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HomeMy WebLinkAboutFin Year-End Audited Financial Statements and Related Audit Reports____________________________________________________________________________________ FOR CITY CLERK ONLY Council Meeting: November 18, 2024 Disposition: Accepted the Fiscal Year 2023-24 Annual Comprehensive Financial Report, Memorandum on Internal Control, Report of Required Communications, Child Development Program Financial Report, and Gann Appropriations Limit Report Agenda Item No: 5.b Meeting Date: November 18, 2024 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: Finance Prepared by: Paul Navazio, Finance Director City Manager Approval: __________ TOPIC: YEAR-END AUDITED FINANCIAL STATEMENTS AND RELATED AUDIT REPORTS SUBJECT: FISCAL YEAR 2023-24 ANNUAL COMPREHENSIVE FINANCIAL REPORT; MEMORANDUM ON INTERNAL CONTROL; REPORT OF REQUIRED COMMUNICATIONS; CHILD DEVELOPMENT PROGRAM FINANCIAL REPORT; AND GANN APPROPRIATIONS LIMIT RECOMMENDATION: Accept the Fiscal Year (FY) 2023-24 Annual Comprehensive Financial Report, Memorandum on Internal Control, Report of Required Communications, Child Development Program Financial Report, and Gann Appropriations Limit Report BACKGROUND: As required by local code, State law, bond covenants, and best practices, the City of San Rafael completes an annual independent audit of its financial activities. The auditing firm of Maze and Associates, Accountancy Corporation, conducted the audit for fiscal year 2023-24. The auditors completed their work in accordance with generally accepted auditing standards issued by the Comptroller General of the United States, as well as the provisions of Office of Management and Budget Circular A-133, Audits of State and Local Government and Non-Profit Organizations. The auditors also prepared a Memorandum on Internal Control to address the City’s controls over its financial activities. In addition, 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, 2025. 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, 2024, the City did not receive funds under the Transportation Development Act. Therefore, no separate audit report was completed to satisfy the State of California’s requirements regarding these funds. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 ANALYSIS: Fiscal Year 2023-24 Annual Comprehensive Financial Report – City-wide Financial Results The independent auditor has issued an unqualified opinion relative to the City’s financial statements for the fiscal year ended June 30, 2024. This opinion states that the financial statements present fairly, in all material respects, the City’s financial position. The audited results of the City’s financial activities for the fiscal year ended June 30, 2024, are presented in the attached Annual Comprehensive Financial Report (ACFR). The report includes Government-wide financial statements, with governmental activities and business-type activities presented separately. At the end of the fiscal year, the net position of the City’s governmental activities, inclusive of all governmental funds, all assets of the City (including infrastructure), and all liabilities (including long-term debt), was $310.8 million, an increase of $29.3 million from the prior year adjusted balance. Current and other governmental assets increased by $10 million, mainly due to overall revenues outpacing expenses for the year, increasing cash and investment balances. The $8.1 million increase in capital assets reflects project-to-date activity for major infrastructure improvements exceeding depreciation for the year. The decrease of $6.8 million in deferred outflows is primarily a result of the impact of the amortization of pension and other post-employment benefits (OPEB) related outflows recognized into pension expense in the current year. Noncurrent governmental liabilities decreased by $12 million mainly because of the decrease in pension and OPEB liabilities of $8 million, as well as the paydown of long-term debt. Deferred inflows decreased by $5.3 million, mainly due to the amortization of Pension and OPEB inflows in the current year. Increase Increase 2024 2023 (Decrease)2024 2023 (Decrease) Current and other assets $146,001 $135,941 $10,060 $1,518 $1,745 ($227) Capital assets 319,756 311,664 8,092 14,743 15,162 (419) Total assets 465,757 447,605 18,152 16,261 16,907 (646) Deferred outflows (Notes 9 and 11)66,549 73,312 (6,763) 1,780 1,312 468 Current and other liabilities 18,004 18,677 (673) 528 503 25 Noncurrent liabilities 180,544 192,517 (11,973) 6,239 6,942 (703) Total liabilities 198,548 211,194 (12,646) 6,767 7,445 (678) Deferred inflows (Notes 4G, 9 and 11)22,923 28,213 (5,290) 571 772 (201) Net Position: Net investment in capital assets 268,520 259,204 9,316 11,354 11,454 (100) Restricted 48,596 46,773 1,823 0 Unrestricted (6,281) (24,466) 18,185 (651) (653) 2 Total net position $310,835 $281,511 $29,324 $10,703 $10,801 ($98) Governmental Activities Business-Type Activities Summary of Net Position (in thousands) SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3 The Management's Discussion and Analysis (MD&A) section, beginning on page five of the attached ACFR, provides additional explanatory information. The MD&A provides key highlights and a summary view of financial activities for the year. Financial Results: General Fund General fund revenues and transfers-in exceeded expenditures and transfers-out by $8.6 million. Actual revenues, at $104.9 million, exceeded original budgeted revenues by $4.1 million. The increase is largely attributed to investment gains as interest rates increased and the City recouped much of its $2 million unrealized loss incurred in fiscal year 2021-2022. Property Tax receipts also outperformed the budget by $1.5 million following the hot housing market of the last three years. Expenditures of $93.9 million were $6.3 million less than original budgeted expenditures of $100.2 million as the City continued to experience significant personnel savings against vacant positions during the fiscal year. The fund balance of the General Fund as of June 30, 2024, was $36.4 million (an increase of $8.6 million from the prior year’s balance). Of this amount, $54 thousand is non-spendable, $9.8 million is committed, $20.8 million is assigned, and $5.7 million is unassigned. The committed and unrestricted portions of the balance include $9.8 million and $4.9 million for emergency and cash flow needs, respectively, which meets the minimum target reserve levels at 15% of general fund operating expenditures established by City Council policy. Memorandum on Internal Control As a component of the annual financial audit, the auditors must communicate to the City Council matters related to internal controls that may impact the accuracy of the City’s financial statements. The auditor’s Memorandum on Internal Control identifies findings that are deemed to be either material weaknesses, significant deficiencies, or “other matters.” (Attachment 2) The Memorandum on Internal Control issued with the audit of the financial statements for the fiscal year ended June 30, 2024, does not identify any material weaknesses or significant deficiencies. However, the memorandum notes that two “Other Matters” were identified in prior years’ audits, one of which remained unresolved as of June 30, 2024, and is summarized as follows: Adopted Budget Revised Budget Actual Revenues $100,802 $100,802 $104,946 Transfers in 1,827 2,127 2,061 Issuance of long-term debt - - 2,519 Total resources 102,629 102,929 109,526 Expenditures 100,152 $100,166 93,850 Operating transfers out 2,207 2,404 2,405 Capital transfers out - 4,690 4,624 Total uses 102,359 107,260 100,879 Net Results $270 ($4,331)$8,647 Summary of General Fund Budget and Actual For the fiscal year ended June 30, 2024 (in thousands) SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4 •Finding 2022-2 – Purchasing Policy Compliance and Clarification of Requirements. This finding resulted in a recommendation from the independent auditor that the City review and update its Purchasing Policy to clarify requirements for the use of purchase orders and contracts and review internal controls to ensure practices comply with the City’s policy. In their Memorandum of Internal Controls, the auditor notes that management has not yet fully addressed this matter. Management’s response (included in the Memorandum of Internal Control): As noted, management had concurred with the recommendation(s) from prior Other Matters (2023-2 and 2022-02) related to the Clarification of Requirements for compliance with the City’s Purchasing Policy. Concurrent with the start of the current fiscal year (July 1, 2024), City management issued updated guidelines related to the City’s purchasing policy and procedures. Included as part of the new guidelines were updates specific to past findings issued by the City’s Independent Auditor. Specifically: 1)Effective July 1, 2024, Purchase Orders are now required for all purchases and contracts of $10,000 or more. 2)The updated 2024-25 purchasing guidelines and procedures further clarify that, for purposes of application of delegated spending authority, approval levels are to be based on total contract amount(s) (original plus any amendments or change orders) rather than on an individual transaction. Management recognizes that the update to the City’s purchasing guidelines and procedures became formally effective with the fiscal year starting 7/1/24 and, therefore was not in place for the 2023-24 fiscal year, subject of the current audit report. Staff has reviewed the actions taken with the Independent Auditor and is confident that this finding will be deemed resolved in our next annual audit report. 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. The auditor noted no adverse communications in their report. (Attachment 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 comparing the information presented. No exceptions were noted in these procedures for compliance with the Proposition 111 fiscal year 2024-25 Appropriations Limit calculation. (Attachment 4) Child Development Program (Childcare) Financial Report The Independent Auditor has also completed its audit of the City’s Child Development Program. For the fiscal year ending June 30, 2024, the Child Development Program recorded revenues of $4.36 million, supporting expenditures of $3.73 million. The program ended the year with a fund balance of $1.24 million. The audit report provides an unqualified opinion and includes no findings or recommendations. (Attachment 5) FISCAL IMPACT: SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 5 No fiscal impact occurs by the City Council’s acceptance of these reports. The fiscal year 2023- 24 Annual Comprehensive Financial Report and related reports are presented as the actual results of the City and related entities’ financial activities for the year. RECOMMENDED ACTION: Accept the Fiscal Year (FY) 2023-24 Annual Comprehensive Financial Report, Memorandum on Internal Control, Report of Required Communications, Child Development Program Financial Report, and Gann Appropriations Limit Report. ATTACHMENTS: 1.FY 2023-24 Annual Comprehensive Financial Report 2.FY 2023-24 Memorandum of Internal Controls 3.FY 2023-24 Required Communications 4.FY 2023-24 Child Development Program Financial Report 5.FY 2023-24 Draft Gann Appropriations Limit ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDING JUNE 30, 2024 City Hall, San Rafael, California SAN RAFAEL THE CITY WITH A MISSION ANNUAL COMPREHENSIVE FINANCIAL REPORT For the Fiscal Year Ended June 30, 2024 City of San Rafael, California 1400 Fifth Avenue San Rafael, California 94901 Prepared by the Finance Department of the City of San Rafael Loch Lomond Marina, San Rafael INTRODUCTORY SECTION CITY OF SAN RAFAEL, CALIFORNIA ANNUAL COMPREHENSIVE FINANCIAL REPORT For the Year Ended June 30, 2024 Table of Contents INTRODUCTORY SECTION TABLE OF CONTENTS Letter of Transmittal .................................................................................................................................... v Mission Statement and Vision Statement ................................................................................................... xi City Council and Staff ............................................................................................................................... xii Organizational Chart ................................................................................................................................. xiii Location Map ............................................................................................................................................ 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 i CITY OF SAN RAFAEL, CALIFORNIA ANNUAL COMPREHENSIVE FINANCIAL REPORT For the Year Ended June 30, 2024 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 ..................................... 97 Schedule of Contributions – Defined Benefit Pension Plan ......................................................... 98 Schedule of Changes in Net OPEB Liability and Related Ratios ............................................... 108 Schedule of Contributions – OPEB ............................................................................................ 110 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – Budgetary Basis General Fund ........................................................................................................................... 120 Traffic and Housing Mitigation Special Revenue Fund .......................................................... 121 Gas Tax Special Revenue Fund ............................................................................................... 122 Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – Budgetary Basis Essential Facilities Capital Projects Fund ................................................................................ 124 Non-major Governmental Funds: Combining Balance Sheets ......................................................................................................... 128 Combining Statements of Revenues, Expenditures, and Changes in Fund Balance ................................................................................................................... 132 Budgeted Non-Major Governmental Funds: Combining Schedules of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual ...................................................................... 136 ii CITY OF SAN RAFAEL, CALIFORNIA ANNUAL COMPREHENSIVE FINANCIAL REPORT For the Year Ended June 30, 2024 Table of Contents FINANCIAL SECTION (Continued) Internal Service Funds: Combining Statements of Net Position ....................................................................................... 146 Combining Statements of Revenues, Expenses and Changes in Fund Net Position ................... 148 Combining Statements of Cash Flows ........................................................................................ 150 STATISTICAL SECTION Financial Trends: Net Position by Component – Last Ten Fiscal Years ....................................................................... 156 Changes in Net Position – Last Ten Fiscal Years ............................................................................. 158 Fund Balances of Governmental Funds – Last Ten Fiscal Years ..................................................... 162 Changes in Fund Balance of Governmental Funds – Last Ten Fiscal Years .................................... 164 Revenue Capacity: Assessed and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years ...................... 166 Property Tax Rates – All Overlapping Governments – Last Ten Fiscal Years ................................ 167 Property Tax Rates – Direct & Overlapping Governments – Last Ten Fiscal Years (Rate Per $100 of Assessed Value) .......................................................... 168 Principal Property Tax Payers – Current Year and Nine Years Ago ................................................ 169 Property Tax Levies and Collections – Last Ten Fiscal Years ......................................................... 170 Debt Capacity: Ratio of Outstanding Debt by Type – Last Ten Fiscal Years ........................................................... 171 Computation of Direct and Overlapping Debt .................................................................................. 172 Computation of Legal Bonded Debt Margin .................................................................................... 173 Revenue Bond Coverage Parking Facility – Last Ten Fiscal Years ................................................. 174 iii CITY OF SAN RAFAEL, CALIFORNIA ANNUAL COMPREHENSIVE FINANCIAL REPORT For the Year Ended June 30, 2024 Table of Contents STATISTICAL SECTION (Continued) Demographic and Economic Information: Demographic and Economic Statistics – Last Ten Calendar Years .................................................. 175 Principal Employers – Last Ten Calendar Years .............................................................................. 176 Operating Information: Full-Time Equivalent City Government Employees by Function – Last Ten Fiscal Years ................................................................................................................. 179 Operating Indicators by Function/Program – Last Ten Fiscal Years ................................................ 180 Capital Asset Statistics by Function/Program – Last Ten Fiscal Years ............................................ 182 iv Kate Colin, Mayor • Eli Hill, Vice Mayor • Maribeth Bushey, Councilmember • Maika Llorens Gulati , Councilmember • Rachel Kertz, Councilmember November 4, 2024 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, 2024, 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, 2024. 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 J 1400 FIFTH AVENUE, SAN RAFAEL, CALIFORNIA 94901 J CITYOFSANRAFAEL.ORG Kate Colin, Mayor • Eli Hill, Vice Mayor • Maribeth Bushey, Councilmember • Maika Llorens Gulati , Councilmember • Rachel Kertz, 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 by district to four-year terms while the mayor is elected at-large 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, 2024, was 59,585. Downtown San Rafael is the location of many community events, including Second Friday Art Walks, Mill Valley Film Festival, West End Block Party, Thursday Night Farmer’s Market, Porchfest, and is one of only 14 designated 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. vi CITY OF SAN RAFAEL I 1400 FIFTH AVENUE, SAN RAFAEL, CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG Kate Colin, Mayor • Eli Hill, Vice Mayor • Maribeth Bushey, Councilmember • Maika Llorens Gulati , Councilmember • Rachel Kertz, 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. Significantly, in 2023, the City Council adopted a set of two-year Goals, Objectives, and Strategic Priorities covering fiscal years 2023-24 and 2024-25 and include the following policy focus areas: •Economic Growth •Sustainability, Climate Change, and Disaster Preparedness •Diversity, Equity, Inclusion, and Belonging •Housing and Homelessness The programs, projects, and initiatives supporting these strategic goals will inform ongoing investment of city resources in the near term. ECONOMIC FACTORS The City has a diversified economic base, which includes an assortment of high-tech, healthcare, automotive, 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 75% residential, 20% commercial, 2% industrial, and 3% unsecured and others. The top 25 sales tax producers provide about half of overall sales tax revenues. The overall economy continues to hold steady while facing headwinds of tightening economic policy. Inflation remains elevated but has eased from the highs of the last two years, with key sectors such as housing, healthcare, and services keeping inflationary pressure elevated. Where economists were previously predicting a recession, evidence is beginning to suggest milder adverse economic impacts in response to monetary policy. Locally, Marin County is showing signs of slowing economic activity following the post-pandemic recovery. Although Marin County has a stable economic foundation, challenges remain. The housing market will remain a key issue as the high cost of living will continue to make it difficult for many residents to afford homes and incremental increases in housing supply to combat the issue will take time to materialize. vii CITY OF SAN RAFAEL I 1400 FIFTH AVENUE, SAN RAFAEL, CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG Kate Colin, Mayor • Eli Hill, Vice Mayor • Maribeth Bushey, Councilmember • Maika Llorens Gulati , Councilmember • Rachel Kertz, Councilmember Economic Data The following is a sample of economic attributes that make San Rafael an exceptional place to live and work. •Economic development organizations in San Rafael include the San Rafael Chamber of Commerce, Hispanic Chamber of Commerce, Downtown Business Improvement District, and the Marin Economic Forum. •Marin County’s top employers include Kaiser Permanente, the County of Marin, the City of San Rafael, Marin Independent Journal, YMCA San Francisco, Managed Health Network, 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, 2024, for San Rafael were: 1. Autos and Transportation (29%), 2. State and County Pools, which mainly reflects ecommerce activity (21%), and 3. Building and Construction (18%). •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 927. The Four Points Sheraton was recently sold for $38 million and is slated for a significant rebranding and upgrade. In addition, a downtown AC Marriot recently opened its doors providing 140-rooms and a roof-top bar/lounge. •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 $3,423. The median home value in San Rafael is $1,330,333. viii CITY OF SAN RAFAEL I 1400 FIFTH AVENUE, SAN RAFAEL, CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG Kate Colin, Mayor • Eli Hill, Vice Mayor • Maribeth Bushey, Councilmember • Maika Llorens Gulati , Councilmember • Rachel Kertz, Councilmember Recent growth and economic vibrancy: •As mentioned above, the City is enjoying a boost in development of hotel rooms thanks to a new AC Marriott Hotel located in the heart of our Downtown as well as a two million dollar investment to update the Four Points Sheraton, including design upgrades to the lobby area, dining areas, and restrooms. •Development activity continues to show good momentum, primarily in the area of multi- family housing project planning applications. Plans were recently approved for the construction of a new state licensed residential care facility for the elderly (RCFE) containing 155 senior independent and assisted living units, and 28 secured memory care units at 1515 Fourth Street. The development represents a catalytic investment into the downtown area. •The City is processing an application to redevelop the Northgate Mall which consists of a comprehensive redevelopment of the existing mall into an open-air “main street experience,” surrounded by mixed-use development of retail and up to 1,422 residences. The Project proposes to reduce the existing commercial retail from 775,677 sq. ft. to 225,100 square feet and construct high-density multifamily residential buildings in the form of townhome units and apartment buildings ranging in height from two to seven stories. •The City has received an SB 330 application to develop an 8-story multifamily residential building supporting 213 residences, with ancillary uses on the ground floor available to residents at 930 Irwin Street. The project includes the demolition of three existing commercial structures and the merger of three lots. •The City has adopted its first ever citywide Economic Development Strategic Plan in early 2023. The plan includes detailed actionable tasks that provide measurable benefits and value driving enhanced economic vitality. •The Business Improvement District sponsors several community engagement programs including block parties and business attraction activities that draw foot traffic to our downtown. Also, the City welcomed back the Thursday Night Downtown Farmers Market in 2023 and 2024. 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. ix CITY OF SAN RAFAEL I 1400 FIFTH AVENUE, SAN RAFAEL, CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG 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. 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, and Finance Manager Shawn Plate, with oversight by Accounting Manager Van Bach and Finance Director Paul Navazio 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 twelfth 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, City Manager Finance Dire CITY OF SAN RAFAEL I 1400 FIFTH AVENUE, SAN RAFAEL, CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG Kate Colin, Mayor• Eli Hill, Vice Mayor• Maribeth Bushey, Councilmember • Maika Llorens Gulati , Councilmember • Rachel Kertz, Councilmember x ~ or 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 xi SAN RAFAEL THE CITY WITH A MISSION City Council and Staff As of November 4, 2024 City Council Kate Colin, Mayor Eli Hill, Vice Mayor Maribeth Bushey, Councilmember Maika Llorens Gulati, Councilmember Rachel Kertz, Councilmember Elected Officials Rob Epstein, City Attorney Lindsay Lara, City Clerk Executive Team Cristine Alilovich, City Manager Angela Robinson-Piñon, Assistant City Manager John Stefanski, Assistant City Manager David Spiller, Chief of Police Abraham Roman, Fire Chief April Miller, Public Works Director Micah Hinkle, Community & Economic Development Director Catherine Quffa, Library & Recreation Director Sean Mooney, Director of Digital Service & Open Government Paul Navazio, Finance Director Marissa Sanchez, Human Resources Director xii SAN RAFAEL THE CITY WITH A MISSION ORGANIZATIONAL CHART City Clerk Lindsay Lara City Attorney Rob Epstein Boards & Commissions Volunteer and Sustainability Programs Cory Bytof Finance Paul Navazio Parking Services Jim Myhers Police Department Dave Spiller Fire Department Abraham Roman Library and Recreation Catherine Quffa Public Works April Miller Digital Service and Open Government Sean Mooney Community and Economic Development Micah Hinkle Emergency Management Quinn Gardner Human Resources Marissa Sanchez Assistant City Manager John Stefanski Assistant City Manager Angela Robinson Piñon Mayor & City Council Kate Colin Maribeth Bushey Rachel Kertz Eli Hill Maika Llorens Gulati City Manager Cristine Alilovich Electorate xi i i ~SAN RAFAEL ~ THE CITY WITH A MISSION xiv ., Petaluma O cit Greater San Francisco Bay Area 5 0 5 10 15 Miles ~~~~iiiiiiiiiiiiiii----~!!!'!!"!!! 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Napa -0 LOCATION MAP 0 • Vacaville r 0 Concord Haywa rd 0 • / fremont / 0 San Jose 0 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, 2023 Executive Director/CEO xv e Sun Valley, San Rafael FINANCIAL SECTION 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, 2024, 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, 2024, 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. 1 Accountancy Corporation 3478 Buskirk Avenue, Suite 217 Pleasant Hill, CA 94523 T 925.228.2800 , maze@mazeassociates.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 opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with 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 there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with 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. 2 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. 3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 4, 2024, 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 4, 2024 4 CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2024 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, 2024. 