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Home My WebLink AboutFin Year-End Financial Statements and Related Audit Reports____________________________________________________________________________________ FOR CITY CLERK ONLY Council Meeting: November 21, 2022 Disposition: Accepted report Agenda Item No: 6.a Meeting Date: November 21, 2022 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: Finance Prepared by: Nadine Atieh Hade, Administrative Services Director City Manager Approval: __________ TOPIC: YEAR-END FINANCIAL STATEMENTS AND RELATED AUDIT REPORTS SUBJECT: FISCAL YEAR 2021-2022 ANNUAL FINANCIAL REPORT; GANN APPROPRIATIONS LIMIT; MEMORANDUM ON INTERNAL CONTROL; REPORT OF REQUIRED COMMUNICATIONS; AND THE CHILD DEVELOPMENT PROGRAM FINANCIAL REPORT RECOMMENDATIONS: Accept the Fiscal Year 2021-2022 Annual Financial Report, Gann Appropriations Limit Report, Memorandum on Internal Control, Report of Required Communications, and the Child Development Program Financial Report. BACKGROUND: As required by local code, State law, bond covenants, and best practices, the City of San Rafael completes an annual audit of its financial activities. The auditing firm of Maze and Associates, Accountancy Corporation conducted the audit for fiscal year 2021-2022. Their work was completed in accordance with generally accepted auditing standards, issued by the Comptroller General of the United States; and the provisions of Office of Management and Budget Circular A- 133, Audits of State and Local Government and Non-Profit Organizations. The requirements of Section 1.5 of Article XIIIB of the California Constitution are met with an agreed-upon procedure report applied to the Gann Appropriation Limit calculated for the year ending June 30, 2023. A Memorandum on Internal Control is also prepared by the auditors to address the City’s controls over its financial activities. These reports are attached to this staff report. As part of the fiscal year-end activities, the Finance and Library & Recreation departments worked with the auditors to complete the annual audit of the City’s childcare program, as required by the State of California. For the year ending June 30, 2022, the City did not receive funds under the purview of the Transportation Development Act. Therefore, no separate audit report was completed to satisfy requirements of the State of California pertaining to these funds. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 ANALYSIS: Overview Fiscal Year 2021-22 marked what appears to be a transition from the highs of fiscal 2020-21 as it began with continuing strong revenue growth from sales and use taxes and ended with a bit of a pull-back as inflation and other concerns weighed on economic activity. Overall results were positive, but the latter half of the year portends difficulties for future periods as the global economy navigates numerous challenges to growth. Fiscal Year 2021-22 Annual Financial Report – City-wide Financial Results The actual results of the City’s financial activities are presented in the attached Annual Comprehensive Financial Report. The report includes Government-wide financial statements with governmental activities and business-type activities presented separately. Net position is one indicator of the City’s financial position. At the end of the fiscal year, net position of the City governmental activities inclusive of all governmental funds, all assets of the City (including infrastructure) and all liabilities (including long-term debt) was $234 million, an increase of $77.8 million from the prior year adjusted balance. This increase is mainly attributable to a couple of factors. First, Pension and Other Pensionable Employee Benefits (OPEB) adjustments, based mainly on fiscal 2020-21 activity, greatly reduced expenses as the extraordinary market gains achieved during the measurement period caused Pension and OPEB related expenses to turn negative for the year. The adjustments are reflected in the reduction of functional expenses on the Statement of Activities and, as a result, report stark declines from prior years. Also significantly impacting the increase was the recognition of American Rescue Plan Act proceeds reflected in Operating Grants and Contributions on the Statement of Activities. The funds were recognized after a finalization of regulations with respect to the disbursements and qualified as revenue loss from the pandemic. Also impacting the net position were positive results from strong sales and use tax growth for much of the year as well growth in property tax rolls as we begin to realize the impacts of the housing boom of the prior years. The Parking Fund, reported as a business-type activity, ended the fiscal year with a net position of $1 million, or $1.1 million greater than that of the previous fiscal year. The increase was caused by the aforementioned pension and OPEB adjustments and are not reflective of the operational struggles of the program, which have not fully recovered from the shutdowns of the COVID-19 pandemic. Additional explanatory information is provided in the Management’s Discussion and Analysis (MD&A) section beginning on page five of the attached CAFR. The MD&A provides key highlights and a summary view of financial activities for the year. Financial Results: General Fund General fund revenues exceeded expenditures by $16.9 million, mainly due to the recognition of ARPA revenue during the year. Gains achieved from growth in the City’s major revenue sources were largely offset by increased projected claims related to Liability and Workers’ Compensation self-insurance programs as well as an unrealized loss on investments resulting from the decrease in fair value as of June 30, 2022, caused by rapidly rising interest rates. The fund balance of the General Fund as of June 30, 2022, was $33.8 million (an increase of $16.9 million from the prior year balance): $95 thousand is non-spendable, $9.4 million is committed, and $24.3 million is assigned. The committed portion of $9.4 million is for emergency and cash flow needs which meets the minimum target reserve levels at 10% of general fund operating expenditures. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3 Gann Appropriations Limit The Agreed-Upon Procedures report for the Gann Appropriations Limit required three procedures to be performed including testing the accuracy of the calculations and comparison of information presented. No exceptions were noted in these procedures for compliance with the Proposition 111 fiscal year 2022-2023 Appropriations Limit calculation. Memorandum on Internal Control The auditors are required to communicate to the City Council matters that come to their attention relating to the audit in a report entitled Memorandum on Internal Control. Findings of deficiencies in internal controls were mainly due to administrative and clerical errors. Staff responses addressing each comment are included in the Memorandum. Required Communications Professional standards require that certain information regarding significant audit findings related to the audit be communicated to those charged with governance. These communications include minor changes to accounting policies, new accounting pronouncements, and a discussion of significant accounting estimates among other items. No adverse communications were noted. Child Development Program (Childcare) Financial Report The Childcare Program continues to have negative operating results resulting from the pandemic, with $3.2 million in total revenues and $3.3 million in expenditures for the fiscal year. As a result, the fund balance decreased from $508 thousand to $352 thousand. Although the results are negative for the year, the program showed progress in both the increase in revenues and reduction of expenses when compared to the prior year. The audit resulted in no adverse findings. FISCAL IMPACT: No fiscal impact occurs by the City Council’s acceptance of these reports. The fiscal year 2021- 22 Comprehensive Annual Financial Report and related reports are presented as the actual results of the City and related entities’ financial activities for the year. RECOMMENDATION: Staff recommends that City Council accept the reports as presented. The reports will remain as “draft” until City Council has accepted the reports. ATTACHMENTS: 1. FY 2021-22 Draft Comprehensive Annual Financial Report 2. FY 2021-22 Draft Gann Appropriations Limit 3. FY 2021-22 Draft Memorandum of Internal Controls 4. FY 2021-22 Draft Required Communications 5. FY 2021-22 Draft Child Development Program Financial Report ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDING JUNE 30, 2022 Southern Heights Bridge, San Rafael, California DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT SAN RAFAEL THE CITY WITH A MISSION DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT ANNUAL COMPREHENSIVE FINANCIAL REPORT For the Fiscal Year Ended June 30, 2022 City of San Rafael, California 1400 Fifth Avenue San Rafael, California 94901 Prepared by the Finance Department of the City of San Rafael DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT Goat grazing near Robert Dollar Drive INTRODUCTORY SECTION DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT CITY OF SAN RAFAEL, CALIFORNIA ANNUAL COMPREHENSIVE FINANCIAL REPORT For the Year Ended June 30, 2022 Table of Contents INTRODUCTORY SECTION TABLE OF CONTENTS Letter of Transmittal .................................................................................................................................... v Mission Statement and Vision Statement ................................................................................................... xi City Council and Staff ............................................................................................................................... xii Location Map ............................................................................................................................................ xiii Organizational Chart ................................................................................................................................. xiv Certificate of Achievement for Excellence in Financial Reporting ........................................................... xv FINANCIAL SECTION Independent Auditor's Report .................................................................................................................. 1 Management’s Discussion and Analysis .................................................................................................. 5 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position ............................................................................................................. 23 Statement of Activities .................................................................................................................. 24 Fund Financial Statements: Major Governmental Funds: Balance Sheet ............................................................................................................................ 28 Balance Sheet – Reconciliation of Governmental Fund Balances to Net Position of Governmental Activities .............................................................................. 29 Statement of Revenues, Expenditures, and Changes in Fund Balances .................................... 30 Reconciliation of the Net Change in Fund Balances – Total Governmental Funds with the Statement of Activities ................................................................................. 31 Proprietary Funds: Statement of Net Position .......................................................................................................... 34 Statement of Revenues, Expenses, and Changes in Fund Net Position .................................... 35 Statement of Cash Flows ........................................................................................................... 36 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFTi CITY OF SAN RAFAEL, CALIFORNIA ANNUAL COMPREHENSIVE FINANCIAL REPORT For the Year Ended June 30, 2022 Table of Contents FINANCIAL SECTION (Continued) Fiduciary Funds: Statement of Fiduciary Net Position ......................................................................................... 38 Statement of Changes in Fiduciary Net Position ....................................................................... 39 Notes to Basic Financial Statements .................................................................................................. 41 Required Supplementary Information: Schedule of the City’s Proportionate Share of the Net Pension Liability ..................................... 96 Schedule of Contributions – Defined Benefit Pension Plan ......................................................... 97 Schedule of Changes in Net OPEB Liability and Related Ratios ............................................... 105 Schedule of Contributions – OPEB ............................................................................................ 106 Schedules of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – Budgetary Basis General Fund ........................................................................................................................... 114 Traffic and Housing Mitigation Special Revenue Fund .......................................................... 115 Gas Tax Special Revenue Fund ............................................................................................... 116 Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – Budgetary Basis Essential Facilities Capital Projects Fund ................................................................................ 118 Non-major Governmental Funds: Combining Balance Sheets ......................................................................................................... 122 Combining Statements of Revenues, Expenditures, and Changes in Fund Balance ................................................................................................................... 126 Budgeted Non-major Governmental Funds: Combining Schedules of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual ...................................................................... 130 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFTii CITY OF SAN RAFAEL, CALIFORNIA ANNUAL COMPREHENSIVE FINANCIAL REPORT For the Year Ended June 30, 2022 Table of Contents FINANCIAL SECTION (Continued) Internal Service Funds: Combining Statements of Net Position ....................................................................................... 140 Combining Statements of Revenues, Expenses and Changes in Fund Net Position ................... 142 Combining Statements of Cash Flows ........................................................................................ 144 STATISTICAL SECTION Financial Trends: Net Position by Component – Last Ten Fiscal Years ....................................................................... 150 Changes in Net Position – Last Ten Fiscal Years ............................................................................. 152 Fund Balances of Governmental Funds – Last Ten Fiscal Years ..................................................... 156 Changes in Fund Balance of Governmental Funds – Last Ten Fiscal Years .................................... 158 Revenue Capacity: Assessed and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years ...................... 160 Property Tax Rates – All Overlapping Governments – Last Ten Fiscal Years ................................ 161 Property Tax Rates – Direct & Overlapping Governments – Last Ten Fiscal Years (Rate Per $100 of Assessed Value) .......................................................... 162 Principal Property Tax Payers – Current Year and Nine Years Ago ................................................ 163 Property Tax Levies and Collections – Last Ten Fiscal Years ......................................................... 164 Debt Capacity: Ratio of Outstanding Debt by Type – Last Ten Fiscal Years ........................................................... 165 Computation of Direct and Overlapping Debt .................................................................................. 166 Computation of Legal Bonded Debt Margin .................................................................................... 167 Revenue Bond Coverage Parking Facility – Last Ten Fiscal Years ................................................. 168 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFTiii CITY OF SAN RAFAEL, CALIFORNIA ANNUAL COMPREHENSIVE FINANCIAL REPORT For the Year Ended June 30, 2022 Table of Contents STATISTICAL SECTION (Continued) Demographic and Economic Information: Demographic and Economic Statistics – Last Ten Calendar Years .................................................. 169 Principal Employers – Last Ten Calendar Years .............................................................................. 170 Operating Information: Full-Time Equivalent City Government Employees by Function – Last Ten Fiscal Years ................................................................................................................. 173 Operating Indicators by Function/Program – Last Ten Fiscal Years ................................................ 174 Capital Asset Statistics by Function/Program – Last Ten Fiscal Years ............................................ 176 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFTiv Kate Colin, Mayor • Rachel Kertz, Vice Mayor • Maribeth Bushey, Councilmember • Maika Llorens Gulati, Councilmember • Eli Hill, Councilmember November 21, 2022 Honorable Mayor, Members of the City Council and Residents of San Rafael: The Annual Comprehensive Financial Report (“Annual Report”) of the City of San Rafael (“City”) for the year ended June 30, 2022, is hereby submitted as required by local ordinances, state statutes and bond covenants. This financial report has been prepared in conformance with Generally Accepted Accounting Principles (GAAP) as promulgated by the Governmental Accounting Standards Board (GASB) and includes the report of the independent certified public accounting firm, Maze and Associates Accountancy Corporation, which has issued an unmodified, or “clean” opinion on the City’s financial statements for the fiscal year ended June 30, 2022. The independent audit of the financial statements is part of a broader, federally mandated examination known as a “Single Audit”, which is designed to meet the needs of federal grantor agencies. The standards governing Single Audits require the independent auditor to report on the audited agency’s internal controls and compliance with legal requirements, with special emphasis on such controls and requirements involving the administration of federal funding. These reports will be available in the City’s separately issued Single Audit Report. City Management is responsible for both the data accuracy, and the completeness and fairness of the presentation of this report. To the best of our knowledge and belief, the data presented is accurate in all material respects and is reported in a manner that presents fairly the financial position and results of operations of the various funds and component units of the City. Further, the Annual Report is prepared in accordance with procedures and policies set by the Government Finance Officers Association. The analysis of the financial condition and the result of operations can be found in the financial section of the Management’s Discussion and Analysis document. The Annual Report is organized into three sections: 1. Introductory section, which is unaudited, includes this letter of transmittal, an organizational chart and a list of the City’s elected and appointed officials. 2. Financial section, includes the basic financial statements, related footnote disclosures, and the combining and individual fund financial statements and schedules, as well as the independent auditors' report. 3. Statistical section, which is unaudited, includes selected financial and demographic information, presented on a multi-year basis. Generally, ten-year data is presented for expenditures, revenues, assessed valuation for local properties and construction activity. v CITY OF SAN RAFAEL I 1400 FIFTH AVENUE , SAN RAFAEL , CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG Kate Colin, Mayor • Rachel Kertz, Vice Mayor • Maribeth Bushey, Councilmember • Maika Llorens Gulati, Councilmember • Eli Hill, Councilmember REPORTING ENTITY – PROFILE OF THE GOVERNMENT The City of San Rafael is located 17 miles north of San Francisco in Marin County. Protected by its Mediterranean like setting along the shores of the San Francisco Bay, the City enjoys a mild climate year-round. As the County seat, San Rafael is considered the commercial, financial, cultural and civic hub of Marin County. Abundant recreational facilities are available in and around the City. The City’s park and recreational resources include 24 city parks, 393 acres of developed parkland, city and county open space, and China Camp State Park. San Rafael is close to other attractions, including the Golden Gate Bridge, Muir Woods, Point Reyes National Seashore, Mount Tamalpais, multiple state parks, San Francisco, Oakland and the Sonoma and Napa wine country. In 1874, the City became the first incorporated city in the county, later becoming a charter city in 1913 by vote of City residents. The City Council comprises five members; four are elected to four-year terms while the mayor is elected separately to a four-year term. The City’s land area is 22 square miles, including seventeen square miles of land and 5 of water and tidelands. San Rafael's population on January 1, 2022, was 60,560. Downtown San Rafael is the location of many community events, including Second Friday Art Walks, the Sunset Criterium Bike Race, Mill Valley Film Festival, Parade of Lights and Holiday Festival, and is one of only 14 Cultural Arts Districts in the State of California. San Rafael is also the heart of the County’s cultural activities with venues such as the Marin Center, which presents numerous ballets, concerts, speaking engagements as well as the award-winning Marin County Fair; the Falkirk Cultural Center, providing art exhibits and children's programming; the Christopher B. Smith Film Center, and a host of other diverse dining and entertainment venues. The City provides a full range of municipal services required by statute or charter, namely: police and fire protection, construction and maintenance of streets, parks, storm drains and other infrastructure, recreation, childcare, permits, planning, code enforcement, and a library system serving three locations. The City performed certain infrastructure construction and economic development activities through a separate Redevelopment Agency until its dissolution on February 1, 2012. The City of San Rafael accepted the role of Successor Agency to the Redevelopment Agency per Council action on January 3, 2012, and now conducts its economic development activities with funding from its General Fund. The City and California Municipal Finance Authority compose the San Rafael Joint Powers Financing Authority, originally established by the City and former Redevelopment Agency for the purpose of financing redevelopment and other projects. The San Rafael Sanitation District is a discretely presented component unit of the City and is presented independent of City financial information. For a further explanation of these entities, refer to Note 1 – Summary of Significant Accounting Policies in the Financial Section of the Annual Report. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT vi CITY OF SAN RAFAEL I 1400 FIFTH AVENUE , SAN RAFAEL , CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG Kate Colin, Mayor • Rachel Kertz, Vice Mayor • Maribeth Bushey, Councilmember • Maika Llorens Gulati, Councilmember • Eli Hill, Councilmember The City participates in various organizations through formally organized and separate entities established under the Joint Exercise of Powers Act of the State of California. As separate legal entities, these agencies exercise full powers and authorities within the scope of the related Joint Powers Agreement including the preparation of annual budgets, accountability for all funds, and the power to make and execute contracts. Obligations and liabilities of the separate entities are not those of the City. For a further explanation of these separate entities, refer to Note 12 – Jointly Governed Organizations in the Annual Report. Building from over a decade of community efforts to address San Rafael's aging essential public safety facilities, the Essential Facilities project has been underway with major milestones met during the year. In August of 2020 the City completed and placed into service the new Public Safety Center, a state-of-the-art facility for police headquarters and public safety services. On October 18, 2021, the City Council approved a construction bid for Fire Station 54 and Fire Station 55 and construction is currently underway. ECONOMIC FACTORS The City has a diversified economic base, which includes an assortment of high-tech, financial, service-based, entertainment and industrial businesses. Downtown San Rafael provides a mix of restaurants, retail shops and financial institutions. The City’s varied economic base is reflected in its property tax base, which is 71% residential, 19% commercial, 2% industrial, and 8% unsecured and others. The top 25 sales tax producers provide 52% of overall sales tax revenues. With the COVID-19 pandemic waning, the macro-economic environment is facing increasing challenges on its road to recovery. Inflation is running at 40-year highs and actions by the Federal Reserve to contain it threaten to slow economic activity for the near-term. Further, supply chain disruptions persist with ongoing challenges at the ports, railway networks, and the state’s trucking industry causing delays in getting goods to market. Locally, Marin County is still recovering from the effects of the pandemic, however, as the county’s workforce is more concentrated in the finance, science, and information sectors there is hope the region’s employment figures will continue to outperform much of the state that relies more heavily on personal service and retail. Demographic Data The following is a sample of demographic and economic attributes that make San Rafael an exceptional place to live and work. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT vii CITY OF SAN RAFAEL I 1400 FIFTH AVENUE , SAN RAFAEL , CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG Kate Colin, Mayor • Rachel Kertz, Vice Mayor • Maribeth Bushey, Councilmember • Maika Llorens Gulati, Councilmember • Eli Hill, Councilmember  Economic development organizations in San Rafael include the San Rafael Chamber of Commerce, Downtown Business Improvement District, and the Marin Economic Forum.  Marin County’s top 10 employers include Kaiser Permanente, Marin Health Medical Center, Dominican University of California, Marin Community Clinics, Novato Community Hospital, Hospice by the Bay, W Bradley Electric, Wells Fargo, Community Action Marin, and BioMarin.  Major shopping areas, as measured in available retail square footage, include the Downtown corridor (938,000 aggregate), Northgate Mall (725,000), Montecito Center (130,000) and Northgate One (113,900).  The top three sales tax categories during the fiscal year ended June 30, 2022, for San Rafael were: 1. Autos and Transportation (30%), 2. Building and Construction (22%), and 3. State and County Pools, which mainly reflects ecommerce activity (16%).  Several hotels and motels support tourism activity, led by a combined 471 rooms in the Embassy Suites and Four Points Sheraton. Citywide, the total number of hotel rooms is 787.  Establishing and maintaining affordable residential housing for sale and lease continues to be a challenge both in San Rafael and throughout Marin County. The median rent for an apartment in San Rafael is $2,752. The median home value in San Rafael is $1,507,497. Recent growth and economic vibrancy:  The City is enjoying a boost in development of hotel rooms thanks to a new AC Marriott Hotel currently under construction in the heart of our Downtown. A dual-brand Hampton Inn/H2 Hotel is also coming soon in the East San Rafael neighborhood to serve a variety of large retailers and businesses as well as workers within the traditionally industrial area. These two hotels combined are expected to add 325 new hotel rooms to the City and generate Transit Occupancy Tax (TOT).  The City has embarked upon its first ever Economic Development Strategic Plan by retaining Kosmont Companies to prepare a detailed proposal of insightful, actionable recommendations that provide measurable benefits and value for the City of San Rafael’s economic vitality.  San Rafael continues to serve our local business and restaurant community by implementing a structured formal outdoor dining program called the Streetary Program, which will replace the temporary emergency outdoor dining program that greatly supported our businesses during the COVID-19 pandemic. In coordination with the Business Improvement District, the City has also reimagined the ‘Dining Under the Lights’ event into a tailored, post-COVID program including block parties and entertainment that draws foot traffic to our downtown. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT viii CITY OF SAN RAFAEL I 1400 FIFTH AVENUE , SAN RAFAEL , CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG Kate Colin, Mayor • Rachel Kertz, Vice Mayor • Maribeth Bushey, Councilmember • Maika Llorens Gulati, Councilmember • Eli Hill, Councilmember FINANCIAL INFORMATION The City's management is responsible for establishing and maintaining internal controls to ensure that the City's assets are adequately protected from loss, theft or misuse. In addition, management controls ensure that proper accounting data is collected so as to prepare reports in conformance with generally accepted accounting principles. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition; and (2) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived. All internal control evaluations occur within the above framework. It is management’s belief that the City's internal accounting controls adequately safeguard assets and provide reasonable assurance that financial transactions are properly recorded. The City develops a budget based upon City Council priorities and department objectives. The Finance Department maintains a traditional line-item budget by major function. Budget control is accomplished at the functional or division level within each fund. This budget creates a comprehensive management and fiscal system aimed at achieving the objectives of each operating level consistent with those that have been set for the community by the City Council. Each department director is responsible for accomplishing goals within his or her functional area and monitoring the use of her or his budget allocations consistent with policies set by the City Council and monitored by the City Manager. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT ix CITY OF SAN RAFAEL I 1400 FIFTH AVENUE , SAN RAFAEL , CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG Kate Colin, Mayor • Rachel Kertz, Vice Mayor • Maribeth Bushey, Councilmember • Maika Llorens Gulati, Councilmember • Eli Hill, Councilmember ACKNOWLEDGMENTS The preparation of this City-wide document would not have been possible without the assistance of each of the City’s departments. In addition, Finance support staff Kate Llamas, Whitney Zimmerman, Rayanne Lulay, Damien Oyobio, Claire Coleman, and Finance lead Shawn Plate, with oversight by Accounting Manager Van Bach and Administrative Services Director Nadine Atieh Hade were key to the timely issuance of this report. We believe this document meets the Government Finance Officers Association’s (GFOA) Certificate of Achievement for Excellence in Financial Reporting requirements and will be submitting it to the GFOA to determine its eligibility. If accepted, this will mark the eleventh consecutive year for which the City received the award. Lastly, we appreciate the ongoing leadership and support from the Mayor and City Councilmembers. Their strong commitment to financial accountability and stewardship provide inspiration to the organization and motivate a high level of achievement. Respectfully submitted, Jim Schutz Nadine Atieh Hade City Manager Administrative Services Director DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT x CITY OF SAN RAFAEL I 1400 FIFTH AVENUE , SAN RAFAEL , CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG MISSION STATEMENT The Mission of the City of San Rafael is to enhance the quality of life and to provide for a safe, healthy, prosperous and livable environment in partnership with the community. VISION STATEMENT Our vision for San Rafael is to be a vibrant economic and cultural center reflective of our diversity, with unique and distinct neighborhoods in a beautiful natural environment, sustained by active and informed residents and a responsible innovative local government. January 1996 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFTxi SAN RAFAEL THE CITY WITH A MISSION City Council and Staff As of November 21, 2022 City Council Kate Colin, Mayor Rachel Kertz, Vice Mayor Maribeth Bushey, Councilmember Eli Hill, Councilmember Maika Llorens Gulati, Councilmember Elected Officials Rob Epstein, City Attorney Lindsay Lara, City Clerk Executive Team Jim Schutz, City Manager Cristine Alilovich, Assistant City Manager David Spiller, Chief of Police Darin White, Fire Chief April Miller, Public Works Director Alicia Giudice, Community Development Director Catherine Quffa, Library & Recreation Director Nadine Atieh Hade, Administrative Services Director Sean Mooney, Director of Digital Service & Open Government Genevieve Coyle, Assistant City Attorney DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFTxii SAN RAFAEL THE CITY WITH A MISSION DRAFTDRAFTREVIEW DRAFT 11-7-22DRAFTxiiiPac,fi Oce, Petaluma O Greater San Francisco Bay Area !!s !!liiiiiil!!!!liiiiiiio!!!'!!!!'!!!5s iiii.iiiiiiiiii.iiiiiiiiii1!!!0 !!!'!!!!"!!!!15 MHes LOCATION 0 • Vacaville 0 Concord lD San Leandro 0 Hayward • fremont / 0 0 San Jose 0 MAP ORGANIZATIONAL CHART Electorate City Clerk City Attorney Mayor& City Council Boards & CommissionsAssistant City Manager Volunteer and Sustainability Programs ParkingServices Police DepartmentFire Department Library and Recreation Public Works Economic Development City Manager Digital Service and Open Government Community Development Homeless Initiatives Administrative Services DRAFTDRAFTREVIEW DRAFT 11-7-22DRAFTxiv~SAN RAFAEL ~ THE CITY WITH A M ISSION Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of San Rafael California For its Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2021 Executive Director/CEO DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFTxv e DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT “Streetary”, Downtown San Rafael FINANCIAL SECTION DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT INDEPENDENT AUDITOR’S REPORT To the Honorable Members of the City Council City of San Rafael, California Report on the Audit of the Financial Statements Opinions 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 San Rafael (City), California, as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the Table of Contents. In our opinion, the 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 information of the City as of June 30, 2022, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions 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. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirement relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for 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, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT1 Accountancy Corporation 3478 Buskirk Avenue, Suite 215 Pleasant Hi ll , CA 94523 T 925.930.0902 F 925.930.0 135 E maze @mazeassociat es .com w mazeassociates.com Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:  Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Change in Accounting Principles Management adopted the provisions of Governmental Accounting Standards Board Statement No. 87, Leases, which became effective during the year ended June 30, 2022 and required restatement of certain governmental activities lease-related balances as discussed in Note 1S to the financial statements. Management also adopted the provisions of Governmental Accounting Standards Board Statement No. 98, The Annual Comprehensive Financial Report, for the year ended June 30, 2022, which establishes the term annual comprehensive financial report and its acronym ACFR. That new term and acronym replace instances of comprehensive annual financial report and its acronym in generally accepted accounting principles for state and local governments. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT2 The emphasis of these matters does not constitute a modification to our opinions. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis and other required supplementary information as listed in the Table of Contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying Supplementary Information, as listed in the Table of Contents, is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Supplementary Information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the Introductory Section and Statistical Section listed in the Table of Contents, but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exits, we are required to describe it in our report. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 21, 2022, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Pleasant Hill, California November 21, 2022 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT4 CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2022 This analysis of the City of San Rafael’s (City) financial performance provides an overview of the City’s financial activities for the fiscal year ended June 30, 2022. Please read it in conjunction with the basic financial statements and the accompanying notes to those basic financial statements. FINANCIAL HIGHLIGHTS Government-wide: Net Position – The assets and deferred outflows of the City exceeded its liabilities and deferred inflows as of June 30, 2022, by $244 million. Activities – During the fiscal year the City’s total revenues of $152.2 were greater than expenses of $73.4 million for governmental and business-type activities. Changes in Net Position – The City’s total net position increased by $78.9 million in fiscal year 2021-2022 as compared to the net position of the previous year. Net position of governmental activities increased by $77.8 million, while net position of the business-type activities increased by $1.1 million. Fund Level: Governmental Funds – As of the close of fiscal year 2021-2022, the City’s governmental funds reported combined ending fund balances of $71.9 million, an increase of $17.1 million primarily due the recognition of $16.1 million in American Rescue Plan Act (ARPA) funding. Of this total amount, $185 thousand is nonspendable, $36.4 million is restricted, $10.9 million is committed, and $24.4 million is assigned. Governmental fund revenues totaled $147.1 million, an increase of $23.1 million from the those of the previous fiscal year. Approximately $16.1 million was due to the recognition of ARPA funding, $4 million can be attributed to larger use tax remittances with a full year of Measure R proceeds recorded during the year as opposed to one quarter in fiscal 2020-2021. The remainder is mainly due to increased grant activity related to projects during the year, offset by a negative fair value adjustment of approximately $2 million against the pooled fixed income investment portfolio for the year. Governmental fund expenditures increased by $15.8 million to $132.4 million, from $116.5 million in the prior year, due to a number of factors. Compensation increased following labor negotiations in the prior year and the repayment of furloughs enacted during the prior fiscal year additionally, project expenditures increased as we begin to deploy ARPA funds as well as Essential Facilities Capital Projects increasing with the construction of Fire Stations 45 and 55 adding $3.8 million in charges. Overall, we also experienced increasing costs for goods and services across the board. Enterprise fund net position increased $1.1 million to $10 million as a result of pension adjustments related to market gains achieved in FY 2020-2021 (measurement year), which is also responsible for the decrease in Enterprise operating expenses of $1.5 million when compared to the previous year. OVERVIEW OF FINANCIAL STATEMENTS The Annual Comprehensive Financial Report is composed of the following: 1.Introductory section, which includes the Transmittal Letter and general information 2.Management’s Discussion and Analysis (this part) 3.Basic Financial Statements, which include the Government-wide and the Fund financial statements, including Fiduciary Funds, along with the Notes to these financial statements 4.Combining statements for Non-Major Governmental Funds and Internal Service Funds 5.Statistical Information DRAFT DRAFT REVIEW DRAFT 11-7-22 5 DRAFT CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2022 This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements, which have three components: 1) Government-wide Financial Statements, 2) Fund Financial Statements, and 3) Notes to the Basic Financial Statements. The basic financial statements include the City (primary government) and all legally separate entities (component units) for which the government is financially accountable. This report also contains other supplementary information in addition to the basic financial statements for further information and analysis. Government-wide Financial Statements The government-wide financial statements present the financial picture of the City and provide readers with a broad view of the City’s finances. These statements present governmental activities and business-type activities separately and include all assets of the City (including infrastructure) as well as all liabilities (including long-term debt). Additionally, certain interfund receivables, payables, and other interfund activity have been eliminated as prescribed by generally accepted accounting principles. The Statement of Net Position and the Statement of Activities and Changes in Net Position report information about the City as a whole. These statements include all assets and liabilities of the City using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year’s revenues and expenses are taken into account, regardless of when cash is received or paid. The Statement of Net Position presents information on all of the City’s assets, deferred outflows/inflows of resources, and liabilities, with the difference reported as net position. Over time, increases 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 and Changes in Net Position presents information showing how the City’s net position changed during the year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of timing of related cash flows. In the Statement of Net Position and the Statement of Activities and Changes in Net Position, City activities are separated as follows: Governmental Activities – Most of the City’s basic services are reported in this category, including Public Safety, Public Works and Parks, Community Development, Cultural and Recreation, and Government Administration (finance, human resources, legal, City Clerk and City Manager operations). Property tax, sales and use taxes, user fees, interest income, franchise fees, hotel taxes, business licenses, and property transfer taxes, plus state and federal grants finance these activities. Business-type Activities – The City charges fees to customers to cover the full costs of certain services it provides. The City’s Parking Services program is the City’s sole business-type activity. Discretely Presented Component Units – The government–wide financial statements include not only the City itself (the primary government), but also the San Rafael Sanitation District, a legally separate entity for which the City is financially accountable. Financial information for the San Rafael Sanitation District is reported separately from the financial information presented for the primary government. The government-wide financial statements can be found on pages 23 through 25 of this report. DRAFT DRAFT REVIEW DRAFT 11-7-22 6 DRAFT CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2022 Fund Financial Statements and Major Component Unit Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City are divided into three categories: governmental funds, proprietary funds, and fiduciary funds. The fund financial statements provide detailed information about each of the City’s most significant funds called major funds. Each major fund is presented individually with all non-major funds summarized and presented in a single column. Further detail on the non-major funds is presented on pages 122 through 137 of this report. Governmental Funds – Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financial capacity. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for government funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. These reconciliations are presented on the page immediately following each governmental fund financial statement. The City has thirty-two governmental funds, of which four are considered major funds for presentation purposes. Each major fund is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances. The City’s four major funds are: the General Fund, Traffic and Housing Mitigation Fund, Gas Tax Fund and Essential Facilities Capital Projects Fund. Data from the other twenty-five governmental funds are combined into a single, aggregated presentation. The basic governmental fund financial statements can be found on pages 28 through 31 of this report. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements on pages 122 through 137 of this report. Proprietary Funds – The City maintains two different types of proprietary funds - enterprise funds and internal service funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses an enterprise fund to account for its Parking Services program and reports it as a major fund. Internal service funds are used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its building maintenance; vehicle, equipment and computer replacement; workers’ compensation; general liability; self-insured dental program; other employee and retiree benefits programs. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. Like the government-wide financial statements, proprietary fund financial statements use the accrual basis of accounting. There is no reconciliation needed between the government-wide financial statements for business-type activities and the proprietary fund financial statements. The proprietary fund financial statements can be found on pages 34 through 36 of this report. DRAFT DRAFT REVIEW DRAFT 11-7-22 7 DRAFT CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2022 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 those funds are not available to support the City’s own programs. The City acts as an agent on behalf of others, holding amounts collected, and disbursing them as directed or required. The City’s fiduciary activities are reported in the separate Statements of Fiduciary Net Position and the Statement of Changes in Fiduciary Net Position. The City’s fiduciary funds include a private purpose trust fund to account for activities of the City of San Rafael Successor Agency and a custodial fund that accounts for resources held by the City in a custodial capacity for the Pt. San Pedro Road Assessment District. Information for the fiduciary funds can be found on pages 38 through 39 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 41 through 95 of this report. Required Supplementary Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information. One section includes budgetary comparison statements for the General Fund and major funds (general, gas tax, and traffic and housing mitigation). The other section includes schedules of funding progress for the Marin County Employees’ Retirement System and the City’s OPEB plan. All budgeted positions that are filled by either full-time or permanent part-time employees (working seventy-five percent of full-time equivalent) are eligible to participate in the system and the OPEB plan. Required supplementary information can be found on pages 96 through 111 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS Statement of Net Position Net position measures the difference between (a) assets and deferred outflows of resources and (b) liabilities and deferred inflows of resources. During this fiscal year, the net position of the City was $234.3 million from Governmental Activities and $10.1 million from Business-type Activities, for a total of $244.4 million. This represents an increase of $78.9 million from the prior year net position. DRAFT DRAFT REVIEW DRAFT 11-7-22 8 DRAFT CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2022 The following is the condensed Statement of Net Position for the fiscal years ended June 30, 2022 and 2021: Current and other governmental assets increased by $67.4 million, primarily resulting from the inclusion of a Net Pension Asset of $46.6 million as the City’s pension plan became fully funded following substantial gains during the measurement period, as well as the recognition of ARPA revenues during the year of $8 million. The remainder is primarily the result of positive operating results as revenue growth outpaced expense growth during the year. The $15.6 million increase in capital assets reflects project-to-date activity for Fire Station 54 and 55 construction and improvements in combination with major traffic infrastructure improvements. The decrease of $15 million in deferred outflows is primarily a result the impact of pension-related investment gains during the measurement year which caused the unamortized net difference between projected and actual earnings on plan investments to shift to a deferred inflow. In order to decrease the volatility of the measurement of net pension liability gains and losses in excess of those projected are capitalized and amortized over a five-year period. Current and other liabilities decreased by approximately $3.8 million, primarily due to the recognition of ARPA funds that were classified as unearned revenue in the prior year, offset by an increase in accounts payable of $3.6 million. Noncurrent governmental liabilities decreased by $153.6 million mainly as a result of the reclassification of net pension liability to net pension asset mentioned previously. Deferred inflows increased by $147.7 million mainly as a result of the net difference between projected and actual earning on investments during the measurement period that resulted in a substantial net deferred inflow. Increase Increase 2022 2021 (A)(Decrease) 2022 2021 (Decrease) Current and other assets $174,072 $106,662 $67,410 $3,568 $2,536 $1,032 Capital assets 294,928 279,337 15,591 15,281 15,505 (224) Total assets 469,000 385,999 83,001 18,849 18,041 808 Deferred outflows (Notes 9 and 11)42,534 57,577 (15,043) 1,312 1,864 (552) Current and other liabilities 19,246 23,067 (3,821) 533 464 69 Noncurrent liabilities 88,630 242,272 (153,642) 4,086 9,793 (5,707) Total liabilities 107,876 265,339 (157,463) 4,619 10,257 (5,638) Deferred inflows (Notes 4G, 9 and 11)169,434 21,739 147,695 5,475 678 4,797 Net Position: Net investment in capital assets 246,438 228,253 18,185 11,256 11,174 82 Restricted 36,668 36,175 493 0 0 0 Unrestricted (48,883) (107,930) 59,047 (1,189) (2,205) 1,016 Total net position $234,223 $156,498 $77,725 $10,067 $8,969 $1,098 (A)Not restated for the effects of GASB Statement No. 87 implementation. See Note 1S for additional information. Governmental Activities Business-Type Activities Summary of Net Position (in thousands) DRAFT DRAFT REVIEW DRAFT 11-7-22 9 DRAFT CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2022 The net position in business-type activities reflects the fiscal activity of the Parking Services program and increased by $1.1 million from the previous year as a result of pension adjustments noted above for extraordinary gains during the measurement period. Capital assets decreased by $224 thousand due to current year depreciation. The decreases in noncurrent liabilities and deferred outflows and related increases in deferred inflows and current and other assets was due to the pension-related adjustments mentioned above. The $69 thousand increase in current liabilities is driven by the increase accounts payable to end the year. At June 30, 2022, the largest portion of total net position in the amount of $257.7 million consisted of the City’s investment in capital assets net of related debt. This component represents the total amount of funds required to acquire capital assets less any related debt used for such acquisition that is still outstanding. The City uses these assets to provide services to residents. The capital assets of the City are not sources of income for repayment of debt as most assets are not revenue generating and generally are not liquidated to repay debt. Therefore, debt service payments are funded from other sources available to the City. A portion of the City's total net position, $36.7 million, is subject to external restrictions, and their use is determined by those restrictions whether legal or by covenant. The remaining portion, unrestricted negative $50 million, represents the extent to which the net investment in capital assets and restricted net position exceed total net assets. Invested in Capital Assets (net)$257,694 Restricted 36,668 Unrestricted (50,072) Total Net Position $244,290 Net Position as of 6/30/2022 (in thousands) DRAFT DRAFT REVIEW DRAFT 11-7-22 10 DRAFT CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2022 Statement of Activities - Governmental The following is the condensed Statement of Activities and Changes in Net Position for the fiscal years ended June 30, 2022 and 2021: Increase 2022 2021 (Decrease) REVENUES Program revenues: Charges for services $18,938 $19,764 ($826) Operating grants and contributions 22,521 5,133 17,388 Capital grants and contributions 9,868 8,719 1,149 Total program revenues 51,327 33,616 17,711 General revenues: Property taxes 32,324 30,994 1,330 Sales taxes 44,110 39,599 4,511 Paramedic tax 5,110 5,153 (43) Transient occupancy tax 2,976 1,798 1,178 Franchise tax 4,210 3,974 236 Business license tax 2,646 2,575 71 Other taxes 3,109 2,997 112 Investment earnings (1,424)389 (1,813) Gain from sale of capital assets 990 - 990 Miscellaneous 2,966 2,840 126 Total general revenues 97,017 90,319 6,698 TOTAL REVENUES 148,344 123,935 24,409 EXPENSES General government 10,459 12,255 (1,796) Public safety 34,379 54,737 (20,358) Public works and parks 14,031 20,750 (6,719) Community/economic development 2,835 5,804 (2,969) Culture and recreation 7,431 10,619 (3,188) Interest on long-term debt 2,005 1,936 69 TOTAL EXPENSES 71,140 106,101 (34,961) EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENSES 77,204 17,834 59,370 Transfers in 521 538 (17) Total Other Financing Sources (Uses)521 538 (17) Net Change in Net Position 77,725 18,372 59,353 Beginning Net Position 156,498 138,126 18,372 Ending Net Position, June 30 $234,223 $156,498 $77,725 Governmental Activities Summary of Changes in Net Position (in thousands) DRAFT DRAFT REVIEW DRAFT 11-7-22 11 DRAFT CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2022 The City’s governmental activities net position increased by $77.7 million during fiscal year 2021-2022. Year-over- year increases in revenues of $24.4 million were mainly the result of the recognition of ARPA proceeds of $16.1, but also impacted by other items. Sales and use tax remittances continued to outperform forecasts while also including the first full year of Measure R transaction and use tax proceeds leading to an increase of $4.5 million over the prior year. Property tax revenues showed strong growth at 4.2% leading to an overall revenue increase of $1.3 million as we begin to see the impact of increased assessed valuations following the raging hot housing market of the previous fiscal year. Transient occupancy tax showed some resilience as the pandemic waned, leading to a year over year increase of $1.2 million, however these revenues remain below pre-pandemic levels. These positives are offset by the reported investment loss caused by the rapid rise in interest rates toward the latter half of the fiscal year depressing bond markets and adversely affecting the City’s fixed income portfolio. Overall operating expenses report stark declines for the fiscal year as a direct result of pension and OPEB adjustments made during the year. The measurement year for determining these adjustments was the year ending June 30, 2021, when the market had achieved extraordinary returns causing overall pension and OPEB expense to be negative for the year. The adjustments for these expenses offset personnel costs in each functional area on the Statement of Activities and produce a dramatically different picture than that of the fund financial statements, which do not account for pension and OPEB items in the same manner. The following graph shows governmental revenues by source: DRAFT DRAFT REVIEW DRAFT 11-7-22 12 DRAFT Capitill gr.ants and contributions, 6.6§% Revenues by Source Governmental Act"v"f es Cltarges for senrices, 12.76% Operating grants and -...._contributions, 15.11% Misc:ellaneous, 1.81% CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2022 Total expenses for governmental activities were $69.1 million (excluding interest on long-term debt of $2 million). Program revenues offset total expenses as follows:  Those who directly benefited from programs contributed $18.9 million in charges for services.  