as may be necessary
or reasonably required in order to further and more fully vest in the Owners all rights, interests, powers, benefits,
privileges and advantages conferred or intended to be conferred upon them by the Trust Agreement.
fflffisllu&�
The "rruslee. The Trustee shall, prior to an Event of Default, and after the curing or waiver of all Events of
Default that may have occurred, perfonn such duties and only such duties as are specifically set forth in the Trust
Agreement. The Trustee shall, during the existence of any Event of Default that has not been cured or waived
exercise such of the rights and powers vested in it by the Trust Agreement, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's
own affairs.
The City may at any time, unless there exists any Event of Default, remove the Trustee initially appointed
and any successor thereto and may appoint a successor or successors thereto by an instrument in writing; provided,
however, that any such successor shall be a bank or trust company doing business and having a corporate trust office
in Los Angeles or San Francisco, California, having a combined capital (exclusive of borrowed capital) and surplus
of at least $50,000,000 and subject to supervision or examination by federal or state authority. If such bank or trust
company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising
or examining authority above referred to, then for the purpose of the Trust Agreement the combined capital and
surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. The Trustee may at any time resign by giving written notice of such
resignation to the City and by mailing to the Owners notice of such resignation. Upon receiving such notice of
resignation, the City shall promptly appoint a successor Trustee by an instrument in writing. Any removal or
resignation of a Trustee and appointment of a successor Trustee shall become effective only upon the acceptance of
appointment by the successor Trustee. If, within 30 days after notice of the removal or resignation of the Trustee no
successor Trustee shall have been appointed and shall have accepted such appointment, the removed or resigning
Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee, which court
may thereupon, after such notice, if any, as it may deem proper and prescribe and as may be required by law, appoint
a successor Trustee having the qualifications required by the Trust Agreement.
Any company into which the Trustee may be merged or converted or with which it may be consolidated or
any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to
which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such
company shall meet the requirements set forth in the preceding paragraph, shall be the successor to the Trustee under
the Trust Agreement and vested with all of the title to the trust estate and all of the trusts, powers, discretions,
immunities, privileges and all other matters as was its predecessor under the Trust Agreement, without the execution
or filing of any paper or further act, anything in the Trust Agreement to the contrary notwithstanding.
I BVJ
Agreement No. 6085A
The Trustee is authorized to pay or redeem the Bonds when duly presented for payment at maturity or on
redemption prior to maturity. The Trustee shall cancel all Bonds upon payment thereof or upon the surrender thereof
by the City and shall destroy such Bonds and a certificate of destruction shall be delivered to the City. The Trustee
shall keep accurate records of all Bonds paid and discharged and cancelled by it.
1- ability of mstee. The recitals of facts, agreements and covenants in the Trust Agreement and in the
Bonds shall be taken as recitals of facts, agreements and covenants of the City, and the Trustee assumes no
responsibility for the correctness of the same or makes any representation as to the sufficiency or validity of the Trust
Agreement or of the Bonds, or shall incur any responsibility in respect thereof other than in connection with the
rights or obligations assigned to or imposed upon it in the Trust Agreement, in the Bonds or in law or equity. The
Trustee shall not be liable in connection with the performance of its duties under the Trust Agreement except for its
own negligence, willful misconduct or breach of duty. The Trustee shall not be liable for any error of judgment
made in good faith by a responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining
the pertinent facts.
The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Owners of not less than a majority in Aggregate Principal Amount of the Bonds
at the time Outstanding, relating to the tune, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the Trustee under the Trust Agreement.
The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by the Trust
Agreement at the request, order or direction of any of the Owners pursuant to the provisions of the Trust Agreement
unless such Owners shall have offered to the Trustee reasonable security or indemnity against the costs, expenses
and liabilities that may be incurred therein or thereby. The Trustee has no obligation or liability to the Owners for
the payment of interest on, principal of or redemption premium, if any, with respect to the Bonds from its own funds;
but rather the Trustee's obligations shall be limited to the performance of its duties under the Trust Agreement.
The Trustee shall not be bound to ascertain or inquire as to the performance or observance of any of the
terms, conditions, covenants or agreements in the Trust Agreement or of any of the documents executed in
connection with the Bonds, or as to the existence of a default or event of default thereunder. The Trustee shall not
be responsible for the validity or effectiveness of any collateral given to or held by it.
The Trustee may execute any of the trusts or powers under the Trust Agreement or perform any duties under
the Trust Agreement either directly or by or through attorneys -in -fact, agents or receivers, shall not be answerable
for the negligence or misconduct or any such attorney -in -fact, agent or receiver appointed by it in accordance with
the standards specified above. The Trustee shall be entitled to advice of counsel and other professionals concerning
all matters of trust and its duty under the Trust Agreement, but the Trustee shall not be answerable for the professional
malpractice of any attorney -in-law or certified public accountant in connection with the rendering of his professional
advice in accordance with the terms of the Trust Agreement, if such attorney -in-law or certified public accountant
was selected by the Trustee with due care.
Whether or not therein expressly so provided, every provision of the Trust Agreement, or related documents
relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the
provisions of the Trust Agreement described under the heading "THE TRUSTEE."
The Trustee shall be protected in acting upon any notice, resolution, requisition, request (including any
Written Request of the City), consent, order, certificate, report, opinion, bond or other paper or document believed
by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee may consult
with counsel, who may be counsel of or to the City, with regard to legal questions, and the opinion of such counsel
shall be full and complete authorization and protection in respect of any action taken or suffered by it under the Trust
Agreement in good faith and in accordance therewith.
MR
Agreement No. 6085A
Whenever in the administration of its rights and obligations under the Trust Agreement the Trustee shall
deem it necessary or desirable that a matter be established or proved prior to taking or suffering any action under the
Trust Agreement, such matter (unless other evidence in respect thereof be in the Trust Agreement specifically
prescribed) may, in the absence of bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by a Written Certificate of the City, which certificate shall be full warrant to the Trustee for any action
taken or suffered under the provisions of the Trust Agreement upon the faith thereof, but in its discretion the Trustee
may in lieu thereof accept other evidence of such matter or may require such additional evidence as it may deem
reasonable.
No provision of the Trust Agreement shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the perfonnance or exercise of any of its duties under the Trust Agreement, or in the
exercise of its rights or powers.
The Trustee shall have no responsibility or liability with respect to any information, statement or recital in
any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the
Bonds.
All immunities, indemnifications and releases from liability granted in the Trust Agreement to the Trustee
shall extend to the directors, employees, officers and agents thereof.
Any company into which the Trustee may be merged or converted or with which it may be consolidated or
any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to
which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such
company shall meet the requirements set forth in the provisions of the Trust Agreement described under the heading
"THE TRUSTEE — The Trustee," shall be the successor to the Trustee under the Trust Agreement and vested with
all of the title to the trust estate and all of the trusts, powers, discretions, immunities, privileges and all other matters
as was its predecessor under the Trust Agreement, without the execution or filing of any paper or further act, anything
in the Trust Agreement to the contrary notwithstanding.
a illpgnu itign and Indeninific tmion ol-f`ru:stee. The City shall pay to the Trustee from time to time, and the
Trustee shall be entitled to, reasonable compensation for all services rendered by it in the exercise and performance
of any of the powers and duties under the Trust Agreement of the Trustee, and the City will pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of the Trust Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence, default or willful misconduct, including the negligence
or willful misconduct of any of its officers, directors, agents or employees. The City, to the extent pennitted by law,
shall indemnify and save the Trustee harmless against any liabilities, costs, claims or expenses, including those of
its attorneys, which it may incur in the exercise and performance of its powers and duties under the Trust Agreement,
including the enforcement of any remedies and the defense of any suit, and which are not due to its negligence,
default or willful misconduct. The duty of the City to indemnify the Trustee shall survive the termination and
discharge of the Trust Agreement.