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, 2024, by $321.5 million. • Activities – During the fiscal year the City’s total revenues of $150.4 million were greater than expenses of $121.2 million for governmental and business-type activities. • Changes in Net Position – The City’s total net position increased by $29.2 million in fiscal year 2023-2024 as compared to the net position of the previous year. Net position of governmental activities increased by $29.3 million, while net position of the business-type activities decreased by $98 thousand. Fund Level: • Governmental Funds – As of the close of fiscal year 2023-2024, the City’s governmental funds reported combined ending fund balances of $93.2 million, an increase of $14.7 million primarily due to outperforming revenues as well as savings against expenditure budgets in the general fund for a total $13.0 million favorable variance as compared to the adjusted budget. Of this total amount, $58 thousand is nonspendable, $48.4 million is restricted, $18.0 million is committed, $21.0 million is assigned, and $5.7 million is unassigned. • Governmental fund revenues totaled $145.0 million, a decrease of $2.5 million from the those of the previous fiscal year. The decrease is mainly a result of the $12.0 million decline in intergovernmental revenues as major projects were completed during the year (including the Third Street Rehabilitation project) offset by a $3.3 million increase in use of money and properties due to the impact of interest rate fluctuations on bond markets, and general year-over-year increases in other revenue items. • Governmental fund expenditures decreased by $2.4 million to $136.3 million, from $138.7 million in the prior year. The decrease is primarily the result of the large project expenditures incurred in the prior year related to capital projects, most notably the Third Street Rehabilitation project, which were completed during the fiscal year. • Enterprise fund net position increased $106 thousand to $10.9 million as the City’s parking program revenues remained largely static when compared with the prior year while expenses continued to increase. 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 5 CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2024 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 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. 6 CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2024 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 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 128 through 143 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, Gas Tax and Essential Facilities Capital Projects. 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 128 through 143 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. 7 CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2024 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 about 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 97 through 122 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 $310.8 million from Governmental Activities and $10.7 million from Business-type Activities, for a total of $321.5 million. This represents an increase of $29.2 million from the prior year’s net position. 8 CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2024 The following is the condensed Statement of Net Position for the fiscal years ended June 30, 2024 and 2023: Current and other governmental assets increased by $10 million mainly due to overall results of revenues outpacing expenses for the year increasing cash and investment balances. The $8.1 million increase in capital assets reflects project-to-date activity for major infrastructure improvements exceeding depreciation for the year. The decrease of $6.8 million in deferred outflows is primarily a result of the impact of the amortization of pension and OPEB related outflows recognized into pension expense in the current year. Noncurrent governmental liabilities decreased by $12 million mainly as a result of the decrease in Pension and OPEB liabilities of $8 million as well as the paydown of long-term debt. Deferred inflows decreased by $5.3 million mainly as a result of the amortization of Pension and OPEB inflows in the current year. The net position in business-type activities reflects the fiscal activity of the Parking Services program and decreased by $98 thousand from the previous year as revenues stagnated after a strong post-pandemic recovery and expenses, which are mainly personnel related, continued to increase. Current and other assets decreased by $227 million due to a decline in cash and receivables as operations slowed. Noncurrent liabilities decreased by $703 thousand mainly due to a reduction in net pension and OPEB liabilities. At June 30, 2024, the largest portion of total net position in the amount of $279.9 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. Increase Increase 2024 2023 (Decrease) 2024 2023 (Decrease) Current and other assets $146,001 $135,941 $10,060 $1,518 $1,745 ($227) Capital assets 319,756 311,664 8,092 14,743 15,162 (419) Total assets 465,757 447,605 18,152 16,261 16,907 (646) Deferred outflows (Notes 9 and 11)66,549 73,312 (6,763) 1,780 1,312 468 Current and other liabilities 18,004 18,677 (673) 528 503 25 Noncurrent liabilities 180,544 192,517 (11,973) 6,239 6,942 (703) Total liabilities 198,548 211,194 (12,646) 6,767 7,445 (678) Deferred inflows (Notes 4G, 9 and 11)22,923 28,213 (5,290) 571 772 (201) Net Position: Net investment in capital assets 268,520 259,204 9,316 11,354 11,454 (100) Restricted 48,596 46,773 1,823 0 Unrestricted (6,281) (24,466) 18,185 (651) (653) 2 Total net position $310,835 $281,511 $29,324 $10,703 $10,801 ($98) Governmental Activities Business-Typ e Activities Summary of Net Position (in thousands) 9 CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2024 A portion of the City's total net position, $48.6 million, is subject to external restrictions, and their use is determined by those restrictions whether legal or by covenant. In addition, the unrestricted negative $6.9 million represents the extent to which the net investment in capital assets and restricted net position exceed total net assets. 6/30/2024 6/30/2023 Invested in Capital Assets (net) $279,874 $270,658 $9,216 Restricted 48,596 46,773 1,823 Unrestricted (6,932) (25,119) 18,187 Total Net Position:$321,538 $292,312 $29,226 Increase/ (Decrease) Summary of Net Position (in thousands) 10 CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2024 Statement of Activities - Governmental The following is the condensed Statement of Activities and Changes in Net Position for the fiscal years ended June 30, 2024 and 2023: Increase 2024 2023 (Decrease) REVENUES Program revenues: Charges for services $23,170 $20,735 $2,435 Operating grants and contributions 6,531 6,764 (233) Capital grants and contributions 8,181 18,438 (10,257) Total program revenues 37,882 45,937 (8,055) General revenues: Property taxes 35,636 33,023 2,613 Sales taxes 44,554 45,633 (1,079) Paramedic tax 5,316 5,224 92 Transient occupancy tax 3,593 3,396 197 Franchise tax 4,582 4,425 157 Business license tax 2,792 2,584 208 Other taxes 2,937 2,975 (38) Investment earnings 5,284 1,709 3,575 Gain from sale of capital assets 42 42 Miscellaneous 3,241 3,233 8 Total general revenues 107,977 102,202 5,775 TOTAL REVENUES 145,859 148,139 (2,280) EXPENSES General government 14,902 11,163 3,739 Public safety 57,400 49,904 7,496 Public works and parks 24,392 23,354 1,038 Community/economic development 6,043 4,437 1,606 Culture and recreation 12,724 10,723 2,001 Interest on long-term debt 1,656 1,793 (137) TOTAL EXPENSES 117,117 101,374 15,743 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENSES 28,742 46,765 (18,023) Transfers in 582 521 61.00 Total Other Financing Sources (Uses)582 521 61 Net Change in Net Position 29,324 47,286 (17,962) Beginning Net Position 281,511 234,225 47,286 Ending Net Position, June 30 $310,835 $281,511 $29,324 Governmental Activities Summary of Changes in Net Position (in thousands) 11 CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2024 The City’s governmental activities net position increased by $29.3 million during fiscal year 2023-2024. Total revenues decreased by roughly $2.3 million mainly caused by the $8.1 million decline in program revenues. Within program revenues, capital grants and contributions declined by $10.3 million, which was mainly related to the Third Street Rehabilitation project which was completed during the year. This was partially offset by an increase in charges for services that was mainly driven by overall fee increases. Within the general revenues category, property taxes increased $2.6 following the hot housing market of previous years whereas sales taxes declined by about $1 million. The decline in sales tax revenues is mainly related to the fourth quarter of fiscal 2024 where activity began to slow from the economic tightening to combat inflation. The large increase in investment earnings was a result of the increase in interest rates, leading to much greater interest income than the prior year and also recording large unrealized gains as the City recouped the remainder of the unrealized loss recorded in fiscal 2022. Overall operating expenses reflect an increase of $15.7 million for the year mainly resulting from Pension related adjustments. Pension related adjustments had the impact of reducing expenses as compared to the fund financial statements by $4.1 million for fiscal 2024 whereas the same entries reduced expenses as compared to the fund financial statements by $16.6 million in fiscal 2023. The remainder of the increase is the result of annual increases in personnel costs. The following graph shows governmental revenues by source: 12 Revenues by Source Governmental Activities Taxes, 68.15% Capital grants and contributions, 5.61% Charges for services, 15.89% ,,-Operating grants and contributions, 4.48% Miscellaneous, 5.87% CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2024 Total expenses for governmental activities were $115.4 million (excluding interest on long-term debt of $1.7 million). Program revenues offset total expenses as follows: • Those who directly benefited from programs contributed $23.2 million in charges for services. • A total of $14.7 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 $79.2 million. Functional expenses for the year ended June 30, 2024, were as follows: Function Amount Percent of Total General government $14,902 12.7% Public safety 57,400 49.0% Public works and parks 24,392 20.8% Community development 6,043 5.2% Culture and recreation 12,725 10.9% Interest on debt 1,656 1.4% Total expenses $117,118 100% Expenses by Function (in thousands) 13 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $- General Government Expenses and Program Revenues Governmental Activities (in thousands) Public Safety Public Works and Parks Community Development ■ Program Revenues ■ Expenses Culture and Recreation CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2024 Statement of Activities – Business-Type The net position for business-type activities decreased from the prior year by $98 thousand as operations slowed slightly and whereas the increased program revenues from the prior year mostly held, expenses continued to increase. Parking services is the City’s only business-type activity with income derived from program revenues of $4.6 million. Program revenues include parking meter coin income of $1.5 million and parking garage hourly and monthly parking income of $0.9 million. Revenues also include parking and non-vehicle code fines totaling $2.2 million. Total expenses for parking services were $4.1 million and transfers out to general fund and non-major governmental fund for support totaled $582 thousand during the fiscal year 2023-2024. Increase 2024 2023 (Decrease) Revenues Program revenues: Charges for services $4,553 $4,682 ($129) Total program revenues 4,553 4,682 (129) General revenues: Investment Income 9 8 1 Total general revenues 9 8 1 TOTAL REVENUES 4,562 4,690 (128) Expenses General government 4,078 3,436 642 TOTAL EXPENSES 4,078 3,436 642 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENSES 484 1,254 (770) OTHER FINANCING SOURCES (USES) Transfers out (582)(521)(61) Total Other Financing sources (uses)(582) (521) (61) Net Change in Net Position (98) 733 (831) Net Position, Beginning 10,801 10,068 733 Net Position, Ending $10,703 10,801 ($98) Summary of Changes in Net Position For the periods ended June 30, 2024 and 2023 (in thousands) Business-Type Activities 14 CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2024 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, 2024, the City reported a combined ending fund balance of $93.2 million for all governmental funds (an increase of $14.7 million from the prior year): $58 thousand is non-spendable, $48.4 million is restricted, $18.0 million is committed, $21.0 million is assigned, and $5.7 million is unassigned. 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, 2024, was $36.4 million (an increase of $8.6 million from the prior year balance): $54 thousand is non-spendable, $9.8 million is committed, $20.8 million is assigned and $5.7 million is unassigned. The committed and unrestricted portions of the balance include $9.8 million and $4.9 million for emergency and cash flow needs, respectively. The original adopted General Fund budget projected total revenue of $100.8 million and transfers-in of $1.8 million for total resources of $102.6 million. This budget appropriated expenditures of $100.2 million and transfers-out of $2.2 million for total appropriations of $102.4 million. Transfers-in were later increased by $300 thousand to account for the partial reimbursement of SAFE Team costs by the Cannabis Fund. Transfers-out were increased by $4.9 million mainly for project support of the Pickleweed Park Field Renovation Project. Actual revenues, at $104.9 million, exceeded original budgeted revenues by $4.1 million. The increase is largely attributed to investment gains as interest rates increased and the City recouped much of its $2 million unrealized loss incurred in fiscal 2021-2022. Property Tax also outperformed the budget by $1.5 million following the hot housing market of the last three years. These favorable revenue variances were somewhat offset by lower than anticipated reimbursements related to planning support programs. Expenditures of $93.9 million were $6.3 million less than original budgeted expenditures of $100.2 million as the City continued to experience significant personnel savings against vacant positions during the fiscal year. The City expects this trend to subside in the coming fiscal year as new labor agreements were reached with all of the City’s bargaining groups contributing to increased focus on recruitment and retention. Variances in debt service and issuance of long-term debt line items are the result of lease and subscription agreements entered into during the year for body-worn cameras in the police department and a new permitting system. These agreements are now accounted for as borrowings under new accounting guidance. 15 CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2024 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 increased from $5.7 million to $5.9 million. Revenues for the fund can fluctuate significantly year to year as they are mainly a function of development projects undergone during the year and for fiscal 2023-2024 totaled $1.9 million, with additional transfers in of $419 thousand. Capital outlay for the year of $1.7 million was related to a single project, the Grand Avenue Cycle Track, to add bicycle facility on the east side of grand Avenue between Fourth Street and Second Street. 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 $1.5 million in fiscal year 2023- 2024 resulting in an increase in fund balance from $11.8 million to $13.3 million. The activities for the year were all planned and approved project work. Expenditures during fiscal year 2023-2024 totaled $10.9 million. In addition to routine street-related maintenance of $1.9 million, major expenditures included $4.9 million for the third street rehabilitation project, $1.2 million for third street safety improvements, and $1.2 million for road repair at Southern Heights and Courtright. Total revenues of $12.6 million were down about $9.2 million from the prior year mainly due to a reduction in intergovernmental transfers related to the third street rehabilitation project that was completed during the year. State gas tax revenues, on the other hand, saw 11% growth from to prior year to a total of $3.2 million. Essential Facilities Capital Projects Fund – The City uses this fund to account for major capital improvements to public safety facilities. Activity in the fund has reduced as the initial major projects contemplated in creation of the fund have been completed. During the year $580 thousand was expended for remaining costs related to Fire Stations 54 and 55, as well as the repurposing of City Hall. Non-major Governmental Funds – The City’s non-major funds are presented in the basic financial statements in the aggregate. At June 30, 2024, non-major funds had a total fund balance of $33.9 million, a $4.4 million increase over that of the previous year. The largest fund balance decrease, $2.7 million, was recorded in the Stormwater Fund as work continues on the San Quentin Pump Station Repair project funded in large part by a prior year transfer in to the fund. The largest fund balance increase, $4.2 million, was recorded in the Capital Projects Fund as $4.2 million in one-time funds were transferred from the general fund to support the Pickleweed Park Field Renovation project during the year which is expected to begin construction in fiscal 2024-2025. Adopted Budget Revised Budget Actual Revenues $100,802 $100,802 $104,946 Transfers in 1,827 2,127 2,061 Issuance of long-term debt - - 2,519 Total resources 102,629 102,929 109,526 Expenditures 100,152 $100,166 93,850 Operating transfers out 2,207 2,404 2,405 Capital transfers out - 4,690 4,624 Total uses 102,359 107,260 100,879 Net Results $270 ($4,331)$8,647 Summary of General Fund Budget and Actual For the fiscal year ended June 30, 2024 (in thousands) 16 CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2024 Of the ending total non-major fund balances of $33.9 million: $25.6 million (76%) is legally restricted for specific purposes by external funding source providers, $8.2 million (24%) is committed for special purposes by the City Council, $122 thousand (less than 1%) is assigned, and $4 thousand (less than 1%) is 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 on page 14, the City’s enterprise fund net position decreased by $98 thousand during the fiscal year. The Parking Services Fund is the City’s sole business-type (Enterprise) activity. The parking services fund’s operating revenue decreased by $129 thousand in fiscal year 2023-2024 to $4.6 million. The enterprise fund operating expenses were $4.1 million in fiscal year 2023-2024, an increase of $0.6 million over the prior fiscal year. The decrease in operating revenues comes after a healthy $845 thousand increase in the prior year as the fund began to rebound from slower post-pandemic operating activity. The increase in expenses mainly reflects the standard annual increase in personnel costs, as well as general increases in other operating costs. The City’s Internal Service Funds are also reported in this Proprietary Fund classification. In fiscal year 2023-2024, the Internal Service Funds 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 decreased by $782 thousand when compared to the prior year. Net investment in capital assets increased by $1.2 million, while unrestricted fund balance decreased by $1.9 million. The increase in capital assets resulted primarily from vehicle purchases, offset by depreciation of existing capital assets. The decrease in unrestricted fund balance is primarily the result of increased claims and insurance premiums related to the Liability Fund. These expense items have been rising state-wide and have been addressed with the fiscal 2024-2025 budget. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets The City’s investment in capital assets for its governmental activities as of June 30, 2024, amounts to $319.8 million, net of accumulated depreciation of $222.0 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 $18.7 million, offset by accumulated depreciation of $10.6 million. Additions to capital assets during fiscal year 2023-2024 included: •Machinery and Equipment: Vehicles totaling $2.2 million •Infrastructure: $14.6 million •Third Street Rehabilitation - $4.9 million •San Quentin Pump Station Reconstruction - $2.9 million •Grand Avenue Cycle Track - $1.7 million •Third Street Safety Improvements - $1.2 million •Southern Heights-Courtright Road Repair - $1.2 million 17 CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2024 • Rotary Manor Culvert Replacement - $1.0 million • Other - $1.7 million • Right-to-use Leased Equipment: $976 thousand • Body-worn cameras - $549 thousand • Office equipment - $220 thousand • Automated license plate readers - $207 thousand • Right-to-use Subscription Assets: $2.1 million • Body-worn cameras - $1.4 million • Permitting software - $524 thousand • Other - $168 thousand A comparison of the City’s Capital Assets for the fiscal years ending June 30, 2024 and 2023 is presented below: Additional information on the City’s capital assets can be found in Note 5 on pages 63 through 65 of this report. 2024 2023 Governmental Activities Land $84,108 $84,026 Construction in progress 28,785 42,582 Land improvements 10,852 10,852 Buildings and structures 119,722 119,165 Machinery and equipment 23,445 22,016 Infrastructure 264,925 237,123 Intangible right-to-use leased building 5,476 5,476 Intangible right-to-use leased equipment 1,226 258 Intangible right-to-use subscription 3,252 1,559 Less accumulated depreciation (222,034) (211,394) Subtotal Governmental Activities 319,757 311,663 Business-type Activities Land 8,621 8,621 Buildings and structures 10,736 10,714 Machinery and equipment 968 1,047 Less accumulated depreciation (5,582)(5,219) Subtotal Business-type Activities 14,743 15,163 Total Capital Assets $334,500 $326,826 Summary of Capital Assets (in thousands) 18 CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2024 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, 2024 and 2023 were as follows: 2024 2023 Governmental Activity Debt: 2018 Authority Lease Revenue Bond $41,909 $44,852 2010 Taxable Pension Obligation Bonds 1,240 1,805 PG & E City Hall HVAC Retrofit Note Payable 13 PG & E Efficiency Note Payable 381 531 PG & E City Hall Efficiency Note Payable 121 143 Subtotal Governmental Activity Debt 43,651 47,344 Business-Type Activity Debt: PG & E Parking Lot Lighting Retrofit Note Payable 1 2012 Authority Lease Revenue Refunding Bonds 3,389 3,708 Subtotal Business-Type Activity Debt 3,389 3,709 Total Long-Term Obligations $47,040 $51,053 Summary of Outstanding Long-Term Debt (in thousands) 19 CITY OF SAN RAFAEL Management’s Discussion and Analysis Fiscal Year Ended June 30, 2024 ECONOMIC CLIMATE AND NEXT YEAR’S BUDGET After navigating through economic shock of both the pandemic and subsequent recovery, the global economy continues to face several issues, inflation being chief among them. As many central banks continue to hold interest rates at elevated levels, economic growth is expected to continue to temper as borrowing becomes more expensive and consumer demand cools. As a result, the International Monetary Fund currently projects somewhat stagnant global growth of 3.2% in 2024, inching forward to 3.3% in 2025. Nationally, the economic climate also continues to be focused on inflation and corresponding monetary policy surrounding interest rates. Although progress has been made, inflation remains above the Federal Reserve’s 2% target. Consumer demand has remained strong in spite of these economic pressures, however, are showing signs of a pullback, especially with regard to larger ticket items such as housing and automobiles. In California, national trends are reflected with some unique regional dynamics. The housing market remains particularly constrained as high mortgage rates and low affordability put pressure on the sector, currently buoyed by a reduction in supply. The unemployment rate remains elevated in comparison to the national rate partly owing to job losses in the entertainment and the tech sector, however, continued strength in sectors such as biotech and clean energy as well as innovation in artificial intelligence put the state in a strong position for future economic gains. Locally, Marin County remains somewhat insulated from more pronounced impacts of the macro environment with an unemployment rate lower than the national average and per capita income among the highest. This provides stability to the local economy, affording the County the ability to maintain stronger consumer demand in the face of mounting economic pressures. In San Rafael, sales and use tax forecasts show the city beginning to stagnate after its post-pandemic boom with sales taxes forecasted to grow at a modest 1.5% for fiscal 2024-25. The City’s economy remains stable with significant employment in healthcare, education, and public administration and its position as the county’s commercial center. However, housing affordability, transportation challenges, and the evolving retail landscape present ongoing issues for the city's long-term development. The City heads into the new fiscal year with a strong balance sheet and large capital projects in the pipeline bolstered by prior year increases to fund balances. However, costs are continuing to rise and certain projects may need to be prioritized to ensure the City does not become overextended. 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. 20 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. 21 CITY OF SAN RAFAEL STATEMENT OF NET POSITION JUNE 30, 2024 Component Primary Government Unit San Rafael Governmental Business-type Sanitation Activities Activities Total District ASSETS Cash and investments available for operations (Note 2)$120,586,304 $435,618 $121,021,922 $50,985,279 Restricted cash and investments (Note 2)731,527 731,527 Receivables: Accounts, net 4,839,469 1,082,382 5,921,851 1,777,716 Intergovernmental 10,939,953 10,939,953 Grants 445,822 445,822 Interest 828,351 828,351 Loans (Note 4A)3,817,319 3,817,319 Long-term receivable from San Rafael Sanitation District (Note 4G)2,463,069 2,463,069 Leases receivable (Note 4H)430,566 430,566 Prepaid expenses and others 918,809 918,809 89,235 Capital assets (Note 5): Nondepreciable 112,892,640 8,620,853 121,513,493 10,744,862 Depreciable, net 206,863,263 6,121,960 212,985,223 54,983,239 Total Assets 465,757,092 16,260,813 482,017,905 118,580,331 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows related to pension (Note 9)58,559,596 1,649,631 60,209,227 Deferred outflows related to OPEB (Note 11) 7,989,765 131,235 8,121,000 Total Deferred Outflows of Resources 66,549,361 1,780,866 68,330,227 LIABILITIES Accounts payable 8,952,811 130,131 9,082,942 3,931,050 Developer and other deposits payable 453,747 453,747 Interest payable 28,822 28,822 Unearned revenue 566,892 21,474 588,366 Claims payable (Note 13): Due in one year 3,389,162 3,389,162 Due in more than one year 11,112,700 11,112,700 Compensated absences (Note 1L): Due in one year 554,312 17,332 571,644 Due in more than one year 3,880,180 121,327 4,001,507 Long-term debt (Note 6): Due in one year 3,418,106 330,000 3,748,106 Due in more than one year 40,234,018 3,058,653 43,292,671 Lease liabilities (Note 14): Due in one year 180,734 180,734 Due in more than one year 6,224,657 6,224,657 Subscription liabilities (Note 14): Due in one year 488,438 488,438 Due in more than one year 1,929,842 1,929,842 2,463,069 Net OPEB liability, due in more than one year (Note 11)20,513,064 336,936 20,850,000 Net Pension liability, due in more than one year (Note 9)96,649,584 2,722,631 99,372,215 Total Liabilities 198,548,247 6,767,306 205,315,553 6,394,119 DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pension (Note 9)17,135,757 482,716 17,618,473 Deferred inflows related to OPEB (Note 11)5,391,443 88,557 5,480,000 Deferred inflows related to leases receivable (Note 4H)395,898 395,898 Total Deferred Inflows of Resources 22,923,098 571,273 23,494,371 NET POSITION (Note 8): Net investment in capital assets 268,520,108 11,354,160 279,874,268 63,315,799 Restricted for: Special revenue projects: Housing and street improvements 21,206,851 21,206,851 Stormwater 3,916,432 3,916,432 Emergency medical services 3,393,029 3,393,029 Other 15,880,908 15,880,908 Capital projects 4,198,948 4,198,948 Total Restricted Net Position 48,596,168 48,596,168 Unrestricted (6,281,168) (651,060) (6,932,228) 48,870,413 Total Net Position $310,835,108 $10,703,100 $321,538,208 $112,186,212 See accompanying notes to financial statements Long-term payable to the City of San Rafael, due in more than one year (Note 4G) 23 CITY OF SAN RAFAEL STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2024 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary Government Governmental Activities: General government $14,901,980 $411,655 $794,798 Public safety 57,399,596 7,365,020 1,504,773 Public works and parks 24,392,108 4,146,897 3,266,716 $6,860,495 Community development 6,043,266 5,757,689 669,681 Culture and recreation 12,725,048 5,488,779 294,639 1,320,781 Interest on long-term debt 1,655,588 Total Governmental Activities 117,117,586 23,170,040 6,530,607 8,181,276 Business-type Activities: Parking services 4,078,051 4,552,629 Total Business-type Activities 4,078,051 4,552,629 Total Primary Government $121,195,637 $27,722,669 $6,530,607 $8,181,276 Component Unit San Rafael Sanitation District $15,592,949 $16,657,102 $5,775 $248,116 General revenues: Taxes: Property Sales: Sales and Use Measure R quarter-cent sales Measure E three quarter-cent sales Paramedic Transient occupancy Franchise Business license Other Investment earnings Gain (loss) 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 24 Component Primary Government Unit San Rafael Governmental Business-type Sanitation Activities Activities Total District ($13,695,527)($13,695,527) (48,529,803)(48,529,803) (10,118,000)(10,118,000) 384,104 384,104 (5,620,849)(5,620,849) (1,655,588)(1,655,588) (79,235,663)(79,235,663) $474,578 474,578 474,578 474,578 (79,235,663)474,578 (78,761,085) $1,318,044 35,635,864 35,635,864 2,322,601 25,478,845 25,478,845 4,713,640 4,713,640 14,361,735 14,361,735 5,315,689 5,315,689 3,592,883 3,592,883 4,581,586 4,581,586 2,791,927 2,791,927 2,937,428 2,937,428 5,283,676 9,864 5,293,540 2,201,511 41,673 41,673 (23,561) 3,242,511 3,242,511 582,148 (582,148) 108,559,605 (572,284) 107,987,321 4,500,551 29,323,942 (97,706) 29,226,236 5,818,595 281,511,166 10,800,806 292,311,972 106,367,617 $310,835,108 $10,703,100 $321,538,208 $112,186,212 Net (Expenses) Revenues and Changes in Net Position 25 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 2023-2024: 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. 