A total of $32.3 million in operating and capital projects were funded by outside agencies through operating grants, capital grants, and contributions. As a result, total expenses that were funded by tax revenues, investment income, other general revenues and fund balance were $17.9 million. Functional expenses for the year ended June 30, 2022, were as follows: Function Amount Percent of Total General government $10,459 14.7% Public safety 34,379 48.3% Public works and parks 14,031 19.7% Community development 2,835 4.0% Culture and recreation 7,431 10.4% Interest on debt 2,005 2.8% Total expenses $71,140 100% Expenses by Function (in thousands) DRAFT DRAFT REVIEW DRAFT 11-7-22 13 DRAFT $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 s- Public Safety Expenses and Program Revenues Governmenta I Activities (in thousands) Public Works and Parks Culture and Recreati o:n General Government Commuriity Devel op m ent ■ Program Revenues ■ Expenses CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2022 The net position for business-type activities increased from the prior year by $1.1 million primarily as a result of pension adjustments related to extraordinary investment gains during the measurement period reducing reported personnel expenses significantly. Parking services is the City’s only business-type activity with income derived from program revenues of $3.8 million. Program revenues include parking meter coin income of $1.3 million and parking garage hourly and monthly parking income of $0.8 million. Revenues also include parking and non-vehicle code fines totaling $1.7 million. Total expenses for parking services were $2.2 million and transfers out to general fund and non-major governmental fund for support totaled $521 thousand during the fiscal year 2021-2022. The Parking services program has been acutely affected by the lasting impacts of the coronavirus pandemic as the effects of reduced brick-and-mortar business activity and increased remote work arrangements have reduced demand for street and garage parking. Increase 2022 2021 (Decrease) Revenues Program revenues: Charges for services $3,837 $3,352 $485 Total program revenues 3,837 3,352 485 General revenues: Investment Income 9 4 5 Total general revenues 9 4 5 TOTAL REVENUES 3,846 3,356 490 Expenses General government 2,227 3,749 (1,522) TOTAL EXPENSES 2,227 3,749 (1,522) EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENSES 1,619 (393) 2,012 OTHER FINANCING SOURCES (USES) Transfers out (521)(538)17 Total Other Financing sources (uses)(521) (538) 17 Net Change in Net Position 1,098 (931) 2,029 Net Position, Beginning 8,969 9,900 (931) Net Position, Ending $10,067 $8,969 $1,098 Summary of Changes in Net Position For the periods ended June 30, 2022 and 2021 (in thousands) Business-Type Activities DRAFT DRAFT REVIEW DRAFT 11-7-22 14 DRAFT CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2022 FINANCIAL ANALYSIS OF INDIVIDUAL FUNDS Governmental Funds Fund Balance Classifications Fund balances are classified in five categories: nonspendable, restricted, committed, assigned, and unassigned based on a hierarchy of constraint. Further details on fund balance classifications can be found in Note 8B. 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 financial capacity. 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 June 30, 2022, the City reported a combined ending fund balance of $71.9 million of all its governmental funds (an increase of $17.1 million from the prior year): $185 thousand is non-spendable, $36.4 million is restricted, $10.9 million is committed, and $24.4 million is assigned. General Fund – The General Fund is the primary operating fund of the City. General Fund – The fund balance of the General Fund as of June 30, 2022, was $33.8 million (an increase of $16.9 million from the prior year balance): $95 thousand is non-spendable, $9.4 million is committed, and $24.3 million is assigned. The committed portion of the balance includes $9.4 million for emergency and cash flow needs. General Fund Budgetary Highlights: The original adopted General Fund budget projected total revenue of $89 million and transfers-in of $1.8 million for total resources of $90.8 million. This budget appropriated expenditures of $88.5 million and transfers-out of $2 million for total appropriations of $90.5 million. Revenues were later increased to $110.1 million to include the recognition of $16.1 million in ARPA proceeds as well as better-than-anticipated sales and use tax receipts. Transfers- out were increased by $974 thousand to provide increased support of recreation fund expenditures as a result of the lasting effects of the pandemic as well as project support. Actual revenues, at $109.8 million, exceeded original budgeted revenues by $20.8 million. $16.1 million of the increase is related to the recognition of ARPA proceeds and the remainder can be attributed to increased sales and use taxes as the economy remained in high gear for much of the year, as well as the new Measure R transaction and use tax recording its first full year of implementation. These revenue increases were offset by an adverse fair value adjustment to the City’s fixed income portfolio of approximately $2 million. Expenditures of $91.6 million were $3.1 million greater than original budgeted expenditures of $88.5 million after actuarial reports for Liability and Workers’ Compensation programs were issued with substantially increased liabilities for future claims. Fiscal year 2021-2022 General Fund revenues and transfers in of $111.5 million exceeded expenditures and transfers out of $94.6 million by $16.8 million. The increase is primarily the result of the use of ARPA proceeds and the savings have been earmarked for specific future projects and initiatives. DRAFT DRAFT REVIEW DRAFT 11-7-22 15 DRAFT CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2022 Traffic and Housing Mitigation Fund – The City uses this fund to collect developer contributions to be used for major street improvement and housing infrastructure projects. During the year, the fund balance decreased from $6.6 million to $4.9 million. Revenues totaled $630 thousand, while $1.1 million was charged against this fund to support the maintenance of the City-wide traffic model, and $1.2 million was transferred out for project support. The main projects supported during the year include pedestrian improvements in the Canal neighborhood as well as the third street rehabilitation project. The balance in the fund is being held in anticipation of major street projects identified in the General Plan 2040 and other qualifying expenditures. Gas Tax Fund – The City uses this fund to manage its allocation of State gasoline taxes and local funding for street maintenance projects. Gas tax revenues exceeded expenditures and net transfers by $2.6 million in fiscal year 2021- 2022 resulting in an increase in fund balance from $4.3 million to $6.9 million. The activities for the year were all planned and approved project work. Expenditures during fiscal year 2021-2022 totaled $11.6 million. In addition to routine street-related maintenance of $1.5 million, major expenditures included $5.8 million for the third street rehabilitation project, $1.5 million for sidewalk improvements along Francisco Boulevard, $1 million for a resurfacing and improvements to Bungalow Avenue, and $500 thousand for pedestrian improvements in the Canal neighborhood. The largest sources of revenues were $3.9 million in development impact fees, $2.6 million in federal grants, $1.4 million from State gasoline taxes, $1.2 million in State RMRA (Road Maintenance and Rehabilitation Account) funding, $1 million in local Measure A funding. Essential Facilities Capital Projects Fund – The City uses this fund to account for major capital improvements to public safety facilities. During the year, construction began on Fire Stations 54 and 55. Expenditures during fiscal year 2021-2022 totaled $4.9 million, transfers from the General Fund representing an allocation of Measure E Transaction and Use Tax totaled $715 thousand and $307 thousand was allocated from paramedic tax funds. Non-major Governmental Funds – The City’s non-major funds are presented in the basic financial statements in the aggregate. At June 30, 2022, non-major funds had a total fund balance of $17 million, a $2 million increase over that of the previous year. The largest fund balance decrease, $359 thousand, was recorded in the Grants Fund as result of prior year grants being spent down. The largest fund balance increase, $649 thousand, was recorded in the Low and Moderate Income Housing Fund as an old ground lease was refinanced into a loan during the year resulting in the repayment of $643 thousand. Adopted Budget Revised Budget Actual Revenues $88,997 $110,146 $109,790 Transfers in 1,755 1,755 1,755 Total resources 90,752 111,901 111,545 Expenditures 88,491 $92,275 91,636 Operating transfers out 2,000 2,250 2,250 Capital transfers out - 724 724 Total uses 90,491 95,249 94,610 Net Results $261 $16,652 $16,935 Summary of General Fund Budget and Actual For the fiscal year ended June 30, 2022 (in thousands) DRAFT DRAFT REVIEW DRAFT 11-7-22 16 DRAFT CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2022 Of the ending total non-major fund balances of $17 million: $15.3 million (90%) is legally restricted for specific purposes by external funding source providers, $1.5 million (9%) is committed for special purposes by the City Council, $118 thousand (less than 1%) is assigned, and $90 thousand (less than 1%) in nonspendable. Additional information about these aggregated non-major funds is presented in the combining statements which immediately follow the required supplementary information. Proprietary Funds The City’s proprietary funds are presented in the basic financial statements in a manner similar to that found in the government-wide financial statements, but in more detail. As noted in the Summary of Changes in Net Position – Business-type Activities at page 14, the City’s enterprise fund net position increased by $1.1 million during the fiscal year. The Parking Services Fund is the City’s sole business-type (Enterprise) activity. The parking services fund’s operating revenue increased by $485 thousand in fiscal year 2021-2022 to $3.8 million. The enterprise fund operating expenses were $2.1 million in fiscal year 2021-2022, a decrease of $1.5 million over the prior fiscal year. The increase in operating revenues was the result of recovery from the pandemic driving a slightly higher demand for parking, however, is not reaching pre-pandemic totals. The substantial decrease in expenses is a direct result of pension adjustments related to the measurement year ending June 30, 2022, when extraordinary gains were achieved and more than offset expenses for the period. The City’s Internal Service Funds are also reported in this Proprietary Fund classification. In fiscal year 2021-2022, the Internal Services Funds were comprised of: Building Maintenance, Vehicle Replacement, Equipment Replacement, Employee Benefits, Liability Insurance, Workers’ Compensation, Dental Insurance, Employee Retirement, OPEB/Retiree Medical, Radio Replacement, Telephone Replacement and Sewer Maintenance. The net position of the Internal Service Funds increased by $4.5 million. Net investment in capital assets decreased by $863 thousand, while unrestricted fund balance increased by $5.3 million. The decrease in capital assets resulted primarily from depreciation of existing capital assets. The increase in unrestricted fund balance reflected increased allocations to the Building Maintenance Fund, Vehicle Replacement Fund, and Equipment Replacement Fund to fund repair and replacement of aging capital assets. The other Internal Service Funds reported small-to-moderate changes to their respective net positions. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets The City’s investment in capital assets for its governmental and business-type activities as of June 30, 2022, amounts to $310 million, net of accumulated depreciation of $206 million. This investment in capital assets includes land, buildings, improvements, machinery and equipment, infrastructure, right-to-use lease assets, and construction in progress. Infrastructure assets are items that are normally immovable and of value only to the City such as roads, bridges, streets and sidewalks, drainage systems, lighting systems, and similar items. The addition to the City’s investment in capital assets for the current fiscal year was $14.3 million, offset by accumulated depreciation of $8.6 million. Additions to capital assets during fiscal year 2021-2022 included:  Machinery and Equipment: Fire boat infrared camera $39 thousand  Infrastructure: $20.9 million  Anderson Drive Rail Crossing Improvements - $6.2 million  Francisco Blvd East Sidewalk Improvements - $6.1 million DRAFT DRAFT REVIEW DRAFT 11-7-22 17 DRAFT CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2022  Southern Heights Bridge Replacement – $4.7 million  Traffic Signal Improvements - $1.5 million  Francisco Blvd East Resurfacing - $1.1 million  Canal Neighborhood Pedestrian Improvements - $822 thousand  San Rafael High School Crosswalk - $472 thousand The City’s Capital Assets for the fiscal years ending June 30, 2022 and 2021 were as follows: Additional information on the City’s capital assets can be found in Note 5 on pages 62 through 64 of this report. The 2021 balances have been restated to reflect the effects of the implementation of GASB Statement No. 87. See Note 1S for additional information. Debt Administration The City’s debt obligations were stable year-over-year and reflect payments of principal made during the year. The debt of the former Redevelopment Agency is reported under the Successor Agency, which is presented as a Private- Purpose Trust Fund on the Statement of Fiduciary Net Position. (See Note 6 of the financial statements for additional information on the debt obligations of the City and Note 16 for additional information on the Successor Agency.) The City’s long-term obligations for the fiscal years ending June 30, 2022 and 2021 were as follows: 2022 2021 (as restated) Governmental Activities Land $84,026 $83,662 Construction in progress 22,485 24,617 Land improvements 9,763 9,763 Buildings and structures 119,165 119,165 Machinery and equipment 20,497 21,146 Infrastructure 234,559 213,602 Intagible right-to-use leased building 5,476 5,476 Intagible right-to-use leased equipment 258 258 Less accumulated depreciation (201,301) (192,617) Subtotal Governmental Activities 294,928 285,072 Business-type Activities Land 8,621 8,621 Buildings and structures 10,714 10,714 Machinery and equipment 940 940 Less accumulated depreciation (4,994) (4,770) Subtotal Business-type Activities 15,281 15,505 Total Capital Assets $310,209 $300,577 Summary of Capital Assets (in thousands) DRAFT DRAFT REVIEW DRAFT 11-7-22 18 DRAFT CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2022 ECONOMIC CLIMATE AND NEXT YEAR’S BUDGET The global economy is currently experiencing a slowdown as high inflation and supply constraints weigh heavily on the economic outlook. The International Monetary Fund currently projects global growth to slow from 6.0% in 2021 to 3.2% in 2022, then reduced further to 2.7% in 2023. Overall, in the near-term, it is easy to sour upon the outlook as Russia’s invasion of Ukraine rages on, financial markets in turmoil in the United Kingdom, and reduced production from China as they continue to grapple with the COVID-19 pandemic all present considerable challenges to global economic activity. In California the slowdown is beginning to take shape as the Legislative Analyst Office recently revised estimates for personal income, sales, and corporation taxes down, now indicating an 80% chance of falling below the Budget Act assumption of $210 billion. According to preliminary August data, California’s unemployment rate has ticked up to 4.1% after steadily declining to 3.9% in July and posting its first month-over month increase since May of 2020. It appears the state may be at an inflection point and time will tell how it will weather the storm. Locally, Marin County remains somewhat insulated from more pronounced impacts of the macro environment with an unemployment rate among the lowest in the state at 2.4% and per capita income among the highest. However, there could be signs of tougher times ahead as Marin’s traditionally largest service sector, Educational & Health Services, has seen reduced employment of 11.2% year-over year, according to the most recent data from the Employment Development Department. In San Rafael, any negative economic impacts remain subdued early in the year. Sales and use taxes for the first two months of fiscal year 2023 are tapering from the highs of the prior year, however, remain at the elevated post- shutdown level of fiscal year 2020-2021. The macro-economic headwinds are expected to filter down to the City in the near term, however, they can be expected to be less severe at the local level. The City heads into the new fiscal year with a strong balance sheet and large capital projects in the pipeline bolstered by ARPA funds. Expectations are for large drawdowns on accumulated fund balances as capital projects get underway. However, costs are continuing to rise and certain projects may need to be prioritized to ensure the City does not become overextended. 2022 2021 Governmental Activity Debt: 2018 Authority Lease Revenue Bond $47,600 $50,179 2010 Taxable Pension Obligation Bonds 2,340 2,845 PG & E City Hall HVAC Retrofit Note Payable 46 79 PG & E Efficiency Note Payable 680 826 PG & E City Hall Efficiency Note Payable 165 Subtotal Governmental Activity Debt 50,831 53,929 Business-Type Activity Debt: PG & E Parking Lot Lighting Retrofit Note Payable 7 14 2012 Authority Lease Revenue Refunding Bonds 4,018 4,317 Subtotal Business-Type Activity Debt 4,025 4,331 Total Long-Term Obligations $54,856 $58,260 Summary of Long-Term Debt (in thousands) DRAFT DRAFT REVIEW DRAFT 11-7-22 19 DRAFT CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2022 Sales tax and transactions and use tax (Measure E and Measure R) combined, represent the City’s largest tax revenue generators, the second largest being property tax. The City initially budgeted for mostly level revenues with the prior year but has since begun to temper expectations as it begins to be clear that economic headwinds may take their toll on municipal revenues. The City’s largest expenditure relates to personnel costs. Salaries and benefits are tied to the labor agreements with each bargaining group. The City’s labor units are all operating under three-year contracts that expire in 2024. REQUEST FOR INFORMATION This financial report is designed to provide our residents, businesses, customers, and investors and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for providing high quality services within the limits of our fiscal resources. If you have questions about this report or need additional financial information, contact the City of San Rafael – Finance Department at 1400 Fifth Avenue, Room 204, San Rafael, California 94901. DRAFT DRAFT REVIEW DRAFT 11-7-22 20 DRAFT CITY OF SAN RAFAEL STATEMENT OF NET POSITION AND STATEMENT OF ACTIVITIES The Statement of Net Position and the Statement of Activities summarize the entire City’s financial activities and financial position. They are also referred to as Government-wide financial statements. The Statement of Net Position reports the difference between the City’s total assets and deferred outflows of resources and the City’s total liabilities and deferred inflows of resources, including all the City’s capital assets and all its long-term debt. The Statement of Net Position focuses the reader on the composition of the City’s net position, by subtracting total liabilities and deferred inflows of resources from total assets and deferred outflows of resources. The Statement of Net Position summarizes the financial position of all of the City’s Governmental Activities in a single column, and the financial position of all the City’s Business-type Activities in a single column; these columns are followed by a total column which presents the financial position of the entire City. The City’s Governmental Activities include the activities of its General Fund, along with all its Special Revenue and Capital Projects Funds. Since the City’s Internal Service Funds service these Funds, their activities are consolidated with Governmental Activities, after eliminating inter-fund transactions and balances. The City’s Business-type Activities include all its Enterprise Fund activities. The Statement of Activities reports increases and decreases in the City’s net position. It is also prepared on the full accrual basis, which means it includes all the City’s revenues and all its expenses, regardless of when cash changes hands. This differs from the “modified accrual” basis used in the Fund financial statements, which reflect only current assets, current liabilities, deferred outflows/inflows of resources, available revenues, and measurable expenditures. The Statement of Activities presents the City’s expenses first, listed by program, and follows these with the expenses of its business-type activities. Program revenues - that is, revenues which are generated directly by these programs - are then deducted from program expenses to arrive at the net expense of each governmental and Business-type program. The City’s general revenues are then listed in the Governmental Activities or Business-type Activities column, as appropriate, and the Change in Net Position is computed and reconciled with the Statement of Net Position. Both these Statements include the financial activities of the City and the San Rafael Joint Powers Financing Authority which are legally separate but are considered to be component units of the City because they are controlled by the City, which is financially accountable for their activities. The balances and the activities of the San Rafael Sanitation District, a discretely presented component unit, are included in these statements in a separate column. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT21 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT CITY OF SAN RAFAEL STATEMENT OF NET POSITION JUNE 30, 2022 Component Primary Government Unit San Rafael Governmental Business-type Sanitation Activities Activities Total District ASSETS Cash and investments available for operations (Note 2)$102,374,883 $1,129,447 $103,504,330 $46,864,314 Restricted cash and investments (Note 2)712,709 712,709 Receivables: Accounts, net 3,504,742 877,306 4,382,048 1,607,845 Intergovernmental 11,084,418 11,084,418 Grants 2,797,356 2,797,356 Interest 133,047 133,047 Loans (Note 4A)2,778,004 2,778,004 Long-term receivable from San Rafael Sanitation District (Note 4F)3,324,061 3,324,061 Leases receivable (Note 4G)557,629 557,629 Prepaid expenses and others 189,500 189,500 75,194 Net pension asset (Note 9)46,614,932 1,561,377 48,176,309 Capital assets (Note 5): Nondepreciable 106,510,879 8,620,853 115,131,732 937,738 Depreciable, net 188,417,498 6,659,877 195,077,375 54,629,711 Total Assets 468,999,658 18,848,860 487,848,518 104,114,802 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows related to pension (Note 9)36,393,655 1,219,013 37,612,668 Deferred outflows related to OPEB (Note 11) 6,140,534 93,466 6,234,000 Total Deferred Outflows of Resources 42,534,189 1,312,479 43,846,668 LIABILITIES Accounts payable 11,236,564 140,931 11,377,495 1,169,978 Developer and other deposits payable 991,469 991,469 Interest payable 35,897 35,897 Unearned revenue 619,549 25,798 645,347 Claims payable (Note 13): Due in one year 2,802,022 2,802,022 Due in more than one year 12,799,700 12,799,700 Compensated absences (Note 1L): Due in one year 535,976 13,518 549,494 Due in more than one year 3,751,835 94,629 3,846,464 Long-term debt (Note 6): Due in one year 2,978,397 316,816 3,295,213 Due in more than one year 47,852,479 3,707,692 51,560,171 Lease liabilities (Note 14): Due in one year 82,561 82,561 Due in more than one year 5,578,135 5,578,135 3,324,061 Net OPEB liability, due in more than one year (Note 11)18,648,153 283,847 18,932,000 Total Liabilities 107,876,840 4,619,128 112,495,968 4,494,039 DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pension (Note 9)158,929,204 5,323,368 164,252,572 Deferred inflows related to OPEB (Note 11)9,961,376 151,624 10,113,000 Deferred inflows related to leases receivable (Note 4G)543,350 543,350 Total Deferred Inflows of Resources 169,433,930 5,474,992 174,908,922 NET POSITION (Note 8): Net investment in capital assets 246,437,706 11,256,222 257,693,928 55,567,449 Restricted for: Special revenue projects: Housing and street improvements 13,662,708 13,662,708 Stormwater 1,269,705 1,269,705 Emergency medical services 832,600 832,600 Other 11,015,663 11,015,663 Capital projects 9,888,090 9,888,090 Total Restricted Net Position 36,668,766 36,668,766 Unrestricted (48,883,395) (1,189,003) (50,072,398) 44,053,314 Total Net Position $234,223,077 $10,067,219 $244,290,296 $99,620,763 See accompanying notes to financial statements Long-term payable to the City of San Rafael, due in more than one year (Note 4F) DRAFT DRAFT REVIEW DRAFT 11-7-22 23 DRAFT CITY OF SAN RAFAEL STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2022 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary Government Governmental Activities: General government $10,458,884 $1,039,816 $16,732,928 Public safety 34,379,474 6,302,852 1,700,678 Public works and parks 14,030,717 2,996,881 3,706,929 $8,914,792 Community development 2,835,173 4,493,292 5,821 Culture and recreation 7,430,968 4,105,520 374,524 953,091 Interest on long-term debt and fiscal charges 2,004,572 Total Governmental Activities 71,139,788 18,938,361 22,520,880 9,867,883 Business-type Activities: Parking services 2,226,556 3,836,881 Total Business-type Activities 2,226,556 3,836,881 Total Primary Government $73,366,344 $22,775,242 $22,520,880 $9,867,883 Component Unit San Rafael Sanitation District $12,892,687 $16,458,113 $5,568 $517,752 General revenues: Taxes: Property Sales: Sales and Use Measure R quarter-cent sales Measure E half-cent sales Measure E quarter-cent sales Paramedic Transient occupancy Franchise Business license Other Investment earnings Gain from sale of capital assets Miscellaneous Transfers (Note 3A) Total general revenues and transfers Change in Net Position Net Position, beginning of year Net Position, end of year See accompanying notes to financial statements DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT24 Component Primary Government Unit San Rafael Governmental Business-type Sanitation Activities Activities Total District $7,313,860 $7,313,860 (26,375,944)(26,375,944) 1,587,885 1,587,885 1,663,940 1,663,940 (1,997,833)(1,997,833) (2,004,572)(2,004,572) (19,812,664)(19,812,664) $1,610,325 1,610,325 1,610,325 1,610,325 (19,812,664)1,610,325 (18,202,339) $4,088,746 32,324,129 32,324,129 2,086,682 24,502,716 24,502,716 4,778,951 4,778,951 9,885,869 9,885,869 4,942,935 4,942,935 5,109,836 5,109,836 2,976,234 2,976,234 4,209,979 4,209,979 2,645,636 2,645,636 3,108,543 3,108,543 (1,424,183)8,802 (1,415,381)(406,535) 989,991 989,991 2,965,697 2,965,697 521,209 (521,209) 97,537,542 (512,407) 97,025,135 1,680,147 77,724,878 1,097,918 78,822,796 5,768,893 156,498,199 8,969,301 165,467,500 93,851,870 $234,223,077 $10,067,219 $244,290,296 $99,620,763 Net (Expenses) Revenues and Changes in Net Position DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT25 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT FUND FINANCIAL STATEMENTS Major funds are defined generally as having significant activities or balances in the current year. Only individual major funds are presented in the Fund Financial Statements, while non-major funds are combined in a single column. Individual non-major funds may be found in the Supplemental Section. The funds described below were determined to be major funds by the City in fiscal year 2021-2022: GENERAL FUND Established to account for all financial resources necessary to carry out basic governmental activities of the City which are not accounted for in another fund. The General Fund supports essential City services such as police and fire protection, building and street maintenance, libraries, recreation, parks, and open space maintenance. TRAFFIC AND HOUSING MITIGATION SPECIAL REVENUE FUND Established to maintain long-term developer contributions for major housing and street improvement projects. GAS TAX SPECIAL REVENUE FUND Established to receive and expend the City’s allocation of the State gasoline taxes. ESSENTIAL FACILITIES CAPITAL PROJECTS FUND Established to account for major capital improvements to public safety facilities. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT27 CITY OF SAN RAFAEL GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2022 Traffic and Essential Other Total General Housing Facilities Capital Governmental Governmental Fund Mitigation Gas Tax Projects Fund Funds Funds ASSETS Cash and investments available for operations (Note 2) $29,467,022 $2,912,417 $6,470,630 $10,401,325 $14,946,428 $64,197,822 Restricted cash and investments (Note 2)608,125 205 104,379 712,709 Receivables: Accounts 1,433,476 162,167 1,909,099 3,504,742 Intergovernmental 8,944,744 1,982,097 157,577 11,084,418 Grants 545,861 1,187,749 1,045,581 2,779,191 Interest 131,313 1,734 133,047 Loans (Note 4A)747 1,856,431 920,826 2,778,004 Leases (Note 4G)54,319 503,310 557,629 Prepaids 95,279 89,761 185,040 Total Assets $41,280,886 $4,931,015 $9,640,476 $10,401,530 $19,678,695 $85,932,602 LIABILITIES Accounts payable $5,623,208 $59,144 $2,722,209 $1,084,218 $1,262,546 $10,751,325 Deposits payable 286,573 306,567 593,140 Developer deposits payable 394,694 3,635 398,329 Unearned revenue 62,000 557,549 619,549 Total Liabilities 6,366,475 59,144 2,722,209 1,084,218 2,130,297 12,362,343 DEFERRED INFLOWS OF RESOURCES Unavailable revenue: SB90 reimbursement receivable 1,080,400 1,080,400 Related to leases (Note 4G)52,892 490,458 543,350 Total Deferred Inflows of Resources 1,133,292 490,458 1,623,750 Fund Balances (Note 8): Nonspendable 95,279 89,761 185,040 Restricted 4,871,871 6,918,267 9,317,312 15,336,069 36,443,519 Committed 9,415,000 1,514,355 10,929,355 Assigned 24,270,840 117,755 24,388,595 Total Fund Balances 33,781,119 4,871,871 6,918,267 9,317,312 17,057,940 71,946,509 Total Liabilities, Deferred Inflows of Resources and Fund Balances $41,280,886 $4,931,015 $9,640,476 $10,401,530 $19,678,695 $85,932,602 Special Revenue Funds See accompanying notes to basic financial statements DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT28 CITY OF SAN RAFAEL GOVERNMENTAL FUNDS BALANCE SHEET - RECONCILIATION OF GOVERNMENTAL FUND BALANCES TO NET POSITION OF GOVERNMENTAL ACTIVITIES JUNE 30, 2022 Total fund balances reported on the governmental funds balance sheet $71,946,509 Amounts reported for Governmental Activities in the Statement of Net Position are different from those reported in the Governmental Funds because of the following: Capital assets used in Governmental Activities are not financial resources and, therefore, are not reported in the Governmental Funds. 283,221,992 Internal service funds are used by management to charge the cost of management of 33,654,138 Long-term liabilities, including bonds payable and lease liabilities, are not due and payable in the current period and, therefore, are not reported in the Governmental Funds. (56,326,600) Compensated absences (4,287,811) Unavailable revenue 1,080,400 Long-term receivable from San Rafael Sanitation District 3,324,061 Deferred outflows related to pension 36,393,655 Net pension asset 46,614,932 Deferred inflows related to pension (158,929,204) Deferred outflows related to OPEB 6,140,534 Deferred inflows related to OPEB (9,961,376) Net OPEB liability (18,648,153) Net position of governmental activities $234,223,077 building, workers' compensation, employee benefits, insurance, and post-retirement healthcare benefits to individual funds. The assets and liabilities are included in Governmental Activities in the Statement of Net Position. See accompanying notes to financial statements DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT29 CITY OF SAN RAFAEL GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2022 Traffic and Essential Other Total Housing Facilities Capital Governmental Governmental General Mitigation Gas Tax Projects Fund Funds Funds REVENUES Taxes and special assessments $84,324,467 $9,280,515 $93,604,982 Licenses and permits 3,077,355 3,077,355 Fines and forfeitures 296,300 296,300 Use of money and properties (1,969,810) $47,133 $40,412 $95,586 188,965 (1,597,714) Intergovernmental 20,393,799 225,000 9,528,965 4,091,393 34,239,157 Charges for services 2,880,711 198,531 2,089,594 8,146,178 13,315,014 Other revenue 786,766 159,310 1,811,524 1,442,220 4,199,820 Total Revenues 109,789,588 629,974 13,470,495 95,586 23,149,271 147,134,914 EXPENDITURES Current: General government 17,214,009 31,986 470,671 17,716,666 Public safety 46,824,239 11,573,482 58,397,721 Public works and parks 13,516,875 636,429 1,474,091 868,152 16,495,547 Community development 5,377,625 358,588 5,736,213 Culture and recreation 2,989,038 8,330,508 11,319,546 Capital outlay 372,147 99,173 10,099,991 4,897,862 1,876,281 17,345,454 Debt service: Principal 2,829,057 2,829,057 Interest and fiscal charges 2,512,515 2,512,515 Total Expenditures 91,635,505 1,126,176 11,574,082 4,897,862 23,119,094 132,352,719 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 18,154,083 (496,202) 1,896,413 (4,802,276) 30,177 14,782,195 OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets 1,000,000 1,000,000 Transfers in (Note 3A)1,755,022 1,312,000 1,022,198 2,352,544 6,441,764 Transfers out (Note 3A)(2,973,885) (1,190,000) (635,000)(315,857) (5,114,742) Total Other Financing Sources (Uses) (1,218,863) (1,190,000) 677,000 2,022,198 2,036,687 2,327,022 Net Change in Fund Balances 16,935,220 (1,686,202) 2,573,413 (2,780,078) 2,066,864 17,109,217 FUND BALANCES, BEGINNING OF YEAR 16,845,899 6,558,073 4,344,854 12,097,390 14,991,076 54,837,292 FUND BALANCES, END OF YEAR $33,781,119 $4,871,871 $6,918,267 $9,317,312 $17,057,940 $71,946,509 See accompanying notes to financial statements Special Revenue Funds DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT30 CITY OF SAN RAFAEL Reconciliation of the NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS with the STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2022 NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS $17,109,217 Amounts reported for Governmental Activities in the Statement of Activities are different because of the following: Capital Assets Transactions Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is capitalized and allocated over their estimated useful lives and reported as depreciation and amortization expense. Capital outlay and improvement expenditures are added back to fund balance 18,669,368 Retirement of capital assets is deducted from fund balance (1,255) Depreciation and amortization expense is deducted from fund balance (8,113,574) (Depreciation expense is net of internal service fund depreciation of $1,342,045, which has already been allocated to serviced funds.) Long-Term Debt and Lease Liability Proceeds and Payments Governmental funds record proceeds and payments as other financing sources and expenditures. However, in the Statement of Net Position, those costs are reversed as increases and decreases in long-term liabilities. Repayments of long-term debt principal 2,755,169 Amortized bond premium expense is added back to fund balance 507,943 Repayments of lease principal 78,120 Interest on lease is deducted from fund balance (4,232) Accrual of Non-Current Items The amount below included in the Statement of Activities does not require the use of current financial Compensated absences 518,294 Unavailable revenue (12,034) Long-term receivable from San Rafael Sanitation District (1,600,309) Net Pension (Asset) Liability Transactions Governmental funds record pension expense as it is paid. However, in the Statement of Activities those costs are reversed as deferred outflows/(inflows) and an increase/(decrease) in net pension (asset) liability. 40,667,809 Net OPEB Liability Transactions Governmental funds record OPEB expense as it is paid. However, in the Statement of Activities those costs are reversed as deferred outflows/(inflows) and an increase/(decrease) in net OPEB liability. 2,672,302 Allocation of Internal Service Fund Activities Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue of the internal service fund is reported with governmental activities. 4,478,060 Change in Net Position of Governmental Activities $77,724,878 resources and therefore is not reported as revenue or expenditures in governmental funds (net change): See accompanying notes to financial statements DRAFT DRAFT REVIEW DRAFT 11-7-22 31 DRAFT DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT PROPRIETARY FUND FINANCIAL STATEMENTS Proprietary funds account for City operations financed and operated in a manner similar to a private business enterprise. The intent of the City is that the cost of providing goods and services be financed primarily through user charges, whether external or internal. The City reports its only enterprise fund as a major fund. PARKING SERVICES FUND Established to maintain parking garages, lots, and spaces in the Downtown Parking District, and to pay for parking enforcement and meter collection. INTERNAL SERVICE FUNDS Established to account for department services and financing performed for other departments within the same governmental jurisdiction. Funding comes from charges assessed to the departments benefiting from the service. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT33 CITY OF SAN RAFAEL PROPRIETARY FUNDS STATEMENT OF NET POSITION JUNE 30, 2022 Business-type Activities - Governmental Enterprise Fund Activities Parking Internal Services Service Funds ASSETS Current Assets: Cash and investments available for operations (Note 2) $1,129,447 $38,177,061 Receivable: Accounts, net 877,306 Grants 18,165 Prepaid expense 4,460 Total Current Assets 2,006,753 38,199,686 Noncurrent Assets: Capital assets (Note 5): Nondepreciable 8,620,853 909,746 Depreciable, net 6,659,877 10,796,639 Net pension asset (Note 9) 1,561,377 Total Noncurrent Assets 16,842,107 11,706,385 Total Assets 18,848,860 49,906,071 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows related to pension (Note 9) 1,219,013 Deferred outflows related to OPEB (Note 11) 93,466 Total Deferred Outflows of Resources 1,312,479 LIABILITIES Current Liabilities: Accounts payable 140,931 485,239 Interest payable 35,897 Unearned revenue 25,798 Compensated absences, due in one year (Note 1L) 13,518 Claims payable, due in one year (Note 13) 2,802,022 Long-term debt, due in one year (Note 6) 316,816 21,755 Total Current Liabilities 532,960 3,309,016 Noncurrent Liabilities: Compensated absences (Note 1L) 94,629 Claims payable (Note 13)12,799,700 Long-term debt (Note 6) 3,707,692 143,217 Net OPEB liability (Note 11) 283,847 Total Noncurrent Liabilities 4,086,168 12,942,917 Total Liabilities 4,619,128 16,251,933 DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pension (Note 9) 5,323,368 Deferred inflows related to OPEB (Note 11) 151,624 Total Deferred Inflows of Resources 5,474,992 NET POSITION (Note 8): Net investment in capital assets 11,256,222 11,541,413 Unrestricted (1,189,003) 22,112,725 Total Net Position $10,067,219 $33,654,138 See accompanying notes to financial statements DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT34 CITY OF SAN RAFAEL PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION FOR THE YEAR ENDED JUNE 30, 2022 Business-type Activities - Governmental Enterprise Fund Activities Parking Internal Services Service Funds OPERATING REVENUES Charges for current services $2,160,302 $23,687,437 Other operating revenues 1,676,579 882,690 Intergovernmental 43,423 Total Operating Revenues 3,836,881 24,613,550 OPERATING EXPENSES Personnel 295,540 4,024,485 Insurance premiums and claims 10,194,824 Maintenance and repairs 126,205 306,656 Depreciation expense (Note 5) 224,472 1,342,045 General and administrative 1,430,001 3,717,137 Total Operating Expenses 2,076,218 19,585,147 Operating Income 1,760,663 5,028,403 NONOPERATING REVENUES (EXPENSES) Investment income 8,802 230,586 Miscellaneous revenue 30,193 Interest expense (150,338) Gain from sale of capital assets 33,698 (Loss) from disposal of capital assets (39,007) Total Nonoperating Revenues (Expenses) (141,536) 255,470 Income Before Contributions and Transfers 1,619,127 5,283,873 TRANSFERS OUT (Note 3A) (521,209) (805,813) Change in Net Position 1,097,918 4,478,060 NET POSITION, BEGINNING OF YEAR 8,969,301 29,176,078 NET POSITION, END OF YEAR $10,067,219 $33,654,138 See accompanying notes to financial statements DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT35 CITY OF SAN RAFAEL PROPRIETARY FUNDS STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2022 Business-type Activities - Governmental Enterprise Fund Activities Parking Internal Services Service Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers/other funds $2,160,302 $23,732,399 Cash payments to suppliers for goods and services (1,498,095) (13,716,473) Cash payments to employees for salaries and benefits (1,901,398) (1,240,692) Other revenues 1,775,014 882,690 Cash Flows from Operating Activities 535,823 9,657,924 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Miscellaneous revenues 30,193 Interfund payments (521,209)(805,813) Cash Flows from Noncapital Financing Activities (521,209)(775,620) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal payments on revenue bonds and note payable (306,818)(9,064) Proceeds from note payable 174,036 Interest expenses and fiscal charges (151,863) Acquisition of capital assets (696,003) Proceeds from sale of capital assets 46,401 Cash Flows from Capital and Related Financing Activities (458,681)(484,630) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 8,802 230,586 Cash Flows from Investing Activities 8,802 230,586 NET CHANGE IN CASH AND CASH EQUIVALENTS (435,265)8,628,260 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,564,712 29,548,801 CASH AND CASH EQUIVALENTS, END OF YEAR $1,129,447 $38,177,061 Reconciliation of operating income to net cash provided by operating activities: Operating income $1,760,663 $5,028,403 Adjustments to reconcile operating income to cash flows from operating activities: Depreciation 224,472 1,342,045 Net change in assets and liabilities: Accounts receivable 93,811 1,539 Prepaids (4,460) OPEB-related items (276,698) Accounts payable 58,111 (42,422) Unearned revenue 4,624 Compensated absence obligations (10,046) Pension-related items (1,319,114) Claims payable 3,332,819 Net Cash Provided by Operating Activities $535,823 $9,657,924 NON-CASH TRANSACTIONS: Retirement of capital assets ($51,710) Amortization of bond discount $725 See accompanying notes to basic financial statements DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT36 FIDUCIARY FUND FINANCIAL STATEMENTS Fiduciary funds are used to account for assets held by the City as an agent or custodian for other entities. The financial activities of such funds are excluded from the Government-wide financial statements and present fund statements that consist of a Statement of Net Position and a Statement of Changes in Net Position. SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY – PRIVATE PURPOSE TRUST FUND Established to account for the activities of the Successor Agency to the San Rafael Redevelopment Agency. PT. SAN PEDRO ROAD ASSESSMENT DISTRICT CUSTODIAL FUND Established to accumulate funds for payment of principal and interest for Pt. San Pedro Road Median Landscaping Assessment District bonds. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT37 Successor Agency to the Pt. San Pedro Redevelopment Road Assessment Agency District Private-Purpose Custodial Trust Fund Fund ASSETS Cash available for operations (Note 2)$173,063 $221,627 Receivables: Taxes 3,081,500 857 Total Assets 3,254,563 222,484 LIABILITIES Accounts payable 2,500 Interest payable 20,288 Long-term debt (Note 16C): Due within one year 3,553,454 Total Liabilities 3,555,954 20,288 NET POSITION (DEFICIT) Restricted for: Bondholders 173,063 202,196 Unrestricted (474,454) Total Net Position ($301,391)$202,196 See accompanying notes to financial statements CITY OF SAN RAFAEL FIDUCIARY FUNDS STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2022 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT38 Successor Agency to the Pt. San Pedro Redevelopment Road Assessment Agency District Private-Purpose Custodial Trust Fund Fund ADDITIONS Property taxes $3,450,910 $134,759 Use of money and property 7 Total Additions 3,450,917 134,759 DEDUCTIONS General government 180,640 Payments to bondholders 79,900 Interest expense 174,324 61,563 Total Deductions 354,964 141,463 Change in Net Position 3,095,953 (6,704) NET POSITION Beginning of year (3,397,344)208,900 End of year ($301,391)$202,196 CITY OF SAN RAFAEL STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED JUNE 30, 2022 See accompanying notes to financial statements DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT39 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A.Description of the Financial Reporting Entity As required by generally accepted accounting principles, the financial statements present the City of San Rafael (the City) as the Primary Government, with its component units for which the City is considered financially accountable. The component units discussed below are included in the City's reporting entity because of the significance of their operational and financial relationships with the City. B.Description of Blended Component Unit The accompanying basic financial statements include all funds and boards and commissions that are controlled by the City Council. The basic financial statements include the City’s blended component units, entities for which the City is considered to be financially accountable. A blended component unit, although a legally separate entity, is in substance, part of the City’s operations and so data from this entity is combined with the City. The City’s blended component unit is described below. San Rafael Joint Powers Financing Authority – The San Rafael Joint Powers Financing Authority (Authority) was formed by the City of San Rafael and the former San Rafael Redevelopment Agency (Agency) pursuant to Articles 1 and 2 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California for the purpose of assisting in the financing and refinancing of certain assessment district and redevelopment-related activities in the City. On March 18, 2013, the Agency was replaced by the California Municipal Finance Authority (CMFA) in order that the life of the Authority would extend beyond that of the Agency. The Authority is administered by a governing board whose members are the City Council of the City. Activities of the Authority related to the 2012 Authority Lease Revenue Refunding Bonds are reported in the Parking Services Enterprise Fund. Activities of the Authority related to the 2018 Authority Lease Revenue Bonds are reported in the City’s General Fund and the Essential Facilities Capital Projects Fund. Separate financial statements are not prepared for the Authority. C.Description of Discretely Presented Component Unit San Rafael Sanitation District – The San Rafael Sanitation District (District) was formed in 1947 under Section 4700 of the California Health and Safety Code to provide wastewater transmission over the southern two-thirds of the City and adjacent unincorporated areas. The District is governed by a three-member Board of Directors who are appointed to four-year terms. The City Council of the City appoints two out of the three board members and has the ability to remove the two board members at will. The City contracts with the District to maintain the collection systems in the City and surrounding unincorporated areas. These employees are paid through the City’s payroll department and participate in the City’s cost-sharing multiple-employer defined benefit pension plan administered by the Marin County Employees’ Retirement Association. The employees also participate in the City’s healthcare benefits plan which includes a provision for postemployment benefits. These costs are the obligation of the District and not the City. As discussed in Note 4F, a receivable from the District has been established. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT41 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The District’s activities are reported as a discretely presented component unit in a separate column in the basic financial statements which includes the District’s assets, liabilities, revenues, expenses, results of operations and cash flows. The District’s fiscal year ends on June 30 and its separately issued component unit financial statements can be obtained at the San Rafael Sanitation District, 111 Morphew Street, San Rafael, California 94901. D. Basis of Presentation Government-wide Statements – The Statement of Net Position and the Statement of Activities display information about the primary government (the City) and its component units. These statements include the financial activities of the overall City government, except for fiduciary activities. Interfund transfers and amounts owed between funds within the primary government have been eliminated from the statements. Amounts representing interfund services and uses remain in the statements. These statements distinguish between the governmental and business- type activities of the City. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties. The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, (b) grants and contributions that are restricted to meeting the operational needs of a particular program and (c) fees, grants and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements – The fund financial statements provide information about the City’s funds, including fiduciary funds and blended component units. Separate statements for each fund category – governmental, proprietary, and fiduciary – are presented. The emphasis of fund financial statements is on major individual governmental and enterprise funds, each of which is displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as non-major funds. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. E. Major Funds and Other Reported Funds Major funds are defined as funds that have either assets and deferred outflows of resources, liabilities and deferred inflows of resources, revenues, or expenditures/expenses equal to ten percent of their fund-type total and five percent of the grand total. The General Fund is always a major fund. The City may also select other funds it believes should be presented as major funds. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT42 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The City reported the following major governmental funds in the accompanying financial statements: General Fund – Established to account for all financial resources necessary to carry out basic governmental activities of the City which are not accounted for in another fund. Traffic and Housing Mitigation Special Revenue Fund – Established to maintain long-term developer contributions for major housing and street improvement projects. Gas Tax Special Revenue Fund – Established to receive and expend the City’s allocation of State gasoline taxes. Essential Facilities Capital Projects Fund – Established to account for major capital improvements to public safety facilities. The City reported its only enterprise fund as a major fund in the accompanying financial statements. The enterprise fund is: Parking Services Fund – Established to maintain parking garages, lots, and spaces in the Downtown Parking District, and to pay for parking enforcement, meter collection, and downtown enforcement services. The City also reports the following fund types: Internal Service Funds – These funds account for: building maintenance; vehicle, equipment, radio, and telephone replacement; employee benefits; liability insurance; workers’ compensation; dental insurance; employee retirement; retiree medical (OPEB); and sewer maintenance. Fiduciary Funds – These funds include: Successor Agency to the Redevelopment Agency Private- Purpose Trust Fund – which accounts for the accumulation of resources held by the Successor Agency to the Redevelopment Agency to be used for payments at appropriate amounts and times in the future; and Pt. San Pedro Road Assessment District Custodial Fund – which accumulates funds for the payment of principal and interest for Pt. San Pedro Road Median Landscaping District bonds. The financial activities of these funds are excluded from the government-wide financial statements, but are presented in the separate Fiduciary Fund financial statements. F. Basis of Accounting The government-wide, proprietary, fiduciary and discretely presented component unit financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT43 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The City considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end with the exception of sales and use tax revenues which are reported as available if collected within ninety days of year- end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on long-term debt, including lease liabilities, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions, including entering into contracts giving the City the right-to-use leased assets, are reported as expenditures in governmental funds. Proceeds from long-term debt and financing through leases are reported as other financing sources. Those revenues susceptible to accrual are property and sales taxes, certain intergovernmental revenues, interest revenue, charges for services, fines, and forfeitures. Other receipts and taxes are recognized as revenue when the cash is received. Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange include taxes, grants, entitlements, and donations. On the accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Under the terms of grant agreements, the City may fund certain programs with a combination of cost-reimbursement grants, categorical block grants, and general revenue. Thus, both restricted and unrestricted net position may be made available to finance program expenditures. The City’s policy is to first apply restricted grant resources to such programs, followed by general revenues if necessary. The City considers restricted shared state revenues such as gasoline taxes and public safety sales taxes, restricted locally imposed transportation sales taxes, fines, forfeitures, licenses, permits, charges for services, and program grants as program revenues. Certain indirect costs are included in program expenses reported for individual functions and activities. G. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position or balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT44 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) In addition to liabilities, the statement of financial position or balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. Unavailable revenue, a type of deferred inflow of resources, is reported in the governmental funds balance sheet. The governmental funds report unavailable revenues from intergovernmental receivables and deferred amounts related to leases. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. H. Budgets, Budgetary Accounting, and Encumbrances The City adopts an annual budget which is effective July 1 for the ensuing fiscal year. The budget reflects estimated revenues and expenditures, except for the capital projects funds. Appropriations and spending authorizations for projects in the capital projects funds and some special revenue funds are approved by the City Council on a multi-year basis. From the effective date of the budget, which is adopted at the department level, the amounts stated therein as proposed expenditures become appropriations to the various City departments. The City Council may amend the budget by resolution during the fiscal year in order to respond to emerging needs, changes in resources, or shifting priorities. Expenditures may not exceed appropriations at the fund level, which is the legal level of control. The City Manager is authorized to transfer budgeted amounts between accounts, departments, or funds; the Council must approve any increase in the City’s operating expenditures, appropriations for capital projects, and transfers between major funds and reportable fund groups. Budgets are adopted on a basis consistent with Generally Accepted Accounting Principles for the General Fund and Special Revenue Funds. Encumbrance accounting, under which purchase orders for expenditures are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of the budgetary process. All unencumbered appropriations lapse at year end. I. Cash Equivalents For purposes of the statement of cash flows, the City considers all highly liquid investments (including all restricted assets) with maturities of three months or less when purchased to be cash equivalents. The City maintains a cash and investment pool that is available for use by all funds. As the proprietary funds' share of this pool is readily available when needed, such share is also considered to be cash equivalent. J. Prepaids 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. The cost of prepaid items is recorded as expenditures/expenses when consumed rather than when purchased. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT45 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) K.Capital Assets City Contributed capital assets are valued at their estimated acquisition value on the date contributed. Donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement are recorded at acquisition value. All other capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available, except for intangible right-to-use lease assets, the measurement of which is discussed in Note 1R below. Major outlays for capital assets and improvements are capitalized as projects are constructed. City policy has set the capitalization thresholds for reporting capital assets at the following: General capital assets ranging from $5,000 to $50,000 Infrastructure capital assets ranging from $25,000 to $250,000 Depreciation is provided using the straight-line method which means the cost of the asset is divided by its expected useful life in years and the result is charged to expense each year until the asset is fully depreciated. The purpose of depreciation is to spread the cost of capital assets equitably among all users over the life of these assets. The amount charged to depreciation expense each year represents that year’s pro rata share of the cost of capital assets. The City has assigned the useful lives listed below to capital assets: Buildings, improvements, and structures 20 – 50 years Machinery and equipment 4 – 20 years Infrastructure 15 – 50 years Right to use leased building 35 years Right to use leased equipment 1.5 – 5 years District Collection systems and facilities purchased or constructed are stated at cost. Assets contributed are recorded at the estimated acquisition value at the date received. Interest is capitalized for assets constructed when applicable. The costs of normal repairs and maintenance that do not add to the value of an asset or materially extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related capital assets, as applicable. Applicable capital assets must be capitalized for amounts $1,000 or above and may be capitalized for amounts from $500 to $1,000 if determined to be sensitive. Depreciation is provided by the straight-line method over the estimated useful lives of capital assets as follows: Subsurface lines 50 – 80 years Sewage collection facilities 5 – 50 years General plant and administrative facilities 3 – 15 years DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT46 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) L. Compensated Absences Compensated absences are accrued as earned. Upon termination, employees are paid for all unused vacation at their current hourly rates. Unused sick leave may be compensable up to 600 hours, depending upon the provisions of the MOUs, which vary by bargaining unit. The long-term portion of the liability for compensated absences for governmental fund type operations is recorded as compensated absences in the government-wide financial statements. Compensated absences are liquidated by the fund that has recorded the liability. Proprietary fund liabilities are recorded within their respective funds. The long-term portion of governmental activities compensated absences is liquidated primarily by the General Fund. The changes in compensated absences as of June 30, 2022 were as follows: Governmental Business-Type Activities Activities Total Beginning Balance $4,806,105 $118,193 $4,924,298 Additions 2,464,583 86,071 2,550,654 Payments (2,982,877) (96,117) (3,078,994) Ending Balance $4,287,811 $108,147 $4,395,958 Current Portion $535,976 $13,518 $549,494 M. Property Tax Levy, Collection and Maximum Rates – City State of California Constitution Article XIII A provides that the combined maximum property tax rate on any given property may not exceed 1% of its assessed value unless an additional amount for general obligation debt has been approved by voters. Assessed value is calculated at 100% of market value as defined by Article XIII A and may be adjusted by no more than 2% per year unless the property is sold, transferred, or substantially improved. The State Legislature has determined the method of distribution of receipts from a 1% tax levy among the counties, cities, school districts and other districts. Marin County assesses properties, bills for, and collects property taxes on the schedule that follows: Secured Unsecured Valuation/lien dates January 1 January 1 Levy dates July 1 July 1 Due dates (delinquent as of) 50% on November 1 (December 10) July 1 (August 31) 50% on February 1 (April 10) DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT47 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) For assessment and collection purposes, property is classified as either “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 real property having a tax lien that is sufficient, in the opinion of the County Assessor, to secure payment of the taxes. Unsecured property comprises all taxable property not attached to land, such as personal property or business property. Every tax levied by a county that becomes a lien on secured property has priority over all present and future private liens arising pursuant to State law on the secured property, regardless of the time of the creation of the other liens. A tax levied on unsecured property does not become a lien against the taxed unsecured property, but may become a lien on other property owned by the taxpayer. Property taxes are levied and recorded as revenue when received in the fiscal year of levy because of the adoption of the “alternate method of property tax distribution,” known as the Teeter Plan, by the City and the County of Marin. The Teeter Plan authorized the auditor-controller of the County of Marin to allocate 100% of the secured property taxes billed, but not yet paid. The County of Marin remits tax monies to the City in three installments, as follows: 55% remitted on December 15 40% remitted on April 15 5% remitted on June 15 N. Sewer Charges – District Sewer charges are billed and collected on behalf of the District by the County of Marin as a special assessment on annual property tax billings. Property taxes are levied on January 1 and are due in two equal installments on November 1 and February 1 and become delinquent December 10 and April 10, for the first and second installments, respectively. In accordance with the Teeter Plan, the County remits to the District all charges which are assessed and the county retains responsibility for collecting past due amounts. The Teeter Plan provides that the County advance the District its share of the annual gross levy of secured property taxes and special assessments. In consideration, the District gives the County of Marin its rights to penalties and interest on delinquent secured property tax receivables and actual proceeds collected. O. Connection Fees – District Connection fees represent a one-time contribution of resources to the District imposed on contractors and developers for the purpose of financing capital improvements. Connection fees are recognized after non-operating revenues (expenses) in the statement of revenues, expenses, and changes in net position. The District utilizes connection fees received on a first-in-first-out basis to finance current year capital projects. Accordingly, if there is a balance of connection fees available at year-end, it is classified as restricted net position. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT48 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) P. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are inputs – other than quoted prices included within level 1 – that are observable for an asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for an asset or liability. If the fair value of an asset or liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement. Q. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent asset and liabilities at the dates of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting periods. Actual results could differ from those estimates. R. Leases A lease is defined as a contract that conveys control of the right to use another entity’s nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. Lessee – The City is a lessee for noncancellable leases of equipment and land. The City recognizes a lease liability and an intangible right‐to‐use lease asset (lease asset) in the government‐wide financial statements. The City recognizes lease liabilities with an initial individual value of $25,000 or more. At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight‐line basis over the lesser of its useful life or the life of the lease agreement. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT49 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments as follows:  The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for leases.  The lease term includes the noncancellable period of the lease.  Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise, if applicable. The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability. Lease assets are reported with other capital assets and lease liabilities are reported with long-term lease liabilities on the statement of net position. Lessor – The City is a lessor for noncancellable leases of certain buildings and land. The City recognizes a lease receivable and a deferred inflow of resources in the government‐wide and governmental fund financial statements. At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term. Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts as follows:  The City uses its estimated incremental borrowing rate as the discount rate for leases.  The lease term includes the noncancellable period of the lease.  Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee. The City monitors changes in circumstances that would require a remeasurement of its lease, and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT50 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) S. New Accounting Pronouncements GASB Statement No. 87 – In June 2017, GASB issued Statement No. 87, Leases. The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. 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. 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. The provisions of this Statement were implemented during fiscal year 2022. As part of the implementation of this Statement, the City has accounted for certain lessor and lessee transactions, which required the restatement of beginning net position of the governmental activities leases receivable and deferred inflows in the amounts of $615,997, and capital assets and lease liabilities in the amount of $5,734,584, and the net effect on beginning net position and fund balance is zero. See the leases disclosures in Notes 4G and 14. GASB Statement No. 92 – In January 2020, GASB issued Statement No. 92, Omnibus 2020. The objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing practice issues that have been identified during implementation and application of certain GASB Statements. This Statement addresses a variety of topics and includes specific provisions about the following: Statement No. 87, Leases; reporting of intra-entity transfers between a primary government employer and a component unit defined benefit pension plan or defined benefit other postemployment benefit (OPEB) plan; applicability of Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68, as amended, and No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended, to reporting assets accumulated for postemployment benefits; applicability of certain requirements of Statement No. 84, Fiduciary Activities, to postemployment benefit arrangements; asset retirement obligations; reference to nonrecurring fair value measurements of assets or liabilities in authoritative literature; terminology used to refer to derivative instruments. The provisions of this Statement were implemented during fiscal year 2022. The implementation of this Statement did not have a material effect on the financial statements. GASB Statement No. 98 – In October 2021, GASB issued Statement No. 98, The Annual Comprehensive Financial Report. This Statement establishes the term annual comprehensive financial report and its acronym ACFR. That new term and acronym replace instances of comprehensive annual financial report and its acronym in generally accepted accounting principles for state and local governments. The provisions of this Statement were implemented during fiscal year 2022. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT51 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 2 – CASH AND INVESTMENTS A. Policies The City maintains an investment policy that emphasizes safety, liquidity, and reasonable market yield. This policy is reviewed and approved by the City Council annually. The City invests in individual investments and in investment pools. Individual investments are evidenced by specific identifiable securities instruments, or by an electronic entry registering the owner in the records of the institution issuing the security, called the book entry system. In order to increase security, the City employs the trust department of a bank as the custodian of certain City managed investments, regardless of their form. California Law requires banks and savings and loan institutions to pledge government securities with a market value of 110% of the City’s cash on deposit, or first trust deed mortgage notes with a market value of 150% of the deposit, as collateral for these deposits. Under California Law this collateral is held in a separate investment pool by another institution in the City’s name and places the City ahead of general creditors of the institution. The City’s investments are carried at fair value, as required by generally accepted accounting principles. The City adjusts the carrying value of its investments to reflect their fair value at each fiscal year end, and it includes the effects of these adjustments in income for that fiscal year. B. Classification Cash and investments as of June 30, 2022, are classified in the financial statements as shown below, based on whether or not their use is restricted under the terms of City debt instruments or agency agreements. Statement of Net Position: City of San Rafael: Cash and investments available for operations $103,504,330 Restricted cash and investments 712,709 Total Primary Government Cash and Investments 104,217,039 San Rafael Sanitation District (Component Unit): Cash and investments available for operations 46,864,314 Total San Rafael Sanitation District Cash and Investments 46,864,314 Statement of Fiduciary Net Position (separate statement): Successor Agency to the Redevelopment Agency Private Purpose Trust Fund: Cash available for operations 173,063 Pt. San Pedro Road Assessment District Custodial Fund: Cash available for operations 221,627 Total Fiduciary Fund Cash and Investments 394,690 Total Cash and Investments $151,476,043 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT52 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 2 – CASH AND INVESTMENTS (Continued) The City does not normally allocate investments by fund. Each proprietary fund’s portion of Cash and Investments Available for Operations is in substance a demand deposit available to finance operations, and is considered a cash equivalent in preparing the statement of cash flows. C. Investments Authorized by the California Government Code and the City’s Investment Policy The City’s investment policy and the California Government Code allow the City to invest in the following securities provided the credit ratings of the issuers are acceptable to the City and approved percentages and maturities are not exceeded. The table below also identifies certain provisions of the California Government Code, or the City’s Investment Policy where it is more restrictive: Minimum Maximum Maximum Maximum Credit Percentage of Investment in Authorized Investment Type Maturity Quality (A) Portfolio (A)One Issuer U.S. Government Obligations 5 years N/A No limit No limit Federal Agency Securities and Instruments 5 years N/A No limit No limit Repurchase Agreements 1 year N/A No limit No limit Prime Commercial Paper 270 days A-1 25% 10% of total outstanding commercial paper and 5% of portfolio Banker's Acceptances 180 days A-1 40%$2,000,000 Medium-Term Corporate Notes 5 years A 30%5% of portfolio Negotiable Certificates of Deposit 5 years A-1 30%5% of portfolio Non-negotiable Certificates of Deposit 5 years N/A 30%5% of portfolio Local Agency Investment Fund N/A N/A N/A $75m per Account Money Market Funds N/A AAA 10%N/A Mortgage and Asset-Backed Obligations 5 years AA 20%N/A Supranational Securities 5 years AA 15%N/A Limited Obligation Improvement Bonds Special Assessment Districts and Special Tax Districts issued by the City of San Rafael 30 years N/A N/A N/A (A) At time of purchase The San Rafael Sanitation District maintains all of its cash in the County of Marin pooled investment fund for the purpose of increasing interest earnings through pooled investment activities. The County Pool includes both voluntary and involuntary participation from external entities. The District is a voluntary participant. The State of California statutes require certain special districts and other governmental entities to maintain their cash surplus with the County Treasurer. The District has approved by resolution, the investment policy of the County of Marin which complies with the California Government Code. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT53 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 2 – CASH AND INVESTMENTS (Continued) D. Investments Authorized by Debt Agreements The City must maintain required amounts of cash and investments with trustees or fiscal agents under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged as reserves to be used if there are insufficient resources to meet debt repayment obligations. The California Government Code requires these funds to be invested in accordance with City ordinance bond indentures or State statute. The table below identifies the investment types that are authorized for investments held by fiscal agents. The table also identifies certain provisions of these debt agreements: Maximum Maturity U.S. Treasury Obligations 5 years to no maximum N/A No Limit U.S. Agency Securities 3 - 5 years N/A No Limit U.S. Agency Instruments 5 years N/A No Limit Repurchase Agreements 1 year A-1 No Limit Banker's Acceptances 360 days Highest Category Rating No Limit Money Market Mutual Funds N/A Highest Category Rating No Limit Prime Commercial Paper 270 days Highest Category Rating No Limit N/A Highest Category Rating No Limit Medium-Term Corporate Notes 5 Years A No Limit Non-Negotiable Certificates of Deposit 180 Days N/A No Limit Negotiable Certificates of Deposit 5 Years N/A No Limit Local Agency Investment Fund N/A N/A No Limit California Asset Management Program N/A N/A No Limit Deposit Accounts N/A A No Limit Defeasance Securities N/A N/A No Limit (A) At time of purchase. (B)Guaranteed Investment Contracts must be fully collateralized with U.S. Treasury or U.S. Agency Obligations. Maximum Percentage of Portfolio Guaranteed Investment Contracts (fully collateralized) (B) Authorized Investment Type Minimum Credit Quality (A) DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT54 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 2 – CASH AND INVESTMENTS (Continued) E. Fair Value Hierarchy The following is a summary of the fair value hierarchy of the fair value of investments of the City as of June 30, 2022: (a)(b)(c) Level 1 Level 2 Level 3 Total City: Money Market Funds $787,168 $787,168 U.S. Government Obligations $19,307,665 19,307,665 Federal Agency Securities and Instruments 11,004,009 11,004,009 Medium-Term Corporate Notes 13,224,811 13,224,811 Investment in Pt. San Pedro Bonds $1,134,017 (d)1,134,017 $19,307,665 $25,015,988 $1,134,017 45,457,670 Investments Exempt from Fair Value Hierarchy: Local Agency Investment Fund 48,843,399 Marin County Investment Pool 81,400 Total Investments 94,382,469 Cash in banks and on hand 9,834,570 Total City Cash and Investments 104,217,039 Fiduciary: Cash in banks 394,690 Total Fiduciary Cash 394,690 Total City and Fiduciary Cash and Investments 104,611,729 San Rafael Sanitation District: Marin County Investment Pool 46,864,314 46,864,314 Total Cash and Investments $151,476,043 Source: The above GASB 72 Classifications in the different input levels are provided by US Bank. (a) (b) (c) (d)This pertains to the City-owned bonds of its investments in Pt. San Pedro Special Assessment District that has no trading market and is thus listed under Level 3. This bond is valued using discounted cash flow techniques. District's Total Cash and Investments Level 1 inputs are quoted prices in active market for identical assets. These are quoted prices in active markets for identical assets at the measurement date. An active market for the asset is a market in which transactions for the asset occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 inputs are significant other observable inputs. These inputs include: a) Quoted prices for similar assets in active markets; b) Quoted prices for identical or similar assets in markets that are not active; and c) Inputs other than quoted prices that are observable for an asset. Level 3 inputs are significant unobservable inputs. These inputs shall be used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset at the measurement date. DRAFT DRAFT REVIEW DRAFT 11-7-22 55 DRAFT CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 2 – CASH AND INVESTMENTS (Continued) F. Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Normally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The City also manages its interest rate risk by holding most investments to maturity, thus reversing unrealized market gains and losses. Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity or earliest call date: 12 Months More than Type of Investment or Less 12 Months Total City: Money Market Funds $787,168 $787,168 Local Agency Investment Fund 48,843,399 48,843,399 Marin County Investment Pool 81,400 81,400 U.S. Government Obligations 7,739,810 $11,567,855 19,307,665 Federal Agency Securities and Instruments 4,665,547 6,338,462 11,004,009 Medium-Term Corporate Notes 1,986,625 11,238,186 13,224,811 Investment in Pt. San Pedro Bonds 1,134,017 1,134,017 Total Investments $64,103,949 $30,278,520 94,382,469 Cash in banks and on hand 9,834,570 Total City Cash and Investments 104,217,039 Fiduciary: Cash in banks 394,690 Total Fiduciary Cash 394,690 Total City and Fiduciary Cash and Investments 104,611,729 San Rafael Sanitation District: Marin County Investment Pool 46,864,314 Total District's Cash and Investments 46,864,314 Total Cash and Investments $151,476,043 DRAFT DRAFT REVIEW DRAFT 11-7-22 56 DRAFT CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 2 – CASH AND INVESTMENTS (Continued) The City is a participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City reports its investment in LAIF at the fair value amount provided by LAIF, which is the same as the value of the pool share. The balance is available for withdrawal on demand, and is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Each regular LAIF account is permitted to have up to 15 transactions per month, with a minimum transaction amount of $5,000, a maximum transaction amount of $75 million and at least 24 hours advance notice for withdrawals of $10 million or more. Included in LAIF’s investment portfolio are collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, loans to certain state funds, and floating rate securities issued by federal agencies, government-sponsored enterprises, United States Treasury Notes and Bills, and corporations. At June 30, 2022, these investments matured in an average of 311 days. Money Market Mutual Funds are available for withdrawal on demand. The investment portfolio of the Money Market Mutual Fund had an average maturity of 12 days at June 30, 2022. The County’s investment pool is not registered with the Securities and Exchange Commission as an investment company. The pool has a credit rating of “AAA/V1.” Investments made by the Treasurer are regulated by the California Government Code and by the County’s investment policy. The objectives of the policy are in order of priority, safety, liquidity, yield, and public trust. The County has established a treasury oversight committee to monitor and review the management of public funds maintained in the investment pool in accordance with Article 6 Section 27131 of the California Government Code. The oversight committee and the Board of Supervisors review and approve the investment policy annually. The County Treasurer prepares and submits a comprehensive investment report to the members of the oversight committee and the investment pool participants every month. The report covers the types of investments in the pool, maturity dates, par value, actual costs, and fair value. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT57 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 2 – CASH AND INVESTMENTS (Continued) G. Credit Risk Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the actual rating as of June 30, 2022, for each of the City’s or District’s investment types as provided by Standard and Poor’s or Moody’s investment rating systems, except as noted: Percentage Amount of Investments Invested Investments NRSRO Rating City: Money Market Funds $787,168 1% AAAm Marin County Investment Pool 81,400 < 1%AAA/V1 U.S. Government Obligations 19,307,665 20%AA+/Aaa Federal Agency Securities and Instruments 11,004,009 12%AA+/Aaa Medium-Term Corporate Notes 13,224,811 14% AA+, AA, AA-, A+, A-/ Aaa, Aa2, Aa3, A1, A2, A3 Local Agency Investment Fund 48,843,399 52%Not Rated Investment in Pt. San Pedro Bonds 1,134,017 1%Not Rated Total City Investments 94,382,469 San Rafael Sanitation District: Marin County Investment Pool 46,864,314 AAA/V1 Total Investments $141,246,783 H. Concentration Risk Investments in the securities of any individual issuers, other than U.S. Treasury securities, mutual funds, and external investment pools, that represent 5% or more of the total entity–wide investments are as follows at June 30, 2022: Issuer Investment Type Amount Federal National Mortgage Association Federal Agency Securities and Instruments $4,721,114 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT58 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 3 – INTER-FUND TRANSACTIONS A. Transfers Resources may be transferred from one City fund to another. Transfers routinely fund capital projects or capital outlays, lease or debt service payments, and operating expenses. Transfers between funds during the fiscal year ended June 30, 2022, were as follows: From Fund To Fund Amount General Fund Essential Facilities Capital Projects Fund $714,885 (A) Non-Major Governmental Funds 2,259,000 (B) Traffic and Housing Mitigation Special Revenue Fund Gas Tax Special Revenue Fund 1,190,000 (C) Gas Tax Special Revenue Fund General Fund 635,000 (D) Parking Services Enterprise Fund General Fund 436,209 (E) Non-Major Governmental Funds 85,000 (B) Equipment Replacement Internal Service Fund Gas Tax Special Revenue Fund 122,000 (C) Employee Retirement Internal Service Fund General Fund 683,813 (E) Non-Major Governmental Funds Essential Facilities Capital Projects Fund 307,313 (A) Non-Major Governmental Funds 8,544 (C) $6,441,764 (A)Transfers for Public Safety Center Projects. (B)Transfers for administrative costs, grant matching, recreation, and other program support. (D) Transfers for street maintenance support and administrative costs. (E)Transfers for debt service. (C) Transfers for project support. NOTE 4 – LOANS AND LEASES RECEIVABLE A. Summary of Loans Receivable The City has identified the portion of fund balance represented by these loans as nonspendable or restricted as discussed in Note 8. As of June 30, 2022, these loans consisted of the following: Employee Loans $747 Centertown Associates 920,826 One "H" Street Associates 31,431 Vivalon Loan 1,825,000 Total $2,778,004 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT59 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 4 – LOANS AND LEASES RECEIVABLE (Continued) B. Employee Loans The City administers a computer loan program that supports the use of technology by employees. Employees are permitted to borrow up to $1,500 for the purchase of computer hardware and software. The loans are interest-free, have maximum terms of one year, and are repaid through automatic payroll deductions. As of June 30, 2022, the balance of the employee loans receivable was $747. C. Centertown Associates Loan On August 20, 1990, the former Redevelopment Agency loaned Centertown Associates, Ltd, $303,000 at 3% interest due semiannually. The loan was made for the construction of a 60-unit affordable Centertown apartment complex and was fully secured by a deed of trust. The final payment is due on July 31, 2065. With the dissolution of the Redevelopment Agency effective February 1, 2012, the assets of the Agency’s Low and Moderate Income Housing Fund, including the Centertown Associates loan, were assumed by the City’s Low and Moderate Income Housing Special Revenue Fund. On October 22, 2021, City Council approved the Amended and Restated Promissory Note for the loan. The amendment extended the due date to October 22, 2078, for the original loan balance of $266,781 consisting of $219,982 in remaining principal and $46,799 in accrued interest as of the date of the amended loan agreement. In addition, the amendment included an additional loan in the amount of $643,095 for a ground lease for certain land located at 855 C Street, currently improved with approximately sixty units of affordable housing. Interest is compounded at 1.74% annually and is repayable from residual receipts as defined under the agreement. Repayment is due on October 22, 2078. The amended note is secured by a Leasehold Deed of Trust with Assignment of Rents and Security Agreement on the Property. As of June 30, 2022, the balance of the loan including principal and accrued interest was $920,826. D. One “H” Street Associates Loan On January 18, 1994, the City loaned One “H” Street Associates $100,000 at zero percent interest with annual payments of $2,857 and the final payment is due January 18, 2034. As of June 30, 2022, the balance of this loan was $31,431. E. Vivalon Loan On April 1, 2022, the City entered into a loan agreement in the amount of $1,825,000 to fund construction of the Vivalon Healthy Aging Center located at 999 3rd Street. Interest is due annually at 3% during the construction phase. The site will include 66 one-bedroom and studio units for older adults and approximately 20% of the units will be supportive housing. The term is the later of (a) the fifty-seventh anniversary of the date the Deed of Trust is recorded in the Recorder’s Office of Marin County or (b) the fifty-fifth anniversary of the date on which construction financing is converted into permanent financing. Annual payments equal to the City’s proportionate share of residual receipts attributable to the prior calendar year are due beginning June 1st after the end of the calendar year that the construction loan for the property converts to a permanent loan. The note is secured by a Deed of Trust. As of June 30, 2022, the balance of the loan was $1,825,000. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT60 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 4 – LOANS AND LEASES RECEIVABLE (Continued) F. Other Receivables – Long-Term Receivable from San Rafael Sanitation District The City provides staffing to San Rafael Sanitation District (District) under a contractual arrangement originated in 1987 that requires the District to pay all related employee costs incurred by the City on its behalf. Accordingly, the cost of providing pension and post- employment health benefits incurred by the City for the District staff but not yet funded are reflected by the District as an obligation, and by the City as a noncurrent receivable. The obligation as of June 30, 2022, is $3,324,061, and is composed of the following: Defined benefit pension liability allocation $2,658,961 Other post-employment benefit liability allocation 665,100 Total long-term receivable from San Rafael Sanitation District $3,324,061 G. Leases Receivable The City from to time to time engages in lease arrangements allowing the right for others to use various owned land and buildings for the public benefit. As of June 30, 2022, these leases and related deferred inflows of resources consisted of the following: Deferred Leases Inflows of Receivable Resources Marin History Museum $54,319 $52,892 Yacht Club 201,806 197,737 Trans Bay Cable 301,504 292,721 Total $557,629 $543,350 On August 1, 2021, the City began leasing a building to the Marin History Museum with monthly payments of $1,200 - $1,260 through July 1, 2026. The City recognized $11,874 in lease revenue and $2,753 in interest revenue during the current fiscal year related to this lease. Also, the City has a deferred inflow of resources associated with this lease that will be recognized as revenue over the lease term. On April 1, 2014, the City began leasing property to the San Rafael Yacht Club. The lease was extended during fiscal year 2022 and lease payments are due annually with an initial amount of $28,699 commencing March 31, 2022. Lease payments are to be increased by 5% every two years thereafter, until the end of the lease on March 31, 2029. The City recognized $28,248 in lease revenue and $4,520 in interest revenue during the current fiscal year related to this lease. Also, the City has a deferred inflow of resources associated with this lease that will be recognized as revenue over the lease term. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT61 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 4 – LOANS AND LEASES RECEIVABLE (Continued) On January 1, 2007, the City began leasing land to a third party for a cable operation. Lease payments are due annually with an initial amount of $33,500 commencing March 31, 2022. Lease payments are to be increased by 3% every year thereafter, until the end of the lease on January 1, 2031. The City recognized $32,525 in lease revenue and $9,757 in interest revenue during the current fiscal year related to this lease. Also, the City has a deferred inflow of resources associated with this lease that will be recognized as revenue over the lease term. NOTE 5 – CAPITAL ASSETS Changes in capital assets during the fiscal year consisted of: Balance June 30, 2021 Balance (as restated) Additions Retirements Transfers June 30, 2022 Governmental Activities Capital assets not being depreciated: Land $83,662,359 $368,000 ($4,700) $84,025,659 Construction in progress 24,616,957 18,861,107 ($20,992,844) 22,485,220 Total capital assets not being depreciated 108,279,316 19,229,107 (4,700) (20,992,844) 106,510,879 Capital assets being depreciated: Land improvements 9,762,567 9,762,567 Buildings and structures 119,165,142 119,165,142 Machinery and equipment 21,145,959 132,904 (820,929) 39,147 20,497,081 Infrastructure 213,601,501 3,360 20,953,697 234,558,558 Intangible right-to-use leased building 5,476,219 5,476,219 Intangible right-to-use leased equipment 258,365 258,365 Total capital assets being depreciated 369,409,753 136,264 (820,929) 20,992,844 389,717,932 Less accumulated depreciation for: Land improvements (7,137,860) (213,705)(7,351,565) Buildings and structures (24,163,745) (2,894,246)(27,057,991) Machinery and equipment (14,743,393) (1,136,975) 772,664 (15,107,704) Infrastructure (146,572,481) (4,973,490)(151,545,971) Intangible right-to-use leased building (156,463)(156,463) Intangible right-to-use leased equipment (80,740)(80,740) Total accumulated depreciation (192,617,479) (9,455,619) 772,664 (201,300,434) Total net capital assets being depreciated 176,792,274 (9,319,355) (48,265) 20,992,844 188,417,498 Total governmental activity capital assets $285,071,590 $9,909,752 ($52,965)$294,928,377 During fiscal year 2022, the City implemented the provisions of GASB Statement No. 87, Leases, which required the restatement of capital assets, specifically to incorporate an intangible right-to- use leased building and right-to-use leased equipment. As a result, initial intangible right-to-use lease assets were recorded in the amounts of $5,476,219 and $258,365, respectively, as of July 1, 2021. The lease assets are offset with lease liabilities as discussed in Note 14. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT62 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 5 – CAPITAL ASSETS (Continued) Balance Balance June 30, 2021 Additions June 30, 2022 Business-type Activities Capital assets not being depreciated: Land $8,620,853 $8,620,853 Total capital assets not being depreciated 8,620,853 8,620,853 Capital assets being depreciated: Buildings and structures 10,713,814 10,713,814 Machinery and equipment 940,164 940,164 Total capital assets being depreciated 11,653,978 11,653,978 Less accumulated depreciation for: Buildings and structures (3,921,410) ($205,363) (4,126,773) Machinery and equipment (848,219) (19,109)(867,328) Total accumulated depreciation (4,769,629) (224,472) (4,994,101) Total net capital assets being depreciated 6,884,349 (224,472) 6,659,877 Total business-type activity capital assets $15,505,202 ($224,472) $15,280,730 Balance Balance June 30, 2021 Additions Transfers June 30, 2022 San Rafael Sanitation District Capital assets not being depreciated: Land and easements $115,329 $115,329 Construction in progress 4,037,237 $2,546,213 ($5,761,041) 822,409 Total capital assets not being depreciated 4,152,566 2,546,213 (5,761,041) 937,738 Capital assets being depreciated: Subsurface lines 41,910,303 510,563 3,073,641 45,494,507 Sewage collection facilities 45,073,165 155,048 2,687,400 47,915,613 General plant and administration 2,365,939 742 2,366,681 Total capital assets being depreciated 89,349,407 666,353 5,761,041 95,776,801 Less accumulated depreciation for: Subsurface lines (13,538,918) (610,363) (14,149,281) Sewage collection facilities (23,683,812) (1,614,777) (25,298,589) General plant and administration (1,564,017) (135,203) (1,699,220) Total accumulated depreciation (38,786,747) (2,360,343) (41,147,090) Total net capital assets being depreciat ed 50,562,660 (1,693,990) 5,761,041 54,629,711 Total District's capital assets $54,715,226 $852,223 $55,567,449 Capital Asset Contributions – Some capital assets may have been acquired using Federal and State grant funds, or were contributed by developers or other governments. These contributions are accounted for as revenues at the time the capital assets are contributed. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT63 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 5 – CAPITAL ASSETS (Continued) Depreciation Allocation – Depreciation expense is charged to functions and programs based on their usage of the related assets. The amounts allocated to each function or program are as follows: Governmental Activities General government $108,142 Public safety 886,474 Public works and parks 6,309,621 Community development 51,993 Culture and recreation 757,344 Internal service funds 1,342,045 Total Governmental Activities $9,455,619 Business-type Activities Parking services $224,472 Total Business-type Activities $224,472 NOTE 6 – LONG TERM DEBT The City generally incurs long-term debt to finance projects or purchase assets which will have useful lives equal to or greater than the related debt. A summary of governmental and business-type activities transactions for the fiscal year ended June 30, 2022, are as follows: Authorized Balance Balance Current and Issued June 30, 2021 Additions Retirements June 30, 2022 Portion Governmental Activities Bonds: 2018 Authority Lease Revenue Bonds 4.00%-5.00%, due 6/1/2034 $45,485,000 $43,575,000 $2,070,000 $41,505,000 $2,240,000 Add: unamortized bond premium 6,603,265 507,943 6,095,322 2010 Taxable Pension Obligation Bonds 6.00%-6.25%, due 7/1/2025 4,490,000 2,845,000 505,000 2,340,000 535,000 Total Governmental Activities Bonds 53,023,265 3,082,943 49,940,322 2,775,000 Governmental Activities - Direct Borrowings: PG & E City Hall HVAC Retrofit Note Payable 0.00%, due 11/30/2023 334,585 79,438 33,280 46,158 33,280 PG & E CEC Efficiency Note Payable 1.00%, due 12/22/2026 1,104,799 826,313 146,889 679,424 148,362 PG & E Energy Efficient Lighting Project Note Payable 0.00% due 1/20/30 174,036 $174,036 9,064 164,972 21,755 Total Governmental Activities - Direct Borrowings 905,751 174,036 189,233 890,554 203,397 Total Governmental Activities Debt $53,929,016 $174,036 $3,272,176 $50,830,876 $2,978,397 Business-type Activities: Direct Borrowing: PG & E Parking Lot Lighting Retrofit Note Payable 0.00%, due 11/30/2023 66,380 $14,123 $6,818 $7,305 $6,816 2012 Authority Lease Revenue Refunding Bonds 2.00-4.00%, due 4/1/2033 6,750,000 4,325,000 300,000 4,025,000 310,000 Less: unamortized bond discount (8,522)(725)(7,797) Total Business-type Activities Bonds 4,316,478 299,275 4,017,203 310,000 Total Business-type Activities $4,330,601 $306,093 $4,024,508 $316,816 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT64 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 6 – LONG-TERM DEBT (Continued) A. 2018 Authority Lease Revenue Bonds On March 5, 2018, the Authority issued 2018 Authority Lease Revenue Bonds in the amount of $45,485,000 bearing interest at rates from 4.00% to 5.00%. The proceeds of the bonds were provided for replacement of two fire stations and construction of a public safety center. The Authority has pledged revenue pursuant to a site and facility lease between the City and the Authority for the public safety center. The lease rental payments are due semi-annually and are in an amount sufficient to make payments on the Bonds. Interest on the Bonds is payable semiannually on June 1 and December 1. Principal payable on the Bonds will be paid on June 1 starting on June 1, 2021. The Bonds maturing on or prior to June 1, 2028, are not subject to optional redemption prior to their maturity. The Bonds maturing on or after June 1, 2029, are subject to optional redemption as a whole or in part on any date after June 1, 2028, at the option of the Authority, at a redemption price equal to the principal amount of the Bonds subject to redemption, plus accrued interest to the date fixed for redemption, without premium. The Bonds are payable from any source of available funds of the City. The bond covenants contain events of default that require the revenue of the City to be applied by the Trustee as specified in the terms of the agreement if any of the following conditions occur: default on debt service payments; the failure of the City to observe or perform the conditions, covenants, or agreement terms of the debt; bankruptcy filing by the City; or if any court or competent jurisdiction shall assume custody or control of the City. B. 2010 Taxable Pension Obligation Bonds On July 1, 2010, the City issued 2010 Taxable Pension Obligation Bonds in the amount of $4,490,000 bearing interest at rates from 6.00% to 6.25%. Principal payments are due annually on July 1 and interest is payable semiannually on January 1 and July 1. The Bonds were issued to prefund a portion of the obligations of the City to the Marin County Employees’ Retirement Association. Payment of the principal and interest on the Bonds is not limited to any special source of funds and is payable from any legally available moneys of the City. The City is not empowered or obligated to levy or pledge taxes to make payments on the Bonds. The bond covenants contain events of default that require the revenue of the City to be applied by the Trustee as specified in the terms of the agreement if any of the following conditions occur: default on debt service payments; the failure of the City to observe or perform the conditions, covenants, or agreement terms of the debt; bankruptcy filing by the City; or if any court or competent jurisdiction shall assume custody or control of the City. C. Pacific Gas and Electric Notes Payable PG&E HVAC and Lighting Retrofit On September 30, 2013, the City executed a note payable agreement with Pacific Gas and Electric (PG&E) in the amount of $634,861, which does not bear interest. The debt was assumed as a means to finance energy-efficient retrofit projects which include updating the existing heating, ventilation, and air conditioning (HVAC) unit in City Hall and converting the street and parking lot lights to light emitting diode (LED). $334,585 of the loan is for the HVAC projects and $300,276 of the loan is for the LED projects. Repayment of the loan commenced in December 2013, and is due monthly until paid in full in 2023. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT65 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 6 – LONG-TERM DEBT (Continued) PG&E CEC Efficiency On September 5, 2017, City Council approved the execution of a note payable agreement with PG&E in an amount up to $1,178,813, bearing interest at 1%. The debt was assumed as a means to finance the execution of various energy efficiency system upgrades to City facilities and street lights. The upgrades included interior and exterior lighting upgrades and energy management control systems. The City made the final draw on the loan and the final loan obligation was $1,104,799. Payments commenced in December 2019, and are due semi-annually until paid in full in December 2026. PG&E Energy Efficient Lighting Project On September 20, 2021, the City executed a note payable agreement with PG&E in the amount of $174,036, which does not bear interest. The debt was assumed as a means of financing energy efficient lighting for the Al Boro recreation center and the department of Public Works building. Repayment of the loan commenced in February 2022 and payments are due monthly until paid in full in January 2030. D. 2012 Authority Lease Revenue Refunding Bonds On August 7, 2012, the Authority issued 2012 Authority Lease Revenue Refunding Bonds in the amount of $6,750,000 bearing interest at rates from 2.00% to 4.00%. The proceeds of the Series 2012 Bonds were used to repay the Authority’s 2003 Authority Lease Revenue Bonds that financed the construction of the 3rd and C Street parking structure and achieved lower interest rates and lower annual debt service payments. The refunding resulted in a net present value savings to the City in debt service of $670,496. In addition, the requisition price exceeded the net carrying amount of the old debt by $295,278. The Series 2012 Bonds are payable from lease payments made by the City to the Authority for leasing the City facilities. The rights to these lease payments have been irrevocably transferred by the Authority to the Trustee. Activities related to the Series 2012 Bonds are reported in the Parking Services Enterprise Fund. Principal payments are due annually on April 1 and interest is payable semiannually on October 1 and April 1. The Bonds maturing on or prior to April 1, 2022, are not subject to optional redemption prior to their maturity. The Bonds maturing on or after April 1, 2023, are subject to optional redemption as a whole or in part on any date after April 1, 2022, at the option of the Authority, at a redemption price equal to the principal amount of the Bonds subject to redemption, plus accrued interest to the date fixed for redemption, without premium. The Bonds are payable from any source of available funds of the City. The bond covenants contain events of default that require the revenue of the City to be applied by the Trustee as specified in the terms of the agreement if any of the following conditions occur: default on debt service payments; the failure of the City to observe or perform the conditions, covenants, or agreement terms of the debt; bankruptcy filing by the City; or if any court or competent jurisdiction shall assume custody or control of the City. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT66 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 6 – LONG-TERM DEBT (Continued) E. Future Debt Service Future debt service requirements, including interest, at June 30, 2022, are as follows: Governmental Activities For the Year Bonds Direct Borrowings Ended June 30 Principal Interest Principal Interest 2023 $2,775,000 $2,204,781 $203,397 $6,425 2024 3,000,000 2,058,406 184,469 4,951 2025 3,245,000 1,900,250 173,106 3,436 2026 3,510,000 1,729,256 174,623 1,919 2027 3,105,000 1,565,750 98,761 386 2028 - 2032 19,555,000 5,240,250 56,198 2033 - 2034 8,655,000 624,250 Totals 43,845,000 $15,322,943 890,554 $17,117 Reconciliation of Long-term debt: Add: unamortized premium 6,095,322 $49,940,322 $890,554 Business-type Activities For the Year Bonds Direct Borrowing Ended June 30 Principal Interest Principal 2023 $310,000 $143,588 $6,816 2024 320,000 134,288 489 2025 330,000 124,288 2026 335,000 113,562 2027 350,000 102,256 2028 - 2032 1,945,000 314,412 2033 - 2034 435,000 17,400 Totals 4,025,000 $949,794 7,305 Reconciliation of Long-term debt: Less: unamortized discount (7,797) $4,017,203 $7,305 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT67 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 7 – DEBT WITHOUT CITY COMMITMENT A. Special Assessment Debt Without City Commitment Special assessment districts have been established in various parts of the City to provide improvements to properties located in those districts. Properties in these districts are assessed for the cost of improvements; these assessments are payable solely by property owners over the term of the debt issued to finance these improvements. The City is not legally or morally obligated to pay these debts or be the purchaser of last resort of any foreclosed properties in these special assessment districts, nor is it obligated to advance City funds to repay these debts in the event of default by any of these districts. The City does act as an agent for the property owners and bondholders and at June 30, 2022, the balances of these Districts’ outstanding debt were as follows: Project Original Outstanding Description Amount June 30, 2022 Pt. San Pedro Road Median Landscaping Pt. San Pedro Road Assessment District Limited Obligation Bonds-2012 Median Landscaping $1,750,000 $1,159,300 B. Conduit Debt The City has assisted private-sector entities by sponsoring their issuance of debt for purposes the City deems to be in the public interest. These debt issues are secured solely by the property financed by the debt. The City is not legally or morally obligated to pay these debts or be the purchaser of last resort of any foreclosed properties secured by these debts, nor is it obligated to advance City funds to repay these debts in the event of default by any of these issuers. At June 30, 2022, the balance of this issuers’ outstanding debt was as follows: Project Original Outstanding Description Amount June 30, 2022 San Rafael Redevelopment Agency 162-175 Belvedere Multifamily Housing Revenue Bonds-2000A Apartments $3,590,529 $846,020 California Statewide Communities Development Authority Revenue Bonds-2001 St. Marks School 5,605,000 2,335,000 San Rafael Redevelopment Agency San Rafael Commons Multifamily Housing Revenue Bonds-2002 Apartments 6,100,000 4,105,000 San Rafael Redevelopment Agency Multifamily Housing Revenue Bonds-2007 Series A Martinelli House Project 6,000,000 1,676,396 Multifamily Housing Revenue Bonds-2007 Series B Martinelli House 1,000,000 122,650 Total $22,295,529 $9,085,066 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT68 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 8 – NET POSITION AND FUND BALANCE A. Net Position Net Position is the excess of all the City’s assets and deferred outflows of resources over all its liabilities and deferred inflows of resources, regardless of fund. Net Position is divided into three captions. These captions apply only to Net Position, which is determined only at the Government- wide level and business type activity and are described below: Net Investment in Capital Assets describes the portion of Net Position which is represented by the current net book value of the City’s capital assets, less the outstanding balance of any debt issued to finance these assets. Restricted describes the portion of Net Position which is restricted to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions which the City cannot unilaterally alter. Unrestricted describes the portion of Net Position which is not restricted to use. B. Fund Balance In the fund financial statements, fund balances represent the net current assets of each fund. Net current assets generally represent a fund’s cash and receivables, less its liabilities. The City’s fund balances are classified in accordance with generally accepted accounting principles, which require the City to classify its fund balances based on spending constraints imposed on the use of resources. For programs with multiple funding sources, the City prioritizes and expends funds in the following order: Restricted, Committed, Assigned, and Unassigned. Each category in the following hierarchy is ranked according to the degree of spending constraint: Nonspendable represents balances set aside that do not represent available, spendable resources even though they are a component of assets. Fund balances required to be maintained intact, such as Permanent Funds, and assets not expected to be converted to cash, such as prepaids, loans receivable, and land held for redevelopment are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed or assigned, then Nonspendable amounts are required to be presented as a component of the applicable category. Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation which requires the resources to be used only for a specific purpose. Nonspendable amounts subject to restrictions are included along with spendable resources. Committed fund balances have constraints imposed by resolution of the City Council which may be altered only by resolution of the City Council. Nonspendable amounts subject to Council commitments are included along with spendable resources. Assigned fund balances are amounts constrained by the City’s intent that they be used for a specific purpose, but are neither restricted nor committed. Intent is expressed by the City Manager, as designated by the City Council, and may be changed at the discretion of the City Council or City Manager. This authorization is given through Resolution No. 13173 which adopted the City’s Fund Balance Policy. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT69 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 8 – NET POSITION AND FUND BALANCE (Continued) This category includes nonspendables, when it is the City’s intent to use proceeds or collections for a specific purpose; and residual fund balances, if any, of Special Revenue, Capital Projects and Debt Service Funds which have not been restricted or committed. Unassigned fund balance represents residual amounts that have not been restricted, committed, or assigned. This includes the residual General Fund balance and residual fund deficits, if any, of other governmental funds. Detailed classifications of the City’s fund balances, as of June 30, 2022, are below: Capital Project Funds General Fund Traffic and Housing Mitigation Gas Tax Essential Facilities Capital Projects Fund Other Governmental Funds Total Fund balances: Nonspendable: Prepaids $95,279 $89,761 $185,040 Total Nonspendable 95,279 89,761 185,040 Restricted for: Assessment District capital projects 305,142 305,142 Baypoint Lagoons Assessment District 204,245 204,245 Bedroom tax capital projects 130,150 130,150 Childcare 344,552 344,552 Development services 349,645 349,645 Emergency medical services 742,839 742,839 Street improvements and Maintenance (Gas Tax) $6,918,267 6,918,267 Grant funded programs 396,202 396,202 Household hazmat facility 511,631 511,631 Library 3,087,520 3,087,520 Library assessment 959,651 959,651 Loch Lomond Assessment District 771,508 771,508 Loch Lomond Assessment District #2 736,909 736,909 Low and Moderate Income Housing 1,872,570 1,872,570 Measure A - Open space 780,956 780,956 Measure C - Wildlife Prevention 803,182 803,182 Measure E - Public Safety Facility $9,317,312 9,317,312 Measure G - Cannabis 968,251 968,251 Parkland dedication 343,740 343,740 Public safety 133,083 133,083 Pt. San Pedro- Maintenance Portion 140,036 140,036 Recreation revolving 484,552 484,552 Stormwater 1,269,705 1,269,705 Traffic and housing mitigation $4,871,871 4,871,871 Total Restricted 4,871,871 6,918,267 9,317,312 15,336,069 36,443,519 Committed to: Capital improvement capital projects 1,496,419 1,496,419 Emergency and cash flow 9,415,000 9,415,000 Park capital projects 17,936 17,936 Total Committed 9,415,000 1,514,355 10,929,355 Assigned to: Contractual commitments 4,027,421 4,027,421 One-time funds allocated to capital projects 14,971,510 14,971,510 Capital Project grant matching 3,449,733 3,449,733 Infrastructure Reserve 600,000 600,000 General plan / long range planning 1,222,176 1,222,176 Open space capital projects 117,755 117,755 Total Assigned 24,270,840 117,755 24,388,595 Total Fund Balances $33,781,119 $4,871,871 $6,918,267 $9,317,312 $17,057,940 $71,946,509 Special Revenue Funds DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT70 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 8 – NET POSITION AND FUND BALANCE (Continued) C. Minimum Fund Balance Policy The City Council adopted a General Fund Reserve Policy in November 2014 to establish target reserve levels and the methodology for calculating reserve levels. The Policy also establishes criteria for the use of reserves and a process to replenish reserves. The Policy requires the City to strive to maintain the following fund balances: 1)Emergency and Cash Flow Reserve (10% minimum) An emergency and cash flow reserve will be maintained for the purposes of (1) sustaining General Fund operations in the case of a public emergency, such as a natural disaster or other unforeseen catastrophic event; and (2) to cover sudden operating shortfalls caused by (a) a severe drop in revenues that cannot be sufficiently offset by a corresponding reduction in expenditures and/or other available resources, or (b) an unforeseen, unavoidable expenditure that must be paid from the General Fund. This reserve level is measured as a percentage of annual operating expenditures. Budgeted operating expenditures are to be used for the purposes of budget allocations and projections, and actual operating expenditures are to be used for the purpose of measuring this reserve at fiscal year-end. This reserve may be expended only when the City Council determines by resolution that such action is consistent with the purpose and intent of this policy. In the event the balance in the Emergency and Cashflow Reserve falls below the minimum level, the City Manager, shall recommend a plan to replenish the fund within a timeframe not to exceed three years. This recommendation shall be approved by the City Council no later than the time at which the next annual budget is adopted. Any variance from the stipulations established within this policy shall require approval by the City Council along with a statement of findings supporting the temporary or ongoing modification to this policy. The required reserve was $9,415,000 at June 30, 2022, and the balance of the reserve, included in the General Fund’s committed fund balance was $9,415,000 at that date. 2)Other Facilities and Infrastructure The purpose of the assigned infrastructure reserve is to accumulate funds to be used for the purpose of non-public safety facility construction and major improvements (e.g., library, administrative and non-safety buildings, streets, and the stormwater system). This was $600,000 at June 30, 2022. The General Plan/Long Range Planning reserve included in the General Fund’s assigned fund balance was $1,222,176 at June 30, 2022, which is specifically assigned to the City’s General Plan, a state required plan that must address eight topic areas – Neighborhoods, Community Design, Economic Vitality, Infrastructure, Governance, Culture and Arts, Parks and Recreation and Air and Water Quality. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT71 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 9 – PENSION PLAN A. Plan Description The City’s defined benefit retirement plan is administered by the Marin County Employees’ Retirement Association (MCERA), a retirement system established in July 1950 and governed by the California Constitution; the County Employees Retirement Law of 1937 (CERL or 1937 Act, California government Code Section 31450 et seq.); the Public Employees’ Pension Reform Act of 2013 (PEPRA, Government Code Section 7522); the provisions of California Government Code Section 7500 et seq; and the bylaws, procedures, and policies adopted by MCERA’s Board of Retirement. The Marin County Board of Supervisors may also adopt resolutions, as permitted by the CERL and PEPRA, which may affect the benefits of MCERA members. MCERA operates as a cost-sharing multiple employer defined benefit plan for the City and eight other participating employers: County of Marin, Local Agency Formation Commission (LAFCO), Marin City Community Services District, Marin County Superior Court, Marin/Sonoma Mosquito and Vector Control District, Novato Fire Protection District, Southern Marin Fire Protection District and Tamalpais Community Services District. Separate actuarial valuations are performed for these other agencies and districts, and the responsibility for funding their plans rest with those entities. Post-retirement benefits are administered by MCERA to qualified retirees. Copies of MCERA’s annual financial reports, which include required supplementary information (RSI) for the plan may be obtained from their office at One McInnis Parkway, Suite 100, San Rafael, CA 94903 or online at www.mcera.org. B. Benefit Provisions Service Retirement: MCERA’s service retirement benefits are based on the years of credited service, final average compensation, and age at retirement, according to the applicable statutory formula. Members who qualify for service retirement are entitled to receive monthly retirement benefits for life. General members hired prior to January 1, 2013, are eligible to retire once they attain the age of 50 (except Misc. Tier 2, whereby the minimum age is 55) and have acquired 10 or more years of retirement service credit. A member with 30 years of service is eligible to retire regardless of age. A member who is age 70 or older is eligible to retire regardless of service credit. General members who are first hired on or after January 1, 2013, are eligible to retire once they have attained the age of 52, and have acquired 5 years of retirement service credit, or age 70, regardless of service. Safety members hired prior to January 1, 2013, are eligible to retire once they attain the age of 50 and have acquired 10 or more years of retirement service credit. A member with 20 years of service is eligible to retire regardless of age. A member who is age 70 or older is eligible to retire regardless of service. Safety members who are first hired on or after January 1, 2013, are eligible to retire once they have attained the age of 50, and have acquired 5 years of retirement service credit, or age 70, regardless of service. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT72 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 9 – PENSION PLAN (Continued) Disability Retirement: A member with five years of service, regardless of age, who becomes permanently incapacitated for the performance of duty is eligible to apply for a non-service connected disability retirement. Any member who becomes permanently incapacitated for the performance of duty as a result of injury or disease arising out of and in the course of employment is eligible to apply for a service-connected disability retirement, regardless of service length or age. Death Benefits: MCERA provides specified death benefits to beneficiaries and members’ survivors. The death benefits provided depend on whether the member is active or retired. The basic active member death benefit consists of a members’ retirement contributions plus interest plus one month’s pay for each full year of service (up to a maximum of six month’s pay). Retiring members may choose from five retirement benefit payment options. Most retirees elect to receive the unmodified allowance which provides the maximum benefit to the retiree and continuance of 60% of the retiree’s allowance to the surviving spouse or registered domestic partner after the retiree’s death. Other death benefits may be available based on the years of service, marital status, and whether the member has minor children. Cost of Living Adjustment: Retirement allowances are indexed for inflation. Most retirees receive automatic basic cost of living adjustments (COLA’s) based upon the Urban Consumer Price Index (UCPI) for the San Francisco Bay Area. These adjustments go into effect on April 1 of each year. Annual COLA increases are statutorily capped at 2%, 3%, or 4% depending upon the member’s retirement tier. When the UCPI exceeds the maximum statutory COLA for the member’s tier, the difference is accumulated for use in future years when the UCPI is less than the maximum statutory COLA. The accumulated percentage carryover is known as the COLA Bank. C. Funding Policy The funding policy of MCERA provides for actuarially determined periodic contributions by the City at rates such that sufficient assets will be available to pay plan benefits when due. The employer rates for normal cost are determined using the Entry Age Normal Actuarial Cost Method, which takes into account those benefits that are expected to be earned in the future as well as those already accrued. The City contribution rates for the year ended June 30, 2022 were as follows: Employer Employee Contribution Rate Contribution Rate Benefit Basis City of San Rafael Misc Tier 1 54.22%0.00% - 16.13% 2.7% @ 55 Highest year City of San Rafael Misc Tier 2 53.61%7.34% - 11.76% 2.0% @ 55 Average three highest years City of San Rafael Fire Tier 1 77.38%13.21% - 19.59% 3.0% @ 55 Highest year City of San Rafael Fire Tier 2 76.81%11.40% - 17.36% 3.0% @ 55 Average three highest years City of San Rafael Safety Police Tier 1 77.56%13.21% - 19.59% 3.0% @ 55 Highest year City of San Rafael Safety Police Tier 2 79.66%11.40% - 17.36% 3.0% @ 55 Average three highest years PEPRA Misc 47.73%9.71%2.0% @ 62 Average three highest years PEPRA Safety 67.41%14.99%2.7% @ 57 Average three highest years DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT73 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 9 – PENSION PLAN (Continued) These rates were determined by MCERA, based on the actuarial valuation dated June 30, 2020. The actual rate of return on investments during that year was 3.48% on a market value basis net of investment expenses, as compared to the prior year’s 7% assumption. The City uses the actuarially determined percentages of payroll to calculate and pay contributions to MCERA. Contributions to the plan from the City were $21,859,307 for the year ended June 30, 2022, based on a total payroll of $47,190,217, of which $34,418,052 represented the basis for the plan contributions. Of the total payroll subject to plan contributions, $1,402,799 is attributable to the San Rafael Sanitation District (SRSD), a component unit of the City. Effective with the June 30, 2013, valuation, the Unfunded Actuarial Liability (UAL) as of June 30, 2013, is being amortized over a closed 17-year period (10 years remaining as of June 30, 2020), except for the additional UAL attributable to the outstanding unfunded actuarial loss from 2009, which is being amortized over a separate closed period (currently 18 years). Effective with the June 30, 2014 valuation, any new sources of UAL due to actuarial gains and losses or method changes are amortized over a closed 24-year period, with a 5-year ramp up period at the beginning of the period, a 4-year ramp down at the end of the period, and 15 years of level payments as a percentage of payroll between the ramping periods. This amortization method for gains and losses is similar to a 20-year amortization period with level payments as a percentage of payroll, in conjunction with a traditional 5-year asset smoothing. Assumption changes are amortized over a closed 22-year period, with a 3-year ramp up period, 2- year ramp down period, and 17 years of level payments as a percentage of payroll. D. Net Pension Asset and Pension Expense The City’s net pension asset (NPA) has been determined for the financial reporting period ended June 30, 2022, based on the following methodology: The City’s NPA as of June 30, 2020, was updated to the measurement date of June 30, 2021 using the actual City’s plan assets as of June 30, 2021, and estimating the change in the City’s liabilities between July 1, 2020 and June 30, 2021. This estimate is based on a projection of the City’s long-term contributions to the pension plan relative to the projected contributions of all participating employers. The resulting NPA for the City under this calculation is $48,176,309 or 29.665% of the total MCERA NPA of $162,401,177 (reference MCERA’s GASB 67/68 report as of June 30, 2021). This compares to the previous year’s net pension liability of $157,279,576 or 34.3574% of the total MCERA net pension liability of $457,774,963 (reference MCERA’s GASB 67/68 report as of June 30, 2020). In addition to the reporting of the NPA as of June 30, 2022, the City reported deferred inflows of $164,252,572 and deferred outflows of $15,753,361 as of the measurement date June 30, 2021. The City reported post-measurement date outflows of $21,859,307 from actual fiscal year 2021- 2022 pension contributions. Deferred outflows include deferred investment gains and adjustments to assumptions based on actual positive results. Deferred outflows have a positive impact on net assets (offsetting the net pension liability) and will be recognized in future reporting periods. Deferred inflows include deferred investment losses, adjustments to assumptions based on actual negative results, and contributions made after the measurement date. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT74 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 9 – PENSION PLAN (Continued) Deferred inflows have a negative impact on net assets (similar to the net pension liability) and will be recognized in future reporting periods. The net impact of these net pension asset related entries on the City’s Statement of Net Position before allocations to the San Rafael Sanitation District was $78,463,595. After allocations to the San Rafael Sanitation District, the net impact on the City’s Statement of Net Position was $75,804,634. Under generally accepted accounting principles, the City’s pension expense is based on the Plan’s pension expense, adjusted for the City’s actual contributions and net pension liability (asset). Three components are used to calculate pension expense: (1) changes in the net pension liability; (2) changes in benefit terms (if any): and (3) changes in actuarial assumptions and experience. Pension expense is calculated using a different methodology than that used to derive the actuarially determined annual contribution to the Plan. Actual pension contributions during the reporting year were $21,859,307. Because pension expense is affected by annual changes in the net pension liability, volatility is to be expected. For the current measurement period, investment returns above the assumed rate were responsible for the decrease in net pension liability to a net pension asset and had a corresponding impact on pension expense. The table below provides a summary of the key results during the reporting period: Measurement Date Measurement Date Description 6/30/2021 6/30/2020 Net Pension (Asset) Liability ($48,176,309) $157,279,576 Deferred Inflows 164,252,572 17,358,743 Deferred Outflows (15,753,361) (34,080,980) Impact on Net Position before Deferred Outflows from Contributions 100,322,902 140,557,339 Additional Deferred Outflows - Contributions Subsequent to Measurement Date (21,859,307) (20,106,821) Impact on Statement of Net Position before Allocations 78,463,595 120,450,518 Allocation of Net Pension (Asset) Liability to SRSD (1,635,722) 5,026,185 Allocation of Deferred Inflows (measurement date) to SRSD 5,576,838 554,734 Allocation of Deferred Outflows (measurement date) to SRSD (534,871) (1,089,126) Impact on Net Position before Allocation of Deferred Outflows from Contributions to SRSD 3,406,245 4,491,793 Allocation of Additional Deferred Outflows (Contributions) to SRSD (747,284) (713,745) Long-Term Receivable from SRSD, due to pension obligations (see Note 4F)2,658,961 3,778,048 Impact on Statement of Net Position, net of receivable from SRSD $75,804,634 $116,672,470 Pension (Revenue) Expense ($20,127,615) $25,009,310 Summary of Results DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT75 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 9 – PENSION PLAN (Continued) Projection of Total Pension Liability and Net Pension Liability Total Pension Liability (TPL) is the actuarial present value of projected benefit payments attributed to past periods of employee service. MCERA and the City have adopted a measurement date of June 30, 2021. The beginning of year measurement of TPL is based on the actuarial valuation as of June 30, 2020. The TPL at the end of the measurement year, June 30, 2021, is also measured as of the valuation date of June 30, 2020 and projected to June 30, 2021. The Plan Fiduciary Net Position (FNP) is the fair or market value of assets. The FNP at the beginning of the year is based on the actuarial valuation as of June 30, 2020. The FNP at the end of the measurement year, June 30, 2021, is also measured as of the valuation date of June 30, 2020, and projected to June 30, 2021. The Net Pension Liability (Asset) (NPL/NPA) is the City’s liability (asset) for benefits provided through its defined benefit plan administered by MCERA. It is calculated by reducing the TPL by the FNP. The long-term portion of the governmental activities’ NPL is liquidated primarily by the General Fund. Actuarial assumptions: The total pension liability as of June 30, 2021 (measurement date) was determined by an actuarial valuation as of June 30, 2020, using the following actuarial assumptions applied to all prior periods included in the measurement. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT76 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 9 – PENSION PLAN (Continued) The key assumptions in the valuation were as follows: Expected Return on Assets 6.75% per year, net of investment expenses Discount Rate 6.75% per year Price Inflation 2.50% per year Salary Increases 3.00% per year plus merit component based on employee classification and years of service. Administrative Expenses Administrative expenses in the actuarial valuation are assumed to be $5 million for FY 2020-21, to be split between employees and employers based on their share of the overall contributions. Administrative expenses shown in this report are based on the actual FY 2019-20 amounts. Post-Retirement COLA Post-retirement COLAs are assumed at a rate of 2.5% for members with a 4% COLA cap, 2.4% for members with a 3% COLA cap, and 1.9% for members with a 2% COLA cap. Mortality Rates for Healthy Members and Inactives Mortality Rates for Retired Disabled Members Mortality rates for Miscellaneous active members are based on the sex distinct Public General 2010 Employee Mortality Table, with generational mortality improvements projected from 2010 using Projection Scale MP-2020, with no adjustments. Mortality rates for Safety active members are based on the sex distinct Public Safety 2010 Above-Median Income Employee Mortality Table, with generational mortality improvements projected from 2010 using Projection Scale MP-2020, with no adjustments. 10% of Safety member active deaths are assumed to occur in the line of duty. Rates of mortality for Miscellaneous disabled members are based on the sex distinct Public General 2010 Disabled Retiree Mortality Table, with generational mortality improvements projected from 2010 using Projection Scale MP-2020, with no adjustments. Rates of mortality for Safety disabled members are based on the sex distinct Public Safety 2010 Disabled Retiree Mortality Table, with generational mortality improvements projected from 2010 using Projection Scale MP-2020, adjusted by 95% for males with no adjustment for females. Changes of Assumptions The discount rate decreased from 7.0% to 6.75% and price inflation decreased from 2.75% to 2.50%. Other changes included changes to the mortality, service retirement, disability and termination rates. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT77 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 9 – PENSION PLAN (Continued) Asset Allocation Policy and Expected Long-Term Rate of Return by Asset Class The Board of Retirement has adopted an Investment Policy Statement (IPS), which provides the framework for the management of MCERA’s investments. The IPS establishes MCERA’s investment objectives and defines the principal duties of the Retirement Board, the custodian bank, and the investment managers. The asset allocation plan is an integral part of the IPS and is designed to provide an optimum and diversified mix of asset classes with return expectations to satisfy expected liabilities while minimizing risk exposure. MCERA currently employs external investment managers to manage its assets subject to the provisions of the policy. Plan assets are managed on a total return basis with a long term objective of achieving and maintaining a fully funded status for the benefits provided through the Plan. The following was the Retirement Board’s adopted asset allocation policy as of June 30, 2021: Long-Term Expected Rate Target Long-Term Expected of Return Asset Class Allocation Real Rate of Return (with the effect of inflation) Domestic Equity 32% 4.60% 7.10% International Equity 22% 4.80% 7.30% Fixed Income 23% -0.25% 2.25% Public Real Assets 7% 2.90% 5.40% Real Estate 8% 3.75% 6.25% Private Equity 8% 6.00% 8.50% Cash and Short-Term Investments 0% -1.00% 1.50% Total 100% The Long-Term returns are calculated using a 10-year geometric return derived from arithmetic returns and the associated risk (standard deviation). Determination of Discount Rate The discount rate used to measure the Total Pension Liability was 6.75%. Related to the discount rate is the funding assumption that employees will continue to contribute to the plan at the required rates and employers will continue the historical and legally required practice of contributing to the plan based on an actuarially determined contribution, reflecting a payment equal to annual normal cost, a portion of the expected administrative expenses, an amortization payment for the extraordinary losses from 2009 amortized over a closed period (18 years remaining as of the June 30, 2020 actuarial valuation), and an amount necessary to amortize the remaining Unfunded Actuarial Liability as a level percentage of payroll over a closed period (10 years remaining as of the June 30, 2020 actuarial valuation). A change in the discount rate would affect the measurement of the TPL. A lower discount rate results in a higher TPL and higher discount rates results in a lower TPL. Because the discount rate does not affect the measurement of assets, the percentage change in the NPL can be significant for a relatively small change in the discount rate. A one percent decrease in the discount rate increases the TPL by approximately 13% and increase the NPL by approximately 259%. A one percent increase in the discount rate decreases the TPL by approximately 11% and decreases the NPL by approximately 213%. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT78 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 9 – PENSION PLAN (Continued) The table below shows the sensitivity of the Net Pension Liability (Asset) to a one percent decrease and a one percent increase in the discount rate: 1%Discount 1% Decrease Rate Increase Description 5.75%6.75%7.75% Total Pension Liability $1,083,821,676 $959,104,784 $856,399,657 Fiduciary Net Position 1,007,281,093 1,007,281,093 1,007,281,093 Net Pension Liability (Asset)$76,540,583 ($48,176,309) ($150,881,436) 92.9%105.0%117.6% Fiduciary Net Position as a Percentage of the Total Pension Liability Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Pension Resources The impact of experience gains or losses and assumption changes on the Total Pension Liability (TPL) are recognized in the proportionate share of the pension expense over the average expected remaining service life of all active and inactive members of the plan. As of the measurement date, this recognition period was 4 years. The following tables show the current balance and sources of deferred outflows and inflows related to the City’s defined benefit retirement plan, and the scheduled recognition of these deferred amounts: Deferred Deferred Outflows of Inflows of Description Resources Resources Differences between expected and actual experience $5,463,897 Changes in assumptions 7,492,156 Change in proportion 2,797,308 $17,336,022 Difference between City contributions and proportionate share of contributions 8,395,761 Actual FY 21-22 contributions (post measurement date)21,859,307 Net difference between projected and actual earnings on pension plan investments 138,520,789 Deferred Inflows and Outflows Before Allocations $37,612,668 $164,252,572 Allocation of Deferred Inflows and Outflows to SRSD As of measurement date $534,871 $5,576,838 Post-measurement date 747,284 Net Deferred Inflows and Outflows $36,330,513 $158,675,734 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT79 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 9 – PENSION PLAN (Continued) The $21,859,307 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows: Amortization Year ended June 30 Amount 2023 ($37,818,939) 2024 (36,121,281) 2025 (35,717,833) 2026 (38,841,158) Total ($148,499,211) NOTE 10 – PUBLIC AGENCY RETIREMENT SYSTEM (DEFINED CONTRIBUTION RETIREMENT PLAN) The City contributes to the Public Agency Retirement System (PARS), which administers a defined contribution retirement plan. A defined contribution retirement plan provides retirement benefits in return for services rendered, provides an individual account for each participant, and specifies how contributions to the individual’s accounts are determined instead of specifying the amount of benefits the individual is to receive. The benefits a participant will receive depend on the amount contributed to the participant’s account, and the returns earned on investments on those contributions. The Plan’s trust administrator is Phase II, P.O. Box 12919, Newport Beach, California 92658. As established by the plan, all eligible part-time and temporary employees of the City become participants in the plan from the date that they are hired. An eligible employee is any employee who, at any time during which the employer maintains this plan, is not accruing a benefit under the Marin County Employees’ Retirement Fund. As determined by the plan, each employee must contribute 3.75% of gross earnings to the plan. The City contributes an additional 3.75% of the employee’s gross earnings. Contributions made by an employee and the employer vest immediately. During the year, the City and employees each contributed $133,398. The total covered payroll of employees participating in the plan for the year ended June 30, 2022, was $3,557,279. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT80 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 11 – POST-EMPLOYMENT HEALTH CARE BENEFITS Plan Description The City provides certain health care benefits for retired employees and their spouses under an Agent Multiple-Employer Defined Benefit Plan. The benefit provisions were established under the authority of the 1937 Act, Section 31450, et. seq. of the Government Code. Employees who meet the vesting criteria become eligible for these benefits if they receive a retirement benefit from the Marin County Employees’ Retirement Association within 120 days of retirement from City employment. The provisions and benefits of the City’s Other Post Employment Benefit Plan, in effect at June 30, 2022, are summarized as follows: Elected Officials, Mid-Management, & Unrepresented Management All other Bargaining Units Eligibility - Age 50 (age 55 if hired > 7/1/11) with 10 years services (Including reciprocity) OR - -Age 70 - Disability Retirement Benefit Hired < 1/1/09 Full premium/cap Hired < 1/1/10 Up to cap Hired ≥ 1/1/09 PEMHCA Min Hired ≥ 1/1/10 PEMHCA Min Surviving Spouse Benefit Continuation to surviving spouse Medicare Part B Hired < 4/1/07 Full reimbursement None Hired ≥ 4/1/07 None Other No Dental, Vision, or Life Benefits Retire directly from the City: 30 years service (Miscellaneous), 20 years service (Safety) OR Membership in the plan consisted of the following at June 30, 2021, the measurement date: Active plan members 347 Inactive employees or beneficiaries currently receiving benefit payments 371 Inactive employees entitled to but not yet receiving benefit payments 80 Total 798 Funding Policy and Actuarial Assumptions The City’s net OPEB liability was measured using a Total OPEB Liability and Fiduciary Net Position measured as of June 30, 2021, using an actuarial valuation as of June 30, 2021. The following actuarial assumptions were used in the valuation: (a) 6.25% investment rate of return and (b) 2.50% of general inflation increase, and (c) a healthcare trend of declining annual increases ranging from 6.50% in 2023 to 3.75% for the years starting 2076. In addition, the fixed dollar benefit amounts are assumed to be held flat in the future and the premium related benefits are assumed to increase with the healthcare trend rate. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT81 I I I CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 11 – POST-EMPLOYMENT HEALTH CARE BENEFITS (Continued) The actuarial assumptions used in the June 30, 2021 valuation were based on the results of an actuarial experience study for the period July 1, 2020 through June 30, 2021. The long-term expected rate of return on OPEB plan investments 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. These ranges are combined to produce the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Long-Term Expected Long-Term Rate of Return Target Expected (with the effect Asset Class Allocation Real Rate of Return of inflation) Global Equity 59% 4.56% 7.06% Fixed Income 25% 0.78% 3.28% TIPS 5% -0.08% 2.42% Commodities 3% 1.22% 3.72% REITs 8% 4.06% 6.56% Total 100% Assumed Long-Term Rate of Inflation 2.50% Assumed Long-Term Investment Expenses n/a Expected Long-Term Net Rate of Return 6.25% Discount Rate 6.25% The Expected Long-Term Rate of Return is provided by CalPERS’ Strategic Asset Allocation Overview in October 2018 – Strategy 1. Changes of Assumptions The discount rate decreased from 6.75% to 6.25% and general inflation decreased from 2.75% to 2.50%. Other assumption changes included a decreased medical trend rate for Kaiser Senior Advantage, the Medicare Advantage implied subsidy was removed, and mortality and demographic assumptions were updated. Discount Rate The discount rate used to measure the total OPEB liability was 6.25%. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates. Based on these assumptions, the OPEB plan's fiduciary net position was projected to be sufficient to make projected benefit payments and the plan assets are expected to be invested using the strategy to achieve the expected return. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT82 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 11 – POST-EMPLOYMENT HEALTH CARE BENEFITS (Continued) Change in Net OPEB Liability Total OPEB Plan Fiduciary Net Net OPEB Liability Position Liability/(Asset) (a)(b)(c) = (a) - (b) Balance at June 30, 2021 (6/30/20 measurement date)$48,941,000 $22,986,000 $25,955,000 Changes Recognized for the Measurement Period: Service Cost 679,000 679,000 Interest on the total OPEB liability 3,238,000 3,238,000 Difference between expected and actual experience (4,063,000) (4,063,000) Changes of assumptions 2,748,000 2,748,000 Contributions from the employer 3,323,000 (3,323,000) Net investment income 6,319,000 (6,319,000) Administrative expenses (17,000) 17,000 Benefit payments and refunds (3,315,000) (3,315,000) Net Changes during July 1, 2021 to June 30, 2022 (713,000) 6,310,000 (7,023,000) Balance at June 30, 2022 (6/30/21 measurement date)$48,228,000 $29,296,000 $18,932,000 Increase (Decrease) The benefit payments and refunds include implied subsidy benefit payments in the amount of $757,000. Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the net OPEB liability of the City, as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (5.25 percent) or 1-percentage-point higher (7.25 percent) than the current discount rate: Discount Rate -1%Current Discount Discount Rate +1% (5.25%)Rate (6.25%)(7.25%) $24,257,000 $18,932,000 $14,435,000 Plan's Net OPEB Liability/(Asset) Sensitivity of the Net OPEB Liability to Changes in the Health Care Cost Trend Rates The following presents the net OPEB liability of the City, as well as what the City’s net OPEB liability would be if it were calculated using healthcare trend rates that are 1-percentage-point lower or 1-percentage-point higher than the current rates. Healthcare Cost Trend Rate -1% Trend Rates Trend Rate +1% $15,808,000 $18,932,000 $22,629,000 Plan's Net OPEB Liability/(Asset) DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT83 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 11 – POST-EMPLOYMENT HEALTH CARE BENEFITS (Continued) Detailed information about the OPEB plan’s fiduciary net position is available in the separately issued plan financial report. That report may be obtained from the California Public Employees’ Retirement System, CERBT, P.O. Box 942703, Sacramento, CA, 94229. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources related to OPEB Components of OPEB Expense for fiscal year 2021-2022 were as follows: Service Cost $679,000 Interest on Total OPEB Liability 3,238,000 Projected earning on investments (1,552,000) Administrative expense 17,000 Recognition of deferred outflows/inflows: Experience (1,933,000) Assumptions 835,000 Asset Returns (939,000) OPEB Expense $345,000 Components of deferred outflows of resources and deferred inflows of resources related to OPEB at June 30, 2022 were as follows: Governmental Business-Type Activities Activities Total Deferred outflows of resources: Changes of assumptions $2,895,921 $44,079 $2,940,000 Employer contributions made subsequent to the measurement date 3,244,613 49,387 3,294,000 Total deferred outflows of resources $6,140,534 $93,466 $6,234,000 Deferred inflows of resources: Differences between expected and actual experience $5,316,083 $80,917 $5,397,000 Net difference between projected and actual earnings on plan investments 3,346,069 50,931 3,397,000 Changes of assumptions 1,299,224 19,776 1,319,000 Total deferred inflows of resources $9,961,376 $151,624 $10,113,000 The difference between projected OPEB plan investment earnings and actual earnings is amortized over a five-year period. The remaining gains and losses are amortized over the expected average remaining service life. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT84 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 11 – POST-EMPLOYMENT HEALTH CARE BENEFITS (Continued) $3,294,000 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the OPEB liability in the year ended June 30, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as future OPEB expense as follows: Measurement Period Amortized Ended June 30 Amount 2023 ($1,958,000) 2024 (2,015,000) 2025 (1,838,000) 2026 (1,182,000) 2027 (180,000) ($7,173,000) The table below provides a summary of the key results during this reporting period. Measurement Date Measurement Date Description June 30, 2021 June 30, 2020 Net OPEB Liability $18,932,000 $25,955,000 Deferred Inflows 10,113,000 5,058,000 Deferred Outflows (2,940,000) (1,930,417) Impact on Net Position before deferred contributions 26,105,000 29,082,583 Additional Deferred Outflows - Contributions subsequent to measurement date (3,294,000) (3,322,583) Impact on Statement of Net Position before Allocations 22,811,000 25,760,000 Allocation of NOL to SRSD 552,000 1,155,000 A llocation of Deferred Inflows (measurement date) to SRSD 294,865 225,081 Allocation of Deferred Outflows (measurement date) to SRSD (85,722) (85,885) Impact on Net Position before deferred contributions to SRSD 761,143 1,294,196 A llocation of Additional Deferred Outflows (contributions) to SRSD (96,043) (147,874) Long-Term Receivable from SRSD, due to OPEB obligations (see Note 4F)665,100 1,146,322 Impact on Statement of Net Positions, net of receivable from SRSD $22,145,900 $24,613,678 OPEB Expense $345,000 $1,778,000 Covered Employee Payroll $39,310,000 $39,920,000 Summary of Results DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT85 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 12 – JOINTLY GOVERNED ORGANIZATIONS The City participates in the jointly governed organizations discussed below through formally organized and separate entities established under the Joint Exercise of Powers Act of the State of California. As separate legal entities, these entities exercise full powers and authorities within the scope of the related Joint Powers Agreements including the preparation of annual budgets, accountability for all funds, the power to make and execute contracts and the right to sue and be sued. Each joint organization is governed by a board consisting of representatives from member municipalities. Each board controls the operations of the respective joint organization, including selection of management and approval of operating budgets, independent of any influence by member municipalities beyond their representation on that board. Obligations and liabilities of this joint organization are not the City’s responsibility and the City does not have an equity interest in the assets of each joint organization except upon dissolution of the joint organization. A. The Marin County Integrated On-Line Library System (System) The MARINet Library Consortium was formed to provide for the procurement, ownership, operation, maintenance, and governance of shared library services among the libraries, public and academic, in Marin County. Current services shared and paid for through annual membership dues include an integrated library system including patron database, cataloging system, and online catalog of materials; delivery of items between libraries in Marin, a statewide library delivery service called Link+, numerous online resources, and more. The Governing Board of the System consists of the library director or designated alternate of each participant in the System. In accordance with the cost sharing formula developed by the library directors of the participants, the City’s share of annual operating costs was $289,297 for the year ended June 30, 2022. Financial statements of the System can be obtained from the County Librarian, Marin County Free Library at 1401 Los Gamos Drive, Suite 200, San Rafael, California 94903. B. The Marin General Services Authority (MGSA) The MGSA was formed by the County of Marin and twelve local agencies to acquire street light facilities, operate the facilities during an eminent domain action against PG&E, and coordinate the subsequent transfer of the facilities to the individual local agencies. Each of the local agency’s share of contributions was based on the number of street lights to be acquired in the local agency’s individual jurisdiction in relation to the total number of street lights to be acquired by the Marin Streetlight Acquisition Joint Powers Authority. MGSA services now include street light maintenance, abandoned vehicle abatement, taxicab regulation, administrative responsibility for MarinMap and the CATV program formerly administered by the Marin Telecommunications Authority established to regulate the rates for cable television service and equipment. The City’s contribution to MGSA was $803,119 for the year ended June 30, 2022. Financial statements of the MGSA can be obtained at 900 Fifth Avenue, Suite 100, San Rafael, California 94901. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT86 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 12 – JOINTLY GOVERNED ORGANIZATIONS (Continued) C. The Marin Emergency Radio Authority (MERA) MERA was formed on February 28, 1998, by the County of Marin and 25 local agencies within the County to plan, finance, implement, manage, own, and operate a County-wide public safety and emergency radio system. The Governing Board consists of one representative from each member. On February 1, 2007, MERA borrowed $2,250,000 from Citizens Business Bank. The note is being amortized over 14 ½ years at an annual interest rate of 4.43%. Loan Payments are funded by member operating payments. The costs of maintenance, operation, and debt service are divided on a pro rata share based on an agreed-upon formula established by a majority of the Governing Board. The members entered into a Project Operating Agreement on February 1, 1999. Under the Operating Agreement, members are obligated to contribute service payments to cover the Authority’s operations and debt service. The City’s portion of the obligation is 16.913%. The City contributed $388,993 of the Authority’s operations and debt service for the fiscal year ended June 30, 2022. The City has established a reserve in its internal service funds to pay future service payments. Financial statements of the MERA can be obtained at 95 Rowland Way, Novato, California 94945. D. The Marin County Hazardous and Solid Waste Joint Powers Authority The Authority was established by the County, local cities, and waste franchising districts to finance, prepare and implement source reduction and recycling elements on a county-wide integrated waste management plan as required by State Assembly Bill 939. The City’s contribution to the Authority was $17,850 for the year ended June 30, 2022. Financial statements of the Authority can be obtained at 3501 Civic Center Drive, San Rafael, California 94903. E. Central Marin Sanitation Agency (CMSA) In October 1979, the District entered into a joint powers agreement with three neighboring sanitation agencies in central Marin County forming the Central Marin Sanitation Agency (CMSA). CMSA serves as a regional wastewater treatment plant for its four member agencies and San Quentin Prison (SQ) and is governed by a five-member Board of Commissioners, two appointed by the Board of Directors of the District, two appointed by the governing board of the Ross Valley Sanitary District, and one appointed by the governing board of Sanitary District No. 2 (SD 2). Total project costs for the joint venture were funded from federal (75%) and state (12.5%) clean water grants and from local shares (12.5% total) allocated among the member agencies and SQ based upon the weighted average of the strength and volume of sewage flows per member at inception of the project. CMSA derives its annual funding for its operations and capital programs almost exclusively from service charges to member agencies. The joint powers agreement does not provide an explicit measurable right as required to establish an equity interest for any of the joint venture participants, and in addition to, stipulates that all excess capital funds, if any, and all excess administration, operations, and maintenance funds from whatever source, if any, are the property of CMSA. The financial statements of the CMSA are available at the CMSA office at 1301 Anderson Drive, San Rafael, California 94901 and online at www.cmsa.us. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT87 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 13 – RISK MANAGEMENT A. City 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 established the Risk Management Internal Service Fund to account for and finance its uninsured risks of loss. The City manages risk by participating in a public entity risk pool (described below), purchasing insurance and by retaining certain risks. Risk Coverage Liability Coverage The City is a member of the California Joint Powers Risk Management Authority (CJPRMA) which covers general liability claims up to $40,000,000. The purpose of CJPRMA is to spread the adverse effects of general liability losses among the member agencies. The City also purchases commercial insurance for property damage claims with an insured amount of $175,250,878. The City is self-insured up to $750,000 for each general liability claim and $25,000 for each property damage claim. Once the self-insured retention is met, CJPRMA becomes responsible for payment of all liability claims up to the limit. The City contributed a total of $942,552 in liability coverage premiums during the fiscal year ended June 30, 2022. Five years after settlement of all general liability claims for a program year, CJPRMA will retroactively adjust premium deposits for any excess or deficiency in deposits related to paid claims and reserves. Financial statements for the risk pool may be obtained from CJPRMA at 3201 Doolan Road, Suite 285, Livermore, California 94551. Workers’ Compensation Coverage The City purchases insurance for workers’ compensation through Safety National Casualty Corporation Excess Workers’ Compensation and Employers Liability Insurance with coverage up to statutory limits. The City is self-insured up to $1,000,000 for each worker’s compensation claim. Insurance Internal Service Funds and Financial Reporting The City records estimated liabilities for claims filed up to the amounts for which it retains risk in the General Liability and Workers Compensation Internal Service Funds. Charges to the General Fund and other funds are based on relative general liability and workers compensation risk associated with the activities of each fund. Charges are recorded in the funds as expenditures or expenses and as revenues in the respective internal service funds. Generally accepted accounting principles require municipalities to record the liability for uninsured claims and to reflect the current portion of this liability as an expenditure in the financial statements. As discussed above, the City has coverage for such claims, but it has retained the risk for the deductible or uninsured portion of these claims. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT88 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 13 – RISK MANAGEMENT (Continued) The City’s liability for uninsured general liability claims and workers’ compensation claims, including claims incurred but not reported, are reported in the Statements of Net Position. The City’s present value liability for uninsured claims below include a provision for claims incurred but not reported using a discount rate of 2%. General Workers'Totals, as of June 30 Liability * Compensation *2022 2021 Balance, beginning of year $4,041,207 $8,227,696 $12,268,903 $12,420,277 Current year claims and changes in estimates 1,490,936 3,730,334 5,221,270 1,751,191 Claims paid (835,639)(1,052,812)(1,888,451) (1,902,565) Balance, end of year $4,696,504 $10,905,218 $15,601,722 $12,268,903 Due in one year $1,057,147 $1,744,875 $2,802,022 $2,944,075 Due in more than one year 3,639,357 9,160,343 12,799,700 9,324,828 Total claim liabilit ies $4,696,504 $10,905,218 $15,601,722 $12,268,903 * Liability based on an actuarial valuation as of December 31, 2021, extrapolated to June 30, 2022. The claims settlements have not exceeded insurance coverage for the past three years. B. District The District 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 disaster. The District participates in a joint powers agreement with other entities forming the California Sanitation Risk Management Authority (CSRMA), a public entity risk pool operating as a common risk management and insurance program for 60 member entities. CSRMA is governed by a Board of Directors composed of one representative from each member agency and meets three times per year in conjunction with conferences of the California Association of Sanitation Agencies. The Board controls the Note 1 operations of CSRMA, including selection of management and approval of operating budgets, independent of any influence by member entities. The District pays annual premiums to CSRMA for its primary insurance and property insurance programs. Primary and property insurance programs are fully insured wherein CSRMA purchases insurance as a group thereby reducing its costs. CSRMA provides both fully insured and pooled insurance programs for its participating member entities. Because all employees of the District are contracted employees from the City of San Rafael, workers’ compensation insurance is not carried by the District but is provided through the City. CSRMA’s primary and property insurance programs transfer risk to commercial insurance policies for claims above deductibles, while the District retains risk for claims to the extent of deductibles. Settled claims for the District have not exceeded coverage provided by CSRMA in any of the past three fiscal years. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT89 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 13 – RISK MANAGEMENT (Continued) The following summarizes active insurance policies as of June 30, 2022 together with coverage limits for each insured event: Insurance Program Limits Coverage Description CSRMA - Allied World Assur.$3,000,000 Gen/Mgt liability - aggregate CSRMA - Allied World Assur.$1,000,000 Gen/Mgt liability - occurrence CSRMA - Allied World Assur.$1,000,000 Auto liability - accident CSRMA - Allied World Assur.$4,000,000 Excess liability CSRMA - Public Entity Property Insurance Program (P.E.P.I.P.)$30,359,825 Special form property CSRMA - Illinois Union Ins.$25,000,000 Pollution liability - tier 1 CSRMA - Illinois Union Ins.$2,000,000 Pollution liability - tier 2 CSRMA - Lloyds of London $2,000,000 Cyber liability - third party CSRMA - Lloyds of London $2,000,000 Cyber liability - first party CSRMA - Travelers Ins.$25,000 Identity theft CSRMA - Lloyds of London $2,500,000 Deadly weapons - aggregate The financial statements of CSRMA are available at their office: 100 Pine Street, 11th Floor, San Francisco, California 94111. NOTE 14 – LEASE LIABILITIES A summary of governmental activities lease transactions for the fiscal year ended June 30, 2022, are as follows: Balance June 30, 2021 Balance Current (as restated) Additions Retirements June 30, 2022 Portion Governmental Activities Lease Liabilities Fire Station 57 Land Lease $5,476,219 $4,232 $5,480,451 $508 Copier Equipment Leases 258,365 ($78,120) 180,245 82,053 Total $5,734,584 $4,232 ($78,120) $5,660,696 $82,561 On June 21, 2016, the City entered into a lease agreement as lessee with the County of Marin to lease property for constructing Fire Station # 57 for a 40 year term, ending on June 30, 2056. The City is required to make monthly principal and interest lease payments in the amount of $13,343 commencing July 1, 2021. The monthly lease payments are increased annually in the amount of 3% every July 1. The City recorded an initial lease liability and intangible right-to-use asset in the amount of $5,476,219, respectively, as of July 1, 2021. As of June 30, 2022, the balance of the lease liability was $5,480,451 and the net value of the right-to-use asset was $5,319,756, including accumulated amortization of $156,463. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT90 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 14 – LEASE LIABILITIES (Continued) The City has entered into four separate equipment lease agreements as a lessee for copiers with various vendors. The lease terms vary from 3-5 years and interest is implicit in the lease agreements in the amount of 5%. The City is required to make monthly or yearly principal and interest lease payments in varying amounts ranging from $1,003 to $50,278, depending on the lease. The City recorded an initial lease liability and intangible right-to-use asset in the amount of $258,365, respectively, as of July 1, 2021. As of June 30, 2022, the balance of the lease liability was $180,245 and the net value of the right-to-use asset was $177,625, including accumulated amortization of $80,740. The future principal and interest lease payments as of June 30, 2022 were as follows: For the Year Ended June 30 Principal Interest Total 2023 $82,561 $172,869 $255,430 2024 62,395 168,654 231,049 2025 39,584 165,616 205,200 2026 29,156 164,311 193,467 2027 22,511 163,102 185,613 2028-2032 214,992 800,016 1,015,008 2033-2037 423,614 753,058 1,176,672 2038-2042 693,649 670,438 1,364,087 2043-2047 1,039,430 541,921 1,581,351 2048-2052 1,478,312 354,906 1,833,218 2053-2057 1,574,492 100,176 1,674,668 Totals $5,660,696 $4,055,067 $9,715,763 NOTE 15 – COMMITMENTS AND CONTINGENCIES A.City Litigation The City is a defendant in several lawsuits arising from its normal operations. City management is of the opinion that the potential claims against the City not covered by insurance resulting from such litigation would not materially affect the basic financial statements of the City. B.District As of June 30, 2022, SRSD had several contracts for sewer improvement projects with remaining obligations of approximately $2,070,000, the majority of which are expected to be completed within the 2022-2023 fiscal year. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT91 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 16 – SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY PRIVATE-PURPOSE TRUST FUND (SUCCESSOR AGENCY) ACTIVITIES A. Redevelopment Dissolution In an effort to mitigate its budget deficit, the State of California adopted ABx1 26 on June 28, 2011, amended by AB1484 on June 27, 2012, which suspended all new redevelopment activities except for limited specified activities as of that date and dissolved redevelopment agencies on January 31, 2012. The suspension provisions prohibited all redevelopment agencies from a wide range of activities, including incurring new indebtedness or obligations, entering into, or modifying agreements or contracts, acquiring, or disposing of real property, taking actions to adopt or amend redevelopment plans and other similar actions, except actions required by law or to carry out existing enforceable obligations, as defined in ABx1 26. In addition, ABx1 26 and AB1484 directed the State Controller to review the activities of all redevelopment agencies and successor agencies to determine whether an asset transfer between an agency and any public agency occurred on or after January 1, 2011. If an asset transfer did occur and the public agency that received the asset is not contractually committed to a third party for the expenditure or encumbrance of the asset, the legislation requires the State Controller to order the asset returned to the redevelopment agency. This review was performed in May 2013, and a report issued on July 29, 2013 (see section B of this footnote). The City elected to become the Successor Agency to the Redevelopment Agency, and on February 1, 2012, the Redevelopment Agency’s remaining net assets were distributed to the Successor Agency. ABx1 26 requires the establishment of an Oversight Board to oversee the activities of the Successor Agency and one was established on April 2, 2012. On July 1, 2018, the County of Marin formed a county-wide Oversight Board to oversee the activities of all Successor Agencies within the County, including San Rafael. The activities of the Successor Agency are subject to review and approval of the Oversight Board, which is comprised of seven members. The activities of the Successor Agency are reported in the Successor Agency to the Redevelopment Agency Private-Purpose Trust Fund as the activities are under the control of the Oversight Board. The City provides administrative services to the Successor Agency to wind down the affairs of the former Redevelopment Agency. Pursuant to the dissolution of the City of San Rafael Redevelopment Agency, certain assets of the Redevelopment Agency were distributed to the Housing Successor and all remaining Redevelopment Agency assets and liabilities were distributed to the Successor Agency. The City elected to become the Housing Successor and on February 1, 2012. Assets and Liabilities relating to the Housing Successor are reported in the City’s Low and Moderate Income Housing Special Revenue Fund. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT92 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 16 – SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY PRIVATE-PURPOSE TRUST FUND (SUCCESSOR AGENCY) ACTIVITIES (Continued) B. Redevelopment Property Tax Trust Fund (RPTTF) The Successor Agency’s primary source of revenue comes from the RPTTF allocation distributed by the County. Property tax revenues for each Project Area are deposited into the RPTTF, which redistributes each Project Area’s tax increment under specified formulas. The County Auditor administers the RPTTF and disburses twice annually from this fund pass-through payments to affected taxing entities, an amount equal to the total of obligation payments that are required to be paid from tax increment as denoted on the Recognized Obligation Payment Schedule (“ROPS”). The disbursements are established in the treasury of the Successor Agencies, and various allowed administrative fees and allowances. Any remaining balance is then distributed by the County Auditor back to affected taxing entities under a prescribed method that accounts for pass-through payments. The County Auditor is also responsible for the distributing other monies received from the Successor Agency (from sale of assets, etc.) to the affected taxing entities. Successor agencies in turn will use the amounts deposited into their respective funds to make payments for principal and interest on loans and monies advanced to or indebtedness incurred by the dissolved redevelopment agencies. C. Long-Term Debt 1999 Tax Allocation Bonds and Capital Appreciation Bonds On June 16, 1999, the former Agency issued Tax Allocation Bonds in the amount of $23,504,004. The bonds were issued as Current Interest Bonds in the aggregate principal amount of $21,115,000 and as Capital Appreciation Bonds in the original amount of $2,389,004. The proceeds of the bonds were used to finance certain redevelopment activities of benefit to the former Agency’s Central San Rafael Redevelopment Project Area. In December 2009 of the former Agency exercised the redemption option of the Current Interest Bonds. The outstanding balance of the Bonds was refunded, on a current basis, through the issuance of the 2009 Tax Allocation Refunding Bonds as discussed below. The Capital Appreciation Bonds mature annually after December 1 from 2018 to 2022, in amounts ranging from $1,440,000 to $2,070,000 and bear interest at rates from 5.58% to 5.60%. Interest on the Capital Appreciation Bonds will compound on each interest premium date and will be payable solely at maturity. The bonds are secured, on parity with the 1992 and 1995 bonds (refunded in 2002), by a pledge and a lien on tax revenues and amounts on deposit in certain funds and accounts held by the fiscal agent. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT93 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 16 – SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY PRIVATE-PURPOSE TRUST FUND (SUCCESSOR AGENCY) ACTIVITIES (Continued) 2002 Tax Allocation Refunding Bonds On October 9, 2002, the former Agency issued Tax Allocation Refunding Bonds in the amount of $25,020,000. The proceeds of the bonds were used to refund the 1992 Tax Allocation Refunding Bonds and the 1995 Tax Allocation Bonds. The Bonds mature annually each December 1 from 2002 to 2022, in amounts ranging from $540,000 to $1,920,000 and bear interest at rates ranging from 2.00% to 5.25%. Interest is payable semiannually on June 1 and December 1. The Bonds maturing on or after December 1, 2013, are subject to optional redemption prior to maturity, in whole or in part, and by lot within any one maturity, prior to their respective maturity dates, on any date on or after December 1, 2012, at a price equal to the principal amount, plus accrued interest on the redemption date. The bonds are payable from tax revenues to be derived from the redevelopment activities of the former Agency related to the Central San Rafael Redevelopment Project Area. 2009 Tax Allocation Refunding Bonds On December 14, 2009, the former Agency issued 2009 Tax Allocation Refunding Bonds in the amount of $14,660,000 bearing interest at rates from 3.00% to 5.00%. The proceeds of the Series 2009 Bonds were used to refund the former Agency’s 1999 Tax Allocation Current Interest Bonds and to advance funds to the City to finance street and parking improvements for the benefit of the Agency’s Central San Rafael Redevelopment Project. Principal payments are due annually on December 30 and interest payable semiannually on June 30 and December 30. The Series 2009 Bonds maturing on or before December 1, 2019, are not subject to optional redemption prior to their respective stated maturities. The Series 2009 Bonds maturing on or after December 1, 2020, are subject to optional redemption as a whole or in part either on a pro rata basis among maturities or in inverse order of maturity, and by lot within any one maturity, prior to their respective maturity dates, at the option of the Agency, on any date on or after December 1, 2019, at a price equal to the principal amount of such Series 2009 Bonds called for redemption, together with interest accrued on the date fixed for redemption, without premium. Use of Tax Increment The former Agency pledged all future tax increment revenues for the repayment of the 1999 Capital Appreciation Bonds, and the 2002 and 2009 Tax Allocation Refunding Bonds. The pledge of all future tax increment revenues ends upon repayment of $3.6 million in remaining debt service on the Bonds, which is scheduled to occur in 2023. For fiscal year June 30, 2022, tax increment revenue amounted to $3.5 million which was used to make the debt service payment of $3.6 million. The bond covenants contain events of default that require the revenue of the Agency to be applied by the Trustee as specified in the terms of the agreement if any of the following conditions occur: default on debt service payments; the failure of the Agency to observe or perform the conditions, covenants, or agreement terms of the debt; bankruptcy filing by the Agency; or if any court or competent jurisdiction shall assume custody or control of the Agency. The Agency’s bonds also contain a subjective acceleration clause that allows the trustees or holders, who hold the majority of the aggregate principal amount of the notes, to accelerate payment of the entire principal amount outstanding and interest accrued to become immediately due if they determine that a material adverse change occurs. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT94 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2022 NOTE 16 – SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY PRIVATE-PURPOSE TRUST FUND (SUCCESSOR AGENCY) ACTIVITIES (Continued) The following table summarizes the activity for the fiscal year ended June 30, 2022: Authorized Balance Balance Current and Issued June 30, 2021 Additions Retirements June 30, 2022 Portion San Rafael Successor Agency 1999 Tax Allocation Bonds Capital Appreciation Bonds 5.58%-5.6%, due 12/1/2022 $2,389,004 $3,306,178 $147,409 $1,440,000 $2,013,587 $2,013,587 2002 Tax Allocation Refunding Bonds 2.00%-5.25%, due 12/1/2021 25,020,000 615,000 615,000 2009 Tax Allocation Refunding Bonds 3.00%-5.00%, due 12/1/2022 14,660,000 2,850,000 1,390,000 1,460,000 1,460,000 Add: deferred bond premium costs 159,718 79,851 79,867 79,867 Total Successor Agency Long-term Debt $6,930,896 $147,409 $3,524,851 $3,553,454 $3,553,454 Debt Service Requirements Annual debt service requirements are shown below: For the Year Ended June 30 Principal Interest 2023 $3,530,000 $36,500 Totals 3,530,000 $36,500 Reconciliation of long-term debt: Less: unaccreted discount (56,413) Less: deferred bond premium costs 79,867 $3,553,454 D. Commitment and Contingencies State Approval of Enforceable Obligation The Successor Agency prepares a Recognized Obligation Payment Schedule (ROPS) semi-annually that contains all proposed expenditures for the subsequent six-month period. The ROPS is subject to the review and approval of the Oversight Board as well as the State Department of Finance. As of June 30, 2021, the Successor Agency had prepared fourteen ROPS, all of which have been approved by the Oversight Board and the California Department of Finance. The Department of Finance has stated that all items on a future ROPS are subject to a subsequent review. The amount, if any, of current obligations that may be denied by the Department of Finance cannot be determined at this time. The City expects such amounts, if any, to be immaterial. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT95 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2022 Measurement date 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 City's proportionate share 30.0453% 36.7394% 34.9538% 32.7180% 33.4752% Proportionate share of total pension liability $677,753,565 $907,195,058 $900,629,287 $878,483,703 $947,923,920 Proportionate share of fiduciary net position 603,499,779 764,871,931 733,574,437 757,834,016 837,356,062 Proportionate share of the net pension liability $74,253,786 $142,323,127 $167,054,850 $120,649,687 $110,567,858 Plan fiduciary net position as a percentage of the total pension liability 89.04% 84.31% 84.31% 86.27% 88.34% Covered payroll (report date) $28,563,328 $31,073,560 $32,126,272 $32,885,135 $36,349,651 Net pension liability as a percentage of covered payroll 259.96% 458.02% 519.99% 366.88% 304.18% Measurement date 6/30/2019 6/30/2020 6/30/2021 City's proportionate share 36.6081% 34.3574% 29.6650% Proportionate share of total pension liability $1,082,900,638 $1,059,269,505 $959,104,784 Proportionate share of fiduciary net position 949,023,107 901,989,929 1,007,281,093 Proportionate share of the net pension liability (asset)$133,877,531 $157,279,576 ($48,176,309) Plan fiduciary net position as a percentage of the total pension liability 87.64% 85.15% 105.02% Covered payroll (report date) $33,106,430 $32,887,922 $31,697,590 Net pension liability (asset) as a percentage of covered payroll 404.39% 478.23% -151.99% * - The fiscal year ended June 30, 2015 was the first year of implementation, therefore only eight years are shown. Cost-Sharing Multiple Employer Plan Schedule of the City's Proportionate Share of the Net Pension Liability Last 10 years* DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT96 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2022 Schedule of Contributions Cost-Sharing Multiple Employer Defined Benefit Pension Plan Last 10 years (subject to available information: first year of implementation was Fiscal Year ended June 30, 2015) Fiscal year ended, June 30 2015 Contractually required contribution $17,802,358 Contributions in Relation to the Contractually required contribution 17,802,358 Contribution Deficiency/ (Excess)$0 Covered payroll $31,073,560 Contributions as a percentage of covered payroll 57.29% Notes to Schedule Valuation Date / Timing 6/30/2013 (for contributions made in FY2014-2015) Key Methods and Assumptions Used to Determine Contribution Rates (for FY2014-15): Actuarial cost method Entry Age Normal Cost Method Amortization method Level percentage of payroll with separate period for Extraordinary Actuarial Loss from 2009 Remaining Amortization period Unfunded liability - 17 years / Extraordinary Actuarial Loss - 25 years Asset valuation method 5-year smoothed market, 80% /120% corridor around market Inflation 3.25% Salary increases 3.25% plus merit component based on employee classification and years of service Investment Rate of Return 7.50% Retirement Age Healthy Mortality Sex distinct RP-2000 Combined Mortality projected to 2010 using Scale AA with ages set back one year for male members / two years for female members Disabled Mortality Sex distinct RP-2000 Combined Mortality projected to 2010 using Scale AA with ages set forward three years for all members Classic Tiers: Safety - 50, Miscellaneous - 55; PEPRA Tiers: Safety - 57, Miscellaneous - 62 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT97 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2022 Fiscal year ended, June 30 2016 Contractually required contribution $19,339,577 Contributions in Relation to the Contractually required contribution 19,339,577 Contribution Deficiency/ (Excess)$0 Covered payroll $32,126,272 Contributions as a percentage of covered payroll 60.20% Notes to Schedule Valuation Date / Timing 6/30/2014 (for contributions made in FY2015-2016) Key Methods and Assumptions Used to Determine Contribution Rates (for FY2015-16): Actuarial cost method Entry Age Normal Cost Method Amortization method Level percentage of payroll with separate period for Extraordinary Actuarial Loss from 2009 Remaining Amortization period Unfunded liability - 16 years / Extraordinary Actuarial Loss - 24 years Asset valuation method 5-year smoothed market, 80% /120% corridor around market Inflation 3.25% Salary increases 3.25% plus merit component based on employee classification and years of service Investment Rate of Return 7.25% Retirement Age Healthy Mortality CalPERS 2014 Pre-Retirement Non-Industrial Death rates (plus Duty-Related Death rates for Safety Members), with the 20-year static projection used by CalPERS replaced by generational improvements from a base year of 2009 using Scale MP-2014 Disabled Mortality CalPERS 2014 Disability Mortality rates (Non-Industrial rates for Miscellaneous members and Industrial Disability rates for Safety members), adjusted by 90% for Males and Females (Miscellaneous and Safety) with the 20-year static projection used by CalPERS replaced by generational improvements from a base year of 2009 using Scale MP-2014 Classic Tiers: Safety - 50, Miscellaneous - 55; PEPRA Tiers: Safety - 57, Miscellaneous - 62 Defined Benefit Pension Plan Last 10 years (subject to available information: first year of implementation was Fiscal Year ended June 30, 2015) (Continued) Cost-Sharing Multiple Employer Schedule of Contributions DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT98 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2022 Fiscal year ended, June 30 2017 Contractually required contribution $20,003,001 Contributions in Relation to the Contractually required contribution 20,003,001 Contribution Deficiency/ (Excess)$0 Covered payroll $32,885,135 Contributions as a percentage of covered payroll 60.83% Notes to Schedule Valuation Date / Timing 6/30/2015 (for contributions made in FY2016-2017) Key Methods and Assumptions Used to Determine Contribution Rates (for FY2016-17): Actuarial cost method Entry Age Normal Cost Method Amortization method Level percentage of payroll with separate period for Extraordinary Gains or Losses (24 years remaining as of 6/30/14), the remaining UAL as of June 30, 2013 (16 years as of 6/30/14), and additional layers for unexpected changes in UAL after 6/30/13 (24 years for gains and losses with a 5-year phase-in/out and 22 years for assumption changes with a 3-year phase-in/out). Remaining Amortization period 19 years remaining as of June 30, 2016 Asset valuation method Market Value Inflation 2.75% per year Salary increases 3.00% plus merit component based on employee classification and years of service Investment Rate of Return 7.25% Retirement Age Healthy Mortality Sex distinct RP-2000 combined mortality projected to 2010 using Scale AA with ages set back one year for male members/two years for female members Disabled Mortality Sex distinct RP-2000 combined mortality projected to 2010 using Scale AA with ages set forward three years for all members Classic Tiers: Safety - 50, Miscellaneous - 55; PEPRA Tiers: Safety - 57, Miscellaneous - 62 (Continued) Cost-Sharing Multiple Employer Schedule of Contributions Defined Benefit Pension Plan Last 10 years (subject to available information: first year of implementation was Fiscal Year ended June 30, 2015) DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT99 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2022 Fiscal year ended, June 30 2018 Contractually required contribution $20,167,435 Contributions in Relation to the Contractually required contribution 20,167,435 Contribution Deficiency/ (Excess)$0 Covered payroll $36,349,651 Contributions as a percentage of covered payroll 55.48% Notes to Schedule Valuation Date / Timing 6/30/2016 (for contributions made in FY2017-2018) Key Methods and Assumptions Used to Determine Contribution Rates (for FY2017-18): Actuarial cost method Entry Age Normal Cost Method Amortization method Level percentage of payroll with separate period for Extraordinary Gains or Losses (22 years remaining as of 6/30/16), the remaining UAL as of June 30, 2013 (14 years as of 6/30/16), and additional layers for unexpected changes in UAL after 6/30/13 (24 years for gains and losses with a 5-year phase-in/out and 22 years for assumption changes with a 3-year phase-in/out). Remaining Amortization period 18 years remaining as of June 30, 2017 Asset valuation method Market Value Inflation 2.75% per year Salary increases 3.00% plus merit component based on employee classification and years of service Investment Rate of Return 7.25% Retirement Age Healthy Mortality Sex distinct CalPERS 2014 Pre-Retirement Non-Industrial Death rates (plus Duty-Related death rates for Safety members) Disabled Mortality Sex distinct RP-2000 combined mortality projected to 2010 using Scale AA with ages set forward three years for all members Disabled Mortality Rates of mortality among disabled members are given by CalPERS 2017 Disability Mortality rates (Non-Industrial rates for Miscellaneous members and Industrial Disability rates for Safety members), adjusted by 90% for Males (Miscellaneous and Safety) and 90% for Miscellaneous Females, with the 15-year static projection used by CalPERS replaced by generational improvements from a base year of 2014 using Scale MP-2017. Last 10 years (subject to available information: first year of implementation was Fiscal Year ended June 30, 2015) (Continued) Schedule of Contributions Cost-Sharing Multiple Employer Defined Benefit Pension Plan Classic Tiers: Safety - 50, Miscellaneous - 55; PEPRA Tiers: Safety - 57, Miscellaneous - 62 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT100 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2022 Fiscal year ended, June 30 2019 Contractually required contribution $20,352,203 Contributions in Relation to the Contractually required contribution 20,352,203 Contribution Deficiency/ (Excess) $0 Covered payroll $33,106,430 Contributions as a percentage of covered payroll 61.48% Notes to Schedule Valuation Date / Timing 6/30/2017 (for contributions made in FY2018-2019) Key Methods and Assumptions Used to Determine Contribution Rates (for FY2018-19): Actuarial cost method Entry Age Normal Cost Method Amortization method Level percentage of payroll with separate period for Extraordinary Gains or Losses (21 years remaining as of 6/30/17), the remaining UAL as of June 30, 2013 (13 years as of 6/30/17), and additional layers for unexpected changes in UAL after 6/30/13 (24 years for gains and losses with a 5-year phase-in/out and 22 years for assumption changes with a 3-year phase-in/out). Remaining Amortization period 17 years remaining as of June 30, 2018 Asset valuation method Market Value Inflation 2.75% per year Salary increases 3.00% plus merit component based on employee classification and years of service Investment Rate of Return 7.00% Retirement Age Healthy Mortality Rates of mortality for active members are specified by CalPERS 2017 Pre-Retirement Non-Industrial Death Rates (plus Duty-Related Death rates for Safety members), with the 20-year static projection used by CalPERS replaced by generational improvements from a base year of 2014 using Scale MP-2017. Disabled Mortality Rates of mortality among disabled members are given by CalPERS 2017 Disability Mortality rates (Non-Industrial rates for Miscellaneous members and Industrial Disability rates for Safety members), adjusted by 90% for Males (Miscellaneous and Safety) and 90% for Miscellaneous Females, with the 20-year static projection used by CalPERS replaced by generational improvements from a base year of 2014 using Scale MP-2017. Cost-Sharing Multiple Employer Schedule of Contributions Defined Benefit Pension Plan Last 10 years (subject to available information: first year of implementation was Fiscal Year ended June 30, 2015) (Continued) Classic Tiers: Safety - 50, Miscellaneous - 55; PEPRA Tiers: Safety - 57, Miscellaneous - 62 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT101 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2022 Fiscal year ended, June 30 2020 Contractually required contribution $20,031,614 Contributions in Relation to the Contractually required contribution 20,031,614 Contribution Deficiency/ (Excess)$0 Covered payroll $32,887,922 Contributions as a percentage of covered payroll 60.91% Notes to Schedule Valuation Date / Timing 6/30/2018 (for contributions made in FY2019-2020) Key Methods and Assumptions Used to Determine Contribution Rates (for FY2019-20): Actuarial cost method Entry Age Normal Cost Method Amortization method Level percentage of payroll with separate period for Extraordinary Gains or Losses (20 years remaining as of 6/30/18), the remaining UAL as of June 30, 2013 (12 years as of 6/30/18), and additional layers for unexpected changes in UAL after 6/30/13 (24 years for gains and losses with a 5-year phase-in/out and 22 years for assumption changes with a 3-year phase-in/out). Remaining Amortization period 12 years remaining as of June 30, 2018 Asset valuation method Market Value Inflation 2.75% per year Salary increases 3.00% plus merit component based on employee classification and years of service Investment Rate of Return 7.00% Retirement Age Healthy Mortality Disabled Mortality Rates of mortality for active members are specified by CalPERS 2017 Pre-Retirement Non-Industrial Death rates (plus Duty- Related Death rates for Safety members), with the 15-year static projection used by CalPERS replaced by generational improvements from a base year of 2014 using Scale MP-2017. 0% of all Miscellaneous and 95% of all Safety pre-retirement deaths are assumed to be service-connected. Rates of mortality for retired members and their beneficiaries are given by CalPERS 2017 Post-Retirement Healthy Morality rates, adjusted by 90% for Males (Miscellaneous and Safety), with the 15-year static projection used by CalPERS replaced by generational improvements from a base year of 2014 using Scale MP-2017. Schedule of Contributions Defined Benefit Pension Plan Last 10 years (subject to available information: first year of implementation was Fiscal Year ended June 30, 2015) (Continued) Classic Tiers: Safety - 50, Miscellaneous - 55; PEPRA Tiers: Safety - 57, Miscellaneous - 62 Cost-Sharing Multiple Employer DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT102 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2022 Fiscal year ended, June 30 2021 Contractually required contribution $20,106,821 Contributions in Relation to the Contractually required contribution 20,106,821 Contribution Deficiency/ (Excess)$0 Covered payroll $31,697,590 Contributions as a percentage of covered payroll 63.43% Notes to Schedule Valuation Date / Timing 6/30/2019 (for contributions made in FY2020-2021) Key Methods and Assumptions Used to Determine Contribution Rates (for FY2020 - 21): Actuarial cost method Entry Age Normal Cost Method Amortization method Level percentage of payroll with separate period for Extraordinary Gains or Losses (19 years remaining as of 6/30/19), the remaining UAL as of June 30, 2013 (11 years as of 6/30/19), and additional layers for unexpected changes in UAL after 6/30/13 (24 years for gains and losses with a 5-year phase-in/out and 22 years for assumption changes with a 3-year phase-in/out). Remaining Amortization period 11 years remaining as of June 30, 2019 Asset valuation method Market Value Inflation 2.75% per year Salary increases 3.00% plus merit component based on employee classification and years of service Investment Rate of Return 7.00% Retirement Age Healthy Mortality Disabled Mortality Schedule of Contributions Cost-Sharing Multiple Employer Defined Benefit Pension Plan Last 10 years (subject to available information: first year of implementation was Fiscal Year ended June 30, 2015) (Continued) Classic Tiers: Safety - 50, Miscellaneous - 55; PEPRA Tiers: Safety - 57, Miscellaneous - 62 Rates of mortality for active members are specified by CalPERS 2017 Pre-Retirement Non-Industrial Death rates (plus Duty- Related Death rates for Safety members), with the 15-year static projection used by CalPERS replaced by generational improvements from a base year of 2014 using Scale MP-2017. 0% of all Miscellaneous and 95% of all Safety pre-retirement deaths are assumed to be service-connected. Rates of mortality for retired members and their beneficiaries are given by CalPERS 2017 Post-Retirement Healthy Morality rates, adjusted by 90% for Males (Miscellaneous and Safety), with the 15-year static projection used by CalPERS replaced by generational improvements from a base year of 2014 using Scale MP-2017. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT103 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2022 Fiscal year ended, June 30 2022 Contractually required contribution $21,859,307 Contributions in Relation to the Contractually required contribution (21,859,307) Contribution Deficiency/ (Excess)$0 Covered payroll $34,418,052 Contributions as a percentage of covered payroll 63.51% Notes to Schedule Valuation Date / Timing 6/30/2020 (for contributions made in FY2021-2022) Key Methods and Assumptions Used to Determine Contribution Rates (for FY2021 - 22): Actuarial cost method Entry Age Normal Cost Method Amortization method Level percentage of payroll with separate period for Extraordinary Gains or Losses (18 years remaining as of 6/30/20), the remaining UAL as of June 30, 2013 (10 years as of 6/30/20), and additional layers for unexpected changes in UAL after 6/30/13 (24 years for gains and losses with a 5-year phase-in/out and 22 years for assumption changes with a 3-year phase-in/out). Remaining Amortization period 10 years remaining as of June 30, 2020 Asset valuation method Market Value Inflation 2.50% per year Salary increases 3.00% plus merit component based on employee classification and years of service Investment Rate of Return 6.75% Retirement Age Healthy Mortality Disabled Mortality Schedule of Contributions Cost-Sharing Multiple Employer Defined Benefit Pension Plan Last 10 years (subject to available information: first year of implementation was Fiscal Year ended June 30, 2015) (Continued) Classic Tiers: Safety - 50, Miscellaneous - 55; PEPRA Tiers: Safety - 57, Miscellaneous - 62 Mortality rates for Miscellaneous active members are based on the sex distinct Public General 2010 Employee Mortality Table, with generational mortality improvements projected from 2010 using Projection Scale MP-2020, with no adjustments. Mortality rates for Safety active members are based on the sex distinct Public Safety 2010 Above-Median Income Employee Mortality Table, with generational mortality improvements projected from 2010 using Projection Scale MP-2020, with no adjustments. 10% of Safety member active deaths are assumed to occur in the line of duty Mortality Rates for Retired Disabled Members", should be"Rates of mortality for Miscellaneous disabled members are based on the sex distinct Public General 2010 Disabled Retiree Mortality Table, with generational mortality improvements projected from 2010 using Projection Scale MP-2020, with no adjustments. Rates of mortality for Safety disabled members are based on the sex distinct Public Safety 2010 Disabled Retiree Mortality Table, with generational mortality improvements projected from 2010 using Projection Scale MP-2020, adjusted by 95% for males with no adjustment for females. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT104 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2022 Measurement period 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Total OPEB liability Service cost $766,000 $789,000 $822,000 $805,000 $687,000 $679,000 Interest 3,447,000 3,540,000 3,435,000 3,515,000 3,196,000 3,238,000 Differences between expected and actual experience (4,107,000) (3,040,000) (4,063,000) Assumption changes 4,831,000 (2,735,000) 2,748,000 Benefit payments, including refunds of employee contributions (2,896,000) (3,015,000) (3,028,000) (3,072,000) (3,225,000) (3,315,000) Net change in total OPEB liability 1,317,000 2,038,000 1,229,000 (4,527,000) 658,000 (713,000) Total OPEB liability - beginning 48,226,000 49,543,000 51,581,000 52,810,000 48,283,000 48,941,000 Total OPEB liability - ending (a)$49,543,000 $51,581,000 $52,810,000 $48,283,000 $48,941,000 $48,228,000 OPEB fiduciary net position Contributions - employer $2,896,000 $3,475,000 $3,573,000 $3,725,000 $3,784,000 $3,323,000 Net investment income 157,000 1,675,000 1,425,000 1,224,000 770,000 6,319,000 Benefit payments, including refunds of employee contributions (2,896,000) (3,015,000) (3,028,000) (3,072,000) (3,225,000) (3,315,000) Administrative expense (7,000) (8,000) (44,000) (12,000) (19,000) (17,000) Net change in plan fiduciary net position 150,000 2,127,000 1,926,000 1,865,000 1,310,000 6,310,000 Plan fiduciary net position - beginning 15,608,000 15,758,000 17,885,000 19,811,000 21,676,000 22,986,000 Plan fiduciary net position - ending (b)$15,758,000 $17,885,000 $19,811,000 $21,676,000 $22,986,000 29,296,000 Plan net OPEB liability - ending (a) - (b)$33,785,000 $33,696,000 $32,999,000 $26,607,000 $25,955,000 $18,932,000 Plan fiduciary net position as a percentage of the total OPEB liability 31.81%34.67%37.51%44.89%46.97%60.74% Covered employee payroll $37,846,000 $32,885,000 $36,350,000 $40,496,000 $39,920,000 $39,310,000 Plan net OPEB liability as a percentage of covered employee payroll 89.27% 102.47%90.78%65.70%65.02%48.16% Historical information is required only for the measurement periods for which GASB 75 is applicable. Other Post-Employment Benefits (OPEB) Last Ten Fiscal Years Agent Multiple Employer Defined Benefit Plan SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT105 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2022 SCHEDULE OF CONTRIBUTIONS Agent Multiple Employer Defined Benefit Plan Last Ten Fiscal Years Other Post-Employment Benefits (OPEB) Fiscal year 2016-17 Actuarially determined contribution $3,450,000 Contributions in relation to the actuarially determined contribution (3,475,000) Contribution deficiency (excess)($25,000) Covered employee payroll $32,885,000 Contributions as a percentage of covered employee payroll 10.49% GASB 75 requires this information for plans funding with OPEB trusts be reported in the employer's Required Supplementary Information for 10 years or as many years as are available upon implementation. The June 30, 2017 actuarial valuation provided the Actuarially Determined Contributions for fiscal years ending 06/30/17. Notes to Schedule: Actuarially determined contribution rates are calculated as of June 30, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Valuation Date June 30, 2015 Actuarial Cost Method Entry Age Normal, Level Percentage of Payroll Amortization Method Level dollar amount, over approximate 10-year period Remaining Amortization 19 years remaining as of June 30, 2016 Asset Valuation Method Investment gains and losses spread over 5-year rolling period Discount Rate 7.25% Contribution Policy City contributes full ADC General Inflation 2.75% per annum Mortality, Retirement, Disability, Termination Same as June 30, 2015 actuarial valuation Mortality Improvement Expected Long-Term Rate of Return on Investments Salary Increases Aggregate - 3% Merit - 6/30/14 MCERA assumptions Medical Trend Non-Medicare - 6.5% for 2017, decreasing 0.5% per year to an ultimate rate of 4.50% for 2021 and Medicare - 6.7% for 2017, decreasing to an ultimate rate of 4.5% for 2021 and later years Healthcare participation for future retirees Capped benefit: 100% currently covered, 80% currently waived PEMHCA minimum - 60% Cap Increases None Mortality projected fully generational with Scale MP-14, modified to converge to ultimate improvement rates in 2022 Same as discount rate - expected City contributions projected to keep sufficient plan assets to pay all benefits from trust DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT106 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2022 SCHEDULE OF CONTRIBUTIONS Last Ten Fiscal Years Other Post-Employment Benefits (OPEB) (Continued) Fiscal year 2017-18 Actuarially determined contribution $3,530,000 Contributions in relation to the actuarially determined contribution (3,563,000) Contribution deficiency (excess)($33,000) Covered employee payroll $36,350,000 Contributions as a percentage of covered employee payroll 9.80% GASB 75 requires this information for plans funding with OPEB trusts be reported in the employer's Required Supplementary Information for 10 years or as many years as are available upon implementation. The June 30, 2017 actuarial valuation provided the Actuarially Determined Contributions for fiscal years ending 6/30/18 and 6/30/19. Notes to Schedule: Actuarially determined contribution rates are calculated as of June 30, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Valuation Date June 30, 2017 Actuarial Cost Method Entry Age Normal, Level Percentage of Payroll Amortization Method Level dollar amount, over approximate 10-year period Remaining Amortization 18 years remaining as of June 30, 2017 Asset Valuation Method Investment gains and losses spread over 5-year rolling period Discount Rate 6.75% at June 30, 2017; 7.25% at June 30, 2016 Contribution Policy City contributes full ADC General Inflation 2.75% per annum Mortality, Retirement, Disability, Termination Same as June 30, 2017 actuarial valuation Mortality Improvement Expected Long-Term Rate of Return on Investments Salary Increases Aggregate - 3% Merit - 6/30/17 MCERA assumptions Medical Trend Non-Medicare - 7.5% for 2019, decreasing to 4.00% for 2076 and later years and Medicare - 6.5% for 2019, decreasing to 4.00% for 2076 and later years Healthcare participation for future retirees Capped benefit: 100% currently covered, 80% currently waived PEMHCA minimum - 60% Cap Increases None Agent Multiple Employer Defined Benefit Plan Post-retirement mortality: projected fully generational with Scale MP-2017 Pre-retirement mortality: projected 15-year static with 90% of Scale MP-2016 Same as discount rate - expected City contributions projected to keep sufficient plan assets to pay all benefits from trust DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT107 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2022 SCHEDULE OF CONTRIBUTIONS Last Ten Fiscal Years Other Post-Employment Benefits (OPEB) (Continued) Fiscal year 2018-19 Actuarially determined contribution $3,612,000 Contributions in relation to the actuarially determined contribution (3,725,000) Contribution deficiency (excess) ($113,000) Covered employee payroll $40,496,000 Contributions as a percentage of covered employee payroll 9.20% GASB 75 requires this information for plans funding with OPEB trusts be reported in the employer's Required Supplementary Information for 10 years or as many years as are available upon implementation. The June 30, 2017 actuarial valuation provided the Actuarially Determined Contributions for fiscal years ending 6/30/18 and 6/30/19. Notes to Schedule: Actuarially determined contribution rates are calculated as of June 30, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Valuation Date June 30, 2017 Actuarial Cost Method Entry Age Normal, Level Percentage of Payroll Amortization Method Level dollar amount, over approximate 10-year period Remaining Amortization 18 years remaining as of June 30, 2017 Asset Valuation Method Investment gains and losses spread over 5-year rolling period Discount Rate 6.75% at June 30, 2017; 7.25% at June 30, 2016 Contribution Policy City contributes full ADC General Inflation 2.75% per annum Mortality, Retirement, Disability, Termination Same as June 30, 2017 actuarial valuation Mortality Improvement Expected Long-Term Rate of Return on Investments Salary Increases Aggregate - 3% Merit - 6/30/17 MCERA assumptions Medical Trend Non-Medicare - 7.5% for 2019, decreasing to 4.00% for 2076 and later years and Medicare - 6.5% for 2019, decreasing to 4.00% for 2076 and later years Healthcare participation for future retirees Capped benefit: 100% currently covered, 80% currently waived PEMHCA minimum - 60% Cap Increases None Agent Multiple Employer Defined Benefit Plan Pre-retirement mortality: projected 15-year static with 90% of Scale MP-2016 Post-retirement mortality: projected fully generational with Scale MP-2017 Same as discount rate - expected City contributions projected to keep sufficient plan assets to pay all benefits from trust DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT108 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2022 SCHEDULE OF CONTRIBUTIONS Last Ten Fiscal Years Other Post-Employment Benefits (OPEB) (Continued) Fiscal year 2019-20 Actuarially determined contribution $3,677,000 Contributions in relation to the actuarially determined contribution (3,784,000) Contribution deficiency (excess) ($107,000) Covered employee payroll $39,920,000 Contributions as a percentage of covered employee payroll 9.48% GASB 75 requires this information for plans funding with OPEB trusts be reported in the employer's Required Supplementary Information for 10 years or as many years as are available upon implementation. The June 30, 2019 actuarial valuation provided the Actuarially Determined Contributions for fiscal years ending 6/30/20 and 6/30/21. Notes to Schedule: Actuarially determined contribution rates are calculated as of June 30, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Valuation Date June 30, 2019 Actuarial Cost Method Entry Age Normal, Level Percentage of Payroll Amortization Method Level dollar amount, over approximate 10-year period Remaining Amortization 16 years remaining as of June 30, 2019 Asset Valuation Method Investment gains and losses spread over 5-year rolling period Discount Rate 6.75% at June 30, 2019 and June 30, 2018, respectively Contribution Policy City contributes full ADC General Inflation 2.75% per annum Mortality, Retirement, Disability, Termination Same as June 30, 2017 actuarial valuation Mortality Improvement Expected Long-Term Rate of Return on Investments Salary Increases Aggregate - 3% Merit - 6/30/19 MCERA assumptions Medical Trend Non-Medicare - 7.25% for 2021, decreasing to an ultimate rate of 4.0% in 2076 and Medicare - 6.3% for 2021, decreasing to an ultimate rate of 4.00% in 2076 Healthcare participation for future retirees Capped benefit: 90% currently covered, 70% currently waived PEMHCA minimum - 60% Cap Increases None Agent Multiple Employer Defined Benefit Plan Mortality projected fully generational with Scale MP-2019 Same as discount rate - expected City contributions projected to keep sufficient plan assets to pay all benefits from trust DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT109 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2022 SCHEDULE OF CONTRIBUTIONS Last Ten Fiscal Years Other Post-Employment Benefits (OPEB) (Continued) Fiscal year 2020-21 Actuarially determined contribution $3,027,000 Contributions in relation to the actuarially determined contribution (3,322,583) Contribution deficiency (excess) ($295,583) Covered employee payroll $39,310,000 Contributions as a percentage of covered employee payroll 8.45% GASB 75 requires this information for plans funding with OPEB trusts be reported in the employer's Required Supplementary Information for 10 years or as many years as are available upon implementation. The June 30, 2019 actuarial valuation provided the Actuarially Determined Contributions for fiscal years ending 6/30/20 and 6/30/21. Notes to Schedule: Actuarially determined contribution rates are calculated as of June 30, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Valuation Date June 30, 2019 Actuarial Cost Method Entry Age Normal, Level Percentage of Payroll Amortization Method Level dollar amount, over approximate 10-year period Remaining Amortization 16 years remaining as of June 30, 2019 Asset Valuation Method Investment gains and losses spread over 5-year rolling period Discount Rate 6.75% at June 30, 2020 and June 30, 2019, respectively Contribution Policy City contributes full ADC General Inflation 2.75% per annum Mortality, Retirement, Disability, Termination Same as June 30, 2017 actuarial valuation Mortality Improvement Expected Long-Term Rate of Return on Investments Salary Increases Aggregate - 3% Merit - 6/30/19 MCERA assumptions Medical Trend Non-Medicare - 7.25% for 2021, decreasing to an ultimate rate of 4.0% in 2076 and Medicare - 6.3% for 2021, decreasing to an ultimate rate of 4.00% in 2076 Healthcare participation for future retirees Capped benefit: 90% currently covered, 70% currently waived PEMHCA minimum - 60% Cap Increases None Agent Multiple Employer Defined Benefit Plan Mortality projected fully generational with Scale MP-2019 Same as discount rate - expected City contributions projected to keep sufficient plan assets to pay all benefits from trust DRAFT DRAFT REVIEW DRAFT 11-7-22 110 DRAFT CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2022 SCHEDULE OF CONTRIBUTIONS Last Ten Fiscal Years Other Post-Employment Benefits (OPEB) Fiscal year 2021-22 Actuarially determined contribution $3,093,000 Contributions in relation to the actuarially determined contribution (3,294,000) Contribution deficiency (excess) ($201,000) Covered employee payroll $42,604,000 Contributions as a percentage of covered employee payroll 7.73% GASB 75 requires this information for plans funding with OPEB trusts be reported in the employer's Required Supplementary Information for 10 years or as many years as are available upon implementation. The June 30, 2021 actuarial valuation provided the Actuarially Determined Contributions for fiscal years ending 6/30/22 and 6/30/23. Notes to Schedule: Actuarially determined contribution rates are calculated as of June 30, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Valuation Date June 30, 2021 Actuarial Cost Method Entry Age Normal, Level Percentage of Payroll Amortization Method Level dollar amount, over approximate 10-year period Remaining Amortization 14 years remaining as of June 30, 2021 Asset Valuation Method Investment gains and losses spread over 5-year rolling period Discount Rate 6.25% at June 30, 2022 and June 30, 2021, respectively Contribution Policy City contributes full ADC General Inflation 2.50% per annum Mortality, Retirement, Disability, Termination Same as June 30, 2019 valuation Mortality Improvement Expected Long-Term Rate of Return on Investments Salary Increases Aggregate - 2.75% Merit - Increases - same as MCERA Assumptions as of June 30, 2020 valuation Medical Trend Non-Medicare - 6.50% for 2023, decreasing to an ultimate rate of 3.75% in 2076 Medicare (Non-Kaiser) - 5.65% for 2023, decreasing to an ultimate rate of 3.75% in 2076 Medicare (Kaiser) - 4.60% for 2023, decreasing to an ultimate rate of 3.75% in 2076 Healthcare participation for future retirees Capped benefit: 90% currently covered, 70% currently waived PEMHCA minimum - 60% Cap Increases None Agent Multiple Employer Defined Benefit Plan Mortality projected fully generational with Scale MP-2021 Same as discount rate - expected City contributions projected to keep sufficient plan assets to pay all benefits from trust DRAFT DRAFT REVIEW DRAFT 11-7-22 111 DRAFT DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT GENERAL FUND AND MAJOR SPECIAL REVENUE FUND BUDGET-TO-ACTUAL STATEMENTS Generally accepted accounting principles dictate that budget-to-actual information in the basic financial statements should be limited to the General Fund and major Special Revenue Funds. This section is provided for the presentation of Budget-to-Actual Statements for the General Fund, Traffic and Housing Mitigation, and the Gas Tax Special Revenue Funds. Budgets are adopted on a basis consistent with Generally Accepted Accounting Principles for the General Fund and Special Revenue Funds. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT113 CITY OF SAN RAFAEL GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2022 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Taxes and special assessments $77,725,521 $82,785,521 $84,324,467 $1,538,946 Licenses and permits 2,902,778 2,902,778 3,077,355 174,577 Fines and forfeitures 182,100 182,100 296,300 114,200 Use of money and properties 276,383 276,383 (1,969,810) (2,246,193) Intergovernmental 3,625,147 19,714,033 20,393,799 679,766 Charges for services 2,806,603 2,806,603 2,880,711 74,108 Other revenue 1,478,750 1,478,750 786,766 (691,984) Total Revenues 88,997,282 110,146,168 109,789,588 (356,580) EXPENDITURES Current: General government 13,138,280 16,887,256 17,214,009 (326,753) Public safety 47,061,089 47,083,093 46,824,239 258,854 Public works and parks 13,612,436 13,617,436 13,516,875 100,561 Community development 6,400,770 6,400,770 5,377,625 1,023,145 Culture and recreation 3,084,018 3,091,417 2,989,038 102,379 Capital outlay 92,776 92,776 372,147 (279,371) Debt service: Principal 2,755,169 2,755,169 2,829,057 (73,888) Interest and fiscal charges 2,346,760 2,346,761 2,512,515 (165,754) Total Expenditures 88,491,298 92,274,678 91,635,505 639,173 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 505,984 17,871,490 18,154,083 282,593 OTHER FINANCING SOURCES (USES) Transfers in 1,755,022 1,755,022 1,755,022 Transfers out (2,000,000) (2,973,885) (2,973,885) Total Other Financing Sources (Uses) (244,978) (1,218,863) (1,218,863) Net Change in Fund Balance $261,006 $16,652,627 16,935,220 $282,593 FUND BALANCE, BEGINNING OF YEAR 16,845,899 FUND BALANCE, END OF YEAR $33,781,119 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT114 CITY OF SAN RAFAEL TRAFFIC AND HOUSING MITIGATION SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2022 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Use of money and properties $3,683 $10,564 $47,133 $36,569 Intergovernmental 225,000 225,000 Charges for services 863,000 887,563 198,531 (689,032) Other revenue 159,310 159,310 Total Revenues 866,683 898,127 629,974 (268,153) EXPENDITURES Current: General government 15,750 31,986 (16,236) Public works and parks 225,138 652,138 636,429 15,709 Community development 374,824 358,588 16,236 Capital outlay 83,699 83,699 99,173 (15,474) Total Expenditures 308,837 1,126,411 1,126,176 235 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 557,846 (228,284) (496,202) (267,918) OTHER FINANCING SOURCES (USES) Transfers out (1,190,000) (1,190,000) Total Other Financing Sources (Uses)(1,190,000) (1,190,000) Net Change in Fund Balance $557,846 ($1,418,284) (1,686,202) ($267,918) 6,558,073 FUND BALANCE, END OF YEAR $4,871,871 FUND BALANCE, BEGINNING OF YEAR DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT115 CITY OF SAN RAFAEL GAS TAX SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2022 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Use of money and properties $7,943 $7,943 $40,412 $32,469 Intergovernmental 3,738,452 3,738,452 9,528,965 5,790,513 Charges for services 1,562,100 1,562,100 2,089,594 527,494 Other revenue 220,000 220,000 1,811,524 1,591,524 Total Revenues 5,528,495 5,528,495 13,470,495 7,942,000 EXPENDITURES Current: Public works and parks 2,492,528 3,660,828 1,474,091 2,186,737 Capital outlay 1,708,534 25,140,534 10,099,991 15,040,543 Total Expenditures 4,201,062 28,801,362 11,574,082 17,227,280 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 1,327,433 (23,272,867) 1,896,413 25,169,280 OTHER FINANCING SOURCES (USES) Transfers in 1,312,000 1,312,000 Transfers out (635,000) (635,000) (635,000) Total Other Financing Sources (Uses) (635,000) 677,000 677,000 Net Change in Fund Balance $692,433 ($22,595,867) 2,573,413 $25,169,280 FUND BALANCE, BEGINNING OF YEAR 4,344,854 FUND BALANCE, END OF YEAR $6,918,267 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT116 SUPPLEMENTARY INFORMATION DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT117 CITY OF SAN RAFAEL ESSENTIAL FACILITIES CAPITAL PROJECTS FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2022 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property $17,695 $17,695 $95,586 $77,891 Total Revenues 17,695 17,695 95,586 77,891 EXPENDITURES Capital outlay 103,931 10,345,975 4,897,862 5,448,113 Total Expenditures 103,931 10,345,975 4,897,862 5,448,113 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (86,236) (10,328,280) (4,802,276) 5,526,004 OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets 1,000,000 1,000,000 Transfers in 1,022,198 1,022,198 Total Other Financing Sources (Uses)1,022,198 2,022,198 1,000,000 Net Change in Fund Balance ($86,236) ($9,306,082) (2,780,078) $6,526,004 FUND BALANCE, BEGINNING OF YEAR 12,097,390 FUND BALANCE, END OF YEAR $9,317,312 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT118 NON-MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Recreation Revolving Fund – Established to administer the Community Services Department’s program and facility rental charge and accounts for the Recreation Memorial Fund. Baypoint Lagoons Assessment District Fund – The Baypoint Lagoons Lighting and Landscape District was formed to protect and enhance wildlife habitat and water quality in Baypoint (Spinnaker) Lagoon and the adjacent diked salt marsh. Household Hazmat Facility Fund – Established to account for State mandated hazardous materials information, collection, and reporting. Expenditures include inspection of businesses for compliance with regulations. This fund also serves as the depository for countywide Household Hazardous Waste Program. Childcare Fund – Established to administer and account for childcare programs at eight sites throughout the City. Loch Lomond #10 Community Facilities District Fund – Established to provide maintenance for stormwater and geotechnical mitigation facilities. A Mello Roos District was formed to fund this maintenance. Loch Lomond Marina #2 Community Facilities District Fund – Established to report tax assessments and maintenance expenditures of the District. Library Fund – Established to account for restricted library activities that are intended to be self- funding. Library Assessment Fund – Established to account for a special parcel tax dedicated to public library services and facilities, equipment, and technology improvements. Public Safety Fund – Established for special police services that are intended to be self-funding. Stormwater Fund – Established to provide for self-funding storm drain maintenance program plus separate programs through the County and Bay Area to educate residents about urban runoff pollution. Development Services Fund – Established to account for development activities that are supported by external sources of funds. This fund does not account for the operating costs of building, planning, and engineering, which are located in the General Fund. Grants Fund – Established to account for grants for the Library, Childcare, Police and Falkirk Cultural Center. Parkland Dedication Fund – Established to account for long-term developer deposits used to enhance and maintain the park structure within City limits. Emergency Medical Services Fund – Established to account for the Emergency Medical Services and Transportation program that provides services to all segments of the community. Business Improvement Fund – Established to account for activities held in Downtown San Rafael. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT119 NON-MAJOR GOVERNMENTAL FUNDS (Continued) Pt. San Pedro Maintenance Portion Special Revenue Fund – Established to account for ongoing maintenance needs within the Pt. San Pedro assessment district. Low and Moderate Income Housing Special Revenue Fund – Established to account for the activities related to the assets assumed by the City as Housing Successor to the San Rafael Redevelopment Agency for the housing activities of the former Redevelopment Agency. Measure A Open Space Special Revenue Fund – Established to account for the use of proceeds distributed by the County of Marin from Measure A, as well as other supplementary matching or City- funding for the operation or maintenance of open space, park or recreation lands. Measure G Cannabis Special Revenue Fund – Established for the purpose of reporting tax revenue and expenditures related to Cannabis activities authorized by Measure G. Measure C Wildfire Prevention Special Revenue Fund – Established for the purpose of reporting tax revenue and expenditures related to coordinated wildfire prevention activities authorized by Measure C, a parcel tax measure approved on March 3, 2020 by a two-thirds supermajority vote. This is a ten-year parcel tax levying up to 10 cents per building square foot tax and $75 per multifamily unit. CAPITAL PROJECTS FUNDS Capital Improvement Fund – Established for the costs associated with major capital improvement projects not tied to specific funds elsewhere. Improvements could include medians, parkways, sidewalks, and other public assets. Bedroom Tax Fund – Established to collect funds from multiple-unit housing used to pay for maintaining and developing parks within local neighborhoods. Assessment Districts Fund – Established to account for ongoing construction and improvement needs within the following assessment districts: Peacock Gap, Kerner Boulevard, Sun Valley/Lucas Valley Open Space, East San Rafael Drainage Assessment District 1. Park Capital Projects Fund – Established to account for capital improvements for all City owned parks, whether paid for by City funds, grants, donations, or partnership with the community. Open Space Fund – Established for the acquisition of open space. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT120 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT CITY OF SAN RAFAEL NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEETS FOR THE YEAR ENDED JUNE 30, 2022 Baypoint Loch Lomond Lagoons Household #10 Recreation Assessment Hazmat Community Revolving District Facility Childcare Facilities Dist. ASSETS Cash and investments $980,898 $204,093 $460,814 $321,144 $778,135 Restricted cash and investments Receivables: Accounts 272,367 496,430 16,509 Taxes 152 144 Grants 36,622 Interest Loans Leases 201,806 Prepaid expense Total Assets $1,455,071 $204,245 $957,244 $374,275 $778,279 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities: Accounts payable $215,233 $445,613 $29,723 $6,771 Deposits payable Developer deposits payable Unearned revenue 557,549 Total Liabilities 772,782 445,613 29,723 6,771 Deferred Inflows of Resources: Unavailable revenue - leases 197,737 Total Deferred Inflows of Resources 197,737 Fund Balances: Nonspendable Restricted 484,552 $204,245 511,631 344,552 771,508 Committed Assigned Total Fund Balances 484,552 204,245 511,631 344,552 771,508 Total Liabilities, Deferred Inflows of Resources and Fund Balances $1,455,071 $204,245 $957,244 $374,275 $778,279 SPECIAL REVENUE FUNDS DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT122 Loch Lomond Marina #2 Community Library Public Development Parkland Facilities Dist. Library Assessment Safety Stormwater Services Grants Dedication $746,517 $2,590,839 $1,058,487 $133,083 $1,318,844 $472,918 $639,286 $343,740 1,275 1,520 4,522 500,000 900 9,890 301,504 $747,792 $3,090,839 $1,060,907 $133,083 $1,323,366 $774,422 $649,176 $343,740 $10,883 $3,319 $101,256 $53,661 $10,745 $66,904 117,676 186,070 3,635 10,883 3,319 101,256 53,661 132,056 252,974 292,721 292,721 736,909 3,087,520 959,651 $133,083 1,269,705 349,645 396,202 $343,740 736,909 3,087,520 959,651 133,083 1,269,705 349,645 396,202 343,740 $747,792 $3,090,839 $1,060,907 $133,083 $1,323,366 $774,422 $649,176 $343,740 (Continued) SPECIAL REVENUE FUNDS DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT123 CITY OF SAN RAFAEL NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEETS FOR THE YEAR ENDED JUNE 30, 2022 Low and Emergency Pt. San Pedro Moderate Medical Business Maintenance Income Measure A Services Improvement Portion Housing Open Space ASSETS Cash and investments $626,499 $8,800 $154,233 $951,453 $795,075 Restricted cash and investments Receivables: Accounts 149,320 Taxes 27,289 931 Grants Interest 291 Loans 920,826 Leases Prepaid expense 89,761 Total Assets $892,869 $8,800 $155,164 $1,872,570 $795,075 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities: Accounts payable $60,269 $8,800 $15,128 $14,119 Deposits payable Developer deposits payable Unearned revenue Total Liabilities 60,269 8,800 15,128 14,119 Deferred Inflows of Resources: Unavailable revenue - leases Total Deferred Inflows of Resources Fund Balances: Nonspendable 89,761 Restricted 742,839 140,036 $1,872,570 780,956 Committed Assigned Total Fund Balances 832,600 140,036 1,872,570 780,956 Total Liabilities, Deferred Inflows of Resources and Fund Balances $892,869 $8,800 $155,164 $1,872,570 $795,075 SPECIAL REVENUE FUNDS DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT124 SPECIAL REVENUE FUNDS Total Measure C Park Non-Major Measure G Wildfire Capital Bedroom Assessment Capital Open Governmental Cannabis Prevention Improvement Tax Districts Projects Space Funds $846,507 $26,277 $999,203 $130,150 $223,742 $17,936 $117,755 $14,946,428 22,979 81,400 104,379 974,473 1,909,099 121,744 157,577 498,169 1,045,581 1,443 1,734 920,826 503,310 89,761 $968,251 $1,000,750 $1,521,794 $130,150 $305,142 $17,936 $117,755 $19,678,695 $197,568 $22,554 $1,262,546 2,821 306,567 3,635 557,549 197,568 25,375 2,130,297 490,458 490,458 89,761 $968,251 803,182 $130,150 $305,142 15,336,069 1,496,419 $17,936 1,514,355 $117,755 117,755 968,251 803,182 1,496,419 130,150 305,142 17,936 117,755 17,057,940 $968,251 $1,000,750 $1,521,794 $130,150 $305,142 $17,936 $117,755 $19,678,695 CAPITAL PROJECTS FUNDS DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT125 Baypoint Loch Lomond Lagoons Household #10 Recreation Assessment Hazmat Community Revolving District Facility Childcare Facilities Dist. REVENUES Taxes and special assessments $25,368 $23,943 Use of money and properties $52,773 1,508 $1,444 $1,460 5,993 Intergovernmental 44,060 637,151 Charges for services 1,431,873 181,384 2,669,140 Other revenue 5,669 9,720 Total Revenues 1,534,375 26,876 182,828 3,317,471 29,936 EXPENDITURES Current: General government Public safety 114,486 Public works and parks 13,000 11,175 Community development Culture and recreation 3,713,516 3,341,499 Capital outlay Total Expenditures 3,713,516 13,000 114,486 3,341,499 11,175 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (2,179,141) 13,876 68,342 (24,028) 18,761 OTHER FINANCING SOURCES (USES) Transfers in 2,250,000 Transfers out (8,544) Total Other Financing Sources (Uses)2,250,000 (8,544) Net Change in Fund Balances 70,859 13,876 68,342 (24,028) 10,217 Fund Balance, Beginning 413,693 190,369 443,289 368,580 761,291 Fund Balance, Ending $484,552 $204,245 $511,631 $344,552 $771,508 CITY OF SAN RAFAEL COMBINING STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2022 SPECIAL REVENUE FUNDS DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT126 Loch Lomond Marina #2 Community Library Public Development Parkland Facilities Dist. Library Assessment Safety Stormwater Services Grants Dedication $212,494 $1,101,914 $8,670 4,708 $19,510 7,366 $8,806 $49,545 2,597 538,465 900 $83,297 $405,061 1,966 835,739 25,626 70,236 12,725 2,478 242,828 630,177 1,110,180 96,022 847,023 49,545 405,061 11,267 216,137 177,483 548,045 33,821 662,827 20,471 1,162,492 83,356 33,821 20,471 1,162,492 177,483 746,183 764,182 209,007 609,706 (52,312) (81,461) 100,840 49,545 (359,121) 11,267 17,544 85,000 17,544 85,000 226,551 609,706 (52,312) 3,539 100,840 49,545 (359,121) 11,267 510,358 2,477,814 1,011,963 129,544 1,168,865 300,100 755,323 332,473 $736,909 $3,087,520 $959,651 $133,083 $1,269,705 $349,645 $396,202 $343,740 (Continued) SPECIAL REVENUE FUNDS DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT127 Low and Emergency Pt. San Pedro - Moderate Medical Business Maintenance Income Measure A Services Improvement Portion Housing Open Space REVENUES Taxes and special assessments $5,109,836 $155,171 $294,034 Use of money and properties 887 $16,982 5,363 Intergovernmental 58,017 Charges for services 3,026,076 Other revenue 426,685 8,408 773,435 Total Revenues 8,620,614 164,466 790,417 299,397 EXPENDITURES Current: General government 141,039 Public safety 8,325,729 Public works and parks 147,329 Community development Culture and recreation 92,251 Capital outlay 24,695 Total Expenditures 8,325,729 147,329 141,039 116,946 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 294,885 17,137 649,378 182,451 OTHER FINANCING SOURCES (USES) Transfers in Transfers out (307,313) Total Other Financing Sources (Uses) (307,313) Net Change in Fund Balances (12,428) 17,137 649,378 182,451 Fund Balance, Beginning 845,028 122,899 1,223,192 598,505 Fund Balance, Ending $832,600 $140,036 $1,872,570 $780,956 SPECIAL REVENUE FUNDS CITY OF SAN RAFAEL COMBINING STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2022 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT128 Total Measure C Park Non-Major Measure G Wildfire Capital Bedroom Assessment Capital Open Governmental Cannabis Prevention Improvement Tax Districts Projects Space Funds $552,398 $1,770,677 $26,010 $9,280,515 5,011 $3,182 865 $52 $913 188,965 879,202 1,445,240 4,091,393 8,146,178 103,832 $3,406 1,442,220 557,409 2,753,711 1,448,422 26,875 52 3,406 913 23,149,271 113,495 470,671 38,261 2,369,478 11,573,482 868,152 279 8,330,508 1,768,230 1,876,281 151,756 2,369,478 1,768,230 279 23,119,094 405,653 384,233 (319,808) 26,875 52 3,127 913 30,177 2,352,544 (315,857) 2,036,687 405,653 384,233 (319,808) 26,875 52 3,127 913 2,066,864 562,598 418,949 1,816,227 103,275 305,090 14,809 116,842 14,991,076 $968,251 $803,182 $1,496,419 $130,150 $305,142 $17,936 $117,755 $17,057,940 CAPITAL PROJECTS FUNDSSPECIAL REVENUE FUNDS DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT129 CITY OF SAN RAFAEL BUDGETED NONMAJOR GOVERNMENTAL FUNDS COMBINING SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2022 SPECIAL REVENUE FUNDS Recreation Revolving Baypoint Lagoons Assessment District Variance Variance Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) REVENUES Taxes and special assessments $24,100 $25,368 $1,268 Use of money and properties $28,900 $52,773 $23,873 433 1,508 1,075 Intergovernmental 73,945 44,060 (29,885) Charges for services 1,784,047 1,431,873 (352,174) Other revenue 570 5,669 5,099 Total Revenues 1,887,462 1,534,375 (353,087) 24,533 26,876 2,343 EXPENDITURES Current: General government Public safety Public works and parks 229,378 13,000 216,378 Community development Culture and recreation 4,028,756 3,713,516 315,240 Capital outlay Total Expenditures 4,028,756 3,713,516 315,240 229,378 13,000 216,378 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (2,141,294) (2,179,141) (37,847) (204,845) 13,876 218,721 OTHER FINANCING SOURCES (USES) Transfers in 2,250,000 2,250,000 Transfers out Total Other Financing Sources (Uses) 2,250,000 2,250,000 NET CHANGE IN FUND BALANCE $108,706 70,859 ($37,847) ($204,845) 13,876 $218,721 FUND BALANCES, BEGINNING OF YEAR 413,693 190,369 FUND BALANCES, END OF YEAR $484,552 $204,245 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT130 Loch Lomond #10 Household Hazmat Facility Childcare Variance Variance Variance Final Positive Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) Budget Actual (Negative) $23,943 $23,943 $619 $1,444 $825 $1,772 $1,460 ($312) 1,655 5,993 $4,338 385,799 637,151 251,352 183,824 181,384 (2,440) 4,200,000 2,669,140 (1,530,860) 9,720 9,720 184,443 182,828 (1,615) 4,587,571 3,317,471 (1,270,100) 25,598 29,936 4,338 176,919 114,486 62,433 19,148 11,175 7,973 4,676,630 3,341,499 1,335,131 176,919 114,486 62,433 4,676,630 3,341,499 1,335,131 19,148 11,175 7,973 7,524 68,342 60,818 (89,059) (24,028) 65,031 6,450 18,761 12,311 (8,544) (8,544) (8,544) (8,544) $7,524 68,342 $60,818 ($89,059) (24,028) $65,031 ($2,094) 10,217 $12,311 443,289 368,580 761,291 $511,631 $344,552 $771,508 (Continued) Community Facilities District SPECIAL REVENUE FUNDS DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT131 Library Variance Variance Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) REVENUES Taxes and special assessments $80,000 $212,494 $132,494 Use of money and properties 851 4,708 3,857 $5,344 $19,510 $14,166 Intergovernmental 1,000 538,465 537,465 Charges for services 1,966 1,966 Other revenue 25,626 7,000 70,236 63,236 Total Revenues 80,851 242,828 136,351 13,344 630,177 616,833 EXPENDITURES Current: General government Public safety Public works and parks 131,210 33,821 97,389 Community development Culture and recreation 40,000 20,471 19,529 Capital outlay Total Expenditures 131,210 33,821 97,389 40,000 20,471 19,529 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (50,359) 209,007 259,366 (26,656) 609,706 636,362 OTHER FINANCING SOURCES (USES) Transfers in 17,544 17,544 Transfers out Total Other Financing Sources (Uses) 17,544 17,544 NET CHANGE IN FUND BALANCE ($32,815) 226,551 $259,366 ($26,656) 609,706 $636,362 FUND BALANCES, BEGINNING OF YEAR 510,358 2,477,814 FUND BALANCES, END OF YEAR $736,909 $3,087,520 BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2022 CITY OF SAN RAFAEL BUDGETED NONMAJOR GOVERNMENTAL FUNDS COMBINING SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES Community Facilities District SPECIAL REVENUE FUNDS Loch Lomond Marina #2 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT132 SPECIAL REVENUE FUNDS Library Assessment Public Safety Stormwater Variance Variance Variance Final Positive Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) Budget Actual (Negative) $1,100,487 $1,101,914 $1,427 1,341 7,366 6,025 $1,956 $8,806 $6,850 900 900 $75,000 $83,297 $8,297 827,500 835,739 8,239 15,000 12,725 (2,275) 5,000 2,478 (2,522) 1,102,728 1,110,180 7,452 90,000 96,022 6,022 834,456 847,023 12,567 202,490 177,483 25,007 1,037,784 662,827 374,957 1,231,195 1,162,492 68,703 388,773 83,356 305,417 1,231,195 1,162,492 68,703 202,490 177,483 25,007 1,426,557 746,183 680,374 (128,467) (52,312) 76,155 (112,490) (81,461) 31,029 (592,101) 100,840 692,941 85,000 85,000 85,000 85,000 ($128,467) (52,312) $76,155 ($27,490) 3,539 $31,029 ($592,101) 100,840 $692,941 1,011,963 129,544 1,168,865 $959,651 $133,083 $1,269,705 (Continued) DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT133 Grants Variance Variance Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) REVENUES Taxes and special assessments Use of money and properties $37,801 $49,545 $11,744 Intergovernmental $499,250 $405,061 ($94,189) Charges for services Other revenue Total Revenues 37,801 49,545 11,744 499,250 405,061 (94,189) EXPENDITURES Current: General government 216,155 216,137 18 Public safety 721,200 548,045 173,155 Public works and parks Community development Culture and recreation Capital outlay Total Expenditures 937,355 764,182 173,173 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 37,801 49,545 11,744 (438,105) (359,121) 78,984 OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCE $37,801 49,545 $11,744 ($438,105) (359,121) $78,984 FUND BALANCES, BEGINNING OF YEAR 300,100 755,323 FUND BALANCES, END OF YEAR $349,645 $396,202 BUDGET AND ACTUAL CITY OF SAN RAFAEL BUDGETED NONMAJOR GOVERNMENTAL FUNDS COMBINING SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2022 SPECIAL REVENUE FUNDS Development Services DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT134 Parkland Dedication Emergency Medical Services Business Improvement Variance Variance Variance Final Positive Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) Budget Actual (Negative) $8,670 $8,670 $5,144,745 $5,109,836 ($34,909) $671 2,597 1,926 181,100 58,017 (123,083) 2,800,000 3,026,076 226,076 450,000 426,685 (23,315) 671 11,267 10,596 8,575,845 8,620,614 44,769 88 8,561,579 8,325,729 235,850 8,561,587 8,325,729 235,858 671 11,267 10,596 14,258 294,885 280,627 (307,313) (307,313) (307,313) (307,313) $671 11,267 $10,596 ($293,055) (12,428) $280,627 332,473 845,028 $343,740 $832,600 (Continued) SPECIAL REVENUE FUNDS DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT135 Low and Moderate Income Housing Variance Variance Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) REVENUES Taxes and special assessments $150,107 $155,171 $5,064 Use of money and properties 887 887 $2,454 $16,982 $14,528 Intergovernmental Charges for services Other revenue 7,906 8,408 502 773,435 773,435 Total Revenues 158,013 164,466 6,453 2,454 790,417 787,963 EXPENDITURES Current: General government 141,039 141,039 Public safety Public works and parks 185,200 147,329 37,871 Community development Culture and recreation Capital outlay Total Expenditures 185,200 147,329 37,871 141,039 141,039 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (27,187) 17,137 44,324 (138,585) 649,378 787,963 OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCE ($27,187) 17,137 $44,324 ($138,585) 649,378 $787,963 FUND BALANCES, BEGINNING OF YEAR 122,899 1,223,192 FUND BALANCES, END OF YEAR $140,036 $1,872,570 FOR THE YEAR ENDED JUNE 30, 2022 CITY OF SAN RAFAEL BUDGETED NONMAJOR GOVERNMENTAL FUNDS COMBINING SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL Pt. San Pedro-Maintenance Portion SPECIAL REVENUE FUNDS DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT136 SPECIAL REVENUE FUNDS Measure A Open Space Measure G Cannabis Measure C Wildfire Prevention Variance Variance Variance Final Positive Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) Budget Actual (Negative) $472,324 $294,034 ($178,290) $500,000 $552,398 $52,398 $1,826,452 $1,770,677 ($55,775) 355 5,363 5,008 5,011 5,011 879,202 879,202 103,832 103,832 472,679 299,397 (173,282) 500,000 557,409 57,409 1,826,452 2,753,711 927,259 464,308 113,495 350,813 35,687 38,261 (2,574) 2,369,518 2,369,478 40 59,760 59,760 604,765 92,251 512,514 58,825 24,695 34,130 723,350 116,946 606,404 499,995 151,756 348,239 2,369,518 2,369,478 40 (250,671) 182,451 433,122 5 405,653 405,648 (543,066) 384,233 927,299 ($250,671) 182,451 $433,122 $5 405,653 $405,648 ($543,066) 384,233 $927,299 598,505 562,598 418,949 $780,956 $968,251 $803,182 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT137 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT INTERNAL SERVICE FUNDS Internal service funds account for department services and financing performed for other departments within the same governmental jurisdiction. Funding comes from charges assessed to the departments benefiting from the service. Building Maintenance Fund – Established to account for construction projects and cyclical large dollar maintenance tasks (roof, painting) completed on City owned buildings. Vehicle Replacement Fund – Established to provide for the replacement of vehicles. Equipment Replacement Fund – Established to provide for the replacement of computers and equipment. Employee Benefits Fund – This fund is utilized for the payment of retiree benefits, unemployment insurance, accumulated leave requirements and other negotiated benefits not tied to a specific department. Liability Insurance Fund – Established to maintain sufficient reserves for outstanding claims. All costs associated with liability premiums are paid from this fund. Workers’ Compensation Fund – Established to maintain sufficient reserves for injury claims. All costs associated with workers compensation, including safety training, wellness programs, claim expenses and insurance premiums are paid from this fund. Dental Insurance Fund – Set up to maintain sufficient reserves for dental claims. All costs associated with dental claims and administrations are paid from this fund. Employee Retirement Fund – Established to maintain sufficient reserves to fund debt service payments on the 2010 Taxable Pension Obligation Bonds and other pension related obligations. OPEB/Retiree Medical Fund – Established to account for activities related to the funding, administration and procurement of retiree medical benefits. Radio Replacement Fund – Established to meet radio system operating costs, capital acquisition and replacement, and operating lease obligations for the Public Works, Fire, Community Development and Police Departments. The Marin Emergency Radio Authority (MERA) is a countywide JPA that has taken the roll in procurement and installation of a new digital radio system. This fund supports San Rafael's portion of the MERA efforts and related contractual obligations. Telephone Replacement Fund – Established to provide ongoing support services for telephone equipment and usage throughout the organization. Sewer Maintenance Fund – Established to record both the cost of providing services to the San Rafael Sanitation District and the charges for those services. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT139 CITY OF SAN RAFAEL INTERNAL SERVICE FUNDS COMBINING STATEMENTS OF NET POSITION JUNE 30, 2022 Building Vehicle Equipment Employee Liability Maintenance Replacement Replacement Benefits Insurance ASSETS Current Assets: Cash and investments $3,394,947 $6,359,927 $6,082,097 $850,642 $5,669,702 Grants receivable 18,165 Prepaid expenses 4,460 Capital assets: Nondepreciable assets 886,508 23,238 Depreciable assets, net 5,658,343 5,016,452 121,844 Total Assets 9,957,963 11,399,617 6,208,401 850,642 5,669,702 LIABILITIES Current Liabilities: Accounts payable 50,850 23,238 90,845 5,535 Claims payable - due in one year 1,057,147 Long-term debt - due in one year 21,755 Non-current Liabilities: Claims payable - due in more than one year 3,639,357 Long-term debt - due in more than one year 143,217 Total Liabilities 215,822 23,238 90,845 5,535 4,696,504 NET POSITION: Net investment in capital assets 6,379,879 5,039,690 121,844 Unrestricted 3,362,262 6,336,689 5,995,712 845,107 973,198 Total Net Position $9,742,141 $11,376,379 $6,117,556 $845,107 $973,198 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT140 OPEB/ Workers' Dental Employee Retiree Radio Telephone Sewer Compensation Insurance Retirement Medical Replacement Replacement Maintenance Total $12,191,263 $440,432 $2,015,909 $388,642 $328,898 $214,864 $239,738 $38,177,061 18,165 4,460 909,746 10,796,639 12,191,263 440,432 2,015,909 388,642 328,898 214,864 239,738 49,906,071 3,216 7,410 33,406 31,001 239,738 485,239 1,744,875 2,802,022 21,755 9,160,343 12,799,700 143,217 10,908,434 7,410 33,406 31,001 239,738 16,251,933 11,541,413 1,282,829 433,022 2,015,909 355,236 328,898 183,863 22,112,725 $1,282,829 $433,022 $2,015,909 $355,236 $328,898 $183,863 $33,654,138 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT141 Building Vehicle Equipment Employee Liability Maintenance Replacement Replacement Benefits Insurance OPERATING REVENUES Charges for current services $2,500,000 $2,709,458 $3,391,158 $1,849,465 $2,364,880 Intergovernmental 43,423 Other operating revenues 1,500 Total Operating Revenues 2,543,423 2,709,458 3,391,158 1,849,465 2,366,380 OPERATING EXPENSES Personnel 823,105 241,792 Insurance premiums and claims 2,433,183 Maintenance and repairs 225,381 17,132 General and administrative 54,102 1,897,508 338,070 101,800 Depreciation expense 293,708 980,946 67,391 Total Operating Expenses 573,191 998,078 1,964,899 1,161,175 2,776,775 Operating Income (Loss) 1,970,232 1,711,380 1,426,259 688,290 (410,395) NONOPERATING REVENUES (EXPENSES) Investment income 13,810 33,451 36,694 10,215 37,948 Miscellaneous revenues 27,808 Gain from sale of capital assets 33,698 Loss from disposal of capital assets (39,007) Total Nonoperating Revenues (Expenses) 13,810 94,957 (2,313) 10,215 37,948 Net income (loss) before contributions and transfers 1,984,042 1,806,337 1,423,946 698,505 (372,447) TRANSFERS OUT (122,000) Change in Net Position 1,984,042 1,806,337 1,301,946 698,505 (372,447) NET POSITION, BEGINNING OF YEAR 7,758,099 9,570,042 4,815,610 146,602 1,345,645 NET POSITION, END OF YEAR $9,742,141 $11,376,379 $6,117,556 $845,107 $973,198 CITY OF SAN RAFAEL INTERNAL SERVICE FUNDS COMBINING STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION FOR THE YEAR ENDED JUNE 30, 2022 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT142 OPEB/ Workers' Dental Employee Retiree Radio Telephone Sewer Compensation Insurance Retirement Medical Replacement Replacement Maintenance Total $4,553,295 $456,968 $1,780,000 $713,526 $479,464 $2,889,223 $23,687,437 43,423 881,190 882,690 4,553,295 456,968 2,661,190 713,526 479,464 2,889,223 24,613,550 175,795 2,783,793 4,024,485 3,972,017 343,787 3,445,837 10,194,824 64,143 306,656 195,209 44,325 $2,000 388,993 587,315 107,815 3,717,137 1,342,045 4,343,021 388,112 2,000 3,445,837 388,993 651,458 2,891,608 19,585,147 210,274 68,856 (2,000) (784,647) 324,533 (171,994) (2,385) 5,028,403 74,962 3,194 18,292 2,020 230,586 2,385 30,193 33,698 (39,007) 74,962 3,194 18,292 2,020 2,385 255,470 285,236 72,050 16,292 (784,647) 324,533 (169,974) 5,283,873 (683,813) (805,813) 285,236 72,050 (667,521) (784,647) 324,533 (169,974) 4,478,060 997,593 360,972 2,683,430 1,139,883 4,365 353,837 29,176,078 $1,282,829 $433,022 $2,015,909 $355,236 $328,898 $183,863 $33,654,138 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT143 CITY OF SAN RAFAEL INTERNAL SERVICE FUNDS COMBINING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2022 Building Vehicle Equipment Employee Liability Maintenance Replacement Replacement Benefits Insurance CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers/other funds $2,544,962 $2,709,458 $3,391,158 $1,849,465 $2,364,880 Cash payments to suppliers for goods and services (291,183) (54,281) (2,058,180) (361,029) (1,887,661) Cash payments to employees for salaries and benefits (823,105) (241,792) Other operating revenues 1,500 Cash Flows from Operating Activities 2,253,779 2,655,177 1,332,978 665,331 236,927 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Miscellaneous revenues 27,808 Interfund payments (122,000) Cash Flows from Noncapital Financing Activities 27,808 (122,000) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from note payable 174,036 Payment on note payable (9,064) Acquisition and construction of capital assets (539,862) (156,141) Proceeds from sale of property 46,401 Cash Flows from Investing Activities (374,890) (109,740) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 13,810 33,451 36,694 10,215 37,948 Cash Flows from Investing Activities 13,810 33,451 36,694 10,215 37,948 Net increase (decrease) in cash and cash equivalents 1,892,699 2,606,696 1,247,672 675,546 274,875 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,502,248 3,753,231 4,834,425 175,096 5,394,827 CASH AND CASH EQUIVALENTS, END OF YEAR $3,394,947 $6,359,927 $6,082,097 $850,642 $5,669,702 Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income (loss) $1,970,232 $1,711,380 $1,426,259 $688,290 ($410,395) Adjustments to reconcile operating income to cash flows from operating activities: Depreciation 293,708 980,946 67,391 Net change in assets and liabilities: Grants receivable 1,539 Prepaids (4,460) Accounts payable (11,700) (37,149) (156,212) (22,959) (7,975) Claims payable 655,297 Net Cash Provided by (Used in) Operating Activities $2,253,779 $2,655,177 $1,332,978 $665,331 $236,927 NON-CASH TRANSACTIONS: Retirement of capital assets ($12,703) ($39,007) DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT144 OPEB/ Workers' Dental Employee Employee Radio Telephone Sewer Compensation Insurance Retirement Retirement Replacement Replacement Maintenance Total $4,553,295 $456,968 $1,780,000 $713,526 $479,464 $2,889,223 $23,732,399 (1,487,180) (384,244) ($2,000) (3,438,270) (388,993) (635,702) (2,727,750) (13,716,473) (175,795)(1,240,692) 881,190 882,690 2,890,320 72,724 (2,000) (777,080) 324,533 (156,238) 161,473 9,657,924 2,385 30,193 (683,813) (805,813) (683,813) 2,385 (775,620) 174,036 (9,064) (696,003) 46,401 (484,630) 74,962 3,194 18,292 2,020 230,586 74,962 3,194 18,292 2,020 230,586 2,965,282 75,918 (667,521) (777,080) 324,533 (154,218) 163,858 8,628,260 9,225,981 364,514 2,683,430 1,165,722 4,365 369,082 75,880 29,548,801 $12,191,263 $440,432 $2,015,909 $388,642 $328,898 $214,864 $239,738 $38,177,061 $210,274 $68,856 ($2,000) ($784,647) $324,533 ($171,994) ($2,385) $5,028,403 1,342,045 1,539 (4,460) 2,524 3,868 7,567 15,756 163,858 (42,422) 2,677,522 3,332,819 $2,890,320 $72,724 ($2,000) ($777,080) $324,533 ($156,238) $161,473 $9,657,924 ($51,710) DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT145 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT San Rafael Public Library STATISTICAL SECTION DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT STATISTICAL SECTION This part of the City’s Annual Comprehensive 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. In contrast to the financial section, the statistical section information is not subject to independent audit. Financial Trends These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time: 1.Net Position by Component 2.Changes in Net Position 3.Fund Balances of Governmental Funds 4.Changes in Fund Balance of Governmental Funds Revenue Capacity These schedules contain information to help the reader assess the City’s most significant local revenue source, the property tax: 1.Assessed and Estimated Actual Value of Taxable Property 2.Property Tax Rates, All Overlapping Governments 3.Property Tax Rates, Direct & Overlapping Governments 4.Principal Property Taxpayers 5.Property Tax Levies and Collections Debt Capacity These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future: 1.Ratio of Outstanding Debt by Type 2.Computation of Direct and Overlapping Debt 3.Computation of Legal Bonded Debt Margin 4.Revenue Bond Coverage Parking Facility Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place: 1.Demographic and Economic Statistics 2.Principal Employers Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs: 1.Full-Time Equivalent City Government Employees by Function 2.Operating Indicators by Function/Program 3.Capital Asset Statistics by Function/Program Sources Unless otherwise noted, the information in these schedules is derived from the Annual Comprehensive Financial Reports for the relevant year. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT149 CITY OF SAN RAFAEL NET POSITION BY COMPONENT Last Ten Fiscal Years (accrual basis of accounting) 2013 (a) 2014 (a) 2015 (a) 2016 (a) Governmental activities Net investment in capital assets $193,222,791 $190,286,275 $190,621,085 $193,707,175 Restricted 35,780,412 37,339,141 33,389,224 31,286,725 Unrestricted 11,151,318 (196,824) (82,336,534) (93,273,480) Total governmental activities net position $240,154,521 $227,428,592 $141,673,775 $131,720,420 Business-type activities Net investment in capital assets $10,670,190 $10,786,591 $10,744,952 $10,958,058 Unrestricted 2,501,498 2,049,957 (938,519) (1,136,050) Total business-type activities net position $13,171,688 $12,836,548 $9,806,433 $9,822,008 Primary government Net investment in capital assets $203,892,981 $201,072,866 $201,366,037 $204,665,233 Restricted 35,780,412 37,339,141 33,389,224 31,286,725 Unrestricted 13,652,816 1,853,133 (83,275,053) (94,409,530) Total primary government net position $253,326,209 $240,265,140 $151,480,208 $141,542,428 (a) The City adjusted certain beginning balances during fiscal years 2013-2014, 2014-2015 and 2016-2017. Financial data shown for proceeding years were not adjusted for the presentation. Fiscal Year Ended June 30, ($130,000) ($80,000) ($30,000) $20,000 $70,000 $120,000 $170,000 $220,000 $270,000 $320,000 2013 (a)2014 (a)2015 (a)2016 (a)2017 2018 2019 2020 2021 2022Thousands Net investment in capital assets Restricted Unrestricted DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT150 □ ■ ■ 2017 2018 2019 2020 2021 2022 $199,202,842 $217,170,376 $231,844,210 $230,737,025 $228,252,998 $246,437,706 29,225,643 25,549,583 23,288,874 23,522,748 36,175,158 36,668,766 (112,913,181) (122,577,233) (118,215,177) (116,133,437) (107,929,957) (48,883,395) $115,515,304 $120,142,726 $136,917,907 $138,126,336 $156,498,199 $234,223,077 $10,968,642 $10,951,518 $11,023,426 $11,104,751 $11,174,601 $11,256,222 (871,620) (886,848) (1,180,121) (1,204,307) (2,205,300) (1,189,003) $10,097,022 $10,064,670 $9,843,305 $9,900,444 $8,969,301 $10,067,219 $210,171,484 $228,121,894 $242,867,636 $241,841,776 $239,427,599 $257,693,928 29,225,643 25,549,583 23,288,874 23,522,748 36,175,158 36,668,766 (113,784,801) (123,464,081) (119,395,298) (117,337,744) (110,135,257) (50,072,398) $125,612,326 $130,207,396 $146,761,212 $148,026,780 $165,467,500 $244,290,296 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT151 CITY OF SAN RAFAEL CHANGES IN NET POSITION Last Ten Fiscal Years (Accrual Basis of Accounting) 2013 2014 2015 2016 Expenses Governmental Activities: General government $10,202,530 $9,085,672 $9,099,858 $12,952,983 Public safety 41,966,065 43,800,158 39,968,631 55,399,798 Public works and parks 17,695,164 22,125,336 16,893,164 22,929,289 Community development 3,403,158 3,451,244 3,128,373 4,307,269 Culture and recreation 11,330,058 11,846,818 11,198,151 15,026,680 Interest on long-term debt and fiscal charges 283,805 327,350 284,288 277,263 Total Governmental Activities Expenses 84,880,780 90,636,578 80,572,465 110,893,282 Business-Type Activities: Parking services 3,545,387 4,125,476 4,249,597 4,762,851 Total Business-Type Activities Expenses 3,545,387 4,125,476 4,249,597 4,762,851 Total Primary Government Expenses $88,426,167 $94,762,054 $84,822,062 $115,656,133 Component Unit: San Rafael Sanitation District $10,169,082 $11,378,055 $11,375,239 $11,654,767 Program Revenues Governmental Activities: Charges for services: General government $2,655,749 $2,838,940 $1,379,523 $526,495 Public safety 6,478,321 6,014,034 4,966,251 4,939,658 Public works and parks 7,837,472 6,101,460 3,078,267 5,157,289 Community development 3,984,204 3,279,251 3,796,684 4,004,178 Culture and recreation 6,075,129 6,417,003 6,537,646 6,683,059 Operating grants and contributions 4,085,073 4,698,142 4,185,450 4,678,338 Capital grants and contributions 5,876,993 762,719 1,308,027 1,470,953 Total Government Activities Program Revenues 36,992,941 30,111,549 25,251,848 27,459,970 Business-Type Activities: Charges for services: Parking services 3,990,706 4,485,394 5,173,557 5,212,181 Total Business-Type Activities Program Revenues 3,990,706 4,485,394 5,173,557 5,212,181 Total Primary Government Program Revenues $40,983,647 $34,596,943 $30,425,405 $32,672,151 Component Unit: San Rafael Sanitation District Charges for service $12,413,123 $13,732,496 $14,629,758 $15,414,530 Operating grants and contributions Capital grants and contributions Total Component Unit Program Revenues $12,413,123 $13,732,496 $14,629,758 $15,414,530 Net (Expense)/Revenue Governmental Activities ($47,887,839) ($60,525,029) ($55,320,617) ($83,433,312) Business-Type Activities 445,319 359,918 923,960 449,330 Total Primary Government Net Expense ($47,442,520) ($60,165,111) ($54,396,657) ($82,983,982) Component Unit Activities $2,244,041 $2,354,441 $3,254,519 $3,862,215 Fiscal Year Ended June 30, DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT152 2017 2018 2019 2020 2021 2022 $10,996,269 $9,835,941 $11,967,641 $15,629,601 $12,254,642 $10,458,884 44,366,734 53,231,197 49,899,296 50,000,809 54,736,561 34,379,474 19,845,719 22,084,433 19,270,613 21,661,442 20,749,666 14,030,717 4,242,743 4,040,195 5,781,826 5,314,692 5,804,134 2,835,173 14,131,000 13,285,563 12,819,429 11,828,353 10,619,181 7,430,968 271,263 884,336 1,848,263 1,974,834 1,935,532 2,004,572 93,853,728 103,361,665 101,587,068 106,409,731 106,099,716 71,139,788 4,188,152 4,627,716 5,038,553 4,491,375 3,748,667 2,226,556 4,188,152 4,627,716 5,038,553 4,491,375 3,748,667 2,226,556 $98,041,880 $107,989,381 $106,625,621 $110,901,106 $109,848,383 $73,366,344 $11,255,194 $12,235,868 $12,601,257 $13,853,263 $13,790,905 $12,892,687 $421,393 $517,542 $377,606 $394,882 $388,833 $1,039,816 4,264,939 5,628,478 5,304,832 5,824,555 5,332,486 6,302,852 1,804,698 2,362,375 4,158,338 3,082,495 2,719,148 2,996,881 3,850,107 3,814,892 4,312,259 5,470,010 8,390,282 4,493,292 6,941,013 6,819,303 5,750,846 4,370,442 2,932,869 4,105,520 3,965,351 5,142,670 4,584,855 5,545,731 5,132,596 22,520,880 1,702,993 974,603 8,042,524 1,348,640 8,718,764 9,867,883 22,950,494 25,259,863 32,531,260 26,036,755 33,614,978 51,327,124 5,268,991 5,203,585 5,362,016 5,063,318 3,351,864 3,836,881 5,268,991 5,203,585 5,362,016 5,063,318 3,351,864 3,836,881 $28,219,485 $30,463,448 $37,893,276 $31,100,073 $36,966,842 $55,164,005 $16,014,016 $16,829,908 $16,964,083 $16,874,361 $16,945,721 $16,458,113 36,945 58,440 5,907 5,719 5,609 5,568 79,245 105,734 1,433,871 175,217 277,752 517,752 $16,130,206 $16,994,082 $18,403,861 $17,055,297 $17,229,082 $16,981,433 ($70,903,234) ($78,101,802) ($69,055,808) ($80,372,976) ($72,484,738) ($19,812,664) 1,080,839 575,869 323,463 571,943 (396,803) 1,610,325 ($69,822,395) ($77,525,933) ($68,732,345) ($79,801,033) ($72,881,541) ($18,202,339) $4,875,012 $4,758,214 $5,802,604 $3,202,034 $3,438,177 $4,088,746 (Continued) DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT153 CITY OF SAN RAFAEL CHANGES IN NET POSITION (continued) Last Ten Fiscal Years (Accrual Basis of Accounting) 2013 2014 2015 2016 General Revenues and Other Changes in Net Position Governmental Activities: Taxes: Property $17,317,772 $18,439,619 $19,039,443 $19,998,567 Sales 24,262,282 27,758,971 32,269,915 34,348,089 Paramedic 3,804,985 3,816,070 3,820,240 4,226,020 Transient occupancy 2,185,287 2,332,277 2,661,878 3,063,263 Franchise 3,331,160 3,260,958 3,272,390 3,418,277 Business license 2,507,785 2,588,728 2,670,071 2,824,664 Other 2,929,915 3,452,171 3,295,751 3,465,193 Investment earnings 991,762 184,171 216,066 300,091 Gain (loss) from sale of capital assets Miscellaneous 2,580,882 1,140,743 2,254,901 1,387,315 Transfers 423,817 449,917 432,630 448,478 Total Government Activities 60,335,647 63,423,625 69,933,285 73,479,957 Business-Type Activities: Investment earnings 3,739 4,375 7,008 14,723 Gain (loss) from sale of capital assets Transfers (423,817) (449,917) (432,630) (448,478) Total Business-Type Activities (420,078) (445,542) (425,622) (433,755) Total Primary Government $59,915,569 $62,978,083 $69,507,663 $73,046,202 Component Unit: San Rafael Sanitation District Property Taxes $1,177,469 $1,345,018 $1,319,852 $1,367,172 Investment earnings 25,591 151,729 171,804 46,225 Miscellaneous Aid from other governmental agencies 56,589 22,125 35,090 Total Component Unit $1,259,649 $1,518,872 $1,526,746 $1,413,397 Special Item Governmental Activities $4,462,815 Component Unit Activities ($4,462,815) Change in Net Position Governmental Activities $12,447,808 $2,898,596 $19,075,483 ($9,953,355) Business-Type Activities 25,241 (85,624)498,338 15,575 Total Primary Government $12,473,049 $2,812,972 $19,573,821 ($9,937,780) Change in Net Position Component Unit Activities $3,503,690 $3,873,313 $318,450 $5,275,612 Fiscal Year Ended June 30, DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT154 2017 2018 2019 2020 2021 2022 $23,343,140 $24,627,373 $25,903,240 $26,491,505 $30,993,516 $32,324,129 31,819,259 34,119,502 35,626,646 33,784,770 39,599,113 44,110,471 5,485,637 4,923,148 4,934,584 4,923,092 5,153,448 5,109,836 2,984,758 3,115,151 3,203,499 2,410,745 1,797,578 2,976,234 3,610,824 3,726,841 3,627,254 4,029,050 3,973,806 4,209,979 2,774,803 2,790,212 2,788,496 2,824,722 2,575,341 2,645,636 1,824,830 2,245,882 1,783,170 2,152,617 2,996,950 3,108,543 210,628 556,745 1,450,434 1,907,591 388,645 (1,424,183) 26,784 989,991 2,448,604 5,991,713 5,904,968 2,470,926 2,813,015 2,965,697 536,000 632,657 608,698 586,387 538,405 521,209 75,038,483 82,729,224 85,830,989 81,581,405 90,856,601 97,537,542 10,810 24,436 63,870 71,583 4,065 8,802 (536,000)(632,657)(608,698)(586,387)(538,405)(521,209) (525,190)(608,221)(544,828)(514,804)(534,340)(512,407) $74,513,293 $82,121,003 $85,286,161 $81,066,601 $90,322,261 $97,025,135 $1,528,047 $1,620,584 $1,727,221 $1,833,137 $1,888,197 $2,086,682 97,090 234,379 519,793 876,369 48,614 (406,535) 10,690 7,768 489 $1,625,137 $1,865,653 $2,254,782 $2,709,995 $1,936,811 $1,680,147 $4,135,249 $4,627,422 $16,775,181 $1,208,429 $18,371,863 $77,724,878 555,649 (32,352)(221,365)57,139 (931,143) 1,097,918 $4,690,898 $4,595,070 $16,553,816 $1,265,568 $17,440,720 $78,822,796 $6,500,149 $6,623,867 $8,057,386 $5,912,029 $5,374,988 $5,768,893 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT155 2013 2014 (b) 2015 (b) 2016 (b) General Fund Nonspendable $527,235 $503,338 $399,299 $476,316 Restricted Committed 800,876 Assigned 2,476,676 6,866,149 12,374,002 16,440,910 Unassigned 1,588,500 1,772,577 Total General Fund $3,804,787 $7,369,487 $14,361,801 $18,689,803 All Other Governmental Funds Nonspendable $51,521 $8,719 $2,359 $9,449 Restricted 20,769,546 30,185,064 31,742,184 27,552,245 Committed 8,447,495 2,185,825 931,871 3,799,421 Assigned 6,511,850 4,959,533 712,810 119,183 Unassigned Total all other governmental funds $35,780,412 $37,339,141 $33,389,224 $31,480,298 (a) The change in total fund balance for the General Fund and other governmental funds is explained in Management's Discussion and Analysis. (b) The City adjusted certain beginning balances during fiscal years 2013-2014, 2014-2015 and 2015-2016. Financial data shown for preceding years were not adjusted for the presentation. CITY SAN RAFAEL FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Fiscal Year Ended June 30, ($5,000) $15,000 $35,000 $55,000 $75,000 $95,000 2013 2014 (b) 2015 (b) 2016 (b) 2017 2018 2019 2020 2021 2022Thousands Total Fund Balance DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT156 I □ 2017 2018 2019 2020 2021 2022 (a) $508,446 $1,008,234 $37,271 $7,540 $377,861 $95,279 8,321,000 9,415,000 14,900,945 11,214,720 11,391,084 9,799,140 7,226,153 24,270,840 1,295,041 1,104,216 920,885 $16,704,432 $12,222,954 $12,532,571 $9,806,680 $16,845,899 $33,781,119 $302,366 $27,627 $7,813 $89,761 $25,812,405 73,489,688 53,260,504 34,288,302 $36,043,515 36,443,519 3,491,708 1,754,983 1,901,271 1,884,153 1,831,036 1,514,355 115,103 115,942 118,139 120,920 116,842 117,755 (11,118) $29,419,216 $75,662,979 $55,307,541 $36,290,070 $37,991,393 $38,165,390 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT157 2013 2014 2015 2016 Revenues Taxes and special assessments $51,549,306 $56,686,142 $61,804,228 $65,866,218 Licenses and permits 1,929,387 1,934,755 2,456,820 2,588,411 Fines and forfeitures 734,005 669,553 556,076 435,829 Use of money and properties 325,043 363,089 444,757 460,206 Intergovernmental 11,869,889 11,953,308 13,233,503 13,685,003 Charges for services 23,575,374 19,949,333 15,346,794 14,366,744 Other revenue 4,092,411 2,045,407 1,777,003 3,208,749 Total Revenues 94,075,415 93,601,587 95,619,181 100,611,160 Expenditures Current: General government 10,529,480 8,678,833 10,203,687 11,349,079 Public safety 41,377,062 41,900,762 43,954,515 47,071,166 Public works and parks 12,002,448 13,697,957 12,758,643 14,390,699 Community development 2,961,275 3,296,375 3,416,859 3,670,108 Culture and recreation 10,591,057 11,106,367 11,616,777 12,048,104 Capital outlay 4,009,454 2,154,900 4,498,924 4,813,757 Capital improvement/special projects 5,284,720 7,168,776 2,186,986 4,826,576 Debt service: Principal 208,642 75,172 75,172 Interest and fiscal charges 283,805 327,350 284,288 277,263 Total Expenditures 87,039,301 88,539,962 88,995,851 98,521,924 Excess (deficiency) of revenues over (under) expenditures 7,036,114 5,061,625 6,623,330 2,089,236 Other Financing Sources (Uses) Issuance of debt Proceeds from PG&E loans 568,481 Proceeds from sale of capital assets Transfers in 8,425,474 3,655,302 4,348,149 7,533,364 