Amendment, _ of thud"rusi A r�nt. (a) The Trust Agreement and the rights and obligations of the City
and of the Owners may be amended at any time by a Supplemental Trust Agreement which shall become binding
when the written consents of the Owners of a majority in aggregate principal amount of the Outstanding Bonds,
exclusive of Bonds disqualified as provided in the Trust Agreement described under the heading "AMENDMENT
OF THE TRUST AGREEMENT — Disqualified Bonds," are filed with the Trustee. No such amendment shall (i)
extend the maturity of or reduce the interest rate on or amount of interest on or principal or redemption price of, or
extend the time of payment of, any Bond without the express written consent of the Owner of such Bond, or (ii)
reduce the percentage of Bonds required for the written consent to any such amendment.
Agreement No. 6085A
(b) The Trust Agreement and the rights and obligations of the City and of the Owners may also be
amended at any time by a Supplemental Trust Agreement which shall become binding without the consent of any
Owners, for any one or more of the following purposes:
(i) To add to the agreements and covenants required in the Trust Agreement to be performed
by the City other agreements and covenants thereafter to be performed by the City, to pledge or assign
additional security for the Bonds (or any portion thereof), or to surrender any right or power reserved in the
Trust Agreement to or conferred in the Trust Agreement on the City;
(ii) To make such provisions for the purpose of curing any ambiguity or of correcting, curing
or supplementing any defective provision contained in the Trust Agreement or in regard to questions arising
under the Trust Agreement which the City may deem desirable or necessary and not inconsistent with the
Trust Agreement;
(iii) To provide for the issuance of any Additional Bonds and to provide the terms of such
Additional Bonds, subject to the conditions and upon compliance with the procedure set forth in the Trust
Agreement described under the heading "ADDITIONAL BONDS";
(iv) To modify, amend or add to the provisions in the Trust Agreement to permit the
qualification thereof under the Trust Indenture Act of 1939, as amended, or any similar federal statutes in
effect, and to add such other terns, conditions and provisions as may be pennitted by such statute or similar
statute; and
(v) To modify, amend or supplement the Trust Agreement in any manner that does not
materially adversely affect the interest of Owners of Bonds.
Notwithstanding anything to the contrary in this paragraph (b), the City shall not modify, amend or
supplement the Trust Agreement in any manner that materially adversely affects the rights of any Bond Insurer
without the consent of such Bond Insurer (provided, that, the consent of the Bond Insurer shall not be required in
connection with modifications, amendments or additions pursuant to (iii) above). The Bond Insurer, if any, shall
receive written notice of any proposed amendments pursuant to this paragraph (b).
Disqualified Bonds. Bonds owned or held by or for the account of the City shall not be deemed Outstanding
for the purpose of any consent or other action or any calculation of Outstanding Bonds provided in the Trust
Agreement described under the heading "AMENDMENT OF THE TRUST AGREEMENT," and shall not be
entitled to consent to or take any other action provided in the Trust Agreement described under the heading
"AMENDMENT OF THE TRUST AGREEMENT' or otherwise under the Trust Agreement.
Endorsement or Replacement of Bonds After Amendment. After the effective date of any action taken as
provided in the Trust Agreement, the City may determine that the Bonds may bear a notation by endorsement in
form approved by the City as to such action, and in that case upon demand of the Owner of any Outstanding Bonds
and presentation of his Bond for such purpose at the Corporate Trust Office of the Trustee a suitable notation as to
such action shall be made on such Bond. If the City shall so determine, new Bonds so modified as, in the opinion
of the City, shall be necessary to conform to such action shall be prepared and executed, and in that case upon
demand of the Owner of any Outstanding Bond a new Bond or Bonds shall be exchanged at the Corporate Trust
Office of the Trustee without cost to each Owner for its Bond or Bonds then Outstanding upon surrender of such
Outstanding Bonds.
Annendnieni by Mutual Consent. The provisions of the Trust Agreement described under the heading
"AMENDMENT OF THE TRUST AGREEMENT" shall not prevent any Owner from accepting any amendment
as to the particular Bonds held by such Owner, provided that due notation thereof is made on such Bonds.
Wn
Agreement No. 6085A
At oa°nesr t;Ipinsoll l e �ardin t SuJ)t)lenwn(al Trust Agreements. The Trustee shall be provided an opinion
of counsel that any Supplemental Trust Agreement complies with the provisions of the Trust Agreement described
under the heading "AMENDMENT OF THE TRUST AGREEMENT" and the Trustee may conclusively rely upon
such opinion.
Events of Default. If one or more of the following events (herein called "Events of Default") shall happen,
that is to say:
(a) If default shall be made by the City in the due and punctual payment of the interest on any Bond
when and as the same shall become due and payable;
(b) If default shall be made by the City in the due and punctual payment of the principal or redemption
price of any Bond when and as the same shall become due and payable, whether at maturity as therein expressed or
by proceedings for redemption;
(c) If default shall be made by the City in the performance of any of the agreements or covenants
required in the Trust Agreement to be performed by the City, and such default shall have continued for a period of
60 days after the City shall have been given notice in writing of such default by the Trustee or the Owners of not less
than 25% in aggregate Principal Amount of the Bonds at the time Outstanding, specifying such default and requiring
the same to be remedied, provided, however, if the default stated in the notice can be corrected, but not within the
applicable period, the Trustee and such Owners shall not unreasonably withhold their consent to an extension of
such time if corrective action is instituted by the City within the applicable period and diligently pursued until the
default is corrected; or
(d) If the City shall file a petition or answer seeking arrangement or reorganization under the federal
bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of
competent jurisdiction shall approve a petition filed with or without the consent of the City seeking arrangement or
reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any
state therein, or if under the provisions of any other law for the relief or aid of debtors any court of competent
jurisdiction shall assume custody or control of the City or of the whole or any substantial part of its property.
Institution of gan PtrypcagIrp lam tPIC
L-[ijistee.m Remedies. If an Event of Default shall occur and be
continuing, the Trustee may, and upon the written request of the Owners of a majority in aggregate Principal Amount
of the Bonds then Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to protect or
enforce its rights or the rights of the Owners of the Bonds under the Trust Agreement by a suit in equity or action at
law, either for the specific performance of any covenant or agreement contained in the Trust Agreement, or in aid of
the execution of any power granted under the Trust Agreement, or by mandamus or other appropriate proceeding
for the enforcement of any other legal or equitable remedy as the Trustee shall deem most effectual in support of any
of its rights and duties under the Trust Agreement. The principal of the Bonds is not subject to acceleration upon the
occurrence of an Event of Default.
r%➢ig��tion of Funds Aller Default. If an Event of Default shall occur and be continuing, all amounts then
held or thereafter received by the Trustee under any of the provisions of the Trust Agreement shall be applied by the
Trustee as follows and in the following order:
(a) To the payment of any fees and expenses of the Trustee and to the payment of the charges and
expenses of the Trustee (including reasonable fees and disbursements of its counsel, agents and advisors) incurred
in and about the performance of its powers and duties under the Trust Agreement;
Agreement No. 6085A
(b) To the payment of the principal and interest then due with respect to the Bonds (upon presentation
of the Bonds to be paid, and stamping thereon of the payment if only partially paid, or surrender thereof if fully paid)
subject to the provisions of the Trust Agreement, as follows:
First: To the payment to the persons entitled thereto of all installments of interest then due in the
order of the maturity of such installments, and, if the amount available shall not be sufficient to pay in full
any installment or installments maturing on the same date, then to the payment thereof ratably, according
to the amounts due thereon, to the persons entitled thereto, without any discrnnination or preference; and
Second: To the payment to the persons entitled thereto of the unpaid principal of any Bonds which
shall have become due, whether at maturity or by call for redemption, with interest on the overdue principal
at the rate borne by the respective Bonds on the date of maturity or redemption and, if the amount available
shall not be sufficient to pay in full all the Bonds, together with such interest, then to the payment thereof
ratably, according to the amounts of principal due on such date to the persons entitled thereto, without any
discrimination or preference.