27 CITY OF SAN RAFAEL GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2024 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) $31,135,515 $3,962,771 $12,398,690 $3,754,843 $30,859,329 $82,111,148 Restricted cash and investments (Note 2)640,129 5,647 85,751 731,527 Receivables: Accounts 1,969,480 2,857 2,068,095 4,040,432 Intergovernmental 9,141,582 1,372,151 426,220 10,939,953 Grants 4,558 440,264 444,822 Interest 819,164 9,187 828,351 Loans (Note 4A)786 1,974,817 1,841,716 3,817,319 Leases (Note 4H)29,796 400,770 430,566 Due from other funds (Note 3B)394,178 394,178 Prepaids 54,250 3,506 57,756 Total Assets $44,189,438 $5,940,445 $13,770,841 $3,760,490 $36,134,838 $103,796,052 LIABILITIES Accounts payable $6,178,273 $26,268 $398,012 $167,900 $1,250,120 $8,020,573 Deposits payable 4,000 48,105 52,105 Developer deposits payable 398,007 3,635 401,642 Unearned revenue 566,892 566,892 Total Liabilities 6,580,280 26,268 398,012 167,900 1,868,752 9,041,212 DEFERRED INFLOWS OF RESOURCES Unavailable revenue 1,166,896 1,166,896 Related to leases (Note 4H)26,986 368,912 395,898 Total Deferred Inflows of Resources 1,193,882 368,912 1,562,794 Fund Balances (Note 8): Nonspendable 54,250 3,506 57,756 Restricted 5,914,177 13,372,829 3,592,590 25,562,849 48,442,445 Committed 9,837,000 8,209,257 18,046,257 Assigned 20,837,172 121,562 20,958,734 Unassigned 5,686,854 5,686,854 Total Fund Balances 36,415,276 5,914,177 13,372,829 3,592,590 33,897,174 93,192,046 Total Liabilities, Deferred Inflows of Resources and Fund Balances $44,189,438 $5,940,445 $13,770,841 $3,760,490 $36,134,838 $103,796,052 Special Revenue Funds See accompanying notes to basic financial statements 28 CITY OF SAN RAFAEL GOVERNMENTAL FUNDS BALANCE SHEET - RECONCILIATION OF GOVERNMENTAL FUND BALANCES TO NET POSITION OF GOVERNMENTAL ACTIVITIES JUNE 30, 2024 Total fund balances reported on the governmental funds balance sheet $93,192,046 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. 305,803,161 Internal service funds are used by management to charge the cost of management of 37,183,974 Long-term liabilities, including bonds payable, lease liabilities and subscription liabilities, are not due and payable in the current period and, therefore, are not reported in the Governmental Funds.(51,399,059) Compensated absences (4,434,492) Unavailable revenue 1,166,896 Long-term receivable from San Rafael Sanitation District 2,463,069 Deferred outflows related to pension 58,559,596 Net pension liability (96,649,584) Deferred inflows related to pension (17,135,757) Deferred outflows related to OPEB 7,989,765 Deferred inflows related to OPEB (5,391,443) Net OPEB liability (20,513,064) Net position of governmental activities $310,835,108 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 29 CITY OF SAN RAFAEL GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2024 Traffic and Essential Other Total Housing Facilities Capital Governmental Governmental General Mitigation Gas Tax Projects Fund Funds Funds REVENUES Taxes and special assessments $88,564,312 $9,917,552 $98,481,864 Licenses and permits 3,614,566 3,614,566 Fines and forfeitures 259,792 259,792 Use of money and properties 3,377,438 $150,901 $235,085 $68,831 728,915 4,561,170 Intergovernmental 4,830,166 465,000 7,936,247 3,397,468 16,628,881 Charges for services 3,245,323 1,280,962 2,736,113 10,195,691 17,458,089 Other revenue 1,054,355 10,000 1,716,032 1,639 1,266,953 4,048,979 Total Revenues 104,945,952 1,906,863 12,623,477 70,470 25,506,579 145,053,341 EXPENDITURES Current: General government 15,483,609 492,392 15,976,001 Public safety 47,275,482 12,582,544 59,858,026 Public works and parks 14,395,860 112,464 3,431,257 1,235,141 19,174,722 Community development 5,514,463 341,815 419,872 6,276,150Culture and recreation 3,088,241 9,433,062 12,521,303 Capital outlay 2,232,278 1,650,469 7,436,103 580,083 4,690,494 16,589,427 Debt service:Principal 3,760,071 3,760,071 Interest and fiscal charges 2,100,354 2,100,354 Total Expenditures 93,850,358 2,104,748 10,867,360 580,083 28,853,505 136,256,054 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 11,095,594 (197,885) 1,756,117 (509,613) (3,346,926) 8,797,287 OTHER FINANCING SOURCES (USES) Issuance of long-term debt (Note 14)2,518,949 2,518,949 Transfers in (Note 3A)2,061,406 419,000 850,000 384,188 7,964,518 11,679,112 Transfers out (Note 3A)(7,028,671)(1,069,000)(233,945) (8,331,616) Total Other Financing Sources (Uses) (2,448,316) 419,000 (219,000) 384,188 7,730,573 5,866,445 Net Change in Fund Balances 8,647,278 221,115 1,537,117 (125,425) 4,383,647 14,663,732 FUND BALANCES, BEGINNING OF YEAR 27,767,998 5,693,062 11,835,712 3,718,015 29,513,527 78,528,314 FUND BALANCES, END OF YEAR $36,415,276 $5,914,177 $13,372,829 $3,592,590 $33,897,174 $93,192,046 See accompanying notes to financial statements Special Revenue Funds 30 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, 2024 NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS $14,663,732 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 17,230,572 Retirement of capital assets is deducted from fund balance (297,908) Depreciation and amortization expense is deducted from fund balance (9,928,910) (Depreciation and amortization expense is net of internal service fund depreciation and amortization of $1,559,814, 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. Issuance of long-term debt (leases and subscriptions)(2,518,949) Repayments of long-term debt principal 3,162,714 Amortized bond premium expense is added back to fund balance 507,944 Repayments of lease principal 149,051 Repayments of subscription principal 448,306 Accrual of Non-Current Items The amount below included in the Statement of Activities does not require the use of current financial Compensated absences (204,347) Unavailable revenue 19,079 Long-term receivable from San Rafael Sanitation District 460,125 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.4,120,240 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.2,294,646 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.(782,353) Change in Net Position of Governmental Activities $29,323,942 resources and therefore is not reported as revenue or expenditures in governmental funds (net change): See accompanying notes to financial statements 31 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. 33 CITY OF SAN RAFAEL PROPRIETARY FUNDS STATEMENT OF NET POSITION JUNE 30, 2024 Business-type Activities - Governmental Enterprise Fund Activities Parking Internal Services Service Funds ASSETS Current Assets: Cash and investments available for operations (Note 2)$435,618 $38,475,156 Receivable: Accounts, net 1,082,382 799,037 Grants 1,000 Prepaid expense 861,053 Total Current Assets 1,518,000 40,136,246 Noncurrent Assets: Capital assets (Note 5): Nondepreciable 8,620,853 346,448 Depreciable, net 6,121,960 13,606,294 Total Noncurrent Assets 14,742,813 13,952,742 Total Assets 16,260,813 54,088,988 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows related to pension (Note 9)1,649,631 Deferred outflows related to OPEB (Note 11) 131,235 Total Deferred Outflows of Resources 1,780,866 LIABILITIES Current Liabilities: Accounts payable 130,131 932,238 Interest payable 28,822 Unearned revenue 21,474 Compensated absences, due in one year (Note 1L)17,332 Claims payable, due in one year (Note 13)3,389,162 Long-term debt, due in one year (Note 6)330,000 21,755 Subscription liabilities, due in one year (Note 14)271,026 Due to other funds (Note 3B)394,178 Total Current Liabilities 527,759 5,008,359 Noncurrent Liabilities: Compensated absences (Note 1L)121,327 Claims payable (Note 13)11,112,700 Long-term debt (Note 6)3,058,653 99,708 Net OPEB liability (Note 11)336,936 Net pension liability (Note 9)2,722,631 Subscription liabilities (Note 14)684,247 Total Noncurrent Liabilities 6,239,547 11,896,655 Total Liabilities 6,767,306 16,905,014 DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pension (Note 9)482,716 Deferred inflows related to OPEB (Note 11)88,557 Total Deferred Inflows of Resources 571,273 NET POSITION (Note 8): Net investment in capital assets 11,354,160 12,876,006 Unrestricted (651,060) 24,307,968 Total Net Position $10,703,100 $37,183,974 See accompanying notes to financial statements 34 CITY OF SAN RAFAEL PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION FOR THE YEAR ENDED JUNE 30, 2024 Business-type Activities - Governmental Enterprise Fund Activities Parking Internal Services Service Funds OPERATING REVENUES Charges for current services $2,339,239 $18,949,459 Other operating revenues 2,213,390 1,345,450 Total Operating Revenues 4,552,629 20,294,909 OPERATING EXPENSES Personnel 1,854,895 4,727,473 Insurance premiums and claims 7,986,095 Maintenance and repairs 114,046 150,632 Depreciation and amortization expense (Note 5) 442,044 1,559,814 General and administrative 1,535,278 4,629,993 Total Operating Expenses 3,946,263 19,054,007 Operating Income 606,366 1,240,902 NONOPERATING REVENUES (EXPENSES) Investment income 9,864 745,287 Miscellaneous revenue 10,000 Interest expense (131,788) (63,178) Gain from sale of capital assets 49,984 Total Nonoperating Revenues (Expenses) (121,924) 742,093 Income Before Transfers 484,442 1,982,995 TRANSFERS Transfers out (Note 3A) (582,148) (2,765,348) Net transfers (582,148) (2,765,348) Change in Net Position (97,706) (782,353) NET POSITION, BEGINNING OF YEAR 10,800,806 37,966,327 NET POSITION, END OF YEAR $10,703,100 $37,183,974 See accompanying notes to financial statements 35 CITY OF SAN RAFAEL PROPRIETARY FUNDS STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2024 Business-type Activities - Governmental Enterprise Fund Activities Parking Internal Services Service Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $4,634,826 $18,149,422 Cash payments to suppliers for goods and services (1,632,159) (17,402,309) Cash payments to employees for salaries and benefits (2,098,324) (2,088,662) Other revenues 1,345,450 Cash Flows from Operating Activities 904,343 3,901 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Miscellaneous revenues 10,000 Interfund revenues 394,178 Interfund payments (582,148) (2,765,348) Cash Flows from Noncapital Financing Activities (582,148) (2,361,170) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal payments on revenue bonds and note payable (320,489) (21,755) Principal payments on subscription liability (308,281) Interest expenses and fiscal charges (133,563) (63,178) Acquisition of capital assets (22,440) (2,431,263) Proceeds from sale of property 123,283 Cash Flows from Capital and Related Financing Activities (476,492) (2,701,194) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 9,864 745,287 Cash Flows from Investing Activities 9,864 745,287 NET CHANGE IN CASH AND CASH EQUIVALENTS (144,433) (4,313,176) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 580,051 42,788,332 CASH AND CASH EQUIVALENTS, END OF YEAR $435,618 $38,475,156 Reconciliation of operating income to net cash provided by operating activities: Operating income $606,366 $1,240,902 Adjustments to reconcile operating income to cash flows from operating activities: Depreciation and amortization 442,044 1,559,814 Net change in assets and liabilities: Accounts receivable 82,125 (799,037) Grant receivable (1,000) Prepaids (831,807) OPEB-related items (13,354) Accounts payable 17,165 119,865 Unearned revenue 72 Compensated absence obligations 7,111 Pension-related items (237,186) Claims payable (1,284,836) Net Cash Provided by Operating Activities $904,343 $3,901 NON-CASH TRANSACTIONS: Subscription assets $290,380 Retirement of capital assets ($73,299) Amortization of bond discount $725 See accompanying notes to basic financial statements 36 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. 37 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)$38,987 $246,645 Receivables: Taxes 1,591 Total Assets 38,987 248,236 LIABILITIES Interest payable 17,267 Total Liabilities 17,267 NET POSITION Restricted for: Bondholders 38,987 230,969 Total Net Position $38,987 $230,969 See accompanying notes to financial statements CITY OF SAN RAFAEL FIDUCIARY FUNDS STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2024 38 Successor Agency to the Pt. San Pedro Redevelopment Road Assessment Agency District Private-Purpose Custodial Trust Fund Fund ADDITIONS Property taxes $159,051 Total Additions 159,051 DEDUCTIONS General government $161,706 10,244 Payments to bondholders 88,500 Interest expense 52,575 Total Deductions 161,706 151,319 Change in Net Position (161,706)7,732 NET POSITION Beginning of year 200,693 223,237 End of year $38,987 $230,969 CITY OF SAN RAFAEL STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED JUNE 30, 2024 See accompanying notes to financial statements 39 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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 to allow the life of the Authority to 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. 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 4G, a receivable from the District has been established. 41 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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, and results of operations. 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. 42 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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. 43 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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 and subscription 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. 44 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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. For the fiscal year ended June 30, 2024, the following expenditures exceeded the budgeted appropriations: Expenditures Exceeded Budget Loch Lomond #10 Community Facilities District Special Revenue Fund $3,979 Public Safety Special Revenue Fund 5,135 Storm Water Special Revenue Fund 262,292 Grants Special Revenue Fund 419,872 The above expenditures exceeded the budgeted appropriations, however, there were sufficient revenues to cover the excess expenditures during the fiscal year in each of the funds. 45 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. 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 and intangible right-to-use subscription assets, the measurement of which is discussed in Note 1R and Note 1S, respectively, 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 Right to use subscription asset 5 – 10 years 46 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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 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, 2024 were as follows: Governmental Business-Type Activities Activities Total Beginning Balance $4,230,145 $131,548 $4,361,693 Additions 3,322,740 112,984 3,435,724 Payments (3,118,393)(105,873) (3,224,266) Ending Balance $4,434,492 $138,659 $4,573,151 Current Portion $554,312 $17,332 $571,644 47 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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) 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. 48 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. 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 noncancelable 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 in accordance with the capitalization policy for the underlying asset as discussed in Note 1K. 49 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. 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 noncancelable 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. 50 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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 noncancelable 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. S. Subscription-Based Information Technology Arrangements (SBITAs) A Subscription-Based Information Technology Arrangement (SBITA) is a contract that conveys control of the right to use another party’s (a SBITA vendor’s) 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. At the commencement of a SBITA, the City initially measures the subscription liability at the present value of payments expected to be made during the contract term. Subsequently, the subscription liability is reduced by the principal portion of payments made. The subscription asset is initially measured as the initial amount of the subscription liability, adjusted for payments made at or before the SBITA commencement date, plus certain initial direct costs. Subsequently, the subscription asset is amortized on a straight‐line basis over shorter of the subscription term or the useful life of the underlying IT assets. Key estimates and judgments related to SBITAs include how the City determines (1) the discount rate it uses to discount the expected subscription payments to present value, (2) subscription term, and (3) subscription payments as follows: • The City uses the interest rate charged by the IT vendor as the discount rate. When the interest rate charged by the IT vendor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for subscription liabilities. • The subscription term includes the noncancellable period of the subscription. • Subscription payments included in the measurement of the subscription liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise. The City monitors changes in circumstances that would require a remeasurement of its subscription and will remeasure the subscription asset and liability if certain changes occur that are expected to significantly affect the amount of the subscription liability. 51 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Subscription assets are reported with other capital assets and subscription liabilities are reported with long-term debt on the statement of net position. T. New Accounting Pronouncements In June 2022, GASB issued Statement No. 100, Accounting for Changes and Error Corrections. The objective of this Statement is to improve guidance related to accounting for changes and error corrections. 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. This Statement also addresses corrections of errors in previously issued financial statements. The provisions of this Statement were implemented during fiscal year 2024. The implementation had no effect on the financial statements. 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. 52 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 2 – CASH AND INVESTMENTS (Continued) B. Classification Cash and investments as of June 30, 2024, 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 $121,021,922 Restricted cash and investments 731,527 Total Primary Government Cash and Investments 121,753,449 San Rafael Sanitation District (Component Unit): Cash and investments available for operations 50,985,279 Total San Rafael Sanitation District Cash and Investments 50,985,279 Statement of Fiduciary Net Position (separate statement): Successor Agency to the Redevelopment Agency Private Purpose Trust Fund: Cash available for operations 38,987 Pt. San Pedro Road Assessment District Custodial Fund: Cash available for operations 246,645 Total Fiduciary Fund Cash and Investments 285,632 Total Cash and Investments $173,024,360 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. 53 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 2 – CASH AND INVESTMENTS (Continued) 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 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 20%5% of portfolio Local Agency Investment Fund N/A N/A N/A $75m per Account Money Market Funds N/A AAA 20%N/A Mortgage and Asset-Backed Obligations 5 years AA 20%5% of portfolio Supranational Securities 5 years AA 30%10% of portfolio Limited Obligation Improvement Bonds Related to 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. 54 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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 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 Bankers’ Acceptances 360 days Highest Category Rating No Limit Money Market Mutual Funds N/A AAAm No Limit Prime Commercial Paper 270 days Highest Category Rating No Limit N/A Highest Category Rating No Limit Municipal Obligations N/A Two Highest Category Ratings 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 State or Local Bonds 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 collaterized with U.S. Treasury Obligations or U.S. Agency Obligations. Maximum Percentage of Portfolio Guaranteed Investment Contracts (fully collateralized) (b) Authorized Investment Type Minimum Credit Quality (a) 55 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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, 2024: (a)(b)(c) Level 1 Level 2 Level 3 Total City: Money Market Funds $706,201 $706,201 U.S. Treasury Notes $16,576,779 16,576,779 Federal Agency Securities and Instruments 12,441,257 12,441,257 Medium-Term Corporate Notes 17,323,978 17,323,978 Investment in Pt. San Pedro Bonds $1,042,474 (d)1,042,474 $16,576,779 $30,471,436 $1,042,474 48,090,689 Investments Exempt from Fair Value Hierarchy: Local Agency Investment Fund 59,628,752 Marin County Investment Pool 85,751 Total Investments 107,805,192 Cash in banks and on hand 13,948,257 Total City Cash and Investments 121,753,449 Fiduciary: Cash in banks 285,632 Total Fiduciary Cash 285,632 Total City and Fiduciary Cash and Investments 122,039,081 San Rafael Sanitation District: Marin County Investment Pool 50,985,279 50,985,279 Total Cash and Investments $173,024,360 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. 56 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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 $706,201 $706,201 Local Agency Investment Fund 59,628,752 59,628,752 Marin County Investment Pool 85,751 85,751 U.S. Treasury Notes 4,643,114 $11,933,665 16,576,779 Federal Agency Securities and Instruments 3,346,362 9,094,895 12,441,257 Medium-Term Corporate Notes 677,656 16,646,322 17,323,978 Investment in Pt. San Pedro Bonds 1,042,474 1,042,474 Total Investments $69,087,836 $38,717,356 107,805,192 Cash in banks and on hand 13,948,257 Total City Cash and Investments 121,753,449 Fiduciary: Cash in banks 285,632 Total Fiduciary Cash 285,632 Total City and Fiduciary Cash and Investments 122,039,081 San Rafael Sanitation District: Marin County Investment Pool 50,985,279 Total District's Cash and Investments 50,985,279 Total Cash and Investments $173,024,360 57 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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, 2024, these investments matured in an average of 217 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 40 days at June 30, 2024. 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. 58 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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, 2024, 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 $706,201 1% AAAm Marin County Investment Pool 85,751 < 1%Aaa/AAA U.S. Treasury Notes 16,576,779 15%AAA Federal Agency Securities and Instruments 12,441,257 12%AAA Medium-Term Corporate Notes 17,323,978 16% AAA,AA2,AA3,A1,A2,A3 Local Agency Investment Fund 59,628,752 55%Not Rated Investment in Pt. San Pedro Bonds 1,042,474 1%Not Rated Total City Investments 107,805,192 San Rafael Sanitation District: Marin County Investment Pool 50,985,279 AAA/V1 Total Investments $158,790,471 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, 2024: Percentage of Reporting Unit Issuer Investment Type Amount Investments Entity-wide Federal Home Loan Bank Federal Agency Securities and Instruments $5,671,312 5% 59 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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, 2024, were as follows: From Fund To Fund Amount General Fund Essential Facilities Capital Projects Fund $384,188 (A) Non-Major Governmental Funds 6,644,483 (A) (B) Gas Tax Special Revenue Fund General Fund 650,000 (C) Traffic and Housing Mitigation Special Revenue Fund 419,000 (B) Non-Major Governmental Funds General Fund 233,945 (B) Parking Services Enterprise Fund General Fund 497,148 (A) Non-Major Governmental Funds 85,000 (A) Internal Service Funds General Fund 680,313 (D) Gas Tax Special Revenue Fund 850,000 (B) Non-Major Governmental Funds 1,235,035 (B) $11,679,112 (A) Transfers for administrative costs, grant matching, recreation, and other program support. (C) Transfers for street maintenance support and administrative costs. (D) Transfers for debt service. (B) Transfers for project support. B. Due To/From Other Funds During the course of operations, transactions occur between funds to account for goods received or services rendered. These receivables and payables are classified as due from or due to other funds. In addition, when funds overdraw their share of pooled cash, the receivables and payables are also classified as due from or due to other funds. As of June 30, 2024, the City had the following due from and due to fund balances: From Fund To Fund Amount General Fund Sewer Maintenance Internal Service Fund $394,178 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, 2024, these loans consisted of the following: Employee Loans $786 Centertown Associates 952,717 3301 Kerner 888,999 One "H" Street Associates 25,717 Vivalon 1,949,100 Total $3,817,319 60 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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, 2024, the balance of the employee loans receivable was $786. C. Centertown Associates Loan On August 20, 1990, the former Redevelopment Agency loaned Centertown Associates, Ltd, $303,000 at 3% interest due semiannually for the construction of a 60-unit affordable apartment complex and was fully secured by a deed of trust. 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, 2024, the balance of the loan including principal and accrued interest was $952,717. D. 3301 Kerner Loan On March 21, 2023, the City entered into a loan agreement in the amount of $857,500 to fund the construction of a 41-unit multifamily rental housing development affordable to homeless or formerly homeless households with mental illness at rents affordable to extremely low- and very low- income households. 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 of the date 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, 2024, the balance of the loan and accrued interest was $888,999. E. 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, 2024, the balance of this loan was $25,717. 61 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 4 – LOANS AND LEASES RECEIVABLE (Continued) F. 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. 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, 2024, the balance of the loan and accrued interest was $1,949,100. G. 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, 2024, is $2,463,069, and is composed of the following: Defined benefit pension liability allocation $2,013,380 Other post-employment benefit liability allocation 449,689 Total long-term receivable from San Rafael Sanitation District $2,463,069 H. 