Transfers (out)(6,711,657)(3,053,865)(3,051,499)(6,582,555) Total other financing sources (uses)1,713,817 1,169,918 1,296,650 950,809 Extraordinary Item Transfer to Successor Agency (2,352,584) Net Change in fund balances $6,397,347 $6,231,543 $7,919,980 $3,040,045 Debt service as a percentage of noncapital expenditures 0.4%0.7%0.4%0.4% CITY OF SAN RAFAEL CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Fiscal Year Ended June 30, DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT158 2017 2018 2019 2020 2021 2022 $71,166,891 $74,893,789 $77,101,185 $76,410,697 $86,347,728 $93,604,982 2,559,841 2,718,166 2,661,500 3,047,144 3,000,666 3,077,355 400,283 384,268 337,680 350,388 219,030 296,300 349,349 654,531 1,583,060 1,537,869 667,104 (1,597,714) 8,063,156 8,878,974 15,602,264 9,287,181 16,859,749 34,239,157 13,425,161 14,660,094 15,166,876 13,834,843 15,065,363 13,315,014 1,842,053 5,219,414 5,158,042 2,309,226 1,875,299 4,199,820 97,806,734 107,409,236 117,610,607 106,777,348 124,034,939 147,134,914 10,557,416 10,010,100 12,553,499 16,689,526 12,426,899 17,716,666 49,018,153 51,805,708 51,678,876 50,071,531 54,363,872 58,397,721 16,752,961 17,647,312 15,617,622 17,453,823 15,110,972 16,495,547 3,759,564 4,051,224 4,988,260 5,276,887 6,270,129 5,736,213 12,646,728 12,823,771 12,468,008 11,179,410 9,700,739 11,319,546 2,100,926 22,815,967 38,701,047 25,984,748 13,635,066 17,345,454 7,403,249 175,172 280,172 495,172 618,316 2,563,711 2,829,057 271,263 1,005,636 2,356,207 2,482,778 2,443,476 2,512,515 102,685,432 120,439,890 138,858,691 129,757,019 116,514,864 132,352,719 (4,878,698)(13,030,654)(21,248,084)(22,979,671)7,520,075 14,782,195 46,565,800 23,999 1,000,000 9,287,007 68,351,964 15,482,297 13,797,526 7,549,590 6,441,764 (8,454,762)(68,373,222)(14,280,034)(12,585,216)(6,329,123)(5,114,742) 832,245 46,544,542 1,202,263 1,236,309 1,220,467 2,327,022 ($4,046,453)$33,513,888 ($20,045,821) ($21,743,362)$8,740,542 $17,109,217 0.5%1.3%2.8%3.0%4.9%4.6% DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT159 CITY OF SAN RAFAEL ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS Real Property Total Real Total Fiscal Residential Commercial Industrial Secured Unsecured Total Estimated Direct Year Property Property Property Other Property Property Assessed (a) Full Market (a) Tax Rate (b) 2013 7,265,617,525$ 1,987,170,644$ 245,917,096$ 115,453,836$ 9,614,159,101$ 384,534,108$ 9,998,693,209$ 9,998,693,209$ 0.17456% 2014 7,558,708,224 2,009,718,415 245,674,195 130,594,237 9,944,695,071 402,261,887 10,346,956,958 10,346,956,958 0.11985% 2015 7,991,224,952 2,120,065,908 249,864,918 115,675,852 10,476,831,630 417,217,272 10,894,048,902 10,894,048,902 0.11657% 2016 8,511,358,216 2,221,843,976 263,830,302 108,982,883 11,106,015,377 400,942,059 11,506,957,436 11,506,957,436 0.11672% 2017 9,025,896,811 2,390,814,514 267,468,956 135,689,202 11,819,869,483 423,545,667 12,243,415,150 12,243,415,150 0.11693% 2018 9,522,645,933 2,532,439,852 276,751,912 128,305,868 12,460,143,565 417,902,554 12,878,046,119 12,878,046,119 0.11709% 2019 10,042,494,232 2,681,917,170 285,601,803 107,472,477 13,117,485,682 409,129,431 13,526,615,113 13,526,615,113 0.11742% 2020 10,545,909,554 2,850,424,603 293,144,677 127,151,762 13,816,630,596 442,888,708 14,259,519,304 14,259,519,304 0.11724% 2021 11,011,781,157 2,956,073,592 305,080,963 143,953,920 14,416,889,632 460,690,899 14,877,580,531 14,877,580,531 0.11734% 2022 11,516,548,822 3,109,589,216 311,491,969 138,527,146 15,076,157,153 463,320,122 15,539,477,275 15,539,477,275 0.11734% (a) (b) Data Source: Marin County Assessor 2012/13 - 2021/22 Combined Tax Rolls The State Constitution requires property to be assessed at one hundred percent of the most recent purchase price, plus an increment of no more than two percent annually, plus any local over-rides. These values are considered to be full market values. California cities do not set their own direct tax rate. The state constitution establishes the rate at 1% and allocates a portion of that amount, by an annual calculation, to all the taxing entities within a tax rate area. $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Millions Unsecured Property Secured Property DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT160 Fiscal School Misc. Special Year City County (1)Districts Districts Total 2013 0.154 0.295 0.7743 0.0461 1.2691 0.17456% 2014 0.154 0.295 0.7890 0.0461 1.2838 0.11985% 2015 0.154 0.295 0.7651 0.0461 1.2599 0.11657% 2016 0.154 0.295 0.7846 0.0695 1.3028 0.11672% 2017 0.154 0.295 0.8251 0.0553 1.3291 0.11693% 2018 0.154 0.295 0.8127 0.0661 1.3275 0.11709% 2019 0.154 0.295 0.8495 0.0650 1.3635 0.11742% 2020 0.154 0.295 0.8289 0.0635 1.3414 0.11724% 2021 0.154 0.295 0.8221 0.0678 1.3389 0.11734% 2022 0.154 0.295 0.7995 0.0678 1.3160 0.11734% Notes: (1) Like other cities, San Rafael includes several property tax rate areas with different rates. A mean average is indicated. Data Source: Marin County Assessors Office 2012/13 - 2021/22 Tax Rate Tables CITY OF SAN RAFAEL PROPERTY TAX RATES ALL OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS Total Direct Rate DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT161 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 Basic Levy (1) 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 Marin Community College Bonds 0.01780 0.02040 0.01800 0.01650 0.01420 0.03380 0.03390 0.02690 0.02650 0.02750 Marin Healthcare Bond 0.00000 0.00000 0.00000 0.02350 0.00930 0.02010 0.01900 0.01750 0.02180 0.02180 Miller Creek School Bonds 0.01540 0.01500 0.01470 0.04170 0.03830 0.02090 0.03450 0.03280 0.03030 0.01950 Ross Elementary School 0.06640 0.06570 0.06030 0.06150 0.06030 0.06190 0.06180 0.05710 0.05800 0.05760 Ross Valley School Bonds 0.06110 0.05960 0.05700 0.05550 0.05370 0.05680 0.05390 0.05270 0.05190 0.04870 San Rafael Elementary Bonds 0.02170 0.03320 0.02620 0.02570 0.05350 0.05030 0.07290 0.07050 0.06950 0.07400 San Rafael High Bonds 0.04960 0.05130 0.04850 0.04710 0.07100 0.05680 0.06170 0.06000 0.05830 0.04630 Tamalpais Union High School 0.03710 0.03860 0.03520 0.03130 0.02880 0.02690 0.02580 0.02390 0.02260 0.02060 Total Direct & Overlapping Tax Rates 1.26910 1.28380 1.25990 1.30280 1.32910 1.32750 1.36350 1.34140 1.33890 1.31600 City's Share of 1% Levy Per Prop 13 0.12313 0.12306 0.12233 0.12233 0.12233 0.12233 0.12232 0.12232 0.12231 0.12231 Total Direct Rate 0.17456 0.11985 0.11657 0.11672 0.11693 0.11709 0.11742 0.11724 0.11734 0.11734 Notes: Data Source: Marin County Assessors Office 2012/13 - 2021/22 Tax Rate Tables (1) In 1978, California voters passed Proposition 13 which set the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds. CITY OF SAN RAFAEL PROPERTY TAX RATES DIRECT & OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS (RATE PER $100 OF ASSESSED VALUE) DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT162 CITY OF SAN RAFAEL PRINCIPAL PROPERTY TAX PAYERS CURRENT FY 2020/21 AND FY 2012/2013 Percentage Percentage of Total City of Total City Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Taxpayer Value Value Value Value California Corporate Center ACQ LLC 286,882,364$ 1.85% MGP XI Northgate LLC 223,376,777 1.44% NCP Commercial 143,353,203 0.92% Kaiser 115,687,561 0.74% Pur San Rafael LLC 105,996,899 0.68% Bre Properties, Inc 66,994,467 0.43% South Valley Apartments LLC 56,863,460 0.37% North Bay 4040 TT LLC 54,228,065 0.35% Regency Center II Assoc LP 52,307,157 0.34% 42,728,882$ 0.43% Northbay Properties II 49,196,251 0.32% 42,394,545 0.42% Bay Apartment Communities Inc 40,340,145 0.40% Northgate Mall Associates 135,444,524 1.35% SR Corporation Center Phase 1 52,500,001 0.53% SR Corporation Center Phase 2 70,306,032 0.70% Sutter Health 49,632,065 0.50% Robert Dickson Trust 45,189,250 0.45% Rafael Town Center Investors 35,497,775 0.36% Marin Sanitary Service 38,365,767 0.38% Subtotal 1,154,886,204$ 7.43% 552,398,986$ 5.52% Total Net Assessed Valuation: Fiscal Year 2021-2022 15,539,477,275$ Fiscal Year 2012-2013 9,998,693,209$ FY 2021-2022 FY 2012-2013 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT163 Delinquent taxes Fiscal as a Percent of Year Rate Levies Allocations Collections Apportionments Delinquencies Allocations 2013 1.00 (2)20,883,041$ (2)20,883,041$ (2)0.0% 2014 1.00 (2)22,001,357 (2)22,001,357 (2)0.0% 2015 1.00 (2)22,376,457 (2)22,376,457 (2)0.0% 2016 1.00 (2)23,636,093 (2)23,636,093 (2)0.0% 2017 1.00 (2)25,173,651 (2)25,173,651 (2)0.0% 2018 1.00 (2)26,088,961 (2)26,088,961 (2)0.0% 2019 1.00 (2)27,718,712 (2)27,718,712 (2)0.0% 2020 1.00 (2)28,709,606 (2)28,709,606 (2)0.0% 2021 1.00 (2)29,762,184 (2)29,762,184 (2)0.0% 2022 1.00 (2)31,129,632 (2)31,129,632 (2)0.0% Notes: (1) Includes deductions for County property tax administration. (2) Information not applicable. All general purpose property taxes are levied by the county and allocated to other governmental entities. CITY OF SAN RAFAEL PROPERTY TAX LEVIES AND COLLECTIONS (1) LAST TEN FISCAL YEARS $6 $9 $12 $16 $19 $22 $25 $28 $31 $35 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022MillionsAllocationsApportionments DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT164 - ~ -----..., -.... .... --..., -- CITY OF SAN RAFAEL RATIO OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Pension Lease Fiscal Note Obligation Revenue Year Payable Bonds Bonds Total 2013 169,000$ 4,490,000$ 4,659,000$ 2014 528,839 4,490,000 5,018,839 2015 453,667 4,490,000 4,943,667 2016 378,495 4,490,000 4,868,495 2017 303,323 4,390,000 4,693,323 2018 1,308,951 4,185,000 53,612,097$ 59,106,048 2019 1,233,779 3,765,000 53,104,153 58,102,932 2020 1,084,462 3,320,000 52,596,209 57,000,671 2021 905,751 2,845,000 50,178,265 53,929,016 2022 890,554 2,340,000 47,600,322 50,830,876 Parking Total Percentage Fiscal Services Note Primary of Personal Per Year Bonds Payable Total Government Income (a) Capita (a) 2013 6,445,000$ 6,445,000$ 11,104,000$ 0.44% 190.85 2014 6,186,403 61,836$6,248,239 11,267,078 0.43% 192.38 2015 5,942,128 55,020 5,997,148 10,940,815 0.41% 185.87 2016 5,692,853 48,204 5,741,057 10,609,552 0.38% 175.13 2017 5,433,577 41,388 5,474,965 10,168,288 0.35% 167.13 2018 5,164,303 34,572 5,198,875 64,304,923 2.04% 1,060.25 2019 4,890,027 27,755 4,917,782 63,020,714 2.00% 1,049.54 2020 4,605,753 20,939 4,626,692 61,627,363 1.87% 1,030.44 2021 4,316,478 14,123 4,330,601 58,259,617 n/a 987.18 2022 4,017,203 7,305 4,024,508 54,855,384 n/a 905.80 In August 2012, the series 2003 parking services bonds were refunded with series 2012 refunding bonds. Data Sources:City of San Rafael State of California, Department of Finance (population) U.S. Department of commerce, Bureau of the Census (income) (a) See Schedule of Demographic and Economic Statistics for personal income and population data. Governmental Activities Business-Type Activities $- $10 $20 $30 $40 $50 $60 $70 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022MillionsTotal Governmental Total Business DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT165 Cl • CITY OF SAN RAFAEL COMPUTATION OF DIRECT AND OVERLAPPING DEBT June 30, 2022 2021-22 Assessed Valuation:15,539,477,275$ Total Debt City's Share of OVERLAPPING TAX AND ASSESSMENT DEBT:6/30/2022 % Applicable (1) Debt 6/30/2022 Marin Community College District 584,795,000$ 17.343% 101,420,997$ San Rafael High School District 165,382,827 79.145% 130,892,238 Tamalpais Union High School District 84,535,000 0.064%54,102 Miller Creek School District (Formerly Dixie School District)28,160,810 67.334% 18,961,800 Ross School District 15,965,600 1.235% 197,175 Ross Valley School District 40,714,478 0.011%4,479 San Rafael School District 124,227,855 84.549% 105,033,409 Marin Healthcare District 365,425,000 20.766% 75,884,156 Marin Emergency Radio Authority Parcel Tax Obligations 28,020,000 17.318% 4,852,504 City of San Rafael 1915 Act Bonds 1,159,300 100.000% 1,159,300 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 438,460,160$ DIRECT AND OVERLAPPING GENERAL FUND DEBT: Marin County Certificates of Participation 76,250,000$ 17.318% 13,204,975$ Marin County Pension Obligation Bonds 61,840,000 17.318% 10,709,451 Marin Community College District Certification of Participation 11,913,179 17.343% 2,066,103 San Rafael School District General Fund Obligations 2,825,000 84.549% 2,388,509 City of San Rafael General Fund Obligations 52,515,384 100.000% 52,515,384 (2) City of San Rafael Pension Obligations 2,340,000 100.000% 2,340,000 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT 83,224,422 Less: City of San Rafael obligations supported by enterprise revenues 4,017,203 TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT 79,207,219$ OVERLAPPING TAX INCREMENT DEBT (Successor Agency)2,027,822$ 100.000% 2,027,822$ TOTAL GROSS DIRECT DEBT 54,855,384 TOTAL NET DIRECT DEBT 50,838,181 TOTAL OVERLAPPING DEBT 468,857,021 GROSS COMBINED TOTAL DEBT 523,712,405 (3) NET COMBINED TOTAL DEBT 519,695,202 (2) Includes $890,554 PG&E notes. Ratios to 2021-22 Assessed Valuation: Total Overlapping Tax and Assessment Debt 2.82% Total Gross Direct Debt ($54,855,384)0.35% Total Net Direct Debt ($50,838,181)0.33% Gross Combined Total Debt 3.37% Net Combined Total Debt 3.34% Ratios to Redevelopment Incremental Valuation ($3,311,940,202) Total Overlapping Tax Increment Debt 0.06% Data Source: Avenu Insights & Analytics, California Municipal Statistics, Inc. (1) The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value. (3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT166 ASSESSED VALUATION:15,539,477,275$ BONDED DEBT LIMIT (3.75% OF ASSESSED VALUE) (a)582,730,398 LESS AMOUNT OF DEBT SUBJECT TO LIMIT:50,830,876 LEGAL BONDED DEBT MARGIN 531,899,522$ Total net debt Total Net Debt Legal applicable to the limit Fiscal Debt Applicable to Debt as a percentage Year Limit Limit Margin of debt limit 2013 374,950,995$ 4,659,000$ 370,291,995$ 1.26% 2014 388,010,886 5,018,839 382,992,047 1.31% 2015 408,526,834 4,943,667 403,583,167 1.22% 2016 431,510,904 4,868,495 426,642,409 1.14% 2017 459,128,068 4,693,323 454,434,745 1.03% 2018 482,926,729 59,106,048 423,820,681 13.95% 2019 507,248,067 58,102,932 449,145,135 12.94% 2020 534,731,974 57,000,671 477,731,303 11.93% 2021 557,909,270 53,929,016 503,980,254 10.70% 2022 582,730,398 50,830,876 531,899,522 9.56% NOTE: (a) Source: City of San Rafael's Finance Department CITY OF SAN RAFAEL COMPUTATION OF LEGAL BONDED DEBT MARGIN June 30, 2022 California Government Code, Section 43605 sets the debt limit at 15%. The Code section was enacted prior to the change in basing assessed value to full market value when it was previously 25% of market value. Thus, the limit shown as 3.75% is one-fourth of that value. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT167 CITY OF SAN RAFAEL REVENUE BOND COVERAGE PARKING FACILITY LAST TEN FISCAL YEARS Debt Service Requirements Net Revenue Fiscal Gross Operating Available for Year Revenue (1) Expenses (2) Debt Service Principal Interest Total Coverage 2013 3,994,446$ 3,121,964$ 872,481$ 310,000$ 240,012$ 550,012$ 1.59 2014 4,489,769 3,716,552 773,217 245,000 210,063 455,063 1.70 2015 5,180,554 4,031,161 1,149,393 245,000 205,163 450,163 2.55 2016 5,226,904 3,739,321 1,487,583 250,000 199,613 449,613 3.31 2017 5,279,801 2,425,281 2,854,520 260,000 192,038 452,038 6.31 2018 5,219,721 4,320,695 899,026 270,000 184,163 454,163 1.98 2019 5,425,883 4,283,754 1,142,130 275,000 176,025 451,025 2.53 2020 5,134,901 4,072,433 1,062,468 284,999 167,700 452,699 2.35 2021 3,355,929 3,332,327 23,602 290,000 161,288 451,288 0.05 2022 3,845,683 1,851,746 1,993,937 300,000 150,338 450,338 4.43 Notes: On March 26, 2003, the City Financing Authority issued lease revenue bonds for the design and construction of a new parking facility. On August 12, 2012, the City Financing Authority refunded the series 2003 lease revenue bonds with series 2012 lease revenue refunding bonds to take advantage of lower interest rates. (1) Includes all Parking Facility Operating Revenues and Non-operating Interest Revenue (2) Includes all Parking Facility Operating Expenses less Depreciation and Interest Data Source: San Rafael Finance Department Revenue and Expenditure Status Reports 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Coverage DRAFT DRAFT REVIEW DRAFT 11-7-22 168 DRAFT I -- CITY OF SAN RAFAEL DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN CALENDAR YEARS Marin City Personal Per Capita Average Calendar City County Population Income (2)Personal Unemployment Year Population (1)Population % of County (in thousands) Income (2) Rate (3) 2012 58,182 254,790 22.84% 2,438,291$ 41,908$ 5.50% 2013 58,566 254,007 23.06% 2,538,895 43,351 4.70% 2014 58,863 255,846 23.01% 2,621,228 44,531 4.50% 2015 60,582 258,972 23.39% 2,699,436 44,558 3.70% 2016 60,842 262,274 23.20% 2,817,497 46,308 3.40% 2017 60,651 263,604 23.01%2,943,227 48,374 3.30% 2018 60,046 263,886 22.75%3,152,985 52,509 2.30% 2019 59,807 262,879 22.75%3,156,708 52,781 2.20% 2020 59,016 257,774 22.89%3,301,286 55,938 6.70% 2021 60,560 257,135 23.55% 3,390,278 55,982 4.40% Source: (1) State of California, Department of Finance - Demographic Research Unit. The data represents the City's population as of January 1, of each year. (2) US Census Bureau, most recent American Community Survey (3) Unemployment Data: California Employment Development Department 0% 5% 10% 15% 20% 25% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 City Population as a % of County Population $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Total Personal Income (in thousands) $‐ $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Per Capita Personal Income 0% 1% 2% 3% 4% 5% 6% 7% 8% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Average Citywide Unemployment Rate DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT169 CITY OF SAN RAFAEL PRINCIPAL EMPLOYERS FISCAL YEAR 2021-2022 LAST TEN CALENDAR YEARS Employer # (A) # (A) # (A) # (A) Kaiser Permanente 2,339 1.82% 2,059 1.64% 2,014 6.22% 2,092 6.62% BioMarin Pharmaceutical Inc. 950 0.74% 950 0.76% 950 2.93% San Rafael Elementary/High Schools Dist(s) 700 0.55% 700 0.56% 700 2.16% 700 2.22% City of San Rafael 412 0.32% 405 0.32% 410 1.27% 410 1.30% Dominican University of California 394 0.31% 394 0.31% 421 1.30% 319 1.01% Buckelew Programs 0.00% 0.00% 103 0.32% 106 0.34% Lifehouse 0.00% 0.00% 100 0.31% EO Products 0.00% 108 0.09% 150 0.46% Toyota Marin 0.00%0.00% 141 0.44% Ghilotti Bros., Inc.298 0.23% 298 0.24% Community Action Marin 200 0.16% 270 0.21% Equator Coffees, LLC 95 0.07% 88 0.07% Totals 5,388 4.20% 5,272 4.20% 4,989 15.40% 4,508 14.27% #Number of FTE employees in Marin locations (A)Percentage of total employment 2021 2020 Note: From the EDD website, it shows that the Total 2020 Employment in the City of San Rafael was 125,600 of which it is used as the denominator for the 2020 percentages are calculated. Data Sources: State of California, Employment Development Department, Labor Market Information Division & North Bay Business Journal (Annual Book of Lists) 2019 2018 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT170 #(A) # (A) # (A) # (A) # (A) # (A) 2,061 6.52% 662 2.02% 1,575 4.82% 1,637 5.26% 1,756 5.74% 1,803 6.68% 700 2.22% 650 1.98% 650 1.99% 600 1.93% 600 1.96% 600 2.22% 454 1.44% 577 1.76% 581 1.78% 666 2.14% 643 2.10% 521 1.93% 456 1.44% 485 1.48% 422 1.29% 354 1.14% 347 1.13% 346 1.28% 240 0.76% 186 0.57% 5,650 17.88% 5,314 16.20% 5,620 17.19% 6,025 19.37% 6,079 19.87% 6,715 24.87% 2014 2013 2012201520162017 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT171 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT CITY OF SAN RAFAEL FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Function General Government 53.23 55.11 58.11 60.61 62.11 60.11 63.11 62.11 61.41 63.69 Public Safety 163.00 168.00 171.75 175.75 176.55 175.35 175.65 175.30 181.50 185.00 Public Works and Parks 60.00 61.00 62.00 62.00 63.00 66.67 66.00 68.00 69.00 70.00 Community Development 18.25 17.80 17.80 19.80 20.00 21.00 22.00 21.75 21.75 23.00 Culture and Recreation 80.76 83.66 84.23 84.25 84.35 87.35 85.82 78.07 78.07 78.07 Total 375.24 385.57 393.89 402.41 406.01 410.48 412.58 405.23 411.73 419.76 Data Source: City of San Rafael's Finance Department 0 50 100 150 200 250 300 350 400 450 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022FTE'sGeneral Government Public Safety Public Works and Parks Community Development Culture and Recreation DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT173 D ■ ■ ■ ■ CITY OF SAN RAFAEL OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 2013 2014 2015 2016 Function/Program Public safety: Fire: Inspection permit issued 307 261 282 198 Police: Police calls for service 42,707 51,261 55,805 57,026 Law violations: Part I crimes 2,523 2,289 2,533 2,523 Physical arrests (adult and juvenile) 2,951 3,227 3,450 3,453 Traffic violations 3,448 4,498 4,168 3,252 Parking violations 30,881 38,814 36,398 34,803 Public works Street resurfacing (miles) (Eng Div) 2.70 9.00 6.40 6.76 Potholes repaired N/A N/A N/A N/A Asphalt used for street repairs (tons) 7,500 10,700 11,000 7,195 Culture and recreation: Recreation class participants 7,082 9,857 10,023 12,725 Recreation Facility Rentals Childcare School-Age program participants Library: Items in collection 125,920 168,620 127,763 227,890 Total items borrowed 392,230 478,960 443,639 469,790 Note: N/A denotes information not available. DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT174 2017 2018 2019 2020 2021 2022 233 186 123 167 207 195 53,567 51,013 47,919 47,968 43,649 42,901 2,392 2,326 1,893 2,988 2,546 2,015 2,526 2,019 1,923 2,527 1,893 1,945 3,341 2,758 2,944 2,342 2,161 1,710 36,169 36,208 40,407 28,029 24,099 30,178 2.32 2.50 4.30 14.30 5.00 11.70 N/A N/A N/A 967 1,368 1,024 5,800 4,730 7,200 5,885 3,650 5,100 13,493 12,842 N/A N/A N/A N/A 5,146 3,875 1,550 1,962 7,592 6,270 2,132 3,675 117,354 115,812 123,432 140,610 103,399 95,687 327,297 324,452 356,301 199,903 113,385 169,378 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT175 CITY OF SAN RAFAEL CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 2013 2014 2015 2016 Function/Program Public safety: Fire stations 6666 Police stations 1111 Police Fleet Public works Miles of streets 173 173 173 173 Street lights 4,435 4,435 4,435 4,435 Parking District lights Traffic Signals 89 89 89 89 Culture and recreation: Community services: City parks 20 20 20 20 City parks acreage 42 42 42 42 Playgrounds 14 14 14 14 City trails 20 20 20 20 Community gardens 1111 Cultural Art Centers Community centers 4444 Senior centers 0000 Sports centers 0000 Performing arts centers 0000 Swimming pools 1111 Tennis courts 10 10 10 10 Basketball Courts 5555 Baseball/softball diamonds 5555 Soccer/football fields 2222 Library: City Libraries 2222 Wastewater: Miles of sanitary sewers 179 145 145 145 Data Source: City of San Rafael's Finance Department DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT176 2017 2018 2019 2020 2021 2022 66666 6 11111 1 173 173 173 173 173 173 4,435 4,435 4,435 4,435 4,435 4,448 89 89 89 90 90 90 20 20 20 24 24 24 42 42 42 99 99 99 14 14 14 14 14 14 20 20 20 20 20 20 11122 2 11 1 44433 3 00000 0 00000 0 00000 0 11111 1 10 10 10 10 10 10 55566 6 55555 5 22222 2 22222 2 145 145 145 145 145 145 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT177 DRAFT DRAFT REVIEW DRAFT 11-7-22 DRAFT INDEPENDENT ACCOUNTANT’S REPORT ON APPLYING AGREED UPON PROCEDURES FOR COMPLIANCE WITH THE PROPOSITION 111 2022-2023 APPROPRIATIONS LIMIT INCREMENT Honorable Mayor and Members of the City Council City of San Rafael, California We have performed the procedures enumerated below on the Appropriations Limit Worksheet (Worksheet) of the City of San Rafael, California, for the year ended June 30, 2023. The City’s management is responsible for the Worksheet. The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of these procedures, which were suggested by the League of California Cities and presented in their Article XIIIB Appropriations Limitation Uniform Guidelines, were performed solely to assist you in meeting the requirements of Section 1.5 of Article XIIIB of the California Constitution. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes. The procedures and associated findings are as follows: A. We obtained the Worksheet (Exhibit B to the Resolution) and determined that the 2022-2023 Appropriations Limit of $170,762,486 and annual adjustment factors were adopted by Resolution of the City Council. We also determined that the population and inflation options were selected by a recorded vote of the City Council. However, the Resolution indicated that the percent change in California’s per capita personal income was selected, but the Worksheet shows that the larger adjustment factor of the change in assessment roll for nonresidential construction of Marin County was used for the calculation of the 2022-2023 Appropriations Limit. B. We recomputed the 2022-2023 Appropriations Limit by multiplying the 2021-2022 Prior Year Appropriations Limit by the Total Growth Factor. We recomputed the Total Growth Factor by multiplying the population option by the inflation option. C. For the Worksheet, we agreed the Per Capita Income Factor, City Population Factor and County Population Factor to California State Department of Finance Worksheets, and the Change in Assessment Roll for Nonresidential Construction Factor to the Marin County Worksheet. We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the Worksheet. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. DRAFT DRAFT REVIEW DRAFT 11-01-22 DRAFT Accountancy Corporation 3478 Busk ir k Aven ue, Suit e 2 15 Pl easant Hill , CA 94523 T 925.930 .0902 F 925.930.0135 E maze@mazeassoc iates .com w mazeassociates.com We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement. This report is intended solely for the information and use of management and the City Council and is not intended to be and should not be used by anyone other than those specified parties; however, this restriction is not intended to limit the distribution of this report, which is a matter of public record. Pleasant Hill, California November 21, 2022 DRAFT DRAFT REVIEW DRAFT 11-01-22 DRAFT CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL FOR THE YEAR ENDED JUNE 30, 2022 DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT This Page Left Intentionally Blank DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL For the Year Ended June 30, 2022 Table of Contents Page Memorandum on Internal Control ................................................................................................... 1 Schedule of Significant Deficiency ......................................................................................... 3 Schedule of Other Matters ....................................................................................................... 5 Status of Prior Year Significant Deficiencies ........................................................................ 19 DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT This Page Left Intentionally Blank DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT MEMORANDUM ON INTERNAL CONTROL To the City Council of the City of San Rafael, California In planning and performing our audit of the basic financial statements of the City of San Rafael (City) as of and for the year ended June 30, 2022, in accordance with auditing standards generally accepted in the United States of America, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore material weaknesses or significant deficiencies may exist that were not identified. In addition, because of inherent limitations in internal control, including the possibility of management override of controls, misstatements due to error or fraud may occur and not be detected by such controls. However, as discussed below, we identified certain deficiencies in internal control that we consider to be significant deficiencies. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, or detected and corrected on a timely basis. We did not identify any deficiencies in internal control that we consider to be material weaknesses. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiency in internal control included on the Schedule of Significant Deficiency to be a significant deficiency. Included in the Schedule of Other Matters are recommendations not meeting the above definitions that we believe are opportunities for strengthening internal controls and operating efficiency. Government Auditing Standards require the auditor to perform limited procedures on the City’s response to the findings identified in our audit and described in the accompanying Schedule of Significant Deficiency and Schedule of Other Matters. The City’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response. DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT 1 Accountancy Corporation 3478 Bu skirk Avenue, Suite 215 Pl easant Hill, CA 94523 T 925.930.0902 F 925.930.0 135 E maze @mazeassociates.com w mazeassociates.com This communication is intended solely for the information and use of management, City Council, others within the organization, and agencies and pass-through entities requiring compliance with Government Auditing Standards, and is not intended to be and should not be used by anyone other than these specified parties. Pleasant Hill, California November 21, 2022 DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT2 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF SIGNIFICANT DEFICIENCY 2022-01 Inaccurate Building Permit Fees The rates charged in the City’s permit billing system should be consistent with the City’s Master Fee Schedule approved by City Council and on the City’s website. As noted in the prior year Memorandum on Internal Control comment 2021-01, we again noted that the rates charged in the City’s permit billing system are not consistent with the City’s Master Fee Schedule approved by City Council. During the fiscal year 2022 audit, we tested twenty-five receipts and recalculated the fees using the City’s Master Fee Schedule and noted five receipts for building permits that we recalculated, but could not arrive at the same amount charged. Based on our recalculations using the City’s Master Fee Schedule, the building permit fees that should have been charged, and the related amount undercharged were as follows: Receipt Number Building Permit Fee Charged Building Permit Fee That Should Have Been Charged Based on Master Fee Schedule Undercharged 003-00001681 $3,997.00 $4,820.20 $(823.20) 017-00000203 2,317.00 3,140.20 (823.20) 017-00001783 1,210.00 1,714.00 (504.00) 003-00003680 918.10 1,251.64 (333.54) 003-00004064 947.50 1,285.60 (338.10) We understand that the Community Development Department (CDD) staff determined that the Master Fee Schedule approved by City Council and posted on the City’s website included incorrect building permit fees and CDD staff believed that the correct fees had been charged. We also noted one receipt for an investigation fee (receipt # 003-00003019) and one receipt for a building permit renewal fee (receipt # 017-00001262) that were not listed on the revised Master Fee Schedule, nor supported by an ordinance or resolution. The CDD staff indicated that the Master Fee Schedule is being updated to incorporate these fees that were charged. Although City staff believe that the correct fees were charged for the building permits, investigation fee and building permit renewal fees, we were unable to verify that the correct fees were charged based on the Master Fee Schedule approved by City Council. Therefore, the City’s building permit fees, investigation fees, fire prevention inspection fees and building permit renewal fees revenues may be understated. We understand that the City plans to present an updated Master Fee Schedule to Council to ensure that accurate charges are approved and presented on the City’s website. We recommend that the City develop a process to ensure that the fees approved by City Council are properly entered into the City’s permit billing system to ensure proper fees are charged. In addition, we recommend that the City ensure that the Master Fee Schedule on the City’s website agrees to the Master Fee Schedule approved by City Council. DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT3 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF SIGNIFICANT DEFICIENCY 2022-01 Inaccurate Building Permit Fees (Continued) Management’s Response: The City has been in process of resolving the issue and is currently undergoing a large-scale revision to the master fee schedule which will be presented to council with the December 19, 2022, meeting. Going forward, when a fee change is approved by Council, Finance will be responsible for ensuring the approved fee change has been uploaded to the website, the changes have been entered into the billing system properly and the fee change is implemented on the effective date approved by Council. To formalize this, Finance will create a checklist and will require sign-off as each item is reviewed. DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT4 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS 2022-02 Purchasing Policy Compliance and Clarification of Requirements The City’s Purchasing Policy should indicate when the use of a purchase order, contract, or both is required, including any exceptions, as necessary. The City’s Purchasing Policy defines a contract as including, but not being “limited to, a purchase order, a contract for services, a contract for maintenance, leasing of property or equipment, an addendum or change order, a letter agreement, a memorandum of understanding, or memorandum of agreement.” The Purchasing Policy defines a purchase order as “a standardized form to be utilized in contracts for materials, supplies, labor and equipment.” The Purchasing Policy does not specify whether a purchase order and a contract are required for all purchases, but we understand it is the City’s practice to obtain both documents for purchases. During the fiscal year 2022 audit, we selected twenty-five disbursements for testing of supporting documentation and compliance with the City’s Purchasing Policy and noted two disbursements for which the disbursements were supported by a contract, however, they were not supported by a purchase order. We also noted one disbursement that was supported by a purchase order, but not a contract. For similar types of transactions tested, we noted that these types of disbursements were supported by both a purchase order and a contract. For one of the disbursements noted above, City staff indicated that the staff overseeing the initial project and contract is no longer with the City and that a purchase order was not created for the vendor and contract for the project due to a staff oversight. And, for the second disbursement noted above, City staff indicated that they did not think it was necessary for a purchase order to be created as the vendor is used for on-call repair sidewalk repair services. Lastly, for the third disbursement noted above, City staff indicated that the purchase order was created without a contract, due to a staff oversight. Although that appears reasonable, there does not appear to be such an exemption in the City’s Purchasing Policy for the use of a contract, purchase order or both. Therefore, the City is not in compliance with the Purchasing Policy for these purchases. We recommend that the City ensure all purchases comply with purchase documentation requirements and revise the Purchasing Policy to clarify those requirements to reflect current practices. Management’s Response: The City’s expanded use of purchase orders is relatively new to purchasing procedures within the City and, as the City remains decentralized in administration of contracts and purchase orders, departmental practices for use of purchase orders varies. The City will review its purchasing policy and make and necessary amendments to develop a comprehensive purchasing policy to be adhered to by all departments consistently. DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT5 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS 2022-03 Current Contracts The City should ensure that all contracts with outside parties are current. During the fiscal year 2022 audit, we selected twenty-five disbursements for testing of supporting documentation and noted one disbursement in the amount of $97,615 made to the Transportation Authority of Marin, for which the most recent contract in place expired on January 1, 2011. We understand that the City is currently working on a revised contract with the Transportation Authority of Marin, however, the City should develop procedures to ensure that all contracts are current to ensure that payments to outside parties are valid and properly supported. Management’s Response: The City considers the selected payment to be an anomaly, however, will perform a review of contracts with local agencies to ensure the validity of the agreement. The updated agreement in question is currently in process. DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT6 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS NEW GASB PRONOUNCEMENTS OR PRONOUNCEMENTS NOT YET EFFECTIVE The following comment represents new pronouncements taking affect in the next few years. We have cited them here to keep you informed of developments. EFFECTIVE FISCAL YEARS 2022, 2023 and 2024: GASB 99 – Omnibus 2022 The objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing (1) practice issues that have been identified during implementation and application of certain GASB Statements and (2) accounting and financial reporting for financial guarantees. The practice issues addressed by this Statement are as follows:  Classification and reporting of derivative instruments within the scope of Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, that do not meet the definition of either an investment derivative instrument or a hedging derivative instrument  Clarification of provisions in Statement No. 87, Leases, as amended, related to the determination of the lease term, classification of a lease as a short term lease, recognition and measurement of a lease liability and a lease asset, and identification of lease incentives  Clarification of provisions in Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, related to (a) the determination of the public-private and public-public partnership (PPP) term and (b) recognition and measurement of installment payments and the transfer of the underlying PPP asset  Clarification of provisions in Statement No. 96, Subscription-Based Information Technology Arrangements, related to the subscription-based information technology arrangement (SBITA) term, classification of a SBITA as a short term SBITA, and recognition and measurement of a subscription liability  Extension of the period during which the London Interbank Offered Rate (LIBOR) is considered an appropriate benchmark interest rate for the qualitative evaluation of the effectiveness of an interest rate swap that hedges the interest rate risk of taxable debt  Accounting for the distribution of benefits as part of the Supplemental Nutrition Assistance Program (SNAP)  Disclosures related to nonmonetary transactions  Pledges of future revenues when resources are not received by the pledging government DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT7 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS GASB 99 – Omnibus 2022 (Continued)  Clarification of provisions in Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, as amended, related to the focus of the government-wide financial statements  Terminology updates related to certain provisions of Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position  Terminology used in Statement 53 to refer to resource flows statements. The Requirements of this Statement are Effective as Follows: The requirements in paragraphs 26–32 related to extension of the use of LIBOR, accounting for SNAP distributions, disclosures of nonmonetary transactions, pledges of future revenues by pledging governments, clarification of certain provisions in Statement 34, as amended, and terminology updates related to Statement 53 and Statement 63 are effective upon issuance. The requirements in paragraphs 11–25 related to leases, PPPs, and SBITAs are effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. The requirements in paragraphs 4–10 related to financial guarantees and the classification and reporting of derivative instruments within the scope of Statement 53 are effective for fiscal years beginning after June 15, 2023, and all reporting periods thereafter. Earlier application is encouraged and is permitted by individual topic. How the Changes in This Statement Will Improve Financial Reporting The requirements of this Statement will enhance comparability in the application of accounting and financial reporting requirements and will improve the consistency of authoritative literature. Consistent authoritative literature enables governments and other stakeholders to more easily locate and apply the correct accounting and financial reporting provisions, which improves the consistency with which such provisions are applied. The comparability of financial statements also will improve as a result of this Statement. Better consistency and comparability improve the usefulness of information for users of state and local government financial statements. DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT8 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS EFFECTIVE FISCAL YEAR 2022/23: GASB 91 – Conduit Debt Obligations The primary objectives of this Statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. This Statement achieves those objectives by clarifying the existing definition of a conduit debt obligation; establishing that a conduit debt obligation is not a liability of the issuer; establishing standards for accounting and financial reporting of additional commitments and voluntary commitments extended by issuers and arrangements associated with conduit debt obligations; and improving required note disclosures. A conduit debt obligation is defined as a debt instrument having all of the following characteristics:  There are at least three parties involved: (1) an issuer (2) a third-party obligor, and (3) a debt holder or a debt trustee.  The issuer and the third-party obligor are not within the same financial reporting entity.  The debt obligation is not a parity bond of the issuer, nor is it cross-collateralized with other debt of the issuer.  The third-party obligor or its agent, not the issuer, ultimately receives the proceeds from the debt issuance.  The third-party obligor, not the issuer, is primarily obligated for the payment of all amounts associated with the debt obligation (debt service payments). All conduit debt obligations involve the issuer making a limited commitment. Some issuers extend additional commitments or voluntary commitments to support debt service in the event the third party is, or will be, unable to do so. An issuer should not recognize a conduit debt obligation as a liability. However, an issuer should recognize a liability associated with an additional commitment or a voluntary commitment to support debt service if certain recognition criteria are met. As long as a conduit debt obligation is outstanding, an issuer that has made an additional commitment should evaluate at least annually whether those criteria are met. An issuer that has made only a limited commitment should evaluate whether those criteria are met when an event occurs that causes the issuer to reevaluate its willingness or ability to support the obligor’s debt service through a voluntary commitment. This Statement also addresses arrangements—often characterized as leases—that are associated with conduit debt obligations. In those arrangements, capital assets are constructed or acquired with the proceeds of a conduit debt obligation and used by third-party obligors in the course of their activities. Payments from third-party obligors are intended to cover and coincide with debt service payments. During those arrangements, issuers retain the titles to the capital assets. Those titles may or may not pass to the obligors at the end of the arrangements. DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT9 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS GASB 91 – Conduit Debt Obligations (Continued) Issuers should not report those arrangements as leases, nor should they recognize a liability for the related conduit debt obligations or a receivable for the payments related to those arrangements. In addition, the following provisions apply:  If the title passes to the third-party obligor at the end of the arrangement, an issuer should not recognize a capital asset.  If the title does not pass to the third-party obligor and the third party has exclusive use of the entire capital asset during the arrangement, the issuer should not recognize a capital asset until the arrangement ends.  If the title does not pass to the third-party obligor and the third party has exclusive use of only portions of the capital asset during the arrangement, the issuer, at the inception of the arrangement, should recognize the entire capital asset and a deferred inflow of resources. The deferred inflow of resources should be reduced, and an inflow recognized, in a systematic and rational manner over the term of the arrangement. This Statement requires issuers to disclose general information about their conduit debt obligations, organized by type of commitment, including the aggregate outstanding principal amount of the issuers’ conduit debt obligations and a description of each type of commitment. Issuers that recognize liabilities related to supporting the debt service of conduit debt obligations also should disclose information about the amount recognized and how the liabilities changed during the reporting period. How the Changes in this Statement will Improve Financial Reporting The requirements of this Statement will improve financial reporting by eliminating the existing option for issuers to report conduit debt obligations as their own liabilities, thereby ending significant diversity in practice. The clarified definition will resolve stakeholders’ uncertainty as to whether a given financing is, in fact, a conduit debt obligation. Requiring issuers to recognize liabilities associated with additional commitments extended by issuers and to recognize assets and deferred inflows of resources related to certain arrangements associated with conduit debt obligations also will eliminate diversity, thereby improving comparability in reporting by issuers. Revised disclosure requirements will provide financial statement users with better information regarding the commitments issuers extend and the likelihood that they will fulfill those commitments. That information will inform users of the potential impact of such commitments on the financial resources of issuers and help users assess issuers’ roles in conduit debt obligations. DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT10 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS GASB 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements The primary objective of this Statement is to improve financial reporting by addressing issues related to public-private and public-public partnership arrangements (PPPs). As used in this Statement, a PPP is an arrangement in which a government (the transferor) contracts with an operator (a governmental or nongovernmental entity) to provide public services by conveying control of the right to operate or use a nonfinancial asset, such as infrastructure or other capital asset (the underlying PPP asset), for a period of time in an exchange or exchange-like transaction. Some PPPs meet the definition of a service concession arrangement (SCA), which the Board defines in this Statement as a PPP in which (1) the operator collects and is compensated by fees from third parties; (2) the transferor determines or has the ability to modify or approve which services the operator is required to provide, to whom the operator is required to provide the services, and the prices or rates that can be charged for the services; and (3) the transferor is entitled to significant residual interest in the service utility of the underlying PPP asset at the end of the arrangement. This Statement also provides guidance for accounting and financial reporting for availability payment arrangements (APAs). As defined in this Statement, an APA is an arrangement in which a government compensates an operator for services that may include designing, constructing, financing, maintaining, or operating an underlying nonfinancial asset for a period of time in an exchange or exchange-like transaction. PPPs - This Statement requires that PPPs that meet the definition of a lease apply the guidance in Statement No. 87, Leases, as amended, if existing assets of the transferor that are not required to be improved by the operator as part of the PPP arrangement are the only underlying PPP assets and the PPP does not meet the definition of an SCA. This Statement provides accounting and financial reporting requirements for all other PPPs: those that either (1) meet the definition of an SCA or (2) are not within the scope of Statement 87, as amended (as clarified by this Statement). The PPP term is defined as the period during which an operator has a noncancellable right to use an underlying PPP asset, plus, if applicable, certain periods if it is reasonably certain, based on all relevant factors, that the transferor or the operator either will exercise an option to extend the PPP or will not exercise an option to terminate the PPP. A transferor generally should recognize an underlying PPP asset as an asset in financial statements prepared using the economic resources measurement focus. However, in the case of an underlying PPP asset that is not owned by the transferor or is not the underlying asset of an SCA, a transferor should recognize a receivable measured based on the operator’s estimated carrying value of the underlying PPP asset as of the expected date of the transfer in ownership. In addition, a transferor should recognize a receivable for installment payments, if any, to be received from the operator in relation to the PPP. Measurement of a receivable for installment payments should be at the present value of the payments expected to be received during the PPP term. A transferor also should recognize a deferred inflow of resources for the consideration received or to be received by the transferor as part of the PPP. Revenue should be recognized by a transferor in a systematic and rational manner over the PPP term. This Statement requires a transferor to recognize a receivable for installment payments and a deferred inflow of resources to account for a PPP in financial statements prepared using the current financial resources measurement focus. Governmental fund revenue would be recognized in a systematic and rational manner over the PPP term. DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT11 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS GASB 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements (Continued) This Statement also provides specific guidance in financial statements prepared using the economic resources measurement focus for a government that is an operator in a PPP that either (1) meets the definition of an SCA or (2) is not within the scope of Statement 87, as amended (as clarified in this Statement). An operator should report an intangible right-to-use asset related to an underlying PPP asset that either is owned by the transferor or is the underlying asset of an SCA. Measurement of the right-to- use asset should be the amount of consideration to be provided to the transferor, plus any payments made to the transferor at or before the commencement of the PPP term, and certain direct costs. For an underlying PPP asset that is not owned by the transferor and is not the underlying asset of an SCA, an operator should recognize a liability measured based on the estimated carrying value of the underlying PPP asset as of the expected date of the transfer in ownership. In addition, an operator should recognize a liability for installment payments, if any, to be made to the transferor in relation to the PPP. Measurement of a liability for installment payments should be at the present value of the payments expected to be made during the PPP term. An operator also should recognize a deferred outflow of resources for the consideration provided or to be provided to the transferor as part of the PPP. Expense should be recognized by an operator in a systematic and rational manner over the PPP term. This Statement also requires a government to account for PPP and non-PPP components of a PPP as separate contracts. If a PPP involves multiple underlying assets, a transferor and an operator in certain cases should account for each underlying PPP asset as a separate PPP. To allocate the contract price to different components, a transferor and an operator should use contract prices for individual components as long as they do not appear to be unreasonable based on professional judgment or use professional judgment to determine their best estimate if there are no stated prices or if stated prices appear to be unreasonable. If determining the best estimate is not practicable, multiple components in a PPP should be accounted for as a single PPP. This Statement also requires an amendment to a PPP to be considered a PPP modification, unless the operator’s right to use the underlying PPP asset decreases, in which case it should be considered a partial or full PPP termination. A PPP termination should be accounted for by a transferor by reducing, as applicable, any receivable for installment payments or any receivable related to the transfer of ownership of the underlying PPP asset and by reducing the related deferred inflow of resources. An operator should account for a termination by reducing the carrying value of the right-to-use asset and, as applicable, any liability for installment payments or liability to transfer ownership of the underlying PPP asset. A PPP modification that does not qualify as a separate PPP should be accounted for by remeasuring PPP assets and liabilities. APAs - An APA that is related to designing, constructing, and financing a nonfinancial asset in which ownership of the asset transfers by the end of the contract should be accounted for by a government as a financed purchase of the underlying nonfinancial asset. This Statement requires a government that engaged in an APA that contains multiple components to recognize each component as a separate arrangement. An APA that is related to operating or maintaining a nonfinancial asset should be reported by a government as an outflow of resources in the period to which payments relate. DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT12 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS GASB 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. To the extent relevant, the standards for SBITAs are based on the standards established in Statement No. 87, Leases, as amended. A SBITA is defined as a contract that conveys control of the right to use another party’s (a SBITA vendor’s) information technology (IT) software, alone or in combination with tangible capital assets (the underlying IT assets), as specified in the contract for a period of time in an exchange or exchange-like transaction. The subscription term includes the period during which a government has a noncancelable right to use the underlying IT assets. The subscription term also includes periods covered by an option to extend (if it is reasonably certain that the government or SBITA vendor will exercise that option) or to terminate (if it is reasonably certain that the government or SBITA vendor will not exercise that option). Under this Statement, a government generally should recognize a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability. A government should recognize the subscription liability at the commencement of the subscription term, —which is when the subscription asset is placed into service. The subscription liability should be initially measured at the present value of subscription payments expected to be made during the subscription term. Future subscription payments should be discounted using the interest rate the SBITA vendor charges the government, which may be implicit, or the government’s incremental borrowing rate if the interest rate is not readily determinable. A government should recognize amortization of the discount on the subscription liability as an outflow of resources (for example, interest expense) in subsequent financial reporting periods. The subscription asset should be initially measured as the sum of (1) the initial subscription liability amount, (2) payments made to the SBITA vendor before commencement of the subscription term, and (3) capitalizable implementation costs, less any incentives received from the SBITA vendor at or before the commencement of the subscription term. A government should recognize amortization of the subscription asset as an outflow of resources over the subscription term. Activities associated with a SBITA, other than making subscription payments, should be grouped into the following three stages, and their costs should be accounted for accordingly:  Preliminary Project Stage, including activities such as evaluating alternatives, determining needed technology, and selecting a SBITA vendor. Outlays in this stage should be expensed as incurred.  