; Ywon-" 4�ab,, r. Nothing in the provisions of the Trust Agreement described under the heading "EVENTS
OF DEFAULT AND REMEDIES" or in any other provision of the Trust Agreement or in the Bonds shall affect or
impair the obligation of the City, which is absolute and unconditional, to pay the principal or redemption price of
and the interest on the Bonds to the respective Owners of the Bonds on the respective Payment Dates as provided in
the Trust Agreement, or shall affect or impair the right of such Owners, which is also absolute and unconditional, to
institute suit to enforce such payment by virtue of the contract embodied in the Trust Agreement and in the Bonds.
A waiver of any default or breach of duty or contract by the Trustee or any Owner shall not affect any subsequent
default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of
duty or contract. No delay or omission by the Trustee or any Owner to exercise any right or remedy accruing upon
any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver
of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred
upon the Owners by the Act or by the provisions of the Trust Agreement described under the heading "EVENTS OF
DEFAULT AND REMEDIES" may be enforced and exercised from time to time and as often as shall be deemed
expedient by the Trustee or the Owners.
If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned, the City, the
Trustee and any Owner shall be restored to their former positions, rights and remedies as if such action, proceeding
or suit had not been brought or taken.
Remedies Not Exclusive. No remedy conferred upon or reserved to the Owners as provided in the Trust
Agreement is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be
in addition to every other remedy given under the Trust Agreement or now or thereafter existing at law or in equity
or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred
by the Act or any other law.
Limitation on Owners' Rielit to Sue. No Owner of any Bond shall have the right to institute any suit, action
or proceeding at law or equity, for any remedy under the Trust Agreement, unless (a) such Owner shall have
previously given to the Trustee written notice of the occurrence of an Event of Default, (b) the Owners of at least a
majority in aggregate Principal Amount of all the Bonds then Outstanding shall have made written request upon the
Trustee to exercise the powers granted under the Trust Agreement or to institute such suit, action or proceeding in
its own name, (c) such Owners shall have tendered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities to be incurred by it in compliance with such request, and (d) the Trustee shall have refused
or omitted to comply with such request for a period of 60 days after such request shall have been received by, and
said tender of indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are declared, in every case, to be
conditions precedent to the exercise by any Owner of any remedy under the Trust Agreement; it being understood
IaWA
Agreement No. 6085A
and intended that no one or more Owners of Bonds shall have any right in any manner whatever by his or their action
to enforce any right under the Trust Agreement, except in the manner provided in the Trust Agreement, and that all
proceedings at law or in equity to enforce any provision of the Trust Agreement shall be instituted, had and
maintained in the manner provided in the Trust Agreement and for the equal benefit of all Owners of the Outstanding
Bonds.
Absolute Obligation of City. Nothing contained in the Trust Agreement or in the Bonds shall affect or
impair the obligation of the City, which is absolute and unconditional, to pay the principal or redemption price of
and the interest on the Bonds to the respective Owners of the Bonds on their respective Payment Dates as provided
in the Trust Agreement.
DEFEASANCE
Discharge of Bondss. (a) If the City shall pay or cause to be paid or there shall otherwise be paid to the
Owners of all Outstanding Bonds the interest thereon and the principal thereof and the redemption premiums, if any,
thereon at the times and in the manner stipulated in the Trust Agreement and therein, and shall pay or provide for
the payment of all fees and expenses of the Trustee then due, then all agreements, covenants and other obligations
of the City to the Owners of such Bonds under the Trust Agreement shall thereupon cease, terminate and become
void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to the City all such
instruments as may be necessary or desirable to evidence such discharge and satisfaction, the Trustee shall pay over
or deliver to the City all money or securities held by it pursuant to the Trust Agreement which are not required for
the payment of the interest on and principal of and redemption premiums, if any, on such Bonds.
(b) Any Outstanding Bonds shall prior to the maturity date or redemption date thereof be deemed to
have been paid within the meaning of and with the effect expressed in paragraph (a) above if (i) in case any of such
Bonds are to be redeemed on any date prior to their maturity date, the City shall have given to the Trustee in form
satisfactory to it irrevocable instructions to provide notice in accordance with the provisions of the Trust Agreement
described under the heading "REDEMPTION OF SERIES 2021 BONDS —Notice of Redemption," (ii) there shall
have been deposited with the Trustee either (A) money in an amount which shall be sufficient or (B) Defeasance
Securities, the interest on and principal of which when paid will provide money which, together with the money, if
any, deposited with the Trustee at the same time, shall be sufficient, in the opinion of an independent certified public
accountant (addressed to the City and the Trustee), to pay when due the principal or redemption price of and the
interest on such Bonds to become due on such Bonds on and prior to the maturity date or redemption date thereof,
as the case may be, (iii) there shall be delivered to the Trustee an escrow agreement entered into by the City and the
Trustee or other fiduciary or escrow agent, (iv) there shall be delivered to the Trustee an opinion of nationally
recognized bond counsel to the effect that such Bonds have been paid within the meaning of the provisions of the
Trust Agreement described under the heading "DEFEASANCE — Discharge of Bonds" addressed to the Trustee,
and (v) the City shall have given the Trustee in form satisfactory to it irrevocable instructions to mail to the Owners
of such Bonds in accordance with the provisions of the Trust Agreement described under the heading
"MISCELLANEOUS —Notice to Owners" notice that the deposit required by clause (ii) above has been made with
the Trustee and that such Bonds are deemed to have been paid in accordance with the provisions of the Trust
Agreement described under the heading "DEFEASANCE — Discharge of Bonds" and stating the maturity date or
redemption date upon which money is to be available for the payment of the principal or redemption price of and
interest on such Bonds.
l wnc&aimed Money. Anything contained in the Trust Agreement to the contrary notwithstanding, any money
held by the Trustee in trust for the payment and discharge of any of the Bonds or the interest thereon which remains
unclaimed for two years after the date when such Bonds or interest thereon have become due and payable, either at
their stated maturity dates or by call for redemption prior to maturity, if such money was held by the Trustee at such
date, or for two years after the date of deposit of such money if deposited with the Trustee after the date when such
Bonds and interest shall have become due and payable, shall be repaid by the Trustee to the City as its absolute
property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the
Owners shall not look to the Trustee for the payment of such Bonds; provided, however, that before being required
Wn
Agreement No. 6085A
to make any such payment to the City, the Trustee may, and at the request of the City shall, at the expense of the
City, mail to the Owners in accordance with the provisions of the Trust Agreement described under the heading
"MISCELLANEOUS —Notice to Owners" a notice that such money remains unclaimed and that, after a date named
in such notice, which date shall not be less than 30 days after the date of the mailing of such notice, the balance of
such money then unclaimed will be returned to the City.
Benefits of the T ust Aggeei ref,°it 1 zn flied to Parties. Nothing contained in the Trust Agreement, expressed
or implied, is intended to give to any person other than the City, the Trustee, the Bond Insurer, if any, and the Owners
any right, remedy or claim under or by reason of the Trust Agreement. Any agreement or covenant required in the
Trust Agreement to be performed by or on behalf of the City or any member, officer or employee thereof shall be
for the sole and exclusive benefit of the Trustee, and the Owners.