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, 2024, these leases and related deferred inflows of resources consisted of the following: Deferred Leases Inflows of Receivable Resources Marin History Museum $29,796 $26,986 Yacht Club 151,987 141,240 Trans Bay Cable 248,783 227,672 Total $430,566 $395,898 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 $12,953 in lease revenue and $1,833 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. 62 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 4 – LOANS AND LEASES RECEIVABLE (Continued) 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 $3,543 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 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 $8,281 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 Balance June 30, 2023 Additions Retirements Transfers June 30, 2024 Governmental Activities Capital assets not being depreciated: Land $84,025,659 $82,000 $84,107,659 Construction in progress 42,582,105 14,548,165 ($22,440)($28,322,849) 28,784,981 Total capital assets not being depreciated 126,607,764 14,630,165 (22,440) (28,322,849) 112,892,640 Capital assets being depreciated: Land improvements 10,851,579 10,851,579 Buildings and structures 119,165,142 556,524 119,721,666 Machinery and equipment 22,016,490 2,243,434 (815,198)23,444,726 Infrastructure 237,123,099 35,359 27,766,325 264,924,783 Intangible right-to-use leased building 5,476,219 5,476,219 Intangible right-to-use leased equipment 258,365 976,307 (8,311)1,226,361 Intangible right-to-use subscription asset 1,559,451 2,066,950 (374,019)3,252,382 Total capital assets being depreciated 396,450,345 5,322,050 (1,197,528) 28,322,849 428,897,716 Less accumulated depreciation and amortization for: Land improvements (7,419,679) (1,334,508)(8,754,187) Buildings and structures (29,920,964) (2,838,061)(32,759,025) Machinery and equipment (16,092,860) (1,094,862) 741,899 (16,445,823) Infrastructure (157,200,656) (5,547,646)(162,748,302) Intangible right-to-use leased building (312,927) (156,463)(469,390) Intangible right-to-use leased equipment (161,480) (147,435)(308,915) Intangible right-to-use subscription asset (285,924) (369,749) 106,862 (548,811) Total accumulated depreciation and amortization (211,394,490) (11,488,724) 848,761 (222,034,453) Total net capital assets being depreciated and amortized 185,055,855 (6,166,674) (348,767) 28,322,849 206,863,263 Total governmental activity capital assets $311,663,619 $8,463,491 ($371,207)$319,755,903 63 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 5 – CAPITAL ASSETS (Continued) Balance Balance June 30, 2023 Additions Retirements June 30, 2024 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 $22,440 10,736,254 Machinery and equipment 1,046,906 ($78,806) 968,100 Total capital assets being depreciated 11,760,720 22,440 (78,806) 11,704,354 Less accumulated depreciation for: Buildings and structures (4,332,135) (408,726)(4,740,861) Machinery and equipment (887,021) (33,318) 78,806 (841,533) Total accumulated depreciation (5,219,156) (442,044) 78,806 (5,582,394) Total net capital assets being depreciated 6,541,564 (419,604)6,121,960 Total business-type activity capital assets $15,162,417 ($419,604)$14,742,813 Balance Balance June 30, 2023 Additions Retirements Transfers June 30, 2024 San Rafael Sanitation District Capital assets not being depreciated: Land and easements $115,329 $115,329 Construction in progress 7,653,777 $7,316,118 ($4,340,362) 10,629,533 Total capital assets not being depreciated 7,769,106 7,316,118 (4,340,362) 10,744,862 Capital assets being depreciated: Subsurface lines 45,561,535 747,006 4,340,362 50,648,903 Sewage collection facilities 47,983,030 ($414,756)47,568,274 General plant and administration 2,366,681 (213,361)2,153,320 Total capital assets being depreciated 95,911,246 747,006 (628,117) 4,340,362 100,370,497 Less accumulated depreciation for: Subsurface lines (14,743,840) (585,479) (15,329,319) Sewage collection facilities (27,020,561) (1,710,196) 391,247 (28,339,510) General plant and administration (1,825,961) (105,776) 213,308 (1,718,429) Total accumulated depreciation (43,590,362) (2,401,451) 604,555 (45,387,258) Total net capital assets being depreciated 52,320,884 (1,654,445) (23,562) 4,340,362 54,983,239 Total District's capital assets $60,089,990 $5,661,673 ($23,562)$65,728,101 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. 64 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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 $878,664 Public safety 939,420 Public works and parks 7,092,777 Community development 43,650 Culture and recreation 973,467 Internal service funds 1,560,746 Total Governmental Activities $11,488,724 Business-type Activities Parking services $442,044 Total Business-type Activities $442,044 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, 2024, are as follows: Authorized Balance Balance Current and Issued June 30, 2023 Retirements June 30, 2024 Portion Governmental Activities Bonds: 2018 Authority Lease Revenue Bonds 4.00%-5.00%, due 6/1/2034 $45,485,000 $39,265,000 $2,435,000 $36,830,000 $2,645,000 Add: unamortized bond premium 5,587,379 507,944 5,079,435 2010 Taxable Pension Obligation Bonds 6.00%-6.25%, due 7/1/2025 4,490,000 1,805,000 565,000 1,240,000 600,000 Total Governmental Activities Bonds 46,657,379 3,507,944 43,149,435 3,245,000 Governmental Activities - Direct Borrowings: PG & E City Hall HVAC Retrofit Note Payable 0.00%, due 11/30/2023 334,585 12,878 12,878 PG & E CEC Efficiency Note Payable1.00%, due 12/22/2026 1,104,799 531,062 149,836 381,226 151,351 PG & E Energy Efficient Lighting Project Note Payable 0.00% due 1/20/30 174,036 143,218 21,755 121,463 21,755 Total Governmental Activities - Direct Borrowings 687,158 184,469 502,689 173,106 Total Governmental Activities Debt $47,344,537 $3,692,413 $43,652,124 $3,418,106 Business-type Activities: Direct Borrowing: PG & E Parking Lot Lighting Retrofit Note Payable 0.00%, due 11/30/2023 $66,380 $489 $489 2012 Authority Lease Revenue Refunding Bonds 2.00-4.00%, due 4/1/2033 6,750,000 3,715,000 320,000 $3,395,000 $330,000 Less: unamortized bond discount (7,072) (725)(6,347) Total Business-type Activities Bonds 3,707,928 319,275 3,388,653 330,000 Total Business-type Activities $3,708,417 $319,764 $3,388,653 $330,000 65 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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. Principal payments are due annually on June 1 and interest is payable semiannually on June 1 and December 1. 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 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 streetlights. 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. 66 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 6 – LONG-TERM DEBT (Continued) 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. 67 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 6 – LONG-TERM DEBT (Continued) E. Future Debt Service Future debt service requirements, including interest, at June 30, 2024, are as follows: Governmental Activities For the Year Bonds Direct Borrowings Ended June 30 Principal Interest Principal Interest 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 98,762 386 2028 3,355,000 1,410,500 21,755 2029 3,615,000 1,242,750 21,755 2030 - 2034 21,240,000 3,211,250 12,688 Totals 38,070,000 $11,059,756 502,689 $5,741 Reconciliation of Long-term debt: Add: unamortized premium 5,079,435 $43,149,435 $502,689 For the Year Bonds Ended June 30 Principal Interest 2025 $330,000 $124,288 2026 335,000 113,562 2027 350,000 102,256 2028 360,000 90,006 2029 375,000 77,406 2030 - 2033 1,645,000 164,400 Totals $3,395,000 $671,918 Reconciliation of Long-term debt: Less: unamortized discount ($6,347) $3,388,653 Business-type Activities 68 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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, 2024, the balances of these Districts’ outstanding debt were as follows: Project Original Outstanding Description Amount June 30, 2024 Pt. San Pedro Road Median Landscaping Pt. San Pedro Road Assessment District Limited Obligation Bonds-2012 Median Landscaping $1,750,000 $986,700 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, 2024, the balance of this issuers’ outstanding debt was as follows: Project Original Outstanding Description Amount June 30, 2024 San Rafael Redevelopment Agency 162-175 Belvedere Multifamily Housing Revenue Bonds-2000A Apartments $3,590,529 $729,048 California Statewide Communities Development Authority Revenue Bonds-2001 St. Marks School 5,605,000 1,655,000 San Rafael Redevelopment Agency San Rafael Commons Multifamily Housing Revenue Bonds-2002 Apartments 6,100,000 3,930,000 San Rafael Redevelopment Agency Multifamily Housing Revenue Bonds-2007 Series A Martinelli House Project 6,000,000 1,546,260 Multifamily Housing Revenue Bonds-2007 Series B Martinelli House 1,000,000 82,371 Total $22,295,529 $7,942,679 69 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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 on the following page: 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. 70 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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, 2024, 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 $54,250 $3,506 $57,756 Total Nonspendable 54,250 3,506 57,756 Restricted for: Assessment District capital projects 302,105 302,105 Baypoint Lagoons Assessment District 235,419 235,419 Bedroom tax capital projects 150,530 150,530 Business Improvement District 50,000 50,000 Childcare 1,238,761 1,238,761 Development services 452,761 452,761 Emergency medical services 3,393,029 3,393,029 Streets improvements and maintenance (gas tax)$13,372,829 13,372,829 Grant funded programs 846,685 846,685 Household hazmat facility 582,892 582,892 Library 5,235,352 5,235,352 Library assessment 953,085 953,085 Loch Lomond Assessment District 832,137 832,137 Loch Lomond Assessment District #2 1,092,710 1,092,710 Low and Moderate Income Housing 1,919,845 1,919,845 Measure A - Open Space 1,074,153 1,074,153 Measure C - Wildfire Prevention 1,366,988 1,366,988 Measure E - Public Safety Facility $3,592,590 3,592,590 Measure G - Cannabis 1,037,189 1,037,189 Parkland dedication 366,973 366,973 Public safety 106,487 106,487 Pt. San Pedro - Maintenance Portion 233,894 233,894 Recreation revolving 175,422 175,422 Stormwater 3,916,432 3,916,432 Traffic and housing mitigation $5,914,177 5,914,177 Total Restricted 5,914,177 13,372,829 3,592,590 25,562,849 48,442,445 Committed to: Capital improvement capital projects 8,180,602 8,180,602 Emergency and cash flow 9,837,000 9,837,000 Park capital projects 28,655 28,655 Total Committed 9,837,000 8,209,257 18,046,257 Assigned to: Contractual commitments 1,293,274 1,293,274 One-time funds allocated to projects 16,485,000 16,485,000 Infrastructure Reserve 1,000,000 1,000,000 General plan / long range planning 2,058,898 2,058,898 Open space capital projects 121,562 121,562 Total Assigned 20,837,172 121,562 20,958,734 Unassigned: Economic uncertainty reserve 4,919,000 4,919,000 Unassigned fund balance 767,854 767,854 Total Unassigned 5,686,854 5,686,854 Total Fund Balances $36,415,276 $5,914,177 $13,372,829 $3,592,590 $33,897,174 $93,192,046 Special Revenue Funds 71 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 8 – NET POSITION AND FUND BALANCE (Continued) C. Minimum Fund Balance Policy The City Council adopted a General Fund Reserve Policy in June 2024 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 (15% 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 (10%); 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 (5%). 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 $14,754,000 at June 30, 2024, and the balance of the reserve, included in the General Fund’s committed and unassigned fund balances were $9,837,000 and $4,919,00, respectively. 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 $1,000,000 at June 30, 2024. The General Plan/Long Range Planning reserve included in the General Fund’s assigned fund balance was $2,058,898 at June 30, 2024, 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. 72 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 8 – NET POSITION AND FUND BALANCE (Continued) D. Net Position Deficit At June 30, 2024, the Liability Insurance Internal Service Fund had a deficit net position of ($430,496) due to legal fees for increased litigation activity during the year. The City has approved plans to cure the deficit through the adopted FY 2024-25 budget via transfer from the General Fund. 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. 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. 73 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 9 – PENSION PLAN (Continued) 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. 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. 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, 2024 were as follows: Employer Employee Contribution Rate Contribution Rate Benefit Basis City of San Rafael Misc Tier 1 48.13% 11.23% - 16.67% 2.7% @ 55 Highest year City of San Rafael Misc Tier 2 48.66%8.11% -12.31% 2.0% @ 55 Average three highest years City of San Rafael Fire Tier 1 73.64% 14.19% -20.37% 3.0% @ 55 Highest year City of San Rafael Fire Tier 2 72.35% 12.59% -18.53% 3.0% @ 55 Average three highest years City of San Rafael Safety Police Tier 1 72.72% 14.19% -20.37% 3.0% @ 55 Highest year City of San Rafael Safety Police Tier 2 74.28% 12.59% -18.53% 3.0% @ 55 Average three highest years PEPRA Misc 41.66%9.82%2.0% @ 62 Average three highest years PEPRA Safety 69.44% 15.41% 2.7% @ 57 Average three highest years 74 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 9 – PENSION PLAN (Continued) These rates were determined by MCERA, based on the actuarial valuation dated June 30, 2022. The actual rate of return on investments during that year was -9.6% on a market value basis net of investment expenses, as compared to the prior year’s 6.75% 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 $21,474,137 for the year ended June 30, 2024, based on a total payroll of $51,205,359, of which $36,995,522 represented the basis for the plan contributions. Of the total payroll subject to plan contributions, $1,398,590 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 (8 years remaining as of June 30, 2022), except for the additional UAL attributable to the outstanding unfunded actuarial loss from 2009, which is being amortized over a separate closed period (currently 17 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. Pension Liability and Pension Expense The City’s net pension liability (NPL) has been determined for the financial reporting period ended June 30, 2024, based on the following methodology: The City’s NPL as of June 30, 2022, was updated to the measurement date of June 30, 2023 using the actual City’s plan assets as of June 30, 2023, and estimating the change in the City’s liabilities between July 1, 2022, and June 30, 2023. 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 NPL for the City under this calculation is $99,372,216 or 34.41% of the total MCERA NPL of $288,821,503 (reference MCERA’s GASB 67/68 report as of June 30, 2023). This compares to the previous year’s net pension liability of $105,476,657 or 33.73% of the total MCERA net pension liability of $312,688,342 (reference MCERA’s GASB 67/68 report as of June 30, 2023). In addition to the reporting of the NPL as of June 30, 2024, the City reported deferred inflows of $17,618,473 and deferred outflows of $60,209,227 as of the measurement date June 30, 2023. The City reported post-measurement date outflows of $21,474,137 from actual fiscal year 2023- 2024 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. 75 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 9 – PENSION PLAN (Continued) Deferred inflows have a negative impact on net assets (similar to the NPL) and will be recognized in future reporting periods. The net impact of these pension liability related entries on the City’s Statement of Net Position before allocations to the San Rafael Sanitation District was $56,781,462. After allocations to the San Rafael Sanitation District, the net impact on the City’s Statement of Net Position was $54,768,081 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 $21,474,137. Because pension expense is affected by annual changes in the net pension liability, volatility is to be expected. The table below provides a summary of the key results during the reporting period: Measurement Date Measurement Date Description 6/30/2023 6/30/2022 Net Pension Liability $99,372,215 $105,476,657 Deferred Inflows 17,618,473 24,063,376 Deferred Outflows (38,735,090) (46,954,402) Impact on Net Position before Deferred Outflows from Contributions 78,255,598 82,585,631 Additional Deferred Outflows - Contributions Subsequent to Measurement Date (21,474,137) (21,446,744) Impact on Statement of Net Position before Allocations 56,781,461 61,138,887 Allocation of Net Pension Liability to SRSD 3,351,534 3,563,252 Allocation of Deferred Inflows (measurement date) to SRSD 594,219 812,918 Allocation of Deferred Outflows (measurement date) to SRSD (1,306,420) (2,310,754) Impact on Net Position before Allocation of Deferred Outflows from Contributions to SRSD 2,639,333 2,065,416 Allocation of Additional Deferred Outflows (Contributions) to SRSD (625,953) (661,444) Long-Term Receivable from SRSD, due to pension obligations (see Note 4G)2,013,380 1,403,972 Impact on Statement of Net Position, net of receivable from SRSD $54,768,081 $59,734,915 Pension Expense $16,240,173 $4,048,455 Summary of Results 76 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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, 2023. The beginning of year measurement of TPL is based on the actuarial valuation as of June 30, 2022. The TPL at the end of the measurement year, June 30, 2023, is also measured as of the valuation date of June 30, 2022 and projected to June 30, 2023. 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, 2022. The FNP at the end of the measurement year, June 30, 2023, is also measured as of the valuation date of June 30, 2022, and projected to June 30, 2023. The Net Pension Liability (NPL) 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, 2023 (measurement date) was determined by an actuarial valuation as of June 30, 2022, using the following actuarial assumptions applied to all prior periods included in the measurement. 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 $5.2788 million for FY 2022-23, 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 2022-23 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 Mortality rates for Miscellaneous active members are based on the Healthy Members sex distinct Public General 2010 Employee Mortality Table, with and Inactives 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. 77 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 9 – PENSION PLAN (Continued) Mortality Rates for Rates of mortality for Miscellaneous disabled members are based Retired Disabled on the sex distinct Public General 2010 Disabled Retiree Mortality Members 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. 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, 2023: 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%4.85%7.35% International Equity 22%4.95%7.45% Fixed Income 23%1.75%4.25% Public Real Assets 7%3.70%6.20% Real Estate 8%3.25%5.75% Private Equity 8%6.00%8.50% 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 (16 years remaining as of the June 30, 2022 actuarial valuation), and an amount necessary to amortize the remaining Unfunded Actuarial Liability as a level percentage of payroll over a closed period (8 years remaining as of the June 30, 2022 actuarial valuation). 78 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 9 – PENSION PLAN (Continued) A change in the discount rate would affect the measurement of the TPL. A lower discount rate results in a higher TPL whereas a higher discount rate 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. 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 $1,332,239,715 $1,181,328,195 $1,056,760,230 Fiduciary Net Position 1,081,955,979 1,081,955,979 1,081,955,979 Net Pension Liability (Asset)$250,283,736 $99,372,216 ($25,195,749) 81.2%91.6%102.4% 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 $1,629,361 $2,969,826 Changes in assumptions 2,896,521 Change in proportion 6,366,684 10,217,140 Difference between City contributions and proportionate share of contributions 4,431,507 Actual FY 23-24 contributions (post measurement date)21,474,137 Net difference between projected and actual earnings on pension plan investments 27,842,524 Deferred Inflows and Outflows Before Allocations $60,209,227 $17,618,473 Allocation of Deferred Inflows and Outflows to SRSD As of measurement date $1,306,420 $594,219 Post-measurement date 625,953 Net Deferred Inflows and Outflows $58,276,854 $17,024,254 79 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 9 – PENSION PLAN (Continued) The $21,474,137 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, 2025. 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 2025 ($5,032,158) 2026 (9,512,017) 2027 36,104,739 2028 (443,947) Total $21,116,617 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 $149,761. The total covered payroll of employees participating in the plan for the year ended June 30, 2024, was $3,993,627. 80 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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, 2024, are summarized as follows: Elected Officials, Mid-Management, & Unrepresented Management All other Bargaining Units Eligibility -CLASSIC -Age 50 (age 55 if hired > 7/1/11) with 10 years services (Including reciprocity) OR - -Age 70 -PEPRA -Age 50 (age 52 for Miscellaneous) with 5 years of service (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, 2023, the measurement date: Active plan members 340 Inactive employees or beneficiaries currently receiving benefit payments 370 Inactive employees entitled to but not yet receiving benefit payments 85 Total 795 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, 2023, using an actuarial valuation as of June 30, 2023. 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 8.50% in 2025 to 3.45% 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. 81 I I I CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 11 – POST-EMPLOYMENT HEALTH CARE BENEFITS (Continued) The actuarial assumptions used in the June 30, 2023 valuation were based on the results of an actuarial experience study for the period July 1, 2022 through June 30, 2023. 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) Public Equity 49%4.56%7.06% Fixed Income 23%1.56%4.06% TIPS 5%-0.08%2.42% Commodities 3%1.22%3.72% REITs 20%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 CERBT – Strategy 1. 82 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 11 – POST-EMPLOYMENT HEALTH CARE BENEFITS (Continued) 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. Total OPEB Plan Fiduciary Net Net OPEB Liability Position Liability/(Asset) (a) (b) (c) = (a) - (b) Balance at June 30, 2023 (6/30/22 measurement date) $48,454,000 $25,367,000 $23,087,000 Changes Recognized for the Measurement Period: Service Cost 582,000 - 582,000 Interest on the total OPEB liability 2,966,000 - 2,966,000 Difference between expected and actual experiece (3,269,000) - (3,269,000) Change of assumptions 2,278,000 - 2,278,000 Contributions from the employer - 3,183,000 (3,183,000) Net investment income - 1,629,000 (1,629,000) Administrative expenses - (18,000) 18,000 Benefit payments and refunds (3,172,000) (3,172,000) - Net Changes during July 1, 2023 to June 30, 2024 (615,000) 1,622,000 (2,237,000) Balance at June 30, 2024 (6/30/23 measurement date) $47,839,000 $26,989,000 $20,850,000 Increase (Decrease) The benefit payments and refunds include implied subsidy benefit payments in the amount of $738,000. 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%) $26,072,000 $20,850,000 $16,433,000 Plan's Net OPEB Liability/(Asset) 83 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 11 – POST-EMPLOYMENT HEALTH CARE BENEFITS (Continued) 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% $17,948,000 $20,850,000 $24,316,000 Plan's Net OPEB Liability/(Asset) 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 2023-2024 were as follows: Service Cost $582,000 Interest on Total OPEB Liability 2,966,000 Projected earning on investments (1,585,000) Administrative expense 18,000 Recognition of deferred outflows/inflows: Experience (1,769,000) Assumptions 380,000 Asset Returns 351,000 OPEB Expense $943,000 84 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 11 – POST-EMPLOYMENT HEALTH CARE BENEFITS (Continued) Components of deferred outflows of resources and deferred inflows of resources related to OPEB at June 30, 2024 were as follows: Governmental Business-Type Activities Activities Total Deferred outflows of resources: Changes of assumptions $3,173,868 $52,132 $3,226,000 Net difference between projected and actual earnings on plan investments 1,617,433 26,567 1,644,000 Employer contributions made subsequent to the measurement date 3,198,464 52,536 3,251,000 Total deferred outflows of resources $7,989,765 $131,235 $8,121,000 Deferred inflows of resources: Differences between expected and actual experience $5,022,503 $82,497 $5,105,000 Changes of assumptions 368,940 6,060 375,000 Total deferred inflows of resources $5,391,443 $88,557 $5,480,000 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. $3,251,000 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, 2025. 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: Amortized Yea Ended June 30 Amount 2025 ($861,000) 2026 (205,000) 2027 795,000 2028 (174,000) 2029 (165,000) ($610,000) 85 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 11 – POST-EMPLOYMENT HEALTH CARE BENEFITS (Continued) The table below provides a summary of the key results during this reporting period. Measurement Date Measurement Date Description June 30, 2023 June 30, 2022 Net OPEB Liability $20,850,000 $23,087,000 Deferred Inflows 5,480,000 4,452,000 Deferred Outflows (4,870,000) (3,839,000) Impact on Net Position before deferred contributions 21,460,000 23,700,000 Additional Deferred Outflows - Contributions subsequent to measurement date (3,251,000) (3,183,000) Impact on Statement of Net Position before Allocations 18,209,000 20,517,000 Allocation of NOL to SRSD 514,912 674,000 Allocation of Deferred Inflows (measurement date) to SRSD 135,334 129,971 Allocation of Deferred Outflows (measurement date) to SRSD (120,270) (112,075) Impact on Net Position before deferred contributions to SRSD 529,976 691,896 Allocation of Additional Deferred Outflows (contributions) to SRSD (80,287) (92,924) Long-Term Receivable from SRSD, due to OPEB obligations (see Note 4G)449,689 598,972 Impact on Statement of Net Positions, net of receivable from SRSD $17,759,311 $19,918,028 OPEB Expense $943,000 $889,000 Covered Employee Payroll $43,603,000 $42,604,000 Summary of Results 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. 86 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 12 – JOINTLY GOVERNED ORGANIZATIONS (Continued) 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 on a consortia level 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 $333,316 for the year ended June 30, 2024. 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 streetlights to be acquired in the local agency’s individual jurisdiction in relation to the total number of streetlights 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 $876,716 for the year ended June 30, 2024. Financial statements of the MGSA can be obtained at 900 Fifth Avenue, Suite 100, San Rafael, California 94901. 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. The members entered into a Project Operating Agreement on February 1, 1999. On February 1, 1999, the members entered into an Operating Agreement whereby 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 $503,170 of the Authority’s operations and debt service for the fiscal year ended June 30, 2024. 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. 87 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 12 – JOINTLY GOVERNED ORGANIZATIONS (Continued) 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 $19,680 for the year ended June 30, 2024. 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. 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. 