Initial Implementation Stage, including all ancillary charges necessary to place the subscription asset into service. Outlays in this stage generally should be capitalized as an addition to the subscription asset. DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT13 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS GASB 96 – Subscription-Based Information Technology Arrangements (Continued)  Operation and Additional Implementation Stage, including activities such as subsequent implementation activities, maintenance, and other activities for a government’s ongoing operations related to a SBITA. Outlays in this stage should be expensed as incurred unless they meet specific capitalization criteria. In classifying certain outlays into the appropriate stage, the nature of the activity should be the determining factor. Training costs should be expensed as incurred, regardless of the stage in which they are incurred. If a SBITA contract contains multiple components, a government should account for each component as a separate SBITA or nonsubscription component and allocate the contract price to the different components. If it is not practicable to determine a best estimate for price allocation for some or all components in the contract, a government should account for those components as a single SBITA. This Statement provides an exception for short-term SBITAs. Short-term SBITAs have a maximum possible term under the SBITA contract of 12 months (or less), including any options to extend, regardless of their probability of being exercised. Subscription payments for short-term SBITAs should be recognized as outflows of resources. This Statement requires a government to disclose descriptive information about its SBITAs other than short-term SBITAs, such as the amount of the subscription asset, accumulated amortization, other payments not included in the measurement of a subscription liability, principal and interest requirements for the subscription liability, and other essential information. How the Changes in this Statement will Improve Financial Reporting The requirements of this Statement will improve financial reporting by establishing a definition for SBITAs and providing uniform guidance for accounting and financial reporting for transactions that meet that definition. That definition and uniform guidance will result in greater consistency in practice. Establishing the capitalization criteria for implementation costs also will reduce diversity and improve comparability in financial reporting by governments. This Statement also will enhance the relevance and reliability of a government’s financial statements by requiring a government to report a subscription asset and subscription liability for a SBITA and to disclose essential information about the arrangement. The disclosures will allow users to understand the scale and important aspects of a government’s SBITA activities and evaluate a government’s obligations and assets resulting from SBITAs. DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT14 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS EFFECTIVE FISCAL YEAR 2023/24: GASB 100 – Accounting for Changes and Error Corrections The primary objective of this Statement is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability This Statement defines accounting changes as changes in accounting principles, changes in accounting estimates, and changes to or within the financial reporting entity and describes the transactions or other events that constitute those changes. As part of those descriptions, for (1) certain changes in accounting principles and (2) certain changes in accounting estimates that result from a change in measurement methodology, a new principle or methodology should be justified on the basis that it is preferable to the principle or methodology used before the change. That preferability should be based on the qualitative characteristics of financial reporting—understandability, reliability, relevance, timeliness, consistency, and comparability. This Statement also addresses corrections of errors in previously issued financial statements. This Statement prescribes the accounting and financial reporting for (1) each type of accounting change and (2) error corrections. This Statement requires that (a) changes in accounting principles and error corrections be reported retroactively by restating prior periods, (b) changes to or within the financial reporting entity be reported by adjusting beginning balances of the current period, and (c) changes in accounting estimates be reported prospectively by recognizing the change in the current period. The requirements of this Statement for changes in accounting principles apply to the implementation of a new pronouncement in absence of specific transition provisions in the new pronouncement. This Statement also requires that the aggregate amount of adjustments to and restatements of beginning net position, fund balance, or fund net position, as applicable, be displayed by reporting unit in the financial statements. This Statement requires disclosure in notes to financial statements of descriptive information about accounting changes and error corrections, such as their nature. In addition, information about the quantitative effects on beginning balances of each accounting change and error correction should be disclosed by reporting unit in a tabular format to reconcile beginning balances as previously reported to beginning balances as restated. Furthermore, this Statement addresses how information that is affected by a change in accounting principle or error correction should be presented in required supplementary information (RSI) and supplementary information (SI). For periods that are earlier than those included in the basic financial statements, information presented in RSI or SI should be restated for error corrections, if practicable, but not for changes in accounting principles. DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT15 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS EFFECTIVE FISCAL YEAR 2024/25: GASB 101 – Compensated Absences The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. Recognition And Measurement This Statement requires that liabilities for compensated absences be recognized for (1) leave that has not been used and (2) leave that has been used but not yet paid in cash or settled through noncash means. A liability should be recognized for leave that has not been used if (a) the leave is attributable to services already rendered, (b) the leave accumulates, and (c) the leave is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means. Leave is attributable to services already rendered when an employee has performed the services required to earn the leave. Leave that accumulates is carried forward from the reporting period in which it is earned to a future reporting period during which it may be used for time off or otherwise paid or settled. In estimating the leave that is more likely than not to be used or otherwise paid or settled, a government should consider relevant factors such as employment policies related to compensated absences and historical information about the use or payment of compensated absences. However, leave that is more likely than not to be settled through conversion to defined benefit postemployment benefits should not be included in a liability for compensated absences. This Statement requires that a liability for certain types of compensated absences—including parental leave, military leave, and jury duty leave—not be recognized until the leave commences. This Statement also requires that a liability for specific types of compensated absences not be recognized until the leave is used. This Statement also establishes guidance for measuring a liability for leave that has not been used, generally using an employee’s pay rate as of the date of the financial statements. A liability for leave that has been used but not yet paid or settled should be measured at the amount of the cash payment or noncash settlement to be made. Certain salary-related payments that are directly and incrementally associated with payments for leave also should be included in the measurement of the liabilities. With respect to financial statements prepared using the current financial resources measurement focus, this Statement requires that expenditures be recognized for the amount that normally would be liquidated with expendable available financial resources. Notes To Financial Statements This Statement amends the existing requirement to disclose the gross increases and decreases in a liability for compensated absences to allow governments to disclose only the net change in the liability (as long as they identify it as a net change). In addition, governments are no longer required to disclose which governmental funds typically have been used to liquidate the liability for compensated absences. DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT16 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS GASB 101 – Compensated Absences (Continued) How the Changes in this Statement Will Improve Financial Reporting The unified recognition and measurement model in this Statement will result in a liability for compensated absences that more appropriately reflects when a government incurs an obligation. In addition, the model can be applied consistently to any type of compensated absence and will eliminate potential comparability issues between governments that offer different types of leave. The model also will result in a more robust estimate of the amount of compensated absences that a government will pay or settle, which will enhance the relevance and reliability of information about the liability for compensated absences. DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT17 This Page Left Intentionally Blank DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL STATUS OF PRIOR YEAR SIGNIFICANT DEFICIENCIES 2021-01 Inaccurate Building Permit Fees The rates charged in the City’s permit billing system should be consistent with the City’s Master Fee Schedule approved by City Council and on the City’s website. We tested twenty-five receipts and recalculated the fees using the City’s Master Fee Schedule and we noted one receipt for a building permit in the amount of $78,946 that we recalculated, but could not arrive at the same amount. Based on our recalculation using the City’s Master Fee Schedule, the building permit fee that should have been charged was $83,137. The Community Development Department (CDD) staff determined that the Master Fee Schedule approved by City Council and posted on the City’s website included incorrect building permit fees and CDD staff believed that the correct fees had been charged, resulting in the fee of $78,946. Although City staff believe that the correct fees were charged, we were unable to verify that the correct fees were charged based on the Master Fee Schedule approved by City Council. Therefore, the City’s building permit fees may be understated due to the use of a lower fee schedule. We understand that the City plans to present an updated Master Fee Schedule to Council to ensure that accurate charges are approved and presented on the City website. We recommend that the City develop a process to ensure that the fees approved by City Council are properly entered into the City’s permit billing system to ensure proper fees are charged. In addition, we recommend that the City ensure that the Master Fee Schedule on the City’s website agree to the Master Fee Schedule approved by City Council. Current Status: See current year comment 2022-01. 2021-02 Schedule of Expenditures of Federal Awards (SEFA) Preparation The City should report all Federal awards expended in the Schedule of Expenditures of Federal Awards (SEFA) each fiscal year in accordance with the requirements of OMB Uniform Administrative Requirements Subpart D Section 200.302(b)(1). During our testing of the City’s June 30, 2020 SEFA provided for our audit, we noted that the City incorrectly included non-federal expenditure amounts in the SEFA. After further research by the City, it was determined that the SEFA overstated federal expenditures of $299,054 for the Highway Planning and Construction Program (CFDA # 20.205) and $398,282 for the Disaster Grants Program (CFDA # 97.036). After those corrections were made, it was determined that the City did not need a Single Audit for the year ended June 30, 2020. We understand that the City accounts for federal award expenditures in the same general ledger accounts that the City accounts for local match expenditures. During the preparation of the SEFA by the City’s outside consultant, the entire account balance was used, and the amounts reported did not exclude the non- federal amounts. Incorrect reporting not only misstates the SEFA, but it also means the City is not in compliance with the reporting requirements of the OMB Uniform Administrative Requirements. As a result, future federal funding could be adversely affected. DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT19 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL STATUS OF PRIOR YEAR SIGNIFICANT DEFICIENCIES 2021-02 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Continued) The City should develop procedures and policies to centralize the reporting of grant activity to ensure that all data is readily available when year-end grant activity reporting is necessary. The procedures and policies should facilitate the preparation of the SEFA so that annual expenditures for all grant programs are accurately included on the SEFA. In addition, City staff, including those in departments other than Finance that manage grants, must familiarize themselves with the guidelines for determining federal awards expended contained in the Uniform Guidance. Current Status: Implemented. DRAFT DRAFT REVIEW DRAFT 11-08-22 DRAFT20 CITY OF SAN RAFAEL REQUIRED COMMUNICATIONS FOR THE YEAR ENDED JUNE 30, 2022 DRAFT DRAFT REVIEW DRAFT 11-01-22 DRAFT This Page Left Intentionally Blank DRAFT DRAFT REVIEW DRAFT 11-01-22 DRAFT CITY OF SAN RAFAEL REQUIRED COMMUNICATIONS For the Year Ended June 30, 2022 Table of Contents Page Required Communications .................................................................................................................. 1 Significant Audit Matters: Qualitative Aspects of Accounting Practices ..................................................................... 1 Difficulties Encountered in Performing the Audit ............................................................. 3 Corrected and Uncorrected Misstatements ......................................................................... 3 Disagreements with Management ....................................................................................... 3 Management Representations .............................................................................................. 3 Management Consultations with Other Independent Accountants ................................... 4 Other Audit Findings or Issues ............................................................................................ 4 Other Matters .............................................................................................................................. 4 DRAFT DRAFT REVIEW DRAFT 11-01-22 DRAFT This Page Left Intentionally Blank DRAFT DRAFT REVIEW DRAFT 11-01-22 DRAFT REQUIRED COMMUNICATIONS To the City Council of the City of San Rafael, California We have audited the basic financial statements of the City of San Rafael (City) for the year ended June 30, 2022. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards and the Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated July 20, 2022. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Matters Qualitative Aspects of Accounting Practices Accounting Policies - Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. No new accounting policies were adopted, and the application of existing policies was not changed during the year, except as follows: GASB 87 – Leases The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments’ financial statements by requiring 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. 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. A lease is defined as a contract that conveys control of the right to use another entity’s nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. Any contract that meets this definition should be accounted for under the leases guidance, unless specifically excluded in this Statement. The pronouncement became effective, and as disclosed in Note 1S to the financial statements required a prior period restatement for the cumulative effect on the financial statements. 1 DRAFT DRAFT REVIEW DRAFT 11-01-22 DRAFT Accountancy Corporation 3478 Buskirk Avenue, Suite 215 Pleasant Hill, CA 94523 T 925.930.0902 F 925.930.0135 E maze@mazeassociates.com w mazeassociates.com The following pronouncements became effective, but did not have a material effect on the financial statements: GASB 89 – Accounting for Interest Cost Incurred before the End of a Construction Period GASB 90 – Majority Equity Interests (an amendment of GASB Statements No. 14 and No. 61) GASB 92 – Omnibus 2020 GASB 93 – Replacement of Interbank Offered Rates GASB 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 GASB 99 – Omnibus 2022 (paragraphs 26-32) Unusual Transactions, Controversial or Emerging Areas - We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting Estimates - Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were: Estimated Net Pension Asset (Liability) and Pension-Related Deferred Outflows and Inflows of Resources: Management’s estimates of the net pension asset (liability) and related deferred outflows/inflows of resources are disclosed in Note 9 to the financial statements and are based on an actuarial study and accounting valuation determined by the Marin County Employees’ Retirement Association which are based on the experience of the City. We evaluated the key factors and assumptions used to develop the estimates and determined they are reasonable in relation to the basic financial statements taken as a whole. Estimated Net OPEB Liability and OPEB-Related Deferred Outflows and Inflows of Resources: Management’s estimates of the net OPEB liability and related deferred outflows/inflows of resources are disclosed in Note 11 to the financial statements and are based on an actuarial study determined by a consultant, which is based on the experience of the City. We evaluated the key factors and assumptions used to develop the estimates and determined they are reasonable in relation to the basic financial statements taken as a whole. Estimate of the depreciation: Management’s estimate of depreciation is based on useful lives determined by management. These lives have been determined by management based on the expected useful life of assets as disclosed in Note 1K to the financial statements. We evaluated the key factors and assumptions used to develop the depreciation estimate and determined that it is reasonable in relation to the basic financial statements taken as a whole. Estimated Fair Value of Investments: As of June 30, 2022, cash and investments were measured by fair value, as disclosed in Note 2 to the financial statements. Fair value is essentially market pricing in effect as of June 30, 2022. These fair values are not required to be adjusted for changes in general market conditions occurring subsequent to June 30, 2022. 2 DRAFT DRAFT REVIEW DRAFT 11-01-22 DRAFT Estimated Long-Term Receivable from San Rafael Sanitation District: Management’s estimate of the long-term receivable from the District is disclosed in Note 4F to the financial statements and is based on the District’s estimated liability for pension and post-employment health care benefits incurred by the City for the District staff, but not yet funded. We evaluated the key factors and assumptions used to develop the long-term receivable from the District in determining that it is reasonable in relation to the financial statements taken as a whole. Estimated Claims Liabilities: Management’s estimate of the claims liabilities payable is disclosed in Note 13 to the financial statements and is based on actuarial studies determined by a consultant, which are based on the claims experience of the City. We evaluated the key factors and assumptions used to develop the estimate and determined that it is reasonable in relation to the basic financial statements taken as a whole. Estimate of Compensated Absences: Accrued compensated absences which are comprised of accrued vacation, holiday, and certain other compensating time is estimated using accumulated unpaid leave hours and hourly pay rates in effect at the end of the fiscal year as disclosed in Note 1L to the financial statements. We evaluated the key factors and assumptions used to develop the accrued compensated absences and determined that it is reasonable in relation to the basic financial statements taken as a whole. Disclosures - The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole. Professional standards require us to accumulate all known and likely uncorrected misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. We have no such misstatements to report to the City Council. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in a management representation letter dated November 21, 2022. 3 DRAFT DRAFT REVIEW DRAFT 11-01-22 DRAFT Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters We applied certain limited procedures to the required supplementary information that accompanies and supplements the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the required supplementary information and do not express an opinion or provide any assurance on the required supplementary information. We were engaged to report on the supplementary information that accompanies the financial statements, but is not required supplementary information. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We were not engaged to report on the Introductory and Statistical Sections which accompany the financial statements, but are not required supplementary information. Such information has 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 them. ****** This information is intended solely for the use of City Council and management and is not intended to be, and should not be, used by anyone other than these specified parties. Pleasant Hill, California November 21, 2022 4 DRAFT DRAFT REVIEW DRAFT 11-01-22 DRAFT CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 This Page Left Intentionally Blank i CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM FOR THE YEAR ENDED JUNE 30, 2022 Table of Contents Page INTRODUCTORY SECTION: Table of Contents ........................................................................................................................................... i FINANCIAL SECTION: Independent Auditor’s Report .................................................................................................................. 1 Basic Financial Statements Balance Sheet ......................................................................................................................................... 3 Statement of Revenue, Expenditures and Changes in Fund Balance ................................................... 4 Notes to Basic Financial Statements ...................................................................................................... 5 Supplementary Information Schedule of Federal, State and Local Awards ..................................................................................... 10 Combining Statement of Revenues, Expenditures and Changes in Fund Balance ........................... 11 Schedule of Expenditures by State Categories .................................................................................... 12 Schedule of Claimed Administrative Costs ......................................................................................... 13 Schedule of Claimed Equipment Expenditures ................................................................................. 14 Schedule of Claimed Expenditures for Renovations and Repairs ...................................................... 15 Audited Attendance and Fiscal Reports/Audited Fiscal Reports: CSPP 1283 – California State Preschool Programs .......................................................................... 16 Audited Reserve Account Activity Report ........................................................................................ 24 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards .................................................... 25 Summary of Findings and Questioned Costs ................................................................................ 27 Current Status of Prior Year Findings ........................................................................................... 28 I I I I I I I I I I I I I ■ ■ ■ This Page Left Intentionally Blank INDEPENDENT AUDITOR’S REPORT To the Honorable Members of the City Council City of San Rafael, California Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the City of San Rafael Child Development Program (Program) of the City of San Rafael, California, as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the Program’s basic financial statements as listed in the Table of Contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Program as of June 30, 2022, and the changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions 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. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirement relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management’s for 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, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Program’s ability to continue as a going concern for twelve months beyond the financial statement date, including any known information that may raise substantial doubt shortly thereafter. Accountancy Corpora t ion 3478 Buski rk Avenue, Sui t e 215 Pleasant Hil l, CA 94523 T 925.930.0902 F 925 .930.0135 E maze @mazeassociates.com w mazea ssociates.com Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:  Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Program’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in aggregate, that raise substantial doubt about the Program’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Supplementary Information Our audit was conducted for the purpose of forming opinions on the basic financial statements that collective comprise the Program’s basic financial statements. The accompanying Supplementary Information, as listed in the Table of Contents, is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures and in conformity with the CDE Audit Guide, issued by the California Department of Education, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Supplementary Information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 1, 2022 on our consideration of the Program’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Program’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Program’s internal control over financial reporting and compliance. Pleasant Hill, California November 1, 2022 CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM BALANCE SHEET JUNE 30, 2022 ASSETS Cash (Note 3) $340,211 Accounts receivable 16,509 Grants receivable (Note 4) 104,375 Total Assets $461,095 LIABILITIES AND FUND BALANCE Accounts payable $29,723 Unearned grant and State reserves 79,842 Total Liabilities 109,565 Fund balance, restricted (Note 5) 351,530 Total Liabilities and Fund Balance $461,095 See accompanying notes to financial statements CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2022 REVENUES Restricted: State grants: Current year grants $320,598 First five school readiness grants 106,098 Local grant 77,962 Unrestricted: Interest 1,461 Parent fees 2,669,140 Other 9,720 Total Revenues 3,184,979 EXPENDITURES Certified salaries 68,244 Classified Salaries 1,592,151 Employee benefits 1,157,961 Training and instruction 6,738 Office supplies 419 Books and supplies 130,946 Utilities and housekeeping services 27,511 Rentals 16,723 Travel and conference 1,604 Services and other operating expenditures 187,399 Equipment 52,097 Insurance 28,490 Renovation and repair 71,216 Total Expenditures 3,341,499 CHANGE IN FUND BALANCE (156,520) FUND BALANCE, Beginning of year 508,050 End of year $351,530 See accompanying notes to financial statements CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM Notes to the Basic Financials Statements For the Year Ended June 30, 2022 NOTE 1 - ORGANIZATION The City of San Rafael operates the Child Development Program encompassing eight childcare centers within the City of San Rafael. One of these centers provides day care services to subsidized families under the Child Development Program funded by the California Department of Education, which includes the Preschool program. The City is financially accountable for the activities of the Program. The Program has no employees and substantially all staff services which it requires are performed by the City's personnel. Costs incurred by the City to provide such services including compensation, retirement, and other benefit costs are reimbursed by the Program. These basic financial statements present only the activities of the Program and are not intended to present the financial position of the City of San Rafael, California, or the results of its operations. The financial statements of the Program are included as a Special Revenue Fund in the City's financial statements. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Basis of Accounting The accounting and reporting treatment applied to a fund is determined by its measurement focus. Governmental funds are accounted for on a spending or “current financial resources” measurement focus. Accordingly, only current assets and current liabilities generally are included on the balance sheets. Operating statements of governmental funds present increases (revenues and other financial sources) and decreases (expenditures and other financial uses) in net current assets. The Program’s financial activities are accounted for using the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The City considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Expenditures are recorded when the related fund liability is incurred. Revenues considered susceptible to accrual include charges for services, federal and state grants, and interest. Expenditures are recognized in the accounting period in which the liability is incurred, if measurable. B. Fund Balance Fund Balance is the excess of all the Program’s assets over all its liabilities. CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM Notes to the Basic Financials Statements For the Year Ended June 30, 2022 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are inputs – other than quoted prices included within level 1 – that are observable for an asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for an asset or liability. If the fair value of an asset or liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement. NOTE 3 - CASH AND INVESTMENTS The Program’s cash is included in a City-wide cash and investment pool, the details of which are presented in the City’s basic financial statements. The Program pools cash from all sources with the City of San Rafael so that it can be invested at the maximum yield, consistent with safety and liquidity, while individual funds can make expenditures at any time. The City’s investment policy and the California Government Code permit investments in Securities of the U.S. Government or its agencies, Certificates of Deposit, Negotiable Certificates of Deposit, Banker’s Acceptances, Commercial Paper, the State of California Local Authority Investment Fund (LAIF Pool), Repurchase Agreements, Medium-Term Corporate Notes, Limited Obligation Improvement Bonds related to special assessment districts and special tax districts, and Money Market/Mutual Funds. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure fair value of the assets. Level 1 inputs are quoted prices in an active market for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The City of San Rafael pooled investments is an uncategorized input not defined as Level 1, Level 2, or Level 3 input. CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM Notes to the Basic Financials Statements For the Year Ended June 30, 2022 NOTE 4 – GRANTS RECEIVABLE The Program has the following grants receivable at June 30, 2022: Agency Grant Amount arin County First 5 Grant $36,622 lifornia Department of Education State Preschool Program 67,753 Total $104,375 NOTE 5 – FUND BALANCES Governmental fund balances represent the net current assets of each fund. Net current assets generally represent a fund’s cash and receivables, less its liabilities. The City’s fund balances are classified based on spending constraints imposed on the use of resources. For programs with multiple funding sources, the City prioritizes and expends funds in the following order: Restricted, Committed, Assigned, and Unassigned. Each category in the following hierarchy is ranked according to the degree of spending constraint. Nonspendable represents balances set aside to indicate items do not represent available, spendable resources even though they are a component of assets. Fund balances required to be maintained intact, such as Permanent Funds, and assets not expected to be converted to cash, such as prepaids, notes receivable, and land held for redevelopment are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed or assigned, then Nonspendable amounts are required to be presented as a component of the applicable category. Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation which requires the resources to be used only for a specific purpose. Nonspendable amounts subject to restrictions are included along with spendable resources. Committed fund balances have constraints imposed by formal action of the City Council which may be altered only by formal action of the City Council. Nonspendable amounts subject to council commitments are included along with spendable resources. Assigned fund balances are amounts constrained by the City’s intent to be used for a specific purpose, but are neither restricted nor committed. Intent is expressed by the City Council or its designee and may be changed at the discretion of the City Council or its designee. This category includes nonspendables, when it is the City’s intent to use proceeds or collections for a specific purpose, and residual fund balances, if any, of Special Revenue, Capital Projects and Debt Service Funds which have not been restricted or committed. Unassigned fund balance represents residual amounts that have not been restricted, committed, or assigned. This includes the residual general fund balance and residual fund deficits, if any, of other governmental funds. CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM Notes to the Basic Financials Statements For the Year Ended June 30, 2022 NOTE 6 – CONTINGENCIES AND COMMITMENTS The Program participates in Federal, State and County grant programs that are fully or partially funded by grants received from other governmental units. Expenditures financed by grants are subject to audit by the appropriate grantor government. If expenditures are disallowed due to noncompliance with grantor program regulations, the City may be required to reimburse the grantor government. As of June 30, 2022, some amounts of grant expenditures have not been audited, but the City believes that disallowed expenditures, if any, based on subsequent audits will not have a material effect on any individual governmental funds or the overall financial condition of the City. SUPPLEMENTARY INFORMATION This Page Left Intentionally Blank CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM SCHEDULE OF FEDERAL, STATE AND LOCAL AWARDS FOR THE YEAR ENDED JUNE 30, 2022 Program Federal Assistance Listing Number Pass-Through Identifying Number Award Amount Revenue Expenditures Federal Awards US Department of Housing and Urban Development, Due from State Pass-through the County of Marin Community Development Block Grant 14.218 40CDBG22CD4527 $21,941 $21,941 $21,941 City to provide source of grant here (e.g. US Department of XXX) City to provide pass-through agency, if applicable (e.g. State of California) City to provide name of grant here City to provide City to provide, if applicable City to provide 27,600 City to provide source of grant here (e.g. US Department of XXX) City to provide pass-through agency, if applicable (e.g. State of California) City to provide name of grant here City to provide City to provide, if applicable City to provide 24,806 Total Federal Awards $21,941 $74,347 $21,941 State Awards Child Development Division State Preschool Program FY2022 CSPP-1283 $328,967 $320,598 $320,598 Total State Awards $328,967 $320,598 $320,598 County Award County of Marin First Five - Preschool CSRI-21-009-11 $106,098 $106,098 $106,098 2021 Honorary CSPP QRIS Block Grant N/A $5,106 $5,106 $5,106 Total County Awards $111,204 $111,204 $111,204 Local Awards Marin Child Care Council N/A $50,915 $50,915 $50,915 Total Local Awards $50,915 $50,915 $50,915 Total State, Federal Awards, and Local $507,921 $551,958 $499,552 CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2022 State Preschool Program Total CDE Non-CDE (CSPP1283) CD Contracts Programs Total REVENUES Restricted: State grants: Current year grants $320,598 $320,598 $320,598 CDBG preschool grant First Five school readiness grants $106,098 106,098 Local grants 77,962 77,962 Unrestricted: Interest 1,461 1,461 Parent fees - noncertified children 2,669,140 2,669,140 Other 9,720 9,720 Total Revenues 320,598 320,598 2,864,381 3,184,979 EXPENDITURES Certified salaries 68,244 68,244 68,244 Classified salaries 86,266 86,266 1,505,885 1,592,151 Employee benefits 135,855 135,855 1,022,106 1,157,961 Training and instruction 6,738 6,738 Office supplies 419 419 Books and supplies 12,325 12,325 118,621 130,946 Utilities and housekeeping services 27,511 27,511 Travel and conference 1,604 1,604 Rentals 16,723 16,723 Services and other operating expenditures 17,908 17,908 169,491 187,399 Equipment 52,097 52,097 Insurance 28,490 28,490 Renovation and repair 71,216 71,216 Total Expenditures 320,598 320,598 3,020,901 3,341,499 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (156,520) (156,520) CHANGE IN FUND BALANCE ($156,520) ($156,520) CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM SCHEDULE OF EXPENDITURES BY STATE CATEGORIES FOR THE YEAR ENDED JUNE 30, 2022 CSPP-1283 State Preschool Program Totals EXPENDITURES: 1000 Certified personnel salaries $68,244 $68,244 Due from State 1100 Teachers' salaries 68,244 68,244 1200 Administration 1300 Supervisors' salaries 1600 Infant educators 2001 Classified personnel salaries $86,266 $86,266 2100 Instructional aides' salaries 86,266 86,266 2300 Clerical and other office salaries 2500 Food services salaries 2600 Transportation salaries 3000 Employee benefits $135,855 $135,855 3200 Payroll taxes (Medicare) 2,050 2,050 3300 Other benefits 95,140 95,140 3400 Health and welfare 36,965 36,965 3600 Workers' compensation insurance 1,700 1,700 4000 Books and supplies $12,325 $12,325 4200 Other books 4300 Instructional materials and supplies 12,325 12,325 4500 Other supplies 4600 Food supplies 5000 Services and other operating expenditures $17,908 $17,908 5100 Lecturer 5200 Travel and conferences 5300 Memberships and dues 5400 Insurance 1,041 1,041 5500 Utilities and housekeeping services 59 59 5600 Rentals, leases and repairs 5700 Audit expense 5800 Other direct services & admin. 16,808 16,808 6000 Capital Outlay 6100 Sites and improvements of sites 6200 Buildings and improvements of buildings 6400 Equipment (program-related) 6500 Equipment replacement (program related) Depreciation Costs capitalized as Fixed Assets TOTAL OF REIMBURSABLE AND NONREIMBURSABLE EXPENDITURES $320,598 $320,598 We have examined the claims filed for reimbursement and the original records supporting the transactions recorded under the contracts listed above to an extent considered necessary to assure ourselves that the amounts claimed by the contractor were eligible for reimbursement, reasonable, necessary, and adequately supported, according to governing laws, regulations, and contract provisions. CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM SCHEDULE OF CLAIMED ADMINISTRATIVE COSTS FOR THE YEAR ENDED JUNE 30, 2022 CSPP-1283 State Preschool Program Administrative Costs (Audit Fees) $7,097 Total Administrative Costs $7,097 CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM SCHEDULE OF CLAIMED EQUIPMENT EXPENDITURES FOR THE YEAR ENDED JUNE 30, 2022 Expenditures Under $7,500 Expenditures Over $7,500 Expenditures Over $7,500 Unit Cost Unit Cost with CDD Approval Unit Cost Without CDD Approval Cost Item Cost Item Cost Item None None None SCHEDULE OF RENOVATION AND REPAIR EXPENDITURES UTILIZING CONTRACT FUNDS Expenditures Under $10,000 Expenditures Over $7,500 Expenditures Over $10,000 Unit Cost Unit Cost with CDD Approval Unit Cost Without CDD Approval Cost Item Cost Item Cost Item None None None Reimbursable Expenditures for Renovations and Repairs CSPP-1283 None $0 Total $0 CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM SCHEDULE OF CLAIMED EXPENDITURES FOR RENOVATIONS AND REPAIRS FOR THE YEAR ENDED JUNE 30, 2022 Fiscal Year Ended: June 30, 202 Contractor Name: California Department of Education Audited Enrollment, Attendance and Fiscal Report for California State Preschool Program Contract Number: Vendor Code: Section 1 – Number of Counties Where Services are Provided Number of counties where the agency provided services to certified children (Form 1): Number of counties where the agency provided mental health consultation services to certified children (Form 2): Number of counties where the agency provided services to non-certified children (Form 3): Number of counties where the agency provided mental health consultation services to non-certified children (Form 4): Total enrollment and attendance forms to attach: Note: For each of the above categories, submit one July-December form and one form for each service county for January-June. Section 2 – Days of Enrollment, Attendance and Operation Enrollment and Attendance Form Summary Column A Cumulative FY per CPARIS Column B Audit Adjustments Column C Cumulative FY per Audit Column D Adjusted Days per Audit Total Certified Days of Enrollment Total &HUWLILHG'D\VRI(QUROOPHQWZLWKMental Health Consultation Services Days of Attendance (including MHCS) N/A Total Non-Certified Days of Enrollment Total 1RQ&HUWLILHG'D\VRI(QUROOPHQWZLWKMental Health Consultation Services Days of Operation Column A Cumulative FY per CPARIS Column B Audit Adjustments Column C Cumulative FY per Audit Column D Adjusted Days per Audit Days of Operation N/A AUD 8501 Page 1 of 6 Audit Report Page City of San Rafael Child Development ProgramCSPP 12832193100025,035 5,035 5,035.000005,012 5,01200175 175 Contractor Name: Contract Number: Section 3 – Revenue Restricted Income Column A – Cumulative FY per CPARIS Column B – Audit Adjustments Column C – Cumulative FY per Audit Child Nutrition Programs County Maintenance of Effort (EC Section 8279) Other: Other: TOTAL RESTRICTED INCOMETransfer from Reserve Column A – Cumulative FY per CPARIS Column B – Audit Adjustments Column C – Cumulative FY per Audit Transfer from Reserve Other Income Column A – Cumulative FY per CPARIS Column B – Audit Adjustments Column C – Cumulative FY per Audit Waived Family Fees for Certified Children Interest Earned on Child Development Apportionment Payments Fees for Non-Certified Children Unrestricted Income: Head Start Other: Other: AUD 8501 Page 2 of 6 Audit Report Page 00000000000000City of San Rafael Child Development Program CSPP 1283 Contractor Name: Contract Number: Section 4 - Reimbursable Expenses Cost Category Column A – Cumulative FY per CPARIS Column B – Audit Adjustments Column C – Cumulative FY per Audit Direct Payments to Providers (FCCH only) 1000 Certificated Salaries 2000 Classified Salaries 3000 Employee Benefits 4000 Books and Supplies 5000 Services and Other Operating Expenses 6100/6200 Other Approved Capital Outlay 6400 New Equipment (program-related) 6500 Equipment Replacement (program-related) Depreciation or Use Allowance Start-up Expenses (service level exemption) Indirect Costs (include in Total Administrative Cost) TOTAL REIMBURSABLE EXPENSES Does the agency have an indirect cost rate approved by its cognizant agency (Select YES or NO)? <HV 1RApproved Indirect Cost Rate: Specific Items of Reimbursable Expenses Column A – Cumulative FY per CPARIS Column B – Audit Adjustments Column C – Cumulative FY per Audit Total Administrative Cost (included in Reimbursable Expenses) Total Staff Training Cost (included in Reimbursable Expenses) AUD 8501 Page 3 of 6 Audit Report Page 126833/(0(17$/5(9(18((;3(16(6&KHFNWKLVER[DQGRPLWSDJH068,244 68,24486,266 86,266135,855 135,85512,325 12,32517,908 17,908000000320,598 0 320,5987,097 7,0970City of San Rafael Child Development ProgramCSPP 1283✔□ □ □ Contractor Name: Contract Number: Section 5 - Supplemental Funding Supplemental Revenue Column A – Cumulative FY per CPARIS Column B – Audit Adjustments Column C – Cumulative FY per Audit Enhancement Funding Other: Other: TOTAL SUPPLEMENTAL REVENUE Supplemental Expenses Column A – Cumulative FY per CPARIS Column B – Audit Adjustments Column C – Cumulative FY per Audit 1000 Certificated Salaries 2000 Classified Salaries 3000 Employee Benefits 4000 Books and Supplies 5000 Services and Other Operating Expenses 6000 Equipment / Capital Outlay Depreciation or Use Allowance Indirect Costs Non-Reimbursable Supplemental Expenses TOTAL SUPPLEMENTAL EXPENSES AUD 8501 Page 4 of 6 Audit Report Page 5,106 5,106005,106 0 5,106000543 54304,002 4,0020004,545 0 4,545City of San Rafael Child Development Program CSPP 1283 Contractor Name: Contract Number: Section 6 - Summary Description Column A – Cumulative FY per CPARIS Column B – Audit Adjustments Column C – Cumulative FY per Audit Total Certified Days of Enrollment (including MHCS) Days of Operation Days of Attendance (including MHCS) Total Certified Adjusted Days of Enrollment N/A N/A Total Non-Certified Adjusted Days of Enrollment N/A N/A Restricted Program Income Transfer from Reserve Interest Earned on Apportionment Payments Direct Payments to Providers Start-up Expenses (service level exemption) Total Reimbursable Expenses Total Administrative Cost Total Staff Training Cost Non-Reimbursable Cost (State Use Only) N/A N/A AUD 8501 Page 5 of 6 Audit Report Page 5,035 0 5,035175 0 1755,012 0 5,0125,035.00000.0000000000000000000320,598 0 320,5980 7,097 7,097000City of San Rafael Child Development Program CSPP 1283 Contractor Name: Contract Number: Section 7 – Auditor’s Assurances Independent auditor's assurances on agency's compliance with the contract funding terms and conditions and program requirements of the California Department of Education, Early Education Division: 1REligibility, enrollment and attendance records are being maintained as required (Select YES or NO): <HVReimbursable expenses claimed in Section 4 are eligible for reimbursement, reasonable, necessary, and adequately supported (Select YES or NO): 1R<HVSection 8 – Comments Include any comments in the comment box. If necessary, attach additional sheets to explain adjustments. AUD 8501 Page 6 of 6 Audit Report Page ✔✔Adjustments identified in Column B are adjustments made to report audit fees as administrative costs.City of San Rafael Child Development Program CSPP 1283□ □ □ □ California Department of Education Fiscal Year Ending: June 30, 2022 Audited 3UHVFKRROReserve Account Activity Report Vendor Code: Contractor Name: Section 1 – Prior Year Reserve Account Activity Beginning Balance (2020–21 $8'$Ending Balance): Plus Transfers to Reserve Account: 2020–21 Contract No. Per 2020–21 Post-Audit &'FS 9530 Total Transferred from 2020–21 Contracts Less Excess Reserve to be Billed: 2020–21 &')65HVHUYH%DODQFH$IWHU%LOOLQJ: 6ection 2 – Current Year Reserve Account Activity Plus Interest Earned This Year on Reserve: Description Column A SHU&3$5,6 Column B Audit Adjustments Column C Total per Audit Interest Earned 6. Less Transfers to Contracts from Reserve: 2021–22 Contract No. Column A SHU&3$5,6 Column B Audit Adjustments Column C Total per Audit Total Transferred to Contracts 7. Ending Balance: Description Column A SHU&3$5,6 Column B Audit Adjustments Column C Total per Audit Ending Balance on June 30, 2022 COMMENTS – If necessary, attach additional sheets to explain adjustments. AUD 9530A Page 1 of 1 Audit Report Page 2193 City of San Rafael Child Development Program 10,697 0287 0 10,697 11 1283 0 0 0 000 10,698 0 10,698 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Members of the City Council City of San Rafael, California We have audited, in accordance with the 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, the basic financial statements of the City of San Rafael Child Development Program (Program), California, as of and for the year ended June 30, 2022, and have issued our report thereon dated November 1, 2022. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Program's internal control over financial reporting (internal control) as a basis for designing of audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Program’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Program’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Program’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weakness or significant deficiencies may exist that have not been identified. Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the Program's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Accountancy Corporation 3478 Buskirk Avenue, Sui te 215 Pl easant Hill, CA 94523 T 925 .930 .0902 F 925.930.0135 E maze @mazeassoc iates.com w mazeassociates.com Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Program’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Program’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Pleasant Hill, California November 1, 2022 CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM SUMMARY OF FINDINGS AND QUESTIONED COSTS For the Year Ended June 30, 2022 None noted. CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM CURRENT STATUS OF PRIOR YEAR FINDINGS For the Year Ended June 30, 2022 None noted.