Successor Is Deemed Included inAllReferences to Predecessor. Whenever in the Trust Agreement either
the City or any member, officer or employee thereof or the Trustee is named or referred to, such reference shall be
deemed to include the successor or assigns thereof, and all agreements and covenants required by the Trust
Agreement to be performed by or on behalf of the City or the Trustee, or any member, officer or employee thereof,
shall bind and inure to the benefit of the respective successors thereof whether so expressed or not.
Execution of Documents by Owners. Any declaration, request or other instrument which is permitted or
required in the Trust Agreement to be executed by Owners may be in one or more instruments of similar tenor and
may be executed by Owners in person or by their attorneys appointed in writing. The fact and date of the execution
by any Owner or such Owner's attorney of any declaration, request or other instrument or of any writing appointing
such attorney may be proved by the certificate of any notary public or other officer authorized to make
acknowledgments of deeds to be recorded in the state or territory in which such person purports to act that the person
signing such declaration, request or other instrument or writing acknowledged to such person the execution thereof,
or by an affidavit of a witness of such execution duly swom to before such notary public or other officer. The
ownership of any Bonds and the amount, maturity, number and date of holding the same may be proved by the
registration books for the Bonds maintained by the Trustee pursuant to the provisions of the Trust Agreement
described under the heading "GENERAL BOND PROVISIONS; SERIES 2021 BONDS — Bond Registration
Books" of the Trust Agreement.
Any declaration, request, consent or other instrument or writing of the Owner of any Bond shall bind all
future Owners of such Bond with respect to anything done or suffered to be done by the Trustee or the City in good
faith and in accordance therewith.
Waiver- of personal Liabilt. No member, officer or employee of the City shall be individually or
personally liable for the payment of the principal or redemption price of or the interest on the Bonds by reason of
their issuance, but nothing provided in the Trust Agreement shall relieve any officer of the City from the performance
of any official duty provided by the Act or any other applicable provisions of law or by the Trust Agreement.
AMisii;ron of Bonds by C"i! . All Bonds acquired by the City shall be surrendered to the Trustee for
cancellation.
Destruction of Cancelled Bonds. Whenever provision is made for the return to the City of any Bonds which
have been cancelled pursuant to the provisions of the Trust Agreement, the Trustee shall destroy such Bonds and
furnish to the City a certificate of such destruction.
Notice Any notice required to be given by the Trustee under the Trust Agreement by mail to
any Owners shall be given by mailing a copy of such notice, first class postage prepaid, or by giving such notice by
telecopy or by an overnight delivery service, to such Owners at their addresses appearing in the registration books
maintained by the Trustee pursuant to the provisions of the Trust Agreement described under the heading
Agreement No. 6085A
"GENERAL BOND PROVISIONS; SERIES 2021 BONDS — Bond Registration Books," except as provided in the
provisions of the Trust Agreement described under the heading "REDEMPTION OF SERIES 2021 BONDS —
Notice of Redemption," not less than 30 days nor more than 45 days following the action or prior to the event
concerning which notice thereof is required to be given; provided, however, that receipt of any such notice shall not
be a condition precedent to the effect of such notice and neither failure of any Owner to receive any such notice nor
any immaterial defect contained therein shall affect the validity of the proceedings taken in connection with the
action or the event concerning which such notice was given.
Content of Certificates. Every Written Certificate of the City with respect to compliance with any
agreement, condition, covenant or provision provided in the Trust Agreement shall include (a) a statement that the
person or persons making or giving such certificate have read such agreement, condition, covenant or provision and
the definitions in the Trust Agreement relating thereto, (b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements contained in such certificate are based, (c) a statement that,
in the opinion of the signers, they have made or caused to be made such examination or investigation as is necessary
to enable them to express an informed opinion as to whether or not such agreement, condition, covenant or provision
has been complied with, and (d) a statement as to whether, in the opinion of the signers, such agreement, condition,
covenant or provision has been complied with.
Any Written Certificate of the City may be based, insofar as it relates to legal matters, upon an Opinion of
Counsel unless the person making or giving such certificate knows that the Opinion of Counsel with respect to the
matters upon which his certificate may be based, as aforesaid, is erroneous, or in the exercise of reasonable care
should have known that the same was erroneous. Any Opinion of Counsel may be based, insofar as it relates to
factual matters information with respect to which is in the possession of the City, upon a representation by an officer
or officers of the City unless the counsel executing such Opinion of Counsel knows that the representation with
respect to the matters upon which his opinion may be based, as aforesaid, is erroneous, or in the exercise of reasonable
care should have known that the same was erroneous.
Accounts and Funds, I siness,I')ayw. Any account or fund required in the Trust Agreement to be established
and maintained by the Trustee may be established and maintained in the accounting records of the Trustee either as
an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any reports or
statements with respect thereto, be treated either as an account or a fund; but all such records with respect to all such
accounts and funds shall at all times be maintained in accordance with sound accounting practice and with due regard
for the protection of the security of the Bonds and the rights of the Owners. Any action required to occur under the
Trust Agreement on a day which is not a Business Day shall be required to occur on the next succeeding Business
Day.
E Le .qqnlac -S ature. Each of the parties to the Trust Agreement agrees that the transaction consisting of
the Trust Agreement may be conducted by electronic means. Each party agrees, and acknowledges that it is such
parry's intent (i) that, by signing the Trust Agreement using an electronic signature, it is signing, adopting and
accepting the Trust Agreement, and (ii) that signing the Trust Agreement using an electronic signature is the legal
equivalent of having placed the undersigned officer's handwritten signature on the Trust Agreement on paper. Each
party acknowledges that it is being provided with an electronic or paper copy of the Trust Agreement in a usable
format.
Governing Law. The Trust Agreement shall be governed by and construed in accordance with the laws of
the State of California.
UO. 1
Agreement No. 6085A
F.VWUW 11
My I g I Im I IN r, I
City of El Segundo
(Los Angeles County, California)
Taxable Pension 0151&afion Bonds, Series 2021
(Final Opinion)
Ladies and Gentlemen:
We have acted as bond counsel to the City of El Segundo (the "City") in connection with the issuance
by the City of $144,135,000 aggregate principal amount of City of El Segundo (Los Angeles County,
California) Taxable Pension Obligation Bonds, Series 2021 (the "Series 2021 Bonds"), pursuant to Articles 10
and I I of Chapter 3 of Division 2 of Title 5 of the California Government Code and the Trust Agreement,
dated as of June 1, 2021 (the "Trust Agreement"), by and between the City and U.S. Bank National
Association, as trustee (the "Trustee"). Capitalized terms not otherwise defined herein shall have the meanings
ascribed thereto in the Trust Agreement.
In such connection, we have reviewed the Trust Agreement, opinions of counsel to the City, the
Trustee and others, certificates of the City, the Trustee and others and such other documents, opinions and
matters to the extent we deemed necessary to render the opinions set forth herein.
The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court
decisions, including the default judgment rendered on April 12, 2021, by the Superior Court of the State of
California for the County of Los Angeles in the action entitled City of El Segundo v. All Persons Interested,
etc., Case No. 21TRCV00070, and cover certain matters not directly addressed by such authorities. Such
opinions may be affected by actions taken or omitted or events occurring after original delivery of the Series
2021 Bonds on the date hereof. We have not undertaken to determine, or to inform any person, whether any
such actions are taken or omitted or events do occur or any other matters come to our attention after original
delivery of the Series 2021 Bonds on the date hereof. Accordingly, this letter speaks only as of its date and is
not intended to, and may not, be relied upon or otherwise used in connection with any such actions, events or
matters. Our engagement with respect to the Series 2021 Bonds has concluded with their issuance, and we
disclaim any obligation to update this letter. We have assumed the genuineness of all documents and
signatures provided to us and the due and legal execution and delivery thereof by, and validity against, any
parties other than the City. We have assumed, without undertaking to verify, the accuracy of the factual
matters represented, warranted or certified in the documents, and of the legal conclusions contained in the
opinions, referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all
covenants and agreements contained in the Trust Agreement.