88 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 13 – RISK MANAGEMENT (Continued) 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 $173,243,921 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 $1,474,860 in liability coverage premiums during the fiscal year ended June 30, 2024. 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. 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%. 89 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 13 – RISK MANAGEMENT (Continued) General Workers'Totals, as of June 30 Liability * Compensation * 2024 2023 Balance, beginning of year $4,663,376 $11,123,322 $15,786,698 $15,601,722 Current year claims and changes in estimates 1,257,954 1,060,089 2,318,043 3,856,916 Claims paid (2,580,559) (1,022,320) (3,602,879) (3,671,940) Balance, end of year $3,340,771 $11,161,091 $14,501,862 $15,786,698 Due in one year $960,679 $2,428,483 $3,389,162 $2,886,630 Due in more than one year 2,380,092 8,732,608 11,112,700 12,900,068 Total claim liabilities $3,340,771 $11,161,091 $14,501,862 $15,786,698 * Liability based on an actuarial valuation as of December 31, 2023, extrapolated to June 30, 2024. 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. 90 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 13 – RISK MANAGEMENT (Continued) The following summarizes active insurance policies as of June 30, 2024 together with coverage limits for each insured event: Insurance Program Limits Coverage Description CSRMA - Midvale Indemnity.$3,000,000 Gen/Mgt liability - aggregate CSRMA - Midvale Indemnity.$1,000,000 Gen/Mgt liability - occurrence CSRMA - Midvale Indemnity.$1,000,000 Auto liability - accident CSRMA - Midvale Indemnity.$4,000,000 Excess liability CSRMA - Public Entity Property Insurance Program (P.E.P.I.P.)$26,846,560 Special form property CSRMA - Interstate Fire & Cas.$25,000,000 Pollution liability - tier 1 CSRMA - Interstate Fire & Cas. $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 AND SUBSCRIPTION LIABILITIES A. Lease Liabilities A summary of governmental activities lease transactions for the fiscal year ended June 30, 2024, are as follows: Balance Balance Current June 30, 2023 Additions Retirements June 30, 2024 Portion Governmental Activities Lease Liabilities Fire Station 57 Land Lease $5,479,943 ($5,540) $5,474,403 $10,875 Copier Equipment Leases 98,192 $220,385 (93,158) 225,419 68,525 Police Equipment Leases 755,922 (50,353) 705,569 101,334 Total $5,578,135 $976,307 ($149,051) $6,405,391 $180,734 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. As of June 30, 2024, the balance of the lease liability was $5,474,403 and the net value of the right-to-use asset was $5,006,829, including accumulated amortization of $469,390. 91 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 14 – LEASE AND SUBSCRIPTION LIABILITIES (Continued) The City has entered into five 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 $765 to $52,975, depending on the lease. As of June 30, 2024, the balance of the lease liability was $225,419 and the net value of the right-to-use asset was $213,259, including accumulated amortization of $257,180. In fiscal year 2024, the City has entered into two separate equipment lease agreements as a lessee for police equipment with different vendors. The lease terms vary from 4-10 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 $57,500 to $77,592, depending on the lease. As of June 30, 2024, the balance of the lease liability was $705,569 and the net value of the right-to-use asset was $704,187, including accumulated amortization of $51,735. The future principal and interest lease payments as of June 30, 2024 are as follows: For the Year Ended June 30 Principal Interest Total 2025 $180,734 $210,216 $390,950 2026 169,137 201,736 370,873 2027 169,491 193,528 363,019 2028 125,671 185,417 311,088 2029 84,229 179,619 263,848 2030-2034 607,892 834,939 1,442,831 2035-2039 523,517 724,815 1,248,332 2040-2044 821,973 625,186 1,447,159 2045-2049 1,202,724 474,930 1,677,654 2050-2054 1,684,495 260,366 1,944,861 2055-2058 835,528 26,551 862,079 Totals $6,405,391 $3,917,303 $10,322,694 B. Subscription-Based Information Technology Liabilities A summary of subscription-based information technology arrangements (SBITA) transactions for the fiscal year ended June 30, 2024, are as follows: Balance Balance Current June 30, 2023 Additions Retirements June 30, 2024 Portion Governmental Activities Subscription liabilities Axon $368,671 ($368,671) Microsoft 918,174 (166,166) $752,008 $174,474 SeeClickFix 55,000 (55,000) OpenGov $290,380 (87,115) 203,265 96,552 MioVision 167,652 (79,635) 88,017 88,017 Axon 2 1,374,990 1,374,990 129,395 Total $1,341,845 $1,833,022 ($756,587) $2,418,280 $488,438 92 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 14 – LEASE AND SUBSCRIPTION LIABILITIES (Continued) On March 7, 2019, the City entered into a subscription agreement with Axon Enterprise, Inc. for a subscription with a 5 year term. The City was required to make yearly subscription payments ranging from $24,049 to $83,857 throughout the life of the subscription, which was scheduled to end on December 31, 2029. On April 15, 2024, the City entered into a modified subscription agreement with Axon Enterprise, Inc. for a subscription with a new 5 year term and 5 year renewal option. Interest is implicit in the subscription agreement in the amount of 5%. As of June 30, 2024, the balance of the subscription liability was $1,374,990 and the net value of the right- to-use asset was $1,374,990, including accumulated amortization of $0. On August 9, 2022, the City entered into a subscription agreement with Microsoft for a subscription with a 6 year term. The City is required to make yearly subscription payments of $212,075 throughout the life of the subscription, which ends on August 31, 2028. Interest is implicit in the subscription agreement in the amount of 5%. As of June 30, 2024, the balance of the subscription liability was $752,008 and the net value of the right-to-use asset was $720,446, including accumulated amortization of $360,223. On February 23, 2022, the City entered into a subscription agreement with the SeeClickFix, Inc. for a subscription with a 2 year term. The City is required to make yearly subscription payments ranging from $55,000 to $57,750 throughout the life of the subscription, which ends on August 24, 2024. As of June 30, 2024, the balance of the subscription liability was $0 and the net value of the right-to-use asset was $0, including accumulated amortization of $104,762. On February 1, 2024, the City entered into a subscription agreement with the OpenGov, Inc. for a subscription with a 3 year term. The City is required to make yearly subscription payments ranging from $101,633 to $112,050 throughout the life of the subscription, which ends on January 31, 2027. As of June 30, 2024, the balance of the subscription liability was $203,265 and the net value of the right-to-use asset was $524,308, including accumulated amortization of $0. On November 29, 2023, the City entered into a subscription agreement with the Miovision Technologies Incorporated. for a subscription with a 2 year term. The City is required to make yearly subscription payments ranging from $88,017 to $92,418 throughout the life of the subscription, which ends on April 25, 2025. As of June 30, 2024, the balance of the subscription liability was $88,017 and the net value of the right-to-use asset was $83,826, including accumulated amortization of $83,826. The future subscription and interest subscription payments as of June 30, 2024 follows: For the Year Ended June 30 Principal Interest Total 2025 $488,438 $120,914 $609,352 2026 395,270 96,492 491,762 2027 302,984 76,729 379,713 2028 318,133 61,579 379,712 2029 121,965 45,673 167,638 2030 - 2034 791,490 125,221 916,711 Totals $2,418,280 $526,608 $2,944,888 93 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 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, 2024, SRSD had several contracts for sewer improvement projects with remaining obligations of approximately $3,000,000. 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. 94 CITY OF SAN RAFAEL NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2024 NOTE 16 – SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY PRIVATE-PURPOSE TRUST FUND (SUCCESSOR AGENCY) ACTIVITIES (Continued) 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. 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.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, 2023, the Successor Agency had prepared sixteen 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. NOTE 17 – SUBSEQUENT EVENT A. Household Hazardous Waste Program In September 2024, the City transferred the Household Hazardous Waste Program to the County of Marin. As a result, the City transferred program funds in the amount of $582,892 to the County. 95 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 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 6/30/2022 6/30/2023 City's proportionate share 36.6081%34.3574%29.6650%33.7322%34.4061% Proportionate share of total pension liability $1,082,900,638 $1,059,269,505 $959,104,784 $1,120,775,111 $1,181,328,195 Proportionate share of fiduciary net position 949,023,107 901,989,929 1,007,281,093 1,015,298,454 1,081,955,979 Proportionate share of the net pension liability (asset)$133,877,531 $157,279,576 ($48,176,309) $105,476,657 $99,372,216 Plan fiduciary net position as a percentage of the total pension liability 87.64%85.15%105.02%90.59%91.59% Covered payroll (report date)$33,106,430 $32,887,922 $31,697,590 $34,418,052 $35,543,480 Net pension liability (asset) as a percentage of covered payroll 404.39%478.23%-151.99%306.46%279.58% * - The fiscal year ended June 30, 2015 was the first year of implementation. Cost-Sharing Multiple Employer Plan Schedule of the City's Proportionate Share of the Net Pension Liability Last 10 years* 97 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 Schedule of Contributions Cost-Sharing Multiple Employer Defined Benefit Pension Plan Last 10 years 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 98 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 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 Schedule of Contributions Cost-Sharing Multiple Employer Classic Tiers: Safety - 50, Miscellaneous - 55; PEPRA Tiers: Safety - 57, Miscellaneous - 62 Defined Benefit Pension Plan Last 10 years (Continued) 99 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 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 Cost-Sharing Multiple Employer Schedule of Contributions Defined Benefit Pension Plan Last 10 years Classic Tiers: Safety - 50, Miscellaneous - 55; PEPRA Tiers: Safety - 57, Miscellaneous - 62 (Continued) 100 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 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. Cost-Sharing Multiple Employer Defined Benefit Pension Plan Classic Tiers: Safety - 50, Miscellaneous - 55; PEPRA Tiers: Safety - 57, Miscellaneous - 62 Schedule of Contributions (Continued) Last 10 years 101 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 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 Classic Tiers: Safety - 50, Miscellaneous - 55; PEPRA Tiers: Safety - 57, Miscellaneous - 62 Defined Benefit Pension Plan Last 10 years (Continued) Schedule of Contributions 102 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 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 Last 10 years (Continued) Classic Tiers: Safety - 50, Miscellaneous - 55; PEPRA Tiers: Safety - 57, Miscellaneous - 62 Cost-Sharing Multiple Employer 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 103 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 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 (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. 104 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 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 (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. 105 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 Fiscal year ended, June 30 2023 Contractually required contribution $21,446,744 Contributions in Relation to the Contractually required contribution (21,446,744) Contribution Deficiency/ (Excess)$0 Covered payroll $35,543,480 Contributions as a percentage of covered payroll 60.34% Notes to Schedule Valuation Date / Timing 6/30/2021 (for contributions made in FY2022-2023) Key Methods and Assumptions Used to Determine Contribution Rates (for FY2022 - 23): Actuarial cost method Entry Age Normal Cost Method Amortization method Level percentage of payroll with separate period for Extraordinary Gains or Losses (17 years remaining as of 6/30/21), the remaining UAL as of June 30, 2013 (9 years as of 6/30/21), 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 9 years remaining as of June 30, 2021 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 (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. 106 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 Fiscal year ended, June 30 2024 Contractually required contribution $21,474,137 Contributions in Relation to the Contractually required contribution (21,474,137) Contribution Deficiency/ (Excess)$0 Covered payroll $36,995,522 Contributions as a percentage of covered payroll 58.05% Notes to Schedule Valuation Date / Timing 6/30/2022 (for contributions made in FY2023-2024) Key Methods and Assumptions Used to Determine Contribution Rates (for FY2023 - 24): Actuarial cost method Entry Age Normal Cost Method Amortization method Level percentage of payroll with separate period for Extraordinary Gains or Losses (16 years remaining as of 6/30/22), the remaining UAL as of June 30, 2013 (8 years as of 6/30/22), 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 8 years remaining as of June 30, 2022 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 (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. 107 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS Agent Multiple Employer Defined Benefit Plan Last Ten Fiscal Years Other Post-Employment Benefits (OPEB) Measurement period 2015-16 2016-17 2017-18 2018-19 Total OPEB liability Service cost $766,000 $789,000 $822,000 $805,000 Interest 3,447,000 3,540,000 3,435,000 3,515,000 Differences between expected and actual experience (4,107,000) (3,040,000) Assumption changes 4,831,000 (2,735,000) Benefit payments, including refunds of employee contributions (2,896,000) (3,015,000) (3,028,000) (3,072,000) Net change in total OPEB liability 1,317,000 2,038,000 1,229,000 (4,527,000) Total OPEB liability - beginning 48,226,000 49,543,000 51,581,000 52,810,000 Total OPEB liability - ending (a)$49,543,000 $51,581,000 $52,810,000 $48,283,000 OPEB fiduciary net position Contributions - employer $2,896,000 $3,475,000 $3,573,000 $3,725,000 Net investment income 157,000 1,675,000 1,425,000 1,224,000 Benefit payments, including refunds of employee contributions (2,896,000) (3,015,000) (3,028,000) (3,072,000) Administrative expense (7,000)(8,000) (44,000) (12,000) Net change in plan fiduciary net position 150,000 2,127,000 1,926,000 1,865,000 Plan fiduciary net position - beginning 15,608,000 15,758,000 17,885,000 19,811,000 Plan fiduciary net position - ending (b)$15,758,000 $17,885,000 $19,811,000 $21,676,000 Plan net OPEB liability - ending (a) - (b)$33,785,000 $33,696,000 $32,999,000 $26,607,000 Plan fiduciary net position as a percentage of the total OPEB liability 31.81% 34.67% 37.51% 44.89% Covered employee payroll $37,846,000 $32,885,000 $36,350,000 $40,496,000 Plan net OPEB liability as a percentage of covered employee payroll 89.27% 102.47% 90.78% 65.70% Historical information is required only for the measurement periods for which GASB 75 is applicable. 108 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 2019-20 2020-21 2021-22 2022-23 $687,000 $679,000 $566,000 $582,000 3,196,000 3,238,000 2,946,000 2,966,000 (4,063,000) (3,269,000) 2,748,000 2,278,000 (3,225,000) (3,315,000) (3,286,000) (3,172,000) 658,000 (713,000) 226,000 (615,000) 48,283,000 48,941,000 48,228,000 48,454,000 $48,941,000 $48,228,000 $48,454,000 $47,839,000 $3,784,000 $3,323,000 $3,294,000 $3,183,000 770,000 6,319,000 (3,922,000) 1,629,000 (3,225,000) (3,315,000) (3,286,000) (3,172,000) (19,000) (17,000) (15,000) (18,000) 1,310,000 6,310,000 (3,929,000) 1,622,000 21,676,000 22,986,000 29,296,000 25,367,000 $22,986,000 $29,296,000 $25,367,000 $26,989,000 $25,955,000 $18,932,000 $23,087,000 $20,850,000 46.97%60.74%52.35%56.42% $39,920,000 $39,310,000 $43,602,857 $45,757,607 65.02%48.16%52.95%45.57% 109 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 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 110 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 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 111 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 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 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 Agent Multiple Employer Defined Benefit Plan 112 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 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 113 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 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 114 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 SCHEDULE OF CONTRIBUTIONS Last Ten Fiscal Years Other Post-Employment Benefits (OPEB) (Continued) 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 115 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 SCHEDULE OF CONTRIBUTIONS Last Ten Fiscal Years Other Post-Employment Benefits (OPEB) (Continued) Fiscal year 2022-23 Actuarially determined contribution $2,618,000 Contributions in relation to the actuarially determined contribution (3,183,000) Contribution deficiency (excess)($565,000) Covered employee payroll $43,602,857 Contributions as a percentage of covered employee payroll 7.30% 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 13 year fixed period for 2022/23 Asset Valuation Method Investment gains and losses spread over 5-year rolling period Discount Rate 6.25% Contribution Policy City contributes full ADC General Inflation 2.5% per annum Mortality, Retirement, Disability, Termination 6/30/20 MCERA Valuation assumptions Mortality Improvement Expected Long-Term Rate of Return on Investments Salary Increases Aggregate - 3% Merit - Increases - same as MCERA Assumptions as of June 30, 2020 valuation Medical Trend Non-Medicare - 6.5% for 2023 decreasing 3.75% for 2076 and later Medicare (Non-Kaiser) - 5.65% for 2023, decreasing to an ultimate rate of3.75% in 2076 Medicare (Kaiser) - 4.60% for 2019, decreasing to an ultimate rate of 3.75% in 2076 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 Mortality projected fully generational with Scale MP-2021 Same as discount rate - expected City contributions projected to keep sufficient plan 116 CITY OF SAN RAFAEL REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2024 SCHEDULE OF CONTRIBUTIONS Last Ten Fiscal Years Other Post-Employment Benefits (OPEB) Fiscal year 2023-24 Actuarially determined contribution $2,605,000 Contributions in relation to the actuarially determined contribution (3,251,000) Contribution deficiency (excess)($646,000) Covered employee payroll $45,757,607 Contributions as a percentage of covered employee payroll 7.10% 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, 2023 actuarial valuation provided the Actuarially Determined Contributions for fiscal years ending 6/30/23 and 6/30/24. 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, 2023 Actuarial Cost Method Entry Age Normal, Level Percentage of Payroll Amortization Method Level dollar amount, over approximate 10-year period Remaining Amortization 12 year fixed period for 2023/24 Asset Valuation Method Investment gains and losses spread over 5-year rolling period Discount Rate 6.25% Contribution Policy City contributes full ADC General Inflation 2.5% per annum Mortality, Retirement, Disability, Termination 6/30/23 MCERA Valuation assumptions 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, 2023 valuation Medical Trend Non-Medicare - 8.5% for 2025 decreasing 3.45% for 2076 and later Medicare (Non-Kaiser) - 7.5% for 2025, decreasing to an ultimate rate of 3.45% in 2076 Medicare (Kaiser) - 6.25% for 2025, decreasing to an ultimate rate of 3.45% in 2076 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 Mortality projected fully generational with Scale MP-2021 Same as discount rate - expected City contributions projected to keep sufficient plan 117 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. 119 CITY OF SAN RAFAEL GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2024 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Taxes and special assessments $87,054,486 $87,054,486 $88,564,312 $1,509,826 Licenses and permits 2,855,788 2,855,788 3,614,566 758,778 Fines and forfeitures 212,740 212,740 259,792 47,052 Use of money and properties 462,120 462,120 3,377,438 2,915,318 Intergovernmental 4,369,421 4,369,421 4,830,166 460,745 Charges for services 3,240,314 3,240,314 3,245,323 5,009 Other revenue 2,606,699 2,606,699 1,054,355 (1,552,344) Total Revenues 100,801,568 100,801,568 104,945,952 4,144,384 EXPENDITURES Current: General government 17,053,530 17,053,530 15,483,609 1,569,921 Public safety 50,389,251 50,375,971 47,275,482 3,100,489 Public works and parks 14,970,225 14,970,225 14,395,860 574,365 Community development 9,031,460 9,031,462 5,514,463 3,516,999 Culture and recreation 3,365,971 3,392,970 3,088,241 304,729 Capital outlay 92,776 92,776 2,232,278 (2,139,502) Debt service: Principal 3,162,714 3,162,714 3,760,071 (597,357) Interest and fiscal charges 2,086,013 2,086,014 2,100,354 (14,340) Total Expenditures 100,151,940 100,165,662 93,850,358 6,315,304 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 649,628 635,906 11,095,594 10,459,688 OTHER FINANCING SOURCES (USES) Issuance of long-term debt 2,518,949 2,518,949 Transfers in 1,827,461 2,127,461 2,061,406 (66,055) Transfers out (2,207,000) (7,094,483) (7,028,671) 65,812 Total Other Financing Sources (Uses)(379,539) (4,967,022) (2,448,316) 2,518,706 Net Change in Fund Balance $270,089 ($4,331,116) 8,647,278 $12,978,394 FUND BALANCE, BEGINNING OF YEAR 27,767,998 FUND BALANCE, END OF YEAR $36,415,276 120 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, 2024 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Use of money and properties $6,128 $6,128 $150,901 $144,773 Intergovernmental 225,000 225,000 465,000 240,000 Charges for services 1,209,923 1,209,923 1,280,962 71,039 Other revenue 10,000 10,000 Total Revenues 1,441,051 1,441,051 1,906,863 465,812 EXPENDITURES Current: General government 100,000 100,000 100,000 Public works and parks 565,000 565,000 112,464 452,536 Community development 202,000 1,652,000 341,815 1,310,185 Capital outlay 160,000 1,810,000 1,650,469 159,531 Total Expenditures 1,027,000 4,127,000 2,104,748 2,022,252 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 414,051 (2,685,949) (197,885) 2,488,064 OTHER FINANCING SOURCES (USES) Transfers in 419,000 419,000 419,000 Total Other Financing Sources (Uses)419,000 419,000 419,000 Net Change in Fund Balance $833,051 ($2,266,949) 221,115 $2,488,064 5,693,062 FUND BALANCE, END OF YEAR $5,914,177 FUND BALANCE, BEGINNING OF YEAR 121 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, 2024 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Use of money and properties $235,085 $235,085 Intergovernmental $6,146,327 $6,146,327 7,936,247 1,789,920 Charges for services 1,600,000 1,600,000 2,736,113 1,136,113 Other revenue 5,150,000 5,150,000 1,716,032 (3,433,968) Total Revenues 12,896,327 12,896,327 12,623,477 (272,850) EXPENDITURES Current: Public works and parks 3,240,000 4,687,000 3,431,257 1,255,743 Capital outlay 15,900,000 17,530,000 7,436,103 10,093,897 Total Expenditures 19,140,000 22,217,000 10,867,360 11,349,640 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (6,243,673) (9,320,673) 1,756,117 11,076,790 OTHER FINANCING SOURCES (USES) Transfers in 850,000 850,000 Transfers out (650,000) (1,069,000) (1,069,000) Total Other Financing Sources (Uses)(650,000) (219,000) (219,000) Net Change in Fund Balance ($6,893,673) ($9,539,673) 1,537,117 $11,076,790 FUND BALANCE, BEGINNING OF YEAR 11,835,712 FUND BALANCE, END OF YEAR $13,372,829 122 SUPPLEMENTARY INFORMATION 123 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, 2024 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property $68,831 $68,831 Other revenue 1,639 1,639 Total Revenues 70,470 70,470 EXPENDITURES Capital outlay $2,250,000 $3,367,904 580,083 2,787,821 Total Expenditures 2,250,000 3,367,904 580,083 2,787,821 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (2,250,000) (3,367,904) (509,613) 2,858,291 OTHER FINANCING SOURCES (USES) Transfers in 450,000 384,188 (65,812) Total Other Financing Sources (Uses)450,000 384,188 (65,812) Net Change in Fund Balance ($2,250,000) ($2,917,904) (125,425) $2,792,479 FUND BALANCE, BEGINNING OF YEAR 3,718,015 FUND BALANCE, END OF YEAR $3,592,590 124 NON-MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Recreation Revolving Fund – Established to administer the Recreation 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. 125 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. 