We call attention to the fact that the rights and obligations under the Series 2021 Bonds and the Trust
Agreement and their enforceability may be subject to bankruptcy, insolvency, receivership, reorganization,
arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the
application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the
limitations on legal remedies against cities in the State of California. We express no opinion with respect to
any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute or
ME
Agreement No. 6085A
having the effect of a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forurn,
choice of venue, non -exclusivity of remedies, waiver or severability provisions contained in the foregoing
assets described in or as subject to the lien of the Trust Agreement or the accuracy or sufficiency of the
description contained therein of, or the remedies available to enforce liens on, any such property. Our services
did not include financial or other non -legal advice. Finally, we undertake no responsibility for the accuracy,
completeness or fairness of the Official Statement, dated May 26, 2021, or other offering material relating to
the Series 2021 Bonds and express no opinion with respect thereto.
Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the
following opinions:
I•I
2. The Trust Agreement has been duly executed and delivered by, and constitutes a valid and
binding agreement of, the City.
3. The Series 2021 Bonds do not constitute an obligation of the City for which the City is
obligated to levy or pledge any forrn of taxation or for which the City has levied or pledged any forin of
taxation. Neither the Series 2021 Bonds nor the obligation of the City to make payments on the Series 2021
IFFroUrcom6mr-w an indebtedness of the Cil- - the State of California or anp of its �#,'olitical subdivisions withk,,-
the meaning of any constitutional or statutory debt limitation or restriction.
4. Interest on the Series 2021 Bonds is exempt from State of California personal income taxes.
We express no opinion regarding other tax consequences related to the ownership or disposition of, or the
amount, accrual or receipt of interest on, the Series 2021 Bonds.
Faithfully yours,
0401112MI&I
10
W
Agreement No. 6085A
This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the
City of El Segundo (the "City") in connection with the issuance of $144,135,000 City of El Segundo (Los
Angeles County, California) Taxable Pension Obligation Bonds, Series 2021 (the "Bonds"). The Bonds are
being issued pursuant to a Trust Agreement, dated as of June 1, 2021 (the "Trust Agreement"), by and between
the City and U.S. Bank National Association, as trustee (the "Trustee"). The City covenants as follows:
1. Purpose of alteDisclosure Certificate. This Disclosure Certificate is being executed and
delivered by the City for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist
the Participating Underwriters in complying with the Rule.
2. Definitions. In addition to the definitions set forth in the Trust Agreement, which apply to
any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following
capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the City pursuant to, and as described in,
Sections 3 and 4 of this Disclosure Certificate.
"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or
consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through
nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income
tax purposes.
"Disclosure Representative" shall mean the City Manager or the Director of Finance, or their
respective designees, or such other officer or employee as the City shall designate in writing from time to time.
"Dissemination Agent" shall mean the City, or any successor Dissemination Agent designated in
writing by the City and which has filed with the City a written acceptance of such designation.
"EMMA" means the MSRB's Electronic Municipal Market Access system.
"Listed Events" shall mean any of the events listed in Section 5 of this Disclosure Certificate.
"MSRB" shall mean the Municipal Securities Rulemaking Board.
"Official Statement" shall mean the Official Statement relating to the Bonds, dated May 26, 2021.
"Participating Underwriters" shall mean the original underwriter of the Bonds required to comply with
the Rule in connection with offering of the Bonds.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as the same may be amended from time to time.
"State" shall mean the State of California.
3. Provisiors ��I� amnnLia�l Repoi
(a) The City shall, or, upon delivery of the Annual Report to the Dissemination Agent,
shall cause the Dissemination Agent to, not later than the last day of the ninth month after the end of the City's
fiscal year (presently such fiscal year ends June 30), commencing with the report for the fiscal year ending
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Agreement No. 6085A
June 30, 2021, provide to the MSRB through the EMMA system, an Annual Report which is consistent with
the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single
document or as separate documents, and may cross-reference other information as provided in Section 4 of this
Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately
from the balance of the Annual Report and later than the date required above for the filing of the Annual
Report if they are not available by that date. If the City's fiscal year changes, it shall give notice of such
change in the same manner as for a Listed Event under Section 5.
(b) Not later than fifteen (15) Business Days prior to said date, the City shall provide the
Annual Report to the Dissemination Agent (if other than the City). If the City is unable to provide to the
MSRB an Annual Report by the date required in subsection (a), the City shall send a notice to the MSRB in
substantially the form attached as Exhibit A.
(c) The Dissemination Agent shall (if the Dissemination Agent is other than the City),
file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure
Certificate, stating the date it was provided.
4. Conteni of Annival Rem,. The City's Annual Report shall contain or include by reference
the audited financial statements of the City for the most recent fiscal year of the City then ended. If the audited
financial statements are not available by the time the Annual Report is required to be filed, the Annual Report
shall contain unaudited financial statements of the City in a format similar to the financial statements, and the
audited financial statements shall be filed in the same manner as the Annual Report when they become
available. Audited financial statements of the City shall be audited by such auditor as shall then be required or
permitted by State law. Audited financial statements shall be prepared in accordance with generally accepted
accounting principles as prescribed for governmental units by the Governmental Accounting Standards Board;
provided, however, that the City may from time to time, if required by federal or state legal requirements,
modify the basis upon which its financial statements are prepared. In the event that the City shall modify the
basis upon which its financial statements are prepared, the City shall provide a notice of such modification to
the MSRB, including a reference to the specific federal or state law or regulation specifically describing the
legal requirements for the change in accounting basis.
In addition, to the extent not included in the information in the audited financial statements,
the Annual Report shall contain an annual updating of the tables and information of the type
contained in the Official Statement identified below. Such updating shall consist of updating of
information as of the end of the fiscal year to which the Annual Report relates unless noted
otherwise; projections do not have to be updated.
(i) "Unrepresented Unit and Employee Associations" (Table 3)
(ii) "General Fund Statement of Revenues, Expenditures and Changes in Fund
Balance" (Table 5)
(iii) "General Fund Tax Revenues" (Table 7)
(iv) "Net Taxable Assessed Value History" (Table 8)
(v) "Principal Property Taxpayers" (Table 10)
(vi) "Taxable Sales" (for the most recent available calendar year) (Table 13)
(vii) "Direct and Overlapping Debt" (Table 14)
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Agreement No. 6O85A
(viii) "Scheduled Principal Payments of Outstanding Long Term General Fund
Obligations" (Table 15)
(ix) "Investment Portfolio Summary" (Table 16)
(x) "Historical and Projected Payments to PERS" (projected payments need not
be updated) (Table 17)
(xi) "Funding History" (Table 18A through 18F)
Any or all of the items listed above may be included by specific reference to other documents,
including official statements of debt issues of the City or related public entities, which have been submitted to
the MSRB or the Securities and Exchange Commission. If the document included by reference is a final
official statement, it must be available from the MSRB. The City shall clearly identify each such other
document so included by reference.