126 CITY OF SAN RAFAEL NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEETS FOR THE YEAR ENDED JUNE 30, 2024 Baypoint Loch Lomond Lagoons Household #10 Recreation Assessment Hazmat Community Revolving District Facility Childcare Facilities Dist. ASSETS Cash and investments $646,525 $240,440 $582,892 $1,268,215 $832,552 Restricted cash and investments Receivables: Accounts 266,907 Taxes 254 293 Grants Interest Loans Leases 151,987 Prepaid expense Total Assets $1,065,419 $240,694 $582,892 $1,268,215 $832,845 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities: Accounts payable $181,865 $5,275 $29,454 $708 Deposits payable Developer deposits payable Unearned revenue 566,892 Total Liabilities 748,757 5,275 29,454 708 Deferred Inflows of Resources: Unavailable revenue - leases 141,240 Total Deferred Inflows of Resources 141,240 Fund Balances: Nonspendable Restricted 175,422 235,419 $582,892 1,238,761 832,137 Committed Assigned Total Fund Balances 175,422 235,419 582,892 1,238,761 832,137 Total Liabilities, Deferred Inflows of Resources and Fund Balances $1,065,419 $240,694 $582,892 $1,268,215 $832,845 SPECIAL REVENUE FUNDS 128 Loch Lomond Marina #2 Community Library Public Development Parkland Facilities Dist. Library Assessment Safety Stormwater Services Grants Dedication $1,108,895 $4,895,279 $1,000,386 $109,680 $4,226,855 $85,730 $915,548 $366,973 2,250 517,365 2,809 10,727 7,900 370,000 70,264 248,783 $1,111,704 $5,265,279 $1,011,113 $111,930 $4,234,755 $851,878 $985,812 $366,973 $18,994 $29,927 $58,028 $5,443 $318,323 $139,929 $121,724 27,882 17,402 3,635 18,994 29,927 58,028 5,443 318,323 171,446 139,126 227,672 227,672 1,092,710 5,235,352 953,085 106,487 3,916,432 452,760 846,686 $366,973 1,092,710 5,235,352 953,085 106,487 3,916,432 452,760 846,686 366,973 $1,111,704 $5,265,279 $1,011,113 $111,930 $4,234,755 $851,878 $985,812 $366,973 (Continued) SPECIAL REVENUE FUNDS 129 CITY OF SAN RAFAEL NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEETS FOR THE YEAR ENDED JUNE 30, 2024 Low and Emergency Pt. San Pedro Moderate Medical Business Maintenance Income Measure A Services Improvement Portion Housing Open Space ASSETS Cash and investments $3,078,863 $113,525 $229,112 $78,129 $810,690 Restricted cash and investments Receivables: Accounts 323,746 Taxes 51,438 11,077 290,198 Grants Interest Loans 1,841,716 Leases Prepaid expense Total Assets $3,454,047 $113,525 $240,189 $1,919,845 $1,100,888 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities: Accounts payable $61,018 $63,525 $6,295 $26,735 Deposits payable Developer deposits payable Unearned revenue Total Liabilities 61,018 63,525 6,295 26,735 Deferred Inflows of Resources: Unavailable revenue - leases Total Deferred Inflows of Resources Fund Balances: Nonspendable Restricted 3,393,029 50,000 233,894 $1,919,845 1,074,153 Committed Assigned Total Fund Balances 3,393,029 50,000 233,894 1,919,845 1,074,153 Total Liabilities, Deferred Inflows of Resources and Fund Balances $3,454,047 $113,525 $240,189 $1,919,845 $1,100,888 SPECIAL REVENUE FUNDS 130 Total Measure C Park Non-Major Measure G Wildfire Capital Bedroom Assessment Capital Open Governmental Cannabis Prevention Improvement Tax Districts Projects Space Funds $985,665 $525,348 $8,237,420 $150,530 $216,354 $32,161 $121,562 $30,859,329 85,751 85,751 957,827 2,068,095 51,524 426,220 440,264 9,187 9,187 1,841,716 400,770 3,506 3,506 $1,037,189 $1,483,175 $8,246,607 $150,530 $302,105 $35,667 $121,562 $36,134,838 $116,187 $63,184 $3,506 $1,250,120 2,821 48,105 3,635 566,892 116,187 66,005 3,506 1,868,752 368,912 368,912 3,506 3,506 $1,037,189 1,366,988 $150,530 $302,105 25,562,849 8,180,602 28,655 8,209,257 $121,562 121,562 1,037,189 1,366,988 8,180,602 150,530 302,105 32,161 121,562 33,897,174 $1,037,189 $1,483,175 $8,246,607 $150,530 $302,105 $35,667 $121,562 $36,134,838 SPECIAL REVENUE FUNDS CAPITAL PROJECTS FUNDS 131 Baypoint Loch Lomond Lagoons Household #10 Recreation Assessment Hazmat Community Revolving District Facility Childcare Facilities Dist. REVENUES Taxes and special assessments $25,368 $29,276 Use of money and properties $47,425 4,529 $6,408 $18,447 15,833 Intergovernmental 6,984 900,303 Charges for services 2,040,498 4,027 3,439,791 Other revenue 15,395 1,713 Total Revenues 2,110,302 29,897 10,435 4,360,254 45,109 EXPENDITURES Current: General government Public safety Public works and parks 19,215 22,834 Community development Culture and recreation 4,504,593 3,732,458 Capital outlay Total Expenditures 4,504,593 19,215 3,732,458 22,834 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (2,394,291) 10,682 10,435 627,796 22,275 OTHER FINANCING SOURCES (USES) Transfers in 2,207,000 Transfers out Total Other Financing Sources (Uses)2,207,000 Net Change in Fund Balances (187,291) 10,682 10,435 627,796 22,275 Fund Balance, Beginning 362,713 224,737 572,457 610,965 809,862 Fund Balance, Ending $175,422 $235,419 $582,892 $1,238,761 $832,137 CITY OF SAN RAFAEL COMBINING STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2024 SPECIAL REVENUE FUNDS 132 Loch Lomond Marina #2 Community Library Public Development Parkland Facilities Dist. Library Assessment Safety Stormwater Services Grants Dedication $280,924 $1,166,033 19,277 $106,116 17,109 $98,669 $52,732 $6,984 516,422 $82,839 $869,134 4,184 830,630 381,482 35,145 2,046 188,999 300,201 1,008,204 1,183,142 117,984 931,345 52,732 1,058,133 6,984 368,905 220,860 472,621 104,446 962,069 419,872 10,473 1,164,342 206,843 3,917,338 97,915 104,446 217,316 1,164,342 220,860 4,879,407 1,359,313 195,755 790,888 18,800 (102,876) (3,948,062) 52,732 (301,180) 6,984 85,000 1,235,035 97,483 85,000 1,235,035 97,483 195,755 790,888 18,800 (17,876) (2,713,027) 52,732 (203,697) 6,984 896,955 4,444,464 934,285 124,363 6,629,459 400,028 1,050,383 359,989 $1,092,710 $5,235,352 $953,085 $106,487 $3,916,432 $452,760 $846,686 $366,973 (Continued) SPECIAL REVENUE FUNDS 133 Low and Emergency Pt. San Pedro - Moderate Medical Business Maintenance Income Measure A Services Improvement Portion Housing Open Space REVENUES Taxes and special assessments $5,315,689 $172,670 $598,735 Use of money and properties 35,709 3,482 $42,496 13,216 Intergovernmental 55,291 177,952 Charges for services 3,876,561 Other revenue 578,339 9,351 5,305 Total Revenues 9,861,589 185,503 47,801 789,903 EXPENDITURES Current: General government $50,000 Public safety 8,933,061 Public works and parks 126,577 Community development Culture and recreation 21,196 Capital outlay 169,607 Total Expenditures 8,933,061 50,000 126,577 190,803 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 928,528 (50,000) 58,926 47,801 599,100 OTHER FINANCING SOURCES (USES) Transfers in 100,000 Transfers out Total Other Financing Sources (Uses)100,000 Net Change in Fund Balances 928,528 50,000 58,926 47,801 599,100 Fund Balance, Beginning 2,464,501 174,968 1,872,044 475,053 Fund Balance, Ending $3,393,029 $50,000 $233,894 $1,919,845 $1,074,153 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, 2024 134 Total Measure C Park Non-Major Measure G Wildfire Capital Bedroom Assessment Capital Open Governmental Cannabis Prevention Improvement Tax Districts Projects Space Funds $215,231 $2,108,271 $5,355 $9,917,552 22,190 10,390 $199,371 2,836 $3,382 $2,314 728,915 772,799 15,744 3,397,468 10,195,691 38,878 $10,300 1,266,953 237,421 2,930,338 215,115 8,191 3,382 10,300 2,314 25,506,579 73,487 492,392 43,536 2,912,466 12,582,544 1,235,141 419,872 9,433,062 37,295 261,496 4,690,494 117,023 2,949,761 261,496 28,853,505 120,398 (19,423) (46,381) 8,191 3,382 10,300 2,314 (3,346,926) 4,240,000 7,964,518 (233,945)(233,945) (233,945) 4,240,000 7,730,573 (113,547) (19,423) 4,193,619 8,191 3,382 10,300 2,314 4,383,647 1,150,736 1,386,411 3,986,983 142,339 298,723 21,861 119,248 29,513,527 $1,037,189 $1,366,988 $8,180,602 $150,530 $302,105 $32,161 $121,562 $33,897,174 CAPITAL PROJECTS FUNDSSPECIAL REVENUE FUNDS 135 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, 2024 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 $25,368 $25,368 Use of money and properties $25,000 $47,425 $22,425 4,529 $4,529 Intergovernmental 48,000 6,984 (41,016) Charges for services 2,067,870 2,040,498 (27,372) Other revenue 475 15,395 14,920 Total Revenues 2,141,345 2,110,302 (31,043) 25,368 29,897 4,529 EXPENDITURES Current: General government Public safety Public works and parks 212,700 19,215 193,485 Community development Culture and recreation 4,523,000 4,504,593 18,407 Capital outlay Total Expenditures 4,523,000 4,504,593 18,407 212,700 19,215 193,485 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (2,381,655) (2,394,291) (12,636) (187,332) 10,682 198,014 OTHER FINANCING SOURCES (USES) Transfers in 2,207,000 2,207,000 Transfers out Total Other Financing Sources (Uses) 2,207,000 2,207,000 NET CHANGE IN FUND BALANCE ($174,655) (187,291) ($12,636) ($187,332) 10,682 $198,014 FUND BALANCES, BEGINNING OF YEAR 362,713 224,737 FUND BALANCES, END OF YEAR $175,422 $235,419 136 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) $25,000 $29,276 $4,276 $6,408 $6,408 $18,447 $18,447 15,833 15,833 $598,207 900,303 302,096 4,027 4,027 3,261,400 3,439,791 178,391 1,713 1,713 10,435 10,435 3,859,607 4,360,254 500,647 25,000 45,109 20,109 $119,103 119,103 18,855 22,834 (3,979) 3,929,457 3,732,458 196,999 119,103 119,103 3,929,457 3,732,458 196,999 18,855 22,834 (3,979) (119,103) 10,435 129,538 (69,850) 627,796 697,646 6,145 22,275 16,130 ($119,103) 10,435 $129,538 ($69,850) 627,796 $697,646 $6,145 22,275 $16,130 572,457 610,965 809,862 $582,892 $1,238,761 $832,137 (Continued) Community Facilities District SPECIAL REVENUE FUNDS 137 Library Variance Variance Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) REVENUES Taxes and special assessments $223,119 $280,924 $57,805 Use of money and properties 19,277 19,277 $106,116 $106,116 Intergovernmental $1,001,000 516,422 (484,578) Charges for services 3,814 4,184 370 Other revenue 20,000 381,482 361,482 Total Revenues 223,119 300,201 77,082 1,024,814 1,008,204 (16,610) EXPENDITURES Current: General government Public safety Public works and parks 135,030 104,446 30,584 Community development Culture and recreation 120,000 10,473 109,527 Capital outlay 4,000,000 206,843 3,793,157 Total Expenditures 135,030 104,446 30,584 4,120,000 217,316 3,902,684 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 88,089 195,755 107,666 (3,095,186) 790,888 3,886,074 OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCE $88,089 195,755 $107,666 ($3,095,186) 790,888 $3,886,074 FUND BALANCES, BEGINNING OF YEAR 896,955 4,444,464 FUND BALANCES, END OF YEAR $1,092,710 $5,235,352 BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2024 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 #2 138 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) $1,167,507 $1,166,033 ($1,474) 17,109 17,109 $98,669 $98,669 $80,000 $82,839 $2,839 $830,000 830,630 630 15,000 35,145 20,145 2,046 2,046 1,167,507 1,183,142 15,635 95,000 117,984 22,984 830,000 931,345 101,345 215,725 220,860 (5,135) 699,777 962,069 (262,292) 1,628,626 1,164,342 464,284 9,235,035 3,917,338 5,317,697 1,628,626 1,164,342 464,284 215,725 220,860 (5,135) 9,934,812 4,879,407 5,055,405 (461,119) 18,800 479,919 (120,725) (102,876) 17,849 (9,104,812) (3,948,062) 5,156,750 85,000 85,000 1,235,035 1,235,035 85,000 85,000 1,235,035 1,235,035 ($461,119) 18,800 $479,919 ($35,725) (17,876) $17,849 ($7,869,777) (2,713,027) $5,156,750 934,285 124,363 6,629,459 $953,085 $106,487 $3,916,432 (Continued) 139 Grants Variance Variance Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) REVENUES Taxes and special assessments Use of money and properties $39,000 $52,732 $13,732 Intergovernmental $2,170,252 $869,134 ($1,301,118) Charges for services Other revenue 188,999 188,999 Total Revenues 39,000 52,732 13,732 2,170,252 1,058,133 (1,112,119) EXPENDITURES Current: General government 1,249,906 368,905 881,001 Public safety 740,494 472,621 267,873 Public works and parks Community development 419,872 (419,872) Culture and recreation Capital outlay 463 97,915 (97,452) Total Expenditures 1,990,863 1,359,313 631,550 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 39,000 52,732 13,732 179,389 (301,180) (480,569) OTHER FINANCING SOURCES (USES) Transfers in 97,483 97,483 Transfers out Total Other Financing Sources (Uses) 97,483 97,483 NET CHANGE IN FUND BALANCE $39,000 52,732 $13,732 $276,872 (203,697) ($480,569) FUND BALANCES, BEGINNING OF YEAR 400,028 1,050,383 FUND BALANCES, END OF YEAR $452,760 $846,686 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, 2024 SPECIAL REVENUE FUNDS Development Services 140 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) $5,318,560 $5,315,689 ($2,871) $6,984 $6,984 35,709 35,709 181,100 55,291 (125,809) 3,000,000 3,876,561 876,561 450,000 578,339 128,339 6,984 6,984 8,949,660 9,861,589 911,929 $50,000 $50,000 9,693,072 8,933,061 760,011 9,693,072 8,933,061 760,011 50,000 50,000 6,984 6,984 (743,412) 928,528 1,671,940 (50,000) (50,000) 100,000 100,000 100,000 100,000 6,984 $6,984 ($743,412) 928,528 $1,671,940 $50,000 50,000 359,989 2,464,501 $366,973 $3,393,029 $50,000 (Continued) SPECIAL REVENUE FUNDS 141 Low and Moderate Income Housing Variance Variance Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) REVENUES Taxes and special assessments $150,000 $172,670 $22,670 Use of money and properties 3,482 3,482 $42,496 $42,496 Intergovernmental Charges for services Other revenue 8,000 9,351 1,351 5,305 5,305 Total Revenues 158,000 185,503 27,503 47,801 47,801 EXPENDITURES Current: General government $95,760 95,760 Public safety Public works and parks 183,186 126,577 56,609 Community development Culture and recreation Capital outlay Total Expenditures 183,186 126,577 56,609 95,760 95,760 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (25,186) 58,926 84,112 (95,760) 47,801 143,561 OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCE ($25,186) 58,926 $84,112 ($95,760) 47,801 $143,561 FUND BALANCES, BEGINNING OF YEAR 174,968 1,872,044 FUND BALANCES, END OF YEAR $233,894 $1,919,845 FOR THE YEAR ENDED JUNE 30, 2024 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 142 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) $549,878 $598,735 $48,857 $225,000 $215,231 ($9,769) $1,956,238 $2,108,271 $152,033 13,216 13,216 22,190 22,190 10,390 10,390 177,952 177,952 750,000 772,799 22,799 38,878 38,878 549,878 789,903 240,025 225,000 237,421 12,421 2,706,238 2,930,338 224,100 139,527 73,487 66,040 40,717 43,536 (2,819) 3,163,466 2,912,466 251,000 380,000 21,196 358,804 285,000 169,607 115,393 36,000 37,295 (1,295) 665,000 190,803 474,197 180,244 117,023 63,221 3,199,466 2,949,761 249,705 (115,122) 599,100 714,222 44,756 120,398 75,642 (493,228) (19,423) 473,805 (300,000) (233,945) 66,055 (300,000) (233,945) 66,055 ($115,122) 599,100 $714,222 ($255,244) (113,547) $141,697 ($493,228) (19,423) $473,805 475,053 1,150,736 1,386,411 $1,074,153 $1,037,189 $1,366,988 143 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. 145 CITY OF SAN RAFAEL INTERNAL SERVICE FUNDS COMBINING STATEMENTS OF NET POSITION JUNE 30, 2024 Building Vehicle Equipment Employee Liability Maintenance Replacement Replacement Benefits Insurance ASSETS Current Assets: Cash and investments $6,318,860 $4,966,552 $6,472,986 $767,795 $2,948,852 Accounts receivable 10,000 800 Grants receivable Prepaid expenses 837,058 23,995 Capital assets: Nondepreciable assets 346,448 Depreciable assets, net 5,627,453 6,709,092 1,269,749 Total Assets 12,292,761 12,522,702 7,766,730 767,795 2,949,652 LIABILITIES Current Liabilities: Accounts payable 34,534 28,310 224,114 150,387 39,377 Claims payable - due in one year 960,679 Long-term debt - due in one year 21,755 Subscription liabilities - due in one year 271,026 Due to other funds Non-current Liabilities: Claims payable - due in more than one year 2,380,092 Long-term debt - due in more than one year 99,708 Subscription liabilities - due in more than one year 684,247 Total Liabilities 155,997 28,310 1,179,387 150,387 3,380,148 NET POSITION: Net investment in capital assets 5,852,438 6,709,092 314,476 Unrestricted 6,284,326 5,785,300 6,272,867 617,408 (430,496) Total Net Position $12,136,764 $12,494,392 $6,587,343 $617,408 ($430,496) 146 OPEB/ Workers' Dental Employee Retiree Radio Telephone Sewer Compensation Insurance Retirement Medical Replacement Replacement Maintenance Total $12,875,053 $663,409 $1,823,026 $579,167 $601,949 $457,507 $38,475,156 $788,237 799,037 1,000 1,000 861,053 346,448 13,606,294 12,875,053 663,409 1,823,026 579,167 601,949 458,507 788,237 54,088,988 545 6,679 54,233 394,059 932,238 2,428,483 3,389,162 21,755 271,026 394,178 394,178 8,732,608 11,112,700 99,708 684,247 11,161,636 6,679 54,233 788,237 16,905,014 12,876,006 1,713,417 656,730 1,823,026 579,167 601,949 404,274 24,307,968 $1,713,417 $656,730 $1,823,026 $579,167 $601,949 $404,274 $37,183,974 147 Building Vehicle Equipment Employee Liability Maintenance Replacement Replacement Benefits Insurance OPERATING REVENUES Charges for current services $2,000,000 $1,033,793 $2,540,933 $1,291,329 $2,364,880 Other operating revenues 10,861 39,418 291,472 Total Operating Revenues 2,010,861 1,033,793 2,580,351 1,291,329 2,656,352 OPERATING EXPENSES Personnel 1,037,231 734,018 Insurance premiums and claims 2,735,663 Maintenance and repairs 57,533 5,278 General and administrative 3,329 2,140,760 595,773 554,572 Depreciation and amortization expense 293,708 985,829 280,277 Total Operating Expenses 354,570 991,107 2,421,037 1,633,004 4,024,253 Operating Income (Loss) 1,656,291 42,686 159,314 (341,675) (1,367,901) NONOPERATING REVENUES (EXPENSES) Investment income 108,046 100,300 124,703 50,522 51,480 Interest expense (63,178) Miscellaneous revenues 10,000 Gain on sale of capital assets 49,984 Total Nonoperating Revenues (Expenses) 108,046 160,284 61,525 50,522 51,480 Net income (loss) before contributions and transfers 1,764,337 202,970 220,839 (291,153) (1,316,421) TRANSFERS Transfers out (2,085,035) Net transfers (2,085,035) Change in Net Position 1,764,337 202,970 220,839 (291,153) (3,401,456) NET POSITION, BEGINNING OF YEAR 10,372,427 12,291,422 6,366,504 908,561 2,970,960 NET POSITION, END OF YEAR $12,136,764 $12,494,392 $6,587,343 $617,408 ($430,496) CITY OF SAN RAFAEL INTERNAL SERVICE FUNDS COMBINING STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION FOR THE YEAR ENDED JUNE 30, 2024 148 OPEB/ Workers' Dental Employee Retiree Radio Telephone Sewer Compensation Insurance Retirement Medical Replacement Replacement Maintenance Total $2,523,621 $536,759 $2,675,827 $450,000 $773,763 $2,758,554 $18,949,459 1,002,553 1,146 1,345,450 2,523,621 536,759 3,678,380 450,000 774,909 2,758,554 20,294,909 317,413 2,638,811 4,727,473 1,329,343 375,857 3,545,232 7,986,095 87,821 150,632 197,685 42,660 $2,000 503,170 470,301 119,743 4,629,993 1,559,814 1,844,441 418,517 2,000 3,545,232 503,170 558,122 2,758,554 19,054,007 679,180 118,242 (2,000) 133,148 (53,170) 216,787 1,240,902 237,386 11,487 46,014 8,680 6,669 745,287 (63,178) 10,000 49,984 237,386 11,487 46,014 8,680 6,669 742,093 916,566 129,729 44,014 133,148 (44,490) 223,456 1,982,995 (680,313)(2,765,348) (680,313)(2,765,348) 916,566 129,729 (636,299) 133,148 (44,490) 223,456 (782,353) 796,851 527,001 2,459,325 446,019 646,439 180,818 37,966,327 $1,713,417 $656,730 $1,823,026 $579,167 $601,949 $404,274 $37,183,974 149 CITY OF SAN RAFAEL INTERNAL SERVICE FUNDS COMBINING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2024 Building Vehicle Equipment Employee Liability Maintenance Replacement Replacement Benefits Insurance CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers/other funds $2,000,000 $1,023,793 $2,540,933 $1,291,329 $2,364,080 Cash payments to suppliers for goods and services (28,141) (817,526) (2,116,848) (477,133) (4,577,528) Cash payments to employees for salaries and benefits (1,037,231) (734,018) Other operating revenues 10,861 39,418 291,472 Cash Flows from Operating Activities 1,982,720 206,267 463,503 (223,035) (2,655,994) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Miscellaneous revenues 10,000 Interfund revenues Interfund payments (2,085,035) Cash Flows from Noncapital Financing Activities 10,000 (2,085,035) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Payment on note payable (21,755) Payment on subscription liability (308,281) Payment on subscription interest (63,178) Acquisition and construction of capital assets 7,896 (2,205,230) (233,929) Proceeds from sale of property 123,283 Cash Flows from Investing Activities (13,859) (2,081,947) (605,388) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 108,046 100,300 124,703 50,522 51,480 Cash Flows from Investing Activities 108,046 100,300 124,703 50,522 51,480 Net increase (decrease) in cash and cash equivalents 2,076,907 (1,765,380) (17,182) (172,513) (4,689,549) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 4,241,953 6,731,932 6,490,168 940,308 7,638,401 CASH AND CASH EQUIVALENTS, END OF YEAR $6,318,860 $4,966,552 $6,472,986 $767,795 $2,948,852 Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income (loss)$1,656,291 $42,686 $159,314 ($341,675) ($1,367,901) Adjustments to reconcile operating income to cash flows from operating activities: Depreciation and amortization 293,708 985,829 280,277 Net change in assets and liabilities: Account receivable (10,000)(800) Grant receivable Prepaids (837,058) 5,251 Accounts payable 32,721 24,810 18,661 118,640 35,312 Claims payable (1,322,605) Net Cash Provided by (Used in) Operating Activities $1,982,720 $206,267 $463,503 ($223,035) ($2,655,994) NON-CASH TRANSACTIONS: Subscription assets $290,380 Retirement of capital assets ($73,299) 150 OPEB/ Workers' Dental Employee Employee Radio Telephone Sewer Compensation Insurance Retirement Retirement Replacement Replacement Maintenance Total $2,523,621 $536,759 $2,675,827 $450,000 $772,763 $1,970,317 $18,149,422 (1,489,885) (415,512) ($2,000) (3,556,726) (503,170) (559,161) (2,858,679) (17,402,309) (317,413)(2,088,662) 1,002,553 1,146 1,345,450 716,323 121,247 (2,000) 121,654 (53,170) 214,748 (888,362) 3,901 10,000 394,178 394,178 (680,313)(2,765,348) (680,313)394,178 (2,361,170) (21,755) (308,281) (63,178) (2,431,263) 123,283 (2,701,194) 237,386 11,487 46,014 8,680 6,669 745,287 237,386 11,487 46,014 8,680 6,669 745,287 953,709 132,734 (636,299) 121,654 (44,490) 221,417 (494,184) (4,313,176) 11,921,344 530,675 2,459,325 457,513 646,439 236,090 494,184 42,788,332 $12,875,053 $663,409 $1,823,026 $579,167 $601,949 $457,507 $38,475,156 $679,180 $118,242 ($2,000) $133,148 ($53,170) $216,787 $1,240,902 1,559,814 ($788,237) (799,037) (1,000)(1,000) (831,807) (626) 3,005 (11,494)(1,039) (100,125) 119,865 37,769 (1,284,836) $716,323 $121,247 ($2,000) $121,654 ($53,170) $214,748 ($888,362) $3,901 $290,380 ($73,299) 151 Terra Linda Community Pool, San Rafael STATISTICAL SECTION 153 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. 155 (accrual basis of accounting) 2015 (a) 2016 (a)2017 2018 Governmental activities Net investment in capital assets $190,621,085 $193,707,175 $199,202,842 $217,170,376 Restricted 33,389,224 31,286,725 29,225,643 25,549,583 Unrestricted (82,336,534) (93,273,480) (112,913,181) (122,577,233) Total governmental activities net position $141,673,775 $131,720,420 $115,515,304 $120,142,726 Business-type activities Net investment in capital assets $10,744,952 $10,958,058 $10,968,642 $10,951,518 Unrestricted (938,519) (1,136,050) (871,620) (886,848) Total business-type activities net position $9,806,433 $9,822,008 $10,097,022 $10,064,670 Primary government Net investment in capital assets $201,366,037 $204,665,233 $210,171,484 $228,121,894 Restricted 33,389,224 31,286,725 29,225,643 25,549,583 Unrestricted (83,275,053) (94,409,530) (113,784,801) (123,464,081) Total primary government net position $151,480,208 $141,542,428 $125,612,326 $130,207,396 (a) The City adjusted certain beginning balances during fiscal years 2014-2015 and 2015-2016. Financial data shown for proceeding years were not adjusted for the presentation. CITY OF SAN RAFAEL NET POSITION BY COMPONENT Last Ten Fiscal Years ($130,000) ($80,000) ($30,000) $20,000 $70,000 $120,000 $170,000 $220,000 $270,000 $320,000 $370,000 2015 (a)2016 (a) 2017 2018 2019 2020 2021 2022 2023 2024 Th o u s a n d s Net investment in capital assets Restricted Unrestricted 156 □ • • 2019 2020 2021 2022 2023 2024 $231,844,210 $230,737,025 $228,252,998 $246,437,706 $259,204,102 $268,520,108 23,288,874 23,522,748 36,175,158 36,668,766 46,773,333 48,596,168 (118,215,177) (116,133,437) (107,929,957) (48,883,395) (24,466,269) (6,281,168) $136,917,907 $138,126,336 $156,498,199 $234,223,077 $281,511,166 $310,835,108 $11,023,426 $11,104,751 $11,174,601 $11,256,222 $11,454,000 $11,354,160 (1,180,121) (1,204,307) (2,205,300) (1,189,003) (653,194) (651,060) $9,843,305 $9,900,444 $8,969,301 $10,067,219 $10,800,806 $10,703,100 $242,867,636 $241,841,776 $239,427,599 $257,693,928 $270,658,102 $279,874,268 23,288,874 23,522,748 36,175,158 36,668,766 46,773,333 48,596,168 (119,395,298) (117,337,744) (110,135,257) (50,072,398) (25,119,463) (6,932,228) $146,761,212 $148,026,780 $165,467,500 $244,290,296 $292,311,972 $321,538,208 157 CITY OF SAN RAFAEL CHANGES IN NET POSITION Last Ten Fiscal Years (Accrual Basis of Accounting) 2015 2016 2017 2018 Expenses Governmental Activities: General government $9,099,858 $12,952,983 $10,996,269 $9,835,941 Public safety 39,968,631 55,399,798 44,366,734 53,231,197 Public works and parks 16,893,164 22,929,289 19,845,719 22,084,433 Community development 3,128,373 4,307,269 4,242,743 4,040,195 Culture and recreation 11,198,151 15,026,680 14,131,000 13,285,563 Interest on long-term debt 284,288 277,263 271,263 884,336 Total Governmental Activities Expenses 80,572,465 110,893,282 93,853,728 103,361,665 Business-Type Activities: Parking services 4,249,597 4,762,851 4,188,152 4,627,716 Total Business-Type Activities Expenses 4,249,597 4,762,851 4,188,152 4,627,716 Total Primary Government Expenses $84,822,062 $115,656,133 $98,041,880 $107,989,381 Component Unit: San Rafael Sanitation District $11,375,239 $11,654,767 $11,255,194 $12,235,868 Program Revenues Governmental Activities: Charges for services: General government $1,379,523 $526,495 $421,393 $517,542 Public safety 4,966,251 4,939,658 4,264,939 5,628,478 Public works and parks 3,078,267 5,157,289 1,804,698 2,362,375 Community development 3,796,684 4,004,178 3,850,107 3,814,892 Culture and recreation 6,537,646 6,683,059 6,941,013 6,819,303 Operating grants and contributions 4,185,450 4,678,338 3,965,351 5,142,670 Capital grants and contributions 1,308,027 1,470,953 1,702,993 974,603 Total Government Activities Program Revenues 25,251,848 27,459,970 22,950,494 25,259,863 Business-Type Activities: Charges for services: Parking services 5,173,557 5,212,181 5,268,991 5,203,585 Total Business-Type Activities Program Revenues 5,173,557 5,212,181 5,268,991 5,203,585 Total Primary Government Program Revenues $30,425,405 $32,672,151 $28,219,485 $30,463,448 Component Unit: San Rafael Sanitation District Charges for service $14,629,758 $15,414,530 $16,014,016 $16,829,908 Operating grants and contributions 36,945 58,440 Capital grants and contributions 79,245 105,734 Total Component Unit Program Revenues $14,629,758 $15,414,530 $16,130,206 $16,994,082 Net (Expense)/Revenue Governmental Activities ($55,320,617) ($83,433,312) ($70,903,234) ($78,101,802) Business-Type Activities 923,960 449,330 1,080,839 575,869 Total Primary Government Net Expense ($54,396,657) ($82,983,982) ($69,822,395) ($77,525,933) Component Unit Activities $3,254,519 $3,862,215 $4,875,012 $4,758,214 158 2019 2020 2021 2022 2023 2024 $11,967,641 $15,629,601 $12,254,642 $10,458,884 $11,162,650 $14,901,980 49,899,296 50,000,809 54,736,561 34,379,474 49,903,663 57,399,596 19,270,613 21,661,442 20,749,666 14,030,717 23,353,510 24,392,108 5,781,826 5,314,692 5,804,134 2,835,173 4,436,659 6,043,266 12,819,429 11,828,353 10,619,181 7,430,968 10,723,168 12,725,048 1,848,263 1,974,834 1,935,532 2,004,572 1,793,203 1,655,588 101,587,068 106,409,731 106,099,716 71,139,788 101,372,853 117,117,586 5,038,553 4,491,375 3,748,667 2,226,556 3,435,551 4,078,051 5,038,553 4,491,375 3,748,667 2,226,556 3,435,551 4,078,051 $106,625,621 $110,901,106 $109,848,383 $73,366,344 $104,808,404 $121,195,637 $12,601,257 $13,853,263 $13,790,905 $12,892,687 $13,541,927 $15,592,949 $377,606 $394,882 $388,833 $1,039,816 $383,890 $411,655 5,304,832 5,824,555 5,332,486 6,302,852 7,063,009 7,365,020 4,158,338 3,082,495 2,719,148 2,996,881 3,146,404 4,146,897 4,312,259 5,470,010 8,390,282 4,493,292 4,982,748 5,757,689 5,750,846 4,370,442 2,932,869 4,105,520 5,158,806 5,488,779 4,584,855 5,545,731 5,132,596 22,520,880 6,763,815 6,530,607 8,042,524 1,348,640 8,718,764 9,867,883 18,438,231 8,181,276 32,531,260 26,036,755 33,614,978 51,327,124 45,936,903 37,881,923 5,362,016 5,063,318 3,351,864 3,836,881 4,682,140 4,552,629 5,362,016 5,063,318 3,351,864 3,836,881 4,682,140 4,552,629 $37,893,276 $31,100,073 $36,966,842 $55,164,005 $50,619,043 $42,434,552 $16,964,083 $16,874,361 $16,945,721 $16,458,113 $16,638,611 $16,657,102 5,907 5,719 5,609 5,568 5,531 5,775 1,433,871 175,217 277,752 517,752 175,481 248,116 $18,403,861 $17,055,297 $17,229,082 $16,981,433 $16,819,623 $16,910,993 ($69,055,808) ($80,372,976) ($72,484,738) ($19,812,664) ($55,435,950) ($79,235,663) 323,463 571,943 (396,803)1,610,325 1,246,589 474,578 ($68,732,345) ($79,801,033) ($72,881,541) ($18,202,339) ($54,189,361) ($78,761,085) $5,802,604 $3,202,034 $3,438,177 $4,088,746 $3,277,696 $1,318,044 (Continued) 159 CITY OF SAN RAFAEL CHANGES IN NET POSITION (continued) Last Ten Fiscal Years (Accrual Basis of Accounting) 2015 2016 2017 2018 General Revenues and Other Changes in Net Position Governmental Activities: Taxes: Property $19,039,443 $19,998,567 $23,343,140 $24,627,373 Sales 32,269,915 34,348,089 31,819,259 34,119,502 Paramedic 3,820,240 4,226,020 5,485,637 4,923,148 Transient occupancy 2,661,878 3,063,263 2,984,758 3,115,151 Franchise 3,272,390 3,418,277 3,610,824 3,726,841 Business license 2,670,071 2,824,664 2,774,803 2,790,212 Other 3,295,751 3,465,193 1,824,830 2,245,882 Investment earnings 216,066 300,091 210,628 556,745 Gain (loss) from sale of capital assets Miscellaneous 2,254,901 1,387,315 2,448,604 5,991,713 Transfers 432,630 448,478 536,000 632,657 Total Government Activities 69,933,285 73,479,957 75,038,483 82,729,224 Business-Type Activities: Investment earnings 7,008 14,723 10,810 24,436 Gain (loss) from sale of capital assets Transfers (432,630) (448,478) (536,000) (632,657) Total Business-Type Activities (425,622) (433,755) (525,190) (608,221) Total Primary Government $69,507,663 $73,046,202 $74,513,293 $82,121,003 Component Unit: San Rafael Sanitation District Property Taxes $1,319,852 $1,367,172 $1,528,047 $1,620,584 Investment earnings 171,804 46,225 97,090 234,379 Miscellaneous 10,690 Aid from other governmental agencies 35,090 Total Component Unit $1,526,746 $1,413,397 $1,625,137 $1,865,653 Special Item Governmental Activities $4,462,815 Component Unit Activities ($4,462,815) Change in Net Position Governmental Activities $19,075,483 ($9,953,355) $4,135,249 $4,627,422 Business-Type Activities 498,338 15,575 555,649 (32,352) Total Primary Government $19,573,821 ($9,937,780) $4,690,898 $4,595,070 Change in Net Position Component Unit Activities $318,450 $5,275,612 $6,500,149 $6,623,867 160 2019 2020 2021 2022 2023 2024 $25,903,240 $26,491,505 $30,993,516 $32,324,129 $33,023,030 $35,635,864 35,626,646 33,784,770 39,599,113 44,110,471 45,632,867 44,554,220 4,934,584 4,923,092 5,153,448 5,109,836 5,224,387 5,315,689 3,203,499 2,410,745 1,797,578 2,976,234 3,396,479 3,592,883 3,627,254 4,029,050 3,973,806 4,209,979 4,424,917 4,581,586 2,788,496 2,824,722 2,575,341 2,645,636 2,583,546 2,791,927 1,783,170 2,152,617 2,996,950 3,108,543 2,975,282 2,937,428 1,450,434 1,907,591 388,645 (1,424,183)1,708,860 5,283,676 26,784 989,991 41,673 5,904,968 2,470,926 2,813,015 2,965,697 3,233,349 3,242,511 608,698 586,387 538,405 521,209 521,322 582,148 85,830,989 81,581,405 90,856,601 97,537,542 102,724,039 108,559,605 63,870 71,583 4,065 8,802 8,320 9,864 (608,698)(586,387)(538,405)(521,209)(521,322)(582,148) (544,828)(514,804)(534,340)(512,407)(513,002)(572,284) $85,286,161 $81,066,601 $90,322,261 $97,025,135 $102,211,037 $107,987,321 $1,727,221 $1,833,137 $1,888,197 $2,086,682 $2,129,197 $2,322,601 519,793 876,369 48,614 (406,535)1,328,202 2,201,511 7,768 489 11,759 $2,254,782 $2,709,995 $1,936,811 $1,680,147 $3,469,158 $4,524,112 $16,775,181 $1,208,429 $18,371,863 $77,724,878 $47,288,089 $29,323,942 (221,365)57,139 (931,143)1,097,918 733,587 (97,706) $16,553,816 $1,265,568 $17,440,720 $78,822,796 $48,021,676 $29,226,236 $8,057,386 $5,912,029 $5,374,988 $5,768,893 $6,746,854 $5,818,595 161 CITY SAN RAFAEL FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years (Modified Accrual Basis of Accounting) 2015 (b) 2016 (b)2017 2018 General Fund Nonspendable $399,299 $476,316 $508,446 $1,008,234 Committed Assigned 12,374,002 16,440,910 14,900,945 11,214,720 Unassigned 1,588,500 1,772,577 1,295,041 Total General Fund $14,361,801 $18,689,803 $16,704,432 $12,222,954 All Other Governmental Funds Nonspendable $2,359 $9,449 $302,366 Restricted 31,742,184 27,552,245 $25,812,405 73,489,688 Committed 931,871 3,799,421 3,491,708 1,754,983 Assigned 712,810 119,183 115,103 115,942 Unassigned Total all other governmental funds $33,389,224 $31,480,298 $29,419,216 $75,662,979 (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 2014-2015 and 2015-2016. Financial data shown for preceding years were not adjusted for the presentation. ($5,000) $15,000 $35,000 $55,000 $75,000 $95,000 2015 (b) 2016 (b) 2017 2018 2019 2020 2021 2022 2023 2024 Th o u s a n d s Total Fund Balance 162 / --- V --- V -----,. v - v --l/ / a 2019 2020 2021 2022 2023 2024 (a) $37,271 $7,540 $377,861 $95,279 $78,057 $54,250 8,321,000 9,415,000 9,753,000 9,837,000 11,391,084 9,799,140 7,226,153 24,270,840 17,272,274 16,837,172 1,104,216 920,885 664,667 9,686,854 $12,532,571 $9,806,680 $16,845,899 $33,781,119 $27,767,998 $36,415,276 $27,627 $7,813 $89,761 $182,890 $3,506 53,260,504 34,288,302 $36,043,515 36,443,519 46,449,334 48,442,445 1,901,271 1,884,153 1,831,036 1,514,355 4,008,844 8,209,257 118,139 120,920 116,842 117,755 119,248 121,562 (11,118) $55,307,541 $36,290,070 $37,991,393 $38,165,390 $50,760,316 $56,776,770 163 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, 2015 2016 2017 2018 Revenues Taxes and special assessments $61,804,228 $65,866,218 $71,166,891 $74,893,789 Licenses and permits 2,456,820 2,588,411 2,559,841 2,718,166 Fines and forfeitures 556,076 435,829 400,283 384,268 Use of money and properties 444,757 460,206 349,349 654,531 Intergovernmental 13,233,503 13,685,003 8,063,156 8,878,974 Charges for services 15,346,794 14,366,744 13,425,161 14,660,094 Other revenue 1,777,003 3,208,749 1,842,053 5,219,414 Total Revenues 95,619,181 100,611,160 97,806,734 107,409,236 Expenditures Current: General government 10,203,687 11,349,079 10,557,416 10,010,100 Public safety 43,954,515 47,071,166 49,018,153 51,805,708 Public works and parks 12,758,643 14,390,699 16,752,961 17,647,312 Community development 3,416,859 3,670,108 3,759,564 4,051,224 Culture and recreation 11,616,777 12,048,104 12,646,728 12,823,771 Capital outlay 4,498,924 4,813,757 2,100,926 22,815,967 Capital improvement/special projects 2,186,986 4,826,576 7,403,249 Debt service: Principal 75,172 75,172 175,172 280,172 Interest and fiscal charges 284,288 277,263 271,263 1,005,636 Total Expenditures 88,995,851 98,521,924 102,685,432 120,439,890 Excess (deficiency) of revenues over (under) expenditures 6,623,330 2,089,236 (4,878,698)(13,030,654) Other Financing Sources (Uses) Issuance of debt 46,565,800 Proceeds from PG&E loans Proceeds from sale of capital assets Transfers in 4,348,149 7,533,364 9,287,007 68,351,964 Transfers (out)(3,051,499)(6,582,555)(8,454,762)(68,373,222) Total other financing sources (uses)1,296,650 950,809 832,245 46,544,542 Net Change in fund balances $7,919,980 $3,040,045 ($4,046,453) $33,513,888 Debt service as a percentage of noncapital expenditures 0.4%0.4%0.5%1.3% 164 Fiscal Year Ended June 30, 2019 2020 2021 2022 2023 2024 $77,101,185 $76,410,697 $86,347,728 $93,604,982 $96,373,395 $98,481,864 2,661,500 3,047,144 3,000,666 3,077,355 3,002,122 3,614,566 337,680 350,388 219,030 296,300 228,966 259,792 1,583,060 1,537,869 667,104 (1,597,714) 1,227,353 4,561,170 15,602,264 9,287,181 16,859,749 34,239,157 28,590,886 16,628,881 15,166,876 13,834,843 15,065,363 13,315,014 15,825,770 17,458,089 5,158,042 2,309,226 1,875,299 4,199,820 2,322,859 4,048,979 117,610,607 106,777,348 124,034,939 147,134,914 147,571,351 145,053,341 12,553,499 16,689,526 12,426,899 17,716,666 13,858,624 15,976,001 51,678,876 50,071,531 54,363,872 58,397,721 58,673,878 59,858,026 15,617,622 17,453,823 15,110,972 16,495,547 19,535,588 19,174,722 4,988,260 5,276,887 6,270,129 5,736,213 5,190,246 6,276,150 12,468,008 11,179,410 9,700,739 11,319,546 12,664,282 12,521,303 38,701,047 25,984,748 13,635,066 17,345,454 23,536,840 16,589,427 495,172 618,316 2,563,711 2,829,057 3,044,551 3,760,071 2,356,207 2,482,778 2,443,476 2,512,515 2,241,875 2,100,354 138,858,691 129,757,019 116,514,864 132,352,719 138,745,884 136,256,054 (21,248,084) (22,979,671) 7,520,075 14,782,195 8,825,467 8,797,287 23,999 2,518,949 1,000,000 15,482,297 13,797,526 7,549,590 6,441,764 14,576,818 11,679,112 (14,280,034) (12,585,216) (6,329,123) (5,114,742) (16,820,480) (8,331,616) 1,202,263 1,236,309 1,220,467 2,327,022 (2,243,662) 5,866,445 ($20,045,821) ($21,743,362) $8,740,542 $17,109,217 $6,581,805 $14,663,732 2.8% 3.0% 4.9% 4.6% 4.6% 4.9% 165 CITY OF SAN RAFAEL ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS Real Property Total Real Total Fiscal Residential Commercial Industrial Secured Unsecured Total Estimated Direct Year Property Property Property Other Property Property Assessed (a) Full Market (a) Tax Rate (b) 2015 7,991,224,952$ 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% 2023 12,306,902,659 3,227,380,341 332,424,829 156,067,190 16,022,775,019 492,746,700 16,515,521,719 16,515,521,719 0.11746% 2024 13,055,127,289 3,411,495,113 346,407,421 135,515,797 16,948,545,620 532,247,366 17,480,792,986 17,480,792,986 0.11774% (a) (b) Data Source: Marin County Assessor 2014/15 - 2023/24 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 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Mi l l i o n s Unsecured Property Secured Property 166 ____. ________ ___....------- - -- Fiscal School Misc. Special Year City County (1)Districts Districts Total 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% 2023 0.154 0.295 0.7995 0.0678 1.3160 0.11746% 2024 0.154 0.295 0.7995 0.0678 1.3160 0.11774% 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 2014/15 - 2023/24 Tax Rate Tables CITY OF SAN RAFAEL PROPERTY TAX RATES ALL OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS Total Direct Rate 167 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 Basic Levy (1)1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 Dixie School Bonds 2000 N/A N/A N/A N/A N/A N/A N/A N/A 0.02920 0.02520 Marin Community College Bonds 0.01800 0.01650 0.01420 0.03380 0.03390 0.02690 0.02650 0.02750 0.02580 0.02450 Marin Healthcare Bond 0.00000 0.02350 0.00930 0.02010 0.01900 0.01750 0.02180 0.02180 0.02070 0.01970 Miller Creek School Bonds 0.01470 0.04170 0.03830 0.02090 0.03450 0.03280 0.03030 0.01950 0.01830 0.01810 Ross Elementary School 0.06030 0.06150 0.06030 0.06190 0.06180 0.05710 0.05800 0.05760 0.05500 0.05680 Ross Valley School Bonds 0.05700 0.05550 0.05370 0.05680 0.05390 0.05270 0.05190 0.04870 0.05260 0.04100 San Rafael Elementary Bonds 0.02620 0.02570 0.05350 0.05030 0.07290 0.07050 0.06950 0.07400 0.06860 0.09580 San Rafael High Bonds 0.04850 0.04710 0.07100 0.05680 0.06170 0.06000 0.05830 0.04630 0.05030 0.07730 Tamalpais Union High School 0.03520 0.03130 0.02880 0.02690 0.02580 0.02390 0.02260 0.02060 0.01950 0.01750 Total Direct & Overlapping Tax Rates 1.25990 1.30280 1.32910 1.32750 1.36350 1.34140 1.33890 1.31600 1.34000 1.37590 City's Share of 1% Levy Per Prop 13 0.12233 0.12233 0.12233 0.12233 0.12232 0.12232 0.12231 0.12231 0.12231 0.12231 Total Direct Rate 0.11657 0.11672 0.11693 0.11709 0.11742 0.11724 0.11734 0.11734 0.11746 0.11774 Notes: Data Source: Marin County Assessors Office 2014/15 - 2023/24 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. LAST TEN FISCAL YEARS (RATE PER $100 OF ASSESSED VALUE) DIRECT & OVERLAPPING GOVERNMENTS PROPERTY TAX RATES CITY OF SAN RAFAEL 168 CITY OF SAN RAFAEL PRINCIPAL PROPERTY TAX PAYERS CURRENT FY 2023/24 AND FY 2014/2015 Percentage Percentage of Total City of Total City Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Taxpayer Value Value Value Value California Corporate Center ACQ LLC 313,004,747$ 1.79% 113,704,290$ 1.04% MGP XI Northgate LLC 233,540,088 1.34% Kaiser 149,223,912 0.85% NCP Multifamily LLC 118,812,612 0.68% Pur San Rafael LLC 110,272,040 0.63% State of CA Dept of Trans 74,066,882 0.44% Bre Properties, Inc 69,897,558 0.40% South Valley Apartments LLC 59,190,101 0.34% Lofts Albert Park LLC 58,587,905 0.34% 1201 Fifth Avenue LLC 55,516,550 0.32% Northbay Properties II 43,428,710 0.40% Regency Center II Assoc LP 43,760,844 0.40% Bay Apartment Communities Inc 41,597,687 0.38% Northgate Mall Associates 136,547,395 1.25% 33 North Associates LLC 37,581,141 0.36% MPB Associates LLC 36,320,878 0.33% Sutter Health 50,853,957 0.47% Barbara Fasken Trust 41,017,922 0.38% Marin Sanitary Service 39,428,530 0.36% Subtotal 1,242,112,395$ 7.11% 584,241,354$ 5.36% Total Net Assessed Valuation: Fiscal Year 2023-2024 17,480,792,986$ Fiscal Year 2014-2015 10,894,048,902$ FY 2023-2024 FY 2014-2015 169 Delinquent taxes Fiscal as a Percent of Year Rate Levies Allocations Collections Apportionments Delinquencies Allocations 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% 2023 1.00 (2)29,914,556 (2)29,914,556 (2)0.0% 2024 1.00 (2)31,688,389 (2)31,688,389 (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 $35 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Mi l l i o n s Allocations Apportionments 170 --~ ---------..., --., -..., ~ ~ ~ ~ --+- ~ CITY OF SAN RAFAEL RATIO OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Pension Lease Fiscal Note Obligation Revenue Year Payable Bonds Bonds Total 2015 453,667$ 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 890,555 2,340,000 47,600,321 50,830,876 2023 687,158 1,805,000 44,852,378 47,344,536 2024 502,689 1,240,000 41,909,435 43,652,124 Parking Total Percentage Fiscal Services Note Primary of Personal Per Year Bonds Payable Total Government Income (a) Capita (a) 2015 5,942,128$ 55,020$5,997,148$ 10,940,815$ 0.41% 180.60 2016 5,692,853 48,204 5,741,057 10,609,552 0.38% 174.38 2017 5,433,577 41,388 5,474,965 10,168,288 0.35% 167.65 2018 5,164,303 34,572 5,198,875 64,304,923 2.04% 1,070.93 2019 4,890,027 27,755 4,917,782 63,020,714 2.00% 1,053.73 2020 4,605,753 20,939 4,626,692 61,627,363 1.87% 1,044.25 2021 4,316,478 14,123 4,330,601 58,259,617 1.72% 962.01 2022 4,017,203 7,307 4,024,510 54,855,386 1.45% 919.14 2023 3,707,928 489 3,708,417 51,052,953 1.26% 856.81 2024 3,388,653 0 3,388,653 47,040,777 N/A N/A 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 $70 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Mi l l i o n s Total Governmental Total Business 171 □ ■ CITY OF SAN RAFAEL COMPUTATION OF DIRECT AND OVERLAPPING DEBT June 30, 2024 2023-24 Assessed Valuation:17,480,792,986 Total Debt City's Share of OVERLAPPING TAX AND ASSESSMENT DEBT:6/30/2024 % Applicable (1) Debt 6/30/2024 Marin Community College District 553,925,000$ 17.233% 95,457,895$ San Rafael High School District 267,387,333 79.252% 211,909,809 Tamalpais Union High School District 63,970,000 0.063%40,301 Miller Creek School District (Formerly Dixie School District)27,077,957 67.227% 18,203,698 Ross School District 14,790,075 1.200% 177,481 Ross Valley School District 38,206,127 0.010%3,821 San Rafael School District 156,067,975 84.716% 132,214,546 Marin Healthcare District 463,790,000 20.595% 95,517,551 Marin Emergency Radio Authority Parcel Tax Obligations 30,335,000 17.209% 5,220,350 City of San Rafael 1915 Act Bonds 986,700 100.000% 986,700 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 559,732,152$ DIRECT AND OVERLAPPING GENERAL FUND DEBT: Marin County Certificates of Participation 71,500,000 17.209% 12,304,435$ Marin County Pension Obligation Bonds 41,035,000 17.209% 7,061,713 Marin County Transit District General Fund Obligations - Marin Municipal Water District General Fund Obligations - Marin Community College District Certification of Participation 10,606,864 17.233% 1,827,881 San Rafael School District General Fund Obligations 2,435,000 84.716% 2,062,835 City of San Rafael General Fund Obligations 40,727,689 100.000% 40,727,689 (2) City of San Rafael Pension Obligations 1,240,000 100.000% 1,240,000 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT 65,224,553 Less: City of San Rafael obligations supported by enterprise revenues 3,395,000 TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT 61,829,553$ TOTAL GROSS DIRECT DEBT 41,967,689 TOTAL NET DIRECT DEBT 38,572,689 TOTAL OVERLAPPING DEBT 582,989,016 GROSS COMBINED TOTAL DEBT 624,956,705 (3) NET COMBINED TOTAL DEBT 621,561,705 (2) Includes $502,689 PG&E notes. Ratios to 2023-24 Assessed Valuation: Total Overlapping Tax and Assessment Debt 3.20% Total Gross Direct Debt ($41,967,689)0.24% Total Net Direct Debt ($38,572,689)0.22% Gross Combined Total Debt 3.58% Net Combined Total Debt 3.56% Data Source: Avenu Insights & Analytics, California Municipal Statistics, Inc. (1) The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value. (3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease 172 ASSESSED VALUATION:17,480,792,986$ BONDED DEBT LIMIT (3.75% OF ASSESSED VALUE) (a)655,529,737$ LESS AMOUNT OF DEBT SUBJECT TO LIMIT:43,652,124 LEGAL BONDED DEBT MARGIN 611,877,613$ 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 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% 2023 619,332,064 47,344,536 571,987,528 8.28% 2024 655,529,737 43,652,124 611,877,613 7.13% NOTE: (a) Source: City of San Rafael's Finance Department CITY OF SAN RAFAEL COMPUTATION OF LEGAL BONDED DEBT MARGIN June 30, 2024 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. 173 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 2015 5,180,554$ 4,031,161$ 1,149,393$ 245,000$ 206,388$ 451,388$ 2.55 2016 5,226,904 3,739,321 1,487,583 250,000 201,488 451,488 3.29 2017 5,279,801 2,425,281 2,854,520 260,000 193,988 453,988 6.29 2018 5,219,721 4,320,695 899,026 270,000 186,188 456,188 1.97 2019 5,425,883 4,283,754 1,142,130 275,000 178,088 453,088 2.52 2020 5,134,901 4,072,433 1,062,468 285,000 169,838 454,838 2.34 2021 3,355,929 3,332,327 23,602 290,000 161,288 451,288 0.05 2022 3,845,683 1,851,746 1,993,937 300,000 152,588 452,588 4.41 2023 4,690,455 3,071,480 1,618,974 310,000 143,588 453,588 3.57 2024 4,562,494 3,504,219 1,058,275 320,000 134,288 454,288 2.33 Notes: (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 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Coverage 174 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) 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% 2022 59,681 256,018 23.31% 3,789,444 63,494 2.50% 2023 59,585 254,407 23.42% 4,043,062 67,853 3.10% 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 Censue Bureau, most recent American Community Survey (3)Unemployment Data: California Employment Development Department 0% 5% 10% 15% 20% 25% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 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 $4,500,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Total Personal Income (in thousands) $- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Per Capita Personal Income 0% 1% 2% 3% 4% 5% 6% 7% 8% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Average Citywide Unemployment Rate 175 I I I I I Employer #(A) #(A) #(A) #(A) County of Marin 2,505 1.96% 2,436 1.90% 2,366 1.84% 2,358 1.88% Kaiser Permanente 902 0.71% 2,339 1.83% 2,339 1.82% 2,059 1.64% BioMarin Pharmaceutical Inc.950 0.74% 950 0.74% 950 0.74% 950 0.76% San Rafael Elementary/High Schools Dist(s)700 0.55% 700 0.55% 700 0.55% 700 0.56% City of San Rafael 416 0.33% 420 0.33% 412 0.32% 405 0.32% Dominican University of California 302 0.24% 394 0.31% 394 0.31% 394 0.31% Buckelew Programs 0.00%0.00%0.00%0.00% Lifehouse 0.00%0.00%0.00%0.00% EO Poducts 0.00%0.00%0.00% 108 0.09% Toyota Marin 0.00%0.00%0.00%0.00% Ghilotti Bros., Inc.298 0.23% 298 0.23% 298 0.23% 298 0.24% Community Action Marin 200 0.16% 200 0.16% 200 0.16% 270 0.21% Equator Coffees, LLC 0.00% 95 0.07% 95 0.07% 88 0.07% Totals 3,768 4.92% 7,754 6.04% 7,630 6.07% 7,306 22.55% #Number of FTE employees in Marin locations (A)Percentage of total employment Note: From the EDD website, it shows that the Total Average 2023 Employment in the City of San Rafael was 127,600 of which it is used as the denominator for the 2023 percentages are calculated. Data Sources: State of California, Employment Development Department, Labor Market Information Division & North Bay Business Journal (Annual Book of Lists) PRINCIPAL EMPLOYERS CITY OF SAN RAFAEL 2021 2020 FISCAL YEAR 2023-2024 2023 2022 LAST TEN CALENDAR YEARS 176 #(A) #(A) #(A) #(A) #(A) #(A) 2,317 7.15% 2,305 7.29% 2,283 7.22% 2,206 6.73% 2,194 6.71% 2,130 6.85% 2,014 6.22% 2,092 6.62% 2,061 6.52%662 2.02% 1,575 4.82% 1,637 5.26% 950 2.93% 700 2.16% 700 2.22% 700 2.22% 650 1.98% 650 1.99% 600 1.93% 410 1.27% 410 1.30% 454 1.44% 577 1.76% 581 1.78% 666 2.14% 421 1.30% 319 1.01% 456 1.44% 485 1.48% 422 1.29% 354 1.14% 103 0.32% 106 0.34% 240 0.76% 186 0.57% 100 0.31% 150 0.46% 141 0.44% 6,663 21.09% 7,933 25.10% 5,314 16.20% 5,620 17.19% 6,025 19.37% 6,079 19.87% 201420152016201920172018 177 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Function General Government 58.11 60.61 62.11 60.11 63.11 62.11 61.41 63.69 60.69 63.69 Public Safety 171.75 175.75 176.55 175.35 175.65 175.30 181.50 185.00 185.00 187.00 Public Works and Parks 62.00 62.00 63.00 66.67 66.00 68.00 69.00 70.00 70.00 72.00 Community Development 17.80 19.80 20.00 21.00 22.00 21.75 21.75 23.00 24.00 27.00 Culture and Recreation 84.23 84.25 84.35 87.35 85.82 78.07 78.07 78.07 83.07 66.65 Total 393.89 402.41 406.01 410.48 412.58 405.23 411.73 419.76 422.76 416.34 Data Source: City of San Rafael's Finance Department CITY OF SAN RAFAEL FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS 0 50 100 150 200 250 300 350 400 450 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 FT E ' s General Government Public Safety Public Works and Parks Community Development Culture and Recreation 179 □ • • • • 2015 2016 2017 2018 Function/Program Public safety: Fire: Inspection permit issued 282 198 233 186 Police: Police calls for service 55,805 57,026 53,567 51,013 Law violations: Part I crimes 2,533 2,523 2,392 2,326 Physical arrests (adult and juvenile)3,450 3,453 2,526 2,019 Traffic violations 4,168 3,252 3,341 2,758 Parking violations 36,398 34,803 36,169 36,208 Public works Street resurfacing (miles) (Eng Div)6.40 6.76 2.32 2.50 Potholes repaired N/A N/A N/A N/A Asphalt used for street repairs (tons)11,000 7,195 5,800 4,730 Culture and recreation: Recreation class participants 10,023 12,725 13,493 12,842 Recreation Facility Rentals Childcare School-Age program participants Library: Items in collection 127,763 227,890 117,354 115,812 Total items borrowed 443,639 469,790 327,297 324,452 Note: N/A denotes information not available. CITY OF SAN RAFAEL OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 180 2019 2020 2021 2022 2023 2024 123 167 207 195 170 191 47,919 47,968 43,649 42,901 42,693 44,150 1,893 2,988 2,546 2,015 2,024 2,318 1,923 2,527 1,893 1,945 1,769 1,140 2,944 2,342 2,161 1,710 1,734 1,123 40,407 28,029 24,099 30,178 35,399 33,510 4.30 14.30 5.00 11.70 21 12 N/A 967 1,368 1,024 1,335 1,275 7,200 5,885 3,650 5,100 3,411 11,494 N/A N/A N/A N/A 5,146 3,875 1,550 1,962 7,001 7,160 7,592 6,270 2,132 3,675 2,660 2,703 123,432 140,610 103,399 95,687 97,117 93,136 356,301 199,903 113,385 169,378 185,800 184,897 181 2015 2016 2017 2018 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 42424242 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 145 145 145 145 Data Source: City of San Rafael's Finance Department CITY OF SAN RAFAEL CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 182 2019 2020 2021 2022 2023 2024 666666 111111 173 173 173 173 173 173 4,435 4,435 4,435 4,448 4,448 4,448 89 90 90 90 90 90 20 24 24 24 24 23 42 99 99 99 99 99 14 14 14 14 14 13 20 20 20 20 20 20 122222 11111 4333333 000000 000000 000000 111111 10 10 10 10 10 10 566666 555555 222222 222222 145 145 145 145 145 145 183 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL FOR THE YEAR ENDED JUNE 30, 2024 This Page Left Intentionally Blank CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL For the Year Ended June 30, 2024 Table of Contents Page Memorandum on Internal Control .................................................................................................. 1 Schedule of Other Matters ...................................................................................................... 3 Status of Prior Year Significant Deficiencies ......................................................................... 9 Schedule of Prior Year Other Matters .................................................................................. 11 This Page Left Intentionally Blank 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, 2024, 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. 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. Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses. 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. Given these limitations during our audit, we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 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 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. 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 4, 2024 1 Accountancy Corporation 3478 Buskirk Avenue, Suite 217 Pleasant Hill, CA 94523 T 925.228.2800 , maze@mazeassociates .com w mazeassociates.com This Page Left Intentionally Blank CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS 2024-01 Purchasing Policy Compliance and Clarification of Requirements - Prior Year Recommendation Not Implemented During the current year audit, we followed up on the status of the Other Matter identified on the Status of Prior Year Other Matters Items 2023-02 and 2022-02. We determined that the City adopted new purchasing guidelines effective July 1, 2024. However, because the procedures were not in place until after June 30, 2024, the matter is considered to be unaddressed as of that date and therefore, it is deemed to be a current year Other Matter. Details of the matter are listed in the Status of Prior Year Other Matters. Management’s Response: As noted, management had concurred with the recommendation(s) from prior Other Matters (2023-2 and 2022-02) related to Clarification of Requirements for compliance with the City’s Purchasing Policy. Concurrent with the start of the current fiscal year (July, 1, 2024) City management issued updated guidelines related to the City’s purchasing policy and procedures. Included as part of the new guidelines were updates specific to past findings issued by the City’s Independent Auditor. Specifically: 1)Effective July 1, 2024 Purchase Orders are now required for all purchases and contracts of $10,000 or more. 2)The updated 2024-25 purchasing guidelines and procedures further clarify that, for purposes of application of delegated spending authority, approval levels are to be based on total contract amount(s) (original plus any amendments or change orders), rather than on an individual transaction. Management recognizes that the update to the City’s purchasing guidelines and procedures became formally effective with the fiscal year starting 7/1/24, and therefore was not in place for the 2023-24 fiscal year, subject of the current audit report. Staff has reviewed the actions taken with the Independent Auditor and is confident that this finding will be deemed resolved in our next annual audit report. 3 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 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. 4 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS GASB 101 – Compensated Absences (Continued) 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. 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. GASB 102 – Certain Risk Disclosures State and local governments face a variety of risks that could negatively affect the level of service they provide or their ability to meet obligations as they come due. Although governments are required to disclose information about their exposure to some of those risks, essential information about other risks that are prevalent among state and local governments is not routinely disclosed because it is not explicitly required. The objective of this Statement is to provide users of government financial statements with essential information about risks related to a government’s vulnerabilities due to certain concentrations or constraints. This Statement defines a concentration as a lack of diversity related to an aspect of a significant inflow of resources or outflow of resources. A constraint is a limitation imposed on a government by an external party or by formal action of the government’s highest level of decision-making authority. Concentrations and constraints may limit a government’s ability to acquire resources or control spending. This Statement requires a government to assess whether a concentration or constraint makes the primary government reporting unit or other reporting units that report a liability for revenue debt vulnerable to the risk of a substantial impact. Additionally, this Statement requires a government to assess whether an event or events associated with a concentration or constraint that could cause the substantial impact have occurred, have begun to occur, or are more likely than not to begin to occur within 12 months of the date the financial statements are issued. 5 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS GASB 102 – Certain Risk Disclosures (Continued) If a government determines that those criteria for disclosure have been met for a concentration or constraint, it should disclose information in notes to financial statements in sufficient detail to enable users of financial statements to understand the nature of the circumstances disclosed and the government’s vulnerability to the risk of a substantial impact. The disclosure should include descriptions of the following: • The concentration or constraint. • Each event associated with the concentration or constraint that could cause a substantial impact if the event had occurred or had begun to occur prior to the issuance of the financial statements. • Actions taken by the government prior to the issuance of the financial statements to mitigate the risk. How the Changes in This Statement Will Improve Financial Reporting The requirements of this Statement will improve financial reporting by providing users of financial statements with essential information that currently is not often provided. The disclosures will provide users with timely information regarding certain concentrations or constraints and related events that have occurred or have begun to occur that make a government vulnerable to a substantial impact. As a result, users will have better information with which to understand and anticipate certain risks to a government’s financial condition. 