5. Re,,orting of Sienildcant Events. (a) Pursuant to the provisions of this Section 5, the City
shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the
Bonds in a timely manner not more than ten (10) business days after the event:
1. Principal and interest payment delinquencies;
2. Unscheduled draws on debt service reserves reflecting financial difficulties;
3. Unscheduled draws on credit enhancements reflecting financial difficulties;
4. Substitution of credit or liquidity providers, or their failure to perform;
5. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final
determination of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB);
6, Tender offers;
7, Defeasances;
8, Rating changes; or
9. Bankruptcy, insolvency, receivership or similar event of the obligated person.
10. Default, event of acceleration, termination event, modification of terms, or other similar
events under the terms of a financial obligation, any of which reflect financial difficulties.
Note: for the purposes of the event identified in subparagraph (9), the event is considered to occur
when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated
person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law
in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or
business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental
body and officials or officers in possession but subject to the supervision and orders of a court or governmental
authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or
governmental authority having supervision or jurisdiction over substantially all of the assets or business of the
obligated person.
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Agreement No. 6085A
(b) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given,
notice of the occurrence of any of the following events with respect to the Bonds, if material:
l . Unless described in paragraph 5(a)(5), adverse tax opinions or other notices or determinations
by the Internal Revenue Service with respect to the tax status of the Bonds or other events
affecting the tax status of the Bonds;
2. Modifications to rights of Bond holders;
3. Optional, unscheduled or contingent Bond calls;
4. Release, substitution, or sale of property securing repayment of the Bonds;
5. Non-payment related defaults;
6. The consummation of a merger, consolidation, or acquisition involving an obligated person or
the sale of all or substantially all of the assets of the obligated person, other than in the
ordinary course of business, the entry into a definitive agreement to undertake such an action
or the termination of a definitive agreement relating to any such actions, other than pursuant
to its terms; or
7, Appointment of a successor or additional trustee or the change of name of a trustee.
8, Incurrence of a financial obligation, or agreement to covenants, events of default, remedies,
priority rights, or other similar terms of a financial obligation, any of which affect Bond
holders.
(c) Whenever the City obtains knowledge of the occurrence of a Listed Event described
in subsection 5(b), the City shall as soon as possible determine if such event would be material under
applicable federal securities laws.
(d) If the City determines that knowledge of the occurrence of a Listed Event under
Section 5(b) would be material under applicable federal securities laws, the City shall file a notice of such
occurrence with EMMA in a timely manner not more than ten (10) business days after occurrence of the event.
(e) For purposes of the events identified in subparagraphs (a)(10) and (b)(8), the teen
"financial obligation" means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or
pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i)
or (ii). The term financial obligation shall not include municipal securities as to which a final official
statement has been provided to the MSRB consistent with the Rule.
6. Tennination of Reporting 012kt t tjori. The City's obligations under this Disclosure
Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If
such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination
in the same manner as for a Listed Event under Section 5.
7. Dissemination Auwnt. The City may, from time to time, appoint or engage a Dissemination
Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such
Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent
shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to
this Disclosure Certificate. The Dissemination Agent may resign by providing thirty days written notice to the
City and the Trustee. The Dissemination Agent shall not be responsible for the content of any report or notice
prepared by the City and shall have no duty to review any information provided to it by the City. The
O •,
Agreement No. 6085A
Dissemination Agent shall have no duty to prepare any information report nor shall the Dissemination Agent
be responsible for filing any report not provided to it by the City in a timely manner and in a form suitable for
filing.
8. Amendment: Waived',. Notwithstanding any other provision of this Disclosure Certificate, the
City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived,
provided that, in the opinion of nationally recognized bond counsel, such amendment or waiver is permitted by
the Rule; provided, the Dissemination Agent shall have first consented to any amendment that modifies or
increases its duties or obligations hereunder. In the event of any amendment or waiver of a provision of this
Disclosure Certificate, the City shall describe such amendment in the next Annual Report, and shall include, as
applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in
the case of a change of accounting principles, on the presentation) of financial information or operating data
being presented by the City. In addition, if the amendment relates to the accounting principles to be followed
in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed
Event under Section 5, and (ii) the Annual Report for the year in which the change is made shall present a
comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as
prepared on the basis of the new accounting principles and those prepared on the basis of the former
accounting principles.
9. ' Ad it onaB Information. Nothing in this Disclosure Certificate shall be deemed to prevent the
City from disseminating any other information, using the means of dissemination set forth in this Disclosure
Certificate or any other means of communication, or including any other information in any Annual Report or
notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. if
the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in
addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation
under this Disclosure Certificate to update such information or include it in any future Annual Report or notice
of occurrence of a Listed Event.
10. Default. In the event of a failure of the City to comply with any provision of this Disclosure
Certificate, any Holder or Beneficial Owner of the Bonds may take such actions as may be necessary and
appropriate, including seeking mandate or specific performance by court order, to cause the City to comply
with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be
deemed an Event of Default under the Trust Agreement, and the sole remedy under this Disclosure Certificate
in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel
performance.
No Bond holder or Beneficial Owner may institute such action, suit or proceeding to compel
performance unless they shall have first delivered to the City satisfactory written evidence of their status as
such, and a written notice of and request to cure such failure, and the City shall have refused to comply
therewith within a reasonable time.
11. Unties,. ]mmuniiies and Liabilities of Dissemination Agent. The Dissemination Agent shall
have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees, to the
extent permitted by law, to indemnify and save the Dissemination Agent, its officers, directors, employees and
agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or
performance of its powers and duties hereunder, including the costs and expenses (including attorney's fees) of
defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence
or willful misconduct, The Dissemination Agent shall be paid compensation by the City for its services
provided hereunder in accordance with its schedule of fees as amended from time to tome and all expenses,
legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties
hereunder. In performing its duties hereunder, the Dissemination Agent shall not be deemed to be acting in any
fiduciary capacity for the City, the Bond holders, or any other parry. The obligations of the City under this
Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
19151
Agreement No. 6085A
12. Electronic Sjunalin-c. The City acknowledges that the transaction consisting of this
Disclosure Certificate may be conducted by electronic means. The City agrees, and acknowledges that it is its
intent, that by signing this Disclosure Certificate using an electronic signature, it is signing, adopting, and
accepting this Disclosure Certificate and that signing this Disclosure Certificate using an electronic signature is
the legal equivalent of having placed its handwritten signature on this Disclosure Certificate on paper. The City
acknowledges that it is being provided with an electronic or paper copy of this Disclosure Certificate in a
usable format.
13. ' Not i " c ' e ' s. Any notices or communications to or among any of the parties to this Disclosure
Certificate may be given as follows:
To the City: City of El Segundo
350 Main Street
El Segundo, California 90245
Attention: Director of Finance
Telephone: (310) 524-23 )18
To the Trustee: U.S. Bank National Association
633 W. Fifth Street, 24th Floor
Los Angeles, CA 90071
Attention: Corporate Trust Services
Ref: City of El Segundo
Telephone: (213) 615-6023
14. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the
Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of
the Bonds, and shall create no rights in any other person or entity.
15. S Lig, ijq . This Disclosure Certificate has been executed by the undersigned on the date
hereof, and such signature binds the City to the undertaking herein provided.
CITY OF EL SEGUNDO,
CALIFORNIA
0
By:
Agreement No. 6085A
121031MIXG] M W111 I go] 0=063
6
Name of Issue: City of El Segundo (Los Angeles County, California) Taxable Pension Obligation Bonds,
Series 2021
WK004
'YT.#_M_f Yr1A)T'r04*_1VT_MT1M_N?TL_L =10-FIM-17 =1047=0 I
the above -named Bonds as required by the Continuing Disclosure Certificate dated June 9, 2021. The Issuer
anticipates that the Annual Report will be filed by ...... . ....... ....
F1 1Y, M-1
I uu-111 a M Oum a LVA I I mix I I
M.
1
Agreement No. 6085A
[THIS PAGE INTENTIONALLY LEFT BLANK]
Agreement No. 6085A
1:14101 Ilia DION 1 W&W&M V WA Will1 I
This Appendix E describes how ownership of'the Series 2021 Bonds is to be transferred and how the
principal of and interest on the Series 2021 Bonds are to be paid to and credited by DTC while the Series 2021
Bonds are registered in its nominee's name.
The information in this Appendix E concerning DTC, Euroclear Bank SA/NV, as operator of the
Euroclear System ("Euroclear) and Clearstream Banking, S.A., Luxembourg ("Clearstream Banking')
(DTC, Euroclear and Clearstream Banking together, the "Clearing Systems'), and DTC's book -entry -only
system has been provided by DTC, Euroclear and Clearstream Banking for use in disclosure documents such
as this Official Statement.
DTC will act as the initial securities depository fbl- the Series 2021 Bonds. Euroclear and
Clearstream Banking are participants of DTC and facilitate the clearance and settlement of'securities
transactions by electronic book -entry transfer between their respective account holders.
The information set forth below is subject to any change in or reinterpretation of'the rules, regulations
and procedures of'the Clearing Systems currently in effect and the City expressly disclaims any responsibility
to update this Official Statement to reflect any such changes. The information herein concerning the Clearing
Systems has been obtained from sources that the City believes to be reliable, but neither the City nor the
Underwriters take any responsibility for the accuracy or completeness of'the information set forth herein.
Investors wishing to use the facilities of any of'the Clearing Systems are advised to confirm the continued
applicability of'the rules, regulations and procedures of the relevant Clearing System. the City and the
Underwriters will not have any responsibility or liability far~ any aspect of'the records relating to, or payments
made on account of beneficial ownership interests in the Series 2021 Bonds held through the facilities of'any
Clearing System or for maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The City cannot and does not give any assurance that (1) DTC will distribute payments of debt service
on the Series 2021 Bonds, or redemption or other notices, to participants of the Clearing Systems
("Participants') (2) Participants or others will distribute debt service payments paid to DTC or its nominee
(as the registered owner of'the Series 2021 Bonds), or redemption or other notices, to the Beneficial Owners,
or that they will do so on a timely basis, or (3) DTC or the other Clearing Systems will serve and act in the
manner described in this Official Statement The current rules applicable to DTC are on file with the
Securities and Exchange Commission, and the current procedures of'DTC to befbIlowed in dealing with DTC
Participants (hereinafter defined) are on file with DTC.
DTC Book -Entry -Only System. DTC will act initially as Securities Depository for the Series 2021
Bonds. The Series 2021 Bonds will be issued as fully -registered securities registered in the name of Cede &
Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of
DTC. One fully -registered certificate will be issued for each maturity of the Series 2021 Bonds, in the
aggregate principal amount of such maturity, and will be deposited with DTC.
DTC, the world's largest Securities Depository, is a limited -purpose trust company organized under
the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. DTC holds and provides asset servicing for over 3.5 million
issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments
(from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also
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Agreement No. 6085A
facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in
deposited securities, through electronic computerized book -entry transfers and pledges between Direct
Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct
Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust &
Clearing Corporation ("DTCC"). DTCC is the holding company of DTC, National Securities Clearing
Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is
owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as
both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that
clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its
Participants are on file with the Securities and Exchange Commission. More information about DTC can be
found at www.dtcc.com.
Purchases of Series 2021 Bonds under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Series 2021 Bonds on DTC's records. The ownership interest
of each actual purchaser of each Series 2021 Bond (`Beneficial Owner") is in turn to be recorded on the Direct
and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their
purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction.
Transfers of beneficial ownership interests in the Series 2021 Bonds are to be accomplished by entries
made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their beneficial ownership interests in Series 2021 Bonds,
except in the event that use of the book -entry system for the Series 2021 Bonds is discontinued.
To facilitate subsequent transfers, all Series 2021 Bonds deposited by Direct Participants with DTC
are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested
by an authorized representative of DTC. The deposit of Series 2021 Bonds with DTC and their registration in
the name of Cede & Co., or such other DTC nominee, does not affect any change in beneficial ownership.
DTC has no knowledge of the actual Beneficial Owners of the Series 2021 Bonds; DTC's records reflect only
the identity of the Direct Participants to whose accounts such Series 2021 Bonds are credited, which may or
may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners
will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be
in effect from time to time. Beneficial Owners of Series 2021 Bonds may wish to take certain steps to
augment the transmission to them of notices of significant events with respect to the Series 2021 Bonds, such
as redemptions, tenders, defaults, and proposed amendments to the Series 2021 Bond documents. For
example, Beneficial Owners of Series 2021 Bonds may wish to ascertain that the nominee holding the Series
2021 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative,
Beneficial Owners may wish to provide their names and addresses to the Trustee and request that copies of
notices be provided directly to them.
Redemption notices will be sent to DTC. If less than all of the Series 2021 Bonds within a maturity
are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant
in such maturity to be redeemed, unless other arrangements are made between the City and DTC.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the
Series 2021 Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures.
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Agreement No. 6085A
Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts Series 2021 Bonds are credited on the record date (identified in a listing attached to the Omnibus
Proxy).
All payments on the Series 2021 Bonds will be made to Cede & Co., or such other nominee as may be
requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts
upon DTC's receipt of funds and corresponding detail information from the City or the Trustee, on payable
date in accordance with their respective holdings shown on DTC's records. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Trustee, or the City, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of principal, and interest payments to
Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the
responsibility of the City or the Trustee, disbursement of such payments to Direct Participants will be the
responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility
of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Series 2021 Bonds at
any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a
successor Securities Depository is not obtained, Series 2021 Bond certificates are required to be printed and
delivered.
The City may decide to discontinue use of the system of book -entry -only transfers through DTC (or a
successor Securities Depository). In that event, Series 2021 Bonds will be printed and delivered in accordance
with the Trust Agreement.
In reading this Official Statement it should be understood that while the Series 2021 Bonds are in the
Book -Entry -Only System, references in other sections of this Official Statement to registered owners should be
read to include the person for which the Participant acquires an interest in the Series 2021 Bonds, but (i) all
rights of ownership must be exercised through DTC and the Book -Entry -Only System, and (ii) except as
described above, notices that are to be given to registered owners under the Trust Agreement will be given
only to DTC.
Euroclear and Clearstream Banking. Euroclear and Clearstream Banking have advised as follows:
Euroclear and Clearstream Banking each hold securities for their customers and facilitate the
clearance and settlement of securities transactions by electronic book -entry transfer between their respective
account holders. Euroclear and Clearstream Banking provide various services including safekeeping,
administration, clearance and settlement of internationally traded securities and securities lending and
borrowing. Euroclear and Clearstream Banking also deal with domestic securities markets in several countries
through established depositary and custodial relationships. Euroclear and Clearstream Banking have
established an electronic bridge between their two systems across which their respective participants may settle
trades with each other.
Euroclear and Clearstream Banking customers are worldwide financial institutions, including
underwriters, securities brokers and dealers, banks, trust companies and clearing corporations. Indirect access
to Euroclear and Clearstream Banking is available to other institutions that clear through or maintain a
custodial relationship with an account holder of either system, either directly or indirectly.
Clearing and Settlement Procedures. Any Series 2021 Bonds sold in offshore transactions will be
initially issued to investors through the book -entry facilities of DTC, for the account of its participants,
including but not limited to Euroclear and Clearstream Banking. If the investors are participants in
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Agreement No. 6085A
Clearstream Banking and Euroclear in Europe, or indirectly through organizations that are participants in the
Clearing Systems, Clearstreamn Banking and Euroclear will hold omnibus positions on behalf of their
participants through customers' securities accounts in Clearstream Banking's and Euroclear's names on the
books of their respective depositories. In all cases, the record holder of the Series 2021 Bonds will be DTC's
nominee and not Euroclear or Clearstream Banking. The depositories, in turn, will hold positions in
customers' securities accounts in the depositories' names on the books of DTC. Because of time zone
differences, the securities account of a Clearstream Banking or Euroclear participant as a result of a transaction
with a participant, other than a depository holding on behalf of Clearstream Banking or Euroclear, will be
credited during the securities settlement processing day, which must be a business day for Clearstream
Banking or Euroclear, as the case may be, immediately following the DTC settlement date. These credits or
any transactions in the securities settled during the processing will be reported to the relevant Euroclear
participant or Clearstream Banking participant on that business day. Cash received in Clearstream Banking or
Euroclear as a result of sales of securities by or through a Clearstream Banking participant or Euroclear
participant to a DTC Participant, other than the depository for Clearstream Banking or Euroclear, will be
received with value on the DTC settlement date but will be available in the relevant Clearstream Banking or
Euroclear cash account only as of the business day following settlement in DTC.
Transfers between participants will occur in accordance with DTC rules. Transfers between
Clearstream Banking participants or Euroclear participants will occur in accordance with their respective rules
and operating procedures. Cross -market transfers between persons holding directly or indirectly through DTC,
on the one hand, and directly or indirectly through Clearstream Banking participants or Euroclear participants,
on the other, will be effected in DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by the relevant depositories; however, cross -market transactions will require
delivery of instructions to the relevant European international clearing system by the counterparty in the
system in accordance with its rules and procedures and within its established deadlines in European time. The
relevant European international clearing system will, if the transaction meets its settlement requirements,
deliver instructions to its depository to take action to effect final settlement on its behalf by delivering or
receiving securities in DTC, and making or receiving payment in accordance with normal procedures for same
day funds settlement applicable to DTC. Clearstream Banking participants or Euroclear participants may not
deliver instructions directly to the depositories.
The City will not impose any fees in respect of holding the Series 2021 Bonds; however, holders of
book -entry interests in the Series 2021 Bonds may incur fees nonnally payable in respect of the maintenance
and operation of accounts in the Clearing Systems.
Initial Settlement. Interests in the Series 2021 Bonds will be in uncertified book -entry form.
Purchasers electing to hold book -entry interests in the Series 2021 Bonds through Euroclear and Clearstream
Banking accounts will follow the settlement procedures applicable thereto and applicable to DTC. Book -entry
interests in the Series 2021 Bonds will be credited by DTC to Euroclear and Clearstream Banking participants'
securities clearance accounts on the business day following the date of delivery of the Series 2021 Bonds
against payment (value as on the date of delivery of the Series 2021 Bonds). DTC participants acting on
behalf of purchasers electing to hold book -entry interests in the Series 2021 Bonds through DTC will follow
the delivery practices applicable to securities eligible for DTC's Same Day Funds Settlement system. DTC
participants' securities accounts will be credited with book -entry interests in the Series 2021 Bonds following
confirmation of receipt of payment to the City on the date of delivery of the Series 2021 Bonds.
Secondary Market Trading. Secondary market trades in the Series 2021 Bonds will be settled by
transfer of title to book -entry interests in the Clearing Systems. Title to such book -entry interests will pass by
registration of the transfer within the records of Euroclear, Clearstream Banking or DTC, as the case may be,
in accordance with their respective procedures. Book -entry interests in the Series 2021 Bonds may be
transferred within Euroclear and within Clearstream Banking and between Euroclear and Clearstream Banking
in accordance with procedures established for these purposes by Euroclear and Clearstream Banking. Book -
entry interests in the Series 2021 Bonds may be transferred within DTC in accordance with procedures
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Agreement No. 6085A
established for this purpose by DTC. Transfer of book -entry interests in the Series 2021 Bonds between
Euroclear or Clearstream Banking and DTC shall be effected in accordance with procedures established for
this purpose by Euroclear, Clearstream Banking and DTC. -
Special Timing Considerations. Investors should be aware that investors will only be able to make
and receive deliveries, payments and other communications involving the Series 2021 Bonds through
Euroclear or Clearstream Banking on days when those systems are open for business. In addition, because of
time -zone differences, there may be complications with completing transactions involving Clearstream
Banking and/or Euroclear on the same business day as in the United States. U.S. investors who wish to transfer
their interests in the Series 2021 Bonds, or to receive or make a payment or delivery of Series 2021 Bonds, on
a particular day, may find that the transactions will not be performed until the next business day in
Luxembourg if Clearstream Banking is used, or Brussels if Euroclear is used.
Clearing Information. The City and the Underwriters expect that the Series 2021 Bonds will be
accepted for clearance through the facilities of Euroclear and Clearstream Banking. The international securities
identification number, common code and CUSIP number for the Series 2021 Bonds are set out on the inside
cover page of this Official Statement.
General. None of Euroclear, Clearstream Banking or DTC is under any obligation to perform or
continue to perform the procedures referred to above, and such procedures may be discontinued at any time.
Neither the City, the Underwriters nor any of their agents will have any responsibility for the
performance by Euroclear, Clearstream Banking or DTC or their respective direct or indirect participants or
account holders of their respective obligations under the rules and procedures governing their operations or the
arrangements referred to above.
Limitations. For so long as the Series 2021 Bonds are registered in the name of DTC or its nominee,
Cede & Co., the City and the Trustee will recognize only DTC or its nominee, Cede & Co., as the registered
owner of the Series 2021 Bonds for all purposes, including payments, notices and voting. So long as Cede &
Co. is the registered owner of the Series 2021 Bonds, references in this Official Statement to registered owners
of the Series 2021 Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners of the Series 2021
Bonds.
Because DTC is treated as the owner of the Series 2021 Bonds for substantially all purposes,
Beneficial Owners may have a restricted ability to influence in a timely fashion remedial action or the giving
or withholding of requested consents or other directions. In addition, because the identity of Beneficial
Owners is unknown to the City or DTC, it may be difficult to transmit information of potential interest to
Beneficial Owners in an effective and timely manner. Beneficial Owners should make appropriate
arrangements with their broker or dealer regarding distribution of information regarding the Series 2021 Bonds
that may be transmitted by or through DTC.
The City will have no responsibility or obligation with respect to:
• the accuracy of the records of DTC, its nominee or any Direct Participant or Indirect
Participant with respect to any Beneficial Ownership interest in any Series 2021 Bonds;
• the delivery to any Direct Participant or Indirect Participant or any other person, other than a
registered owner as shown in the bond register kept by the Trustee, of any notice with respect
to any Series 2021 Bonds including, without limitation, any notice of redemption with respect
to any Series 2021 Bonds;
IMS1
Agreement No. 6085A
the payment to any Direct Participant or Indirect Participant or any other person, other than a
registered owner as shown in the bond register kept by the Trustee, of any arnount with
respect to the principal of, premium, if any, or interest on, any Series 2021 Bonds; or
III III I 1 1111 111 111 91111 .111 1 1111!1
Prior to any discontinuation of the book entry only system hereinabove described, the City and the
Trustee may treat Cede & Co. (or such other nominee of DTQ as, and deem Cede & Co. (or such other
nominee) to be, the absolute registered owner of the Series 2021 Bonds for all purposes whatsoever, including,
without limitation:
* the payment of principal, premium, if any, and interest on the Series 2021 Bonds;
• giving notices of redemption and other matters with respect to the Series 2021 Bonds;
• registering transfers with respect to the Series 2021 Bonds; and
• the selection of Series 2021 Bonds for redemption.
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Agreement No. 6085A
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