6 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS EFFECTIVE FISCAL YEAR 2025/26: GASB 103 – Financial Reporting Model Improvements The objective of this Statement is to improve key components of the financial reporting model to enhance its effectiveness in providing information that is essential for decision making and assessing a government’s accountability. This Statement also addresses certain application issues. Management’s Discussion and Analysis - This Statement continues the requirement that the basic financial statements be preceded by management’s discussion and analysis (MD&A), which is presented as required supplementary information (RSI). MD&A provides an objective and easily readable analysis of the government’s financial activities based on currently known facts, decisions, or conditions and presents comparisons between the current year and the prior year. This Statement requires that the information presented in MD&A be limited to the related topics discussed in five sections: (1) Overview of the Financial Statements, (2) Financial Summary, (3) Detailed Analyses, (4) Significant Capital Asset and Long-Term Financing Activity, and (5) Currently Known Facts, Decisions, or Conditions. Furthermore, this Statement stresses that the detailed analyses should explain why balances and results of operations changed rather than simply presenting the amounts or percentages by which they changed. This Statement emphasizes that the analysis provided in MD&A should avoid unnecessary duplication by not repeating explanations that may be relevant to multiple sections and that “boilerplate” discussions should be avoided by presenting only the most relevant information, focused on the primary government. In addition, this Statement continues the requirement that information included in MD&A distinguish between that of the primary government and its discretely presented component units. Unusual or Infrequent Items - This Statement describes unusual or infrequent items as transactions and other events that are either unusual in nature or infrequent in occurrence. Furthermore, governments are required to display the inflows and outflows related to each unusual or infrequent item separately as the last presented flow(s) of resources prior to the net change in resource flows in the government-wide, governmental fund, and proprietary fund statements of resource flows. Presentation of the Proprietary Fund Statement of Revenues, Expenses, and Changes in Fund Net Position - This Statement requires that the proprietary fund statement of revenues, expenses, and changes in fund net position continue to distinguish between operating and nonoperating revenues and expenses. Operating revenues and expenses are defined as revenues and expenses other than nonoperating revenues and expenses. Nonoperating revenues and expenses are defined as (1) subsidies received and provided, (2) contributions to permanent and term endowments, (3) revenues and expenses related to financing, (4) resources from the disposal of capital assets and inventory, and (5) investment income and expenses. In addition to the subtotals currently required in a proprietary fund statement of revenues, expenses, and changes in fund net position, this Statement requires that a subtotal for operating income (loss) and noncapital subsidies be presented before reporting other nonoperating revenues and expenses. Subsidies are defined as (1) resources received from another party or fund (a) for which the proprietary fund does not provide goods and services to the other party or fund and (b) that directly or indirectly keep the proprietary fund’s current or future fees and charges lower than they would be otherwise, (2) resources provided to another party or fund (a) for which the other party or fund does not provide goods and services to the proprietary fund and (b) that are recoverable through the proprietary fund’s current or future pricing policies, and (3) all other transfers. 7 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL SCHEDULE OF OTHER MATTERS GASB 103 – Financial Reporting Model Improvements (Continued) Major Component Unit Information - This Statement requires governments to present each major component unit separately in the reporting entity’s statement of net position and statement of activities if it does not reduce the readability of the statements. If the readability of those statements would be reduced, combining statements of major component units should be presented after the fund financial statements. Budgetary Comparison Information - This Statement requires governments to present budgetary comparison information using a single method of communication—RSI. Governments also are required to present (1) variances between original and final budget amounts and (2) variances between final budget and actual amounts. An explanation of significant variances is required to be presented in notes to RSI. How the Changes in This Statement Will Improve Financial Reporting The requirements for MD&A will improve the quality of the analysis of changes from the prior year, which will enhance the relevance of that information. They also will provide clarity regarding what information should be presented in MD&A. The requirements for the separate presentation of unusual or infrequent items will provide clarity regarding which items should be reported separately from other inflows and outflows of resources. The definitions of operating revenues and expenses and of nonoperating revenues and expenses will replace accounting policies that vary from government to government, thereby improving comparability. The addition of a subtotal for operating income (loss) and noncapital subsidies will improve the relevance of information provided in the proprietary fund statement of revenues, expenses, and changes in fund net position. The requirement for presentation of major component unit information will improve comparability. The requirement that budgetary comparison information be presented as RSI will improve comparability, and the inclusion of the specified variances and the explanations of significant variances will provide more useful information for making decisions and assessing accountability. 8 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL STATUS OF PRIOR YEAR SIGNIFICANT DEFICIENCIES 2023-01 Inaccurate Building Permit Fees – Prior Year Recommendation Not Implemented During the current year audit, we followed up on the status of the Significant Deficiency identified on the Status of Prior Year Significant Deficiency Item 2022-01. We found that the deficiency has not been addressed as of June 30, 2023. Therefore, it is deemed to be a current year Significant Deficiency. Details of the deficiency and management’s response is listed in the Status of Prior Year Significant Deficiency. Current Status: Implemented. 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. 9 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL STATUS OF PRIOR YEAR SIGNIFICANT DEFICIENCIES 2022-01 Inaccurate Building Permit Fees (Continued) 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. Current Status: Implemented. 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: Implemented. 10 CITY OF SAN RAFAEL MEMORANDUM ON INTERNAL CONTROL STATUS OF PRIOR YEAR OTHER MATTERS 2023-02 Purchasing Policy Compliance and Clarification of Requirements - Prior Year Recommendation Not Implemented During the current year audit, we followed up on the status of the Other Matter identified on the Status of Prior Year Other Matters Item 2022-02. We found that the matter has not been addressed as of June 30, 2023. Therefore, it is deemed to be a current year Other Matter. Details of the matter and management’s response is listed in the Status of Prior Year Other Matters. Current Status & Management’s Response: See Current Status & Management’s Response as shown in the Schedule of Other Matters Comment 2024-01. 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. Current Status & Management’s Response: See Current Status & Management’s Response as shown in the Schedule of Other Matters Comment 2024-01. 11 This Page Left Intentionally Blank CITY OF SAN RAFAEL REQUIRED COMMUNICATIONS FOR THE YEAR ENDED JUNE 30, 2024 This Page Left Intentionally Blank CITY OF SAN RAFAEL REQUIRED COMMUNICATIONS For the Year Ended June 30, 2024 Table of Contents Page Required Communications .................................................................................................................. 1 Significant Audit Matters: Qualitative Aspects of Accounting Practices ..................................................................... 1 Difficulties Encountered in Performing the Audit ............................................................. 2 Corrected and Uncorrected Misstatements ......................................................................... 3 Disagreements with Management ....................................................................................... 3 Management Representations .............................................................................................. 3 Management Consultations with Other Independent Accountants ................................... 3 Other Audit Findings or Issues ............................................................................................ 3 Other Matters .............................................................................................................................. 3 This Page Left Intentionally Blank 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, 2024. 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 March 4, 2024. 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 noted below. The following pronouncements became effective, but did not have a material effect on the financial statements: GASB 100 – Accounting for Changes and Error Corrections 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 Liability and Pension-Related Deferred Outflows and Inflows of Resources: Management’s estimates of the net pension 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. 1 Accountancy Corporation 3478 Buskirk Avenue, Suite 217 Pleasant Hill, CA 94523 T 925.228.2800 , maze@mazeassociates .com w mazeassociates.com 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, 2024, 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, 2024. These fair values are not required to be adjusted for changes in general market conditions occurring subsequent to June 30, 2024. Estimated Long-Term Receivable from San Rafael Sanitation District: Management’s estimate of the long-term receivable from the District is disclosed in Note 4G 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. 2 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 4, 2024. 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. 3 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 4, 2024 4 CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 This Page Left Intentionally Blank i CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM FOR THE YEAR ENDED JUNE 30, 2024 Table of Contents Page INTRODUCTORY SECTION: Table of Contents .......................................................................................................................................... i FINANCIAL SECTION: Independent Auditor’s Report ................................................................................................................. 1 Basic Financial Statements Balance Sheet ........................................................................................................................................ 5 Statement of Revenues, Expenditures and Changes in Fund Balance ................................................. 6 Notes to the Basic Financial Statements ............................................................................................... 7 Supplementary Information Schedule of Federal, State, County and Local Awards ...................................................................... 12 Combining Statement of Revenues, Expenditures and Changes in Fund Balance ........................... 13 Schedule of Expenditures by State Categories ................................................................................... 14 Schedule of Claimed Administrative Costs ........................................................................................ 15 Schedule of Claimed Equipment Expenditures ................................................................................ 16 Schedule of Claimed Expenditures for Renovations and Repairs ...................................................... 17 Audited Attendance and Fiscal Reports/Audited Fiscal Reports: CSPP 3284 – California State Preschool Program ........................................................................... 18 Audited Preschool Reserve Account Activity Report ...................................................................... 26 Notes to the Supplementary Information ............................................................................................ 27 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 ................................................... 29 Summary of Findings and Questioned Costs ................................................................................ 31 Current Status of Prior Year Findings ........................................................................................... 32 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 Opinion We have audited the accompanying financial statements of the City of San Rafael Child Development Program (Program) of the City of San Rafael (City), California, as of and for the year ended June 30, 2024, 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, 2024, and the change in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 opinion. Emphasis of Matter As discussed in Note 1, the financial statements present only the Program and do not purport to, and do not present fairly the financial position of the City as of June 30, 2024, or the change in its financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. 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. 1 Accountancy Corporation 3478 Buskirk Avenue, Suite 217 Pleasant Hill, CA 94523 T 925.228.2800 , maze@mazeassociates .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 there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with 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. 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. 2 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 12, 2024, 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 12, 2024 3 This Page Left Intentionally Blank CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM BALANCE SHEET JUNE 30, 2024 ASSETS Cash (Note 3)$1,268,215 Total Assets $1,268,215 LIABILITIES AND FUND BALANCE Accounts payable $29,454 Fund balance, restricted (Note 4)1,238,761 Total Liabilities and Fund Balance $1,268,215 See accompanying notes to financial statements 5 CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2024 REVENUES Restricted: State grants: Current year grants $642,829 CDBG preschool grant (federal grant) 23,000 First Five school readiness grants 90,277 Local grants 32,596 Federal grants 111,601 Unrestricted: Interest 18,447 Parent fees - noncertified children 3,439,791 Other revenue 1,713 Total Revenues 4,360,254 EXPENDITURES Certified salaries 166,062 Classified salaries 1,746,822 Employee benefits 1,223,646 Training and instruction 5,437 Office supplies 184 Books and supplies 213,389 Utilities and housekeeping services 35,881 Rentals 20,369 Travel and conferences 1,454 Services and other operating expenditures 167,683 Equipment 53,938 Insurance 28,490 Renovations and repairs 69,103 Total Expenditures 3,732,458 CHANGE IN FUND BALANCE 627,796 FUND BALANCE Beginning of year 610,965 End of year $1,238,761 See accompanying notes to financial statements 6 CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM Notes to the Basic Financial Statements For the Year Ended June 30, 2024 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. 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. 7 CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM Notes to the Basic Financial Statements For the Year Ended June 30, 2024 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 Program 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 Annual Comprehensive Financial Report. 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, Non-Negotiable 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, Mortgage and Asset-Backed Obligations, Supranational Securities and Money Market/Mutual Funds. The Program 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 investment pool is not subject to the fair value hierarchy and therefore not defined as Level 1, Level 2, or Level 3 input. 8 CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM Notes to the Basic Financial Statements For the Year Ended June 30, 2024 NOTE 4 – FUND BALANCE 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 Program’s fund balances are classified based on spending constraints imposed on the use of resources. For programs with multiple funding sources, the Program 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 Program’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 Program’s intent to use proceeds or collections for a specific purpose. 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. 9 CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM Notes to the Basic Financial Statements For the Year Ended June 30, 2024 NOTE 5 – 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, 2024, 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 the Program or the overall financial condition of the City. 10 SUPPLEMENTARY INFORMATION CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM SCHEDULE OF FEDERAL, STATE, COUNTY AND LOCAL AWARDS FOR THE YEAR ENDED JUNE 30, 2024 Program Federal Assistance Listing Number Pass-Through Identifying Number Award Amount Revenue Expenditures Federal Awards US Department of Housing and Urban Development, Pass-through from County of Marin Community Development Block Grant 14.218 40CDBG24CD452 $23,000 $23,000 $23,000 US Department of Health and Human Services Pass-through from State of California, Department of Education Child Care and Development Fund 93.575 COVID 19 -- ARPA -- Stabilization Stipend Not available 325,893 111,601 COVID 19 -- ARPA -- Stabilization Stipend 004-0045655 24,806 Total Federal Awards $373,699 $134,601 $23,000 State Awards State of California Department of Education Child Development Division State Preschool Program FY2024 CSPP-3284 $510,697 $510,697 $528,698 Cost of Care Award Funds FY2024 Not applicable 129,132 129,132 SB140 Award Funds FY2024 Not applicable 3,000 3,000 Total State Awards $642,829 $642,829 $528,698 County Award County of Marin First Five - Preschool CSRI-21-009-11 $90,277 $90,277 $90,277 Total County Awards $90,277 $90,277 $90,277 Local Awards Marin Child Care Council N/A $32,596 $32,596 $32,596 Total Local Awards $32,596 $32,596 $32,596 Total State, Federal, County and Local Awards $1,139,401 $900,303 $674,571 12 CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2024 State Preschool Program Total CDE Non-CDE (CSPP-3284) CD Contracts Programs Total REVENUES Restricted: State grants: Current year grants $642,829 $642,829 $642,829 CDBG preschool grant (federal grant) $23,000 23,000 First Five school readiness grants 90,277 90,277 Local grants 32,596 32,596 Federal grants 111,601 111,601 Unrestricted: Interest 18,447 18,447 Parent fees - noncertified children 3,439,791 3,439,791 Other revenue 1,713 1,713 Total Revenues 642,829 642,829 3,717,425 4,360,254 EXPENDITURES Certified salaries 166,062 166,062 166,062 Classified salaries 95,873 95,873 1,650,949 1,746,822 Employee benefits 211,868 211,868 1,011,778 1,223,646 Training and instruction 5,437 5,437 Office supplies 184 184 Books and supplies 31,047 31,047 182,342 213,389 Utilities and housekeeping services 35,881 35,881 Travel and conferences 1,454 1,454 Rentals 20,369 20,369 Services and other operating expenditures 23,848 23,848 143,835 167,683 Equipment 53,938 53,938 Insurance 28,490 28,490 Renovations and repairs 69,103 69,103 Total Expenditures 528,698 528,698 3,203,760 3,732,458 CHANGES IN FUND BALANCE $114,131 $114,131 $513,665 $627,796 13 CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM SCHEDULE OF EXPENDITURES BY STATE CATEGORIES FOR THE YEAR ENDED JUNE 30, 2024 CSPP-3284 State Preschool Program Totals EXPENDITURES: 1000 Certified personnel salaries $166,062 $166,062 Due from State 1100 Teachers' salaries 166,062 166,062 1200 Administration 1300 Supervisors' salaries 1600 Infant educators 2001 Classified personnel salaries $95,873 $95,873 2100 Instructional aides' salaries 95,873 95,873 2300 Clerical and other office salaries 2500 Food services salaries 2600 Transportation salaries 3000 Employee benefits $211,868 $211,868 3200 Payroll taxes (Medicare) 3,549 3,549 3300 Other benefits 143,213 143,213 3400 Health and welfare 62,192 62,192 3600 Workers' compensation insurance 2,914 2,914 4000 Books and supplies $31,047 $31,047 4200 Other books 4300 Instructional materials and supplies 30,954 30,954 4500 Other supplies 93 93 4600 Food supplies 5000 Services and other operating expenditures $23,848 $23,848 5100 Lecturer 5200 Travel and conferences 5300 Memberships and dues 480 480 5400 Insurance 1,972 1,972 5500 Utilities and housekeeping services 1,536 1,536 5600 Rentals, leases and repairs 5700 Audit expense 11,890 11,890 5800 Other direct services & admin. 7,970 7,970 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 $528,698 $528,698 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. 14 CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM SCHEDULE OF CLAIMED ADMINISTRATIVE COSTS FOR THE YEAR ENDED JUNE 30, 2024 CSPP-3284 State Preschool Program Administrative Costs 5000 Services and other operating expenses (audit fees) $23,848 Total Administrative Costs claimed for reimbursement $23,848 15 Capitalized Equipment Expensed on the AUD with Prior Written Approval CSPP-3284 None $0 Subtotal 0 Capitalized Equipment Expensed on the AUD without Prior Written Approval CSPP-3284 None 0 Subtotal 0 Total $0 NOTE: The City's capitalization threshold is $5,000. CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM SCHEDULE OF CLAIMED EQUIPMENT EXPENDITURES FOR THE YEAR ENDED JUNE 30, 2024 16 Capitalized R&R Project Under $10,000 CSPP-3284 None $0 Subtotal 0 Capitalized R&R Project of $10,000 or More with Prior Written Approval CSPP-3284 None 0 Subtotal 0 Capitalized R&R Project of $10,000 or More without Prior Written Approval CSPP-3284 None 0 Subtotal 0 Total $0 NOTE: The City's capitalization threshold is $5,000. CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM SCHEDULE OF CLAIMED EXPENDITURES FOR RENOVATIONS AND REPAIRS FOR THE YEAR ENDED JUNE 30, 2024 17 Contractor Name: California Department of Education Audited Enrollment, Attendance and Fiscal Report for California State Preschool Program Contract Number: Fiscal Year Ended: June 30, 2024 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 form for each service county. 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 Certified Days of Enrollment with Mental Health Consultation Services Days of Attendance (including MHCS) N/A Total Non-Certified Days of Enrollment Total Non-Certified Days of Enrollment with Mental 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 18 City of San Rafael Child Development Program 1 0 1 9,678 11,483 176 9,678 0 11,483 0 0 176 CSPP 3284 2193 0 0 9,678.4960 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 8260) American Rescue Plan Act (ARPA) Other: TOTAL RESTRICTED INCOME Transfer from Reserve Column A – Cumulative FY per CPARIS Column B – Audit Adjustments Column C – Cumulative FY per Audit Transfer from Preschool Reserve Account Other Income Column A – Cumulative FY per CPARIS Column B – Audit Adjustments Column C – Cumulative FY per Audit Waived Family Fees for Certified Children (July – September) Family Fees for Certified Children (October – June) Interest Earned on Apportionment Payments Unrestricted Income: Fees for Non-Certified Children Unrestricted Income: Head Start Other: Other: AUD 8501 Page 2 of 6 Audit Report Page 19 City of San Rafael Child Development Program CSPP 3284 0 0 111,601 111,601 Cost of Care Award and SB140 Funds 132,132 132,132 0 243,733 243,733 18,001 18,001 0 0 0 0 0 0 0 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) Direct Payments to Subcontractors: Cost of Care Plus & One-Time Allocations 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)? Approved 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 20 City of San Rafael Child Development Program CSPP 3284 0 0 166,062 166,062 95,873 95,873 211,868 211,868 31,047 31,047 23,848 23,848 0 0 0 0 0 0 528,698 0 528,698 O ves 12] No 3,402 20,446 23,848 0 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 21 City of San Rafael Child Development Program CSPP 3284 7,209 7,209 0 0 7,209 0 7,209 0 0 0 7,209 7,209 0 0 0 0 0 7,209 0 7,209 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 Preschool Reserve Account Family Fees for Certified Children (October – June) 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 22 City of San Rafael Child Development Program CSPP 3284 9,678 0 9,678 176 0 176 11,483 0 11,483 9,678.4960 0.0000 0 243,733 243,733 18,001 0 18,001 0 0 0 0 0 0 0 0 0 0 0 0 528,698 0 528,698 3,402 20,446 23,848 0 0 0 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: Eligibility, enrollment and attendance records are being maintained as required (Select YES or NO): Reimbursable expenses claimed in Section 4 are eligible for reimbursement, reasonable, necessary, and adequately supported (Select YES or NO): Section 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 23 City of San Rafael Child Development Program CSPP 3284 [Z]l ves No Adjustments identified in Column Bare adjustments made to report audit fees as administrative costs, ARPA as revenue, and Cost of Care & SB 140 Funds to Restricted Income. Contractor Name: Contract Number: California State Preschool Program – Form 1 Certified Children Days of Enrollment and Attendance Service County: Enrollment Description Column A Cumulative FY per CPARIS June Report Column B Audit Adjustments Column C Cumulative FY per Audit Column D Adjustment Factor Column E Adjusted Days per Audit Three Years Old Full-time-plus 2.1240 Three Years Old Full-time 1.8000 Three Years Old Part-time Four Years and Older Full-time-plus 1.1800 Four Years and Older Full-time 1.0000 Four Years and Older Part-time Exceptional Needs Full-time-plus 2.8320 Exceptional Needs Full-time 2.4000 Exceptional Needs Part-time Dual Language Learner Full-time-plus 1.4160 Dual Language Learner Full-time 1.2000 Dual Language Learner Part-time AUD 8501 – Form 1 Audit Report Page Page 1 of 2 24 City of San Rafael Child Development Program CSPP 3284 Marin 0 0.0000 0 0.0000 2,775 2,775 1.0872 3,016.9800 0 0.0000 0 0.0000 7,621 7,621 0.6040 4,603.0840 0 0.0000 0 0.0000 1,420 1,420 1.4496 2,058.4320 0 0.0000 0 0.0000 0 0.6040 0.0000 (FY 23-24) Contractor Name: Contract Number: Enrollment Description Column A Cumulative FY per CPARIS June Report Column B Audit Adjustments Column C Cumulative FY per Audit Column D Adjustment Factor Column E Adjusted Days per Audit At Risk of Abuse or Neglect Full-time-plus 1.2980 At Risk of Abuse or Neglect Full-time 1.1000 At Risk of Abuse or Neglect Part-time Severely Disabled Full-time-plus 2.8320 Severely Disabled Full-time 2.4000 Severely Disabled Part-time TOTAL CERTIFIED DAYS OF ENROLLMENT N/A Attendance Column A Cumulative FY per CPARIS June Report Column B Audit Adjustments Column C Cumulative FY per Audit Column D Adjustment Factor Column E Adjusted Days per Audit DAYS OF ATTENDANCE N/A N/A Total Certified Days of Enrollment from all Form 1s in the Total Certified Days of Enrollment line of AUD 8501, Section 2. Days of Attendance from all Form 1s and Form 2s in the Days of Attendance line of AUD 8501, Section 2. AUD 8501 – Form 1 Audit Report Page Page 2 of 2 25 Enter the sum of Enter the sum of City of San Rafael Child Development Program 11,816 0 11,483 (FY 23-24) CSPP 3284 0 0.0000 0 0.0000 0 0.6040 0.0000 0 0.0000 0 0.0000 0 1.4496 0.0000 11,816 9,678.4960 11,483 California Department of Education Fiscal Year Ending: June 30, 202 Audited Reserve Account Activity Report Vendor Code: Contractor Name: Section 1 – Prior Year Reserve Account Activity Beginning Balance (202 –2 Ending Balance): Plus Transfers to Reserve Account: 202 –2 Contract No. Per 202 –2 Post-Audit FS 9530 Total Transferred from 202 –2 Contracts Less Excess Reserve to be Billed: 202 –2 : ection 2 – Current Year Reserve Account Activity Plus Interest Earned This Year on Reserve: Description Column A Column B Audit Adjustments Column C Total per Audit Interest Earned 6. Less Transfers to Contracts from Reserve: 202 –2 Contract No.Column A Column B Audit Adjustments Column C Total per Audit Total Transferred to Contracts 7. Ending Balance: Description Column A Column B Audit Adjustments Column C Total per Audit Ending Balance on June 30, 202 COMMENTS – If necessary, attach additional sheets to explain adjustments. AUD 9530A Page 1 of 1 Audit Report Page 26 1. 2. 3. 4. s 5. 2 3 Preschool lcity of San Rafael Child Development Program 2 3AUD 9530A 3 2 3 2 3 EENFS 9530 Reserve Balance After Billing per CPARIS 763 4 per CPARIS 0 per CPARIS 4 1,829 4 12193 19,067 2 3 EEN 0 18,001 1,066 763 0 0 0 0 0 0 1,829 CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM Notes to the Supplementary Information For the Year Ended June 30, 2024 NOTE 1 – NOTE TO SUPPLEMENTARY INFORMATION In accordance with the applicable requirements from the Funding Terms and Conditions of the City of San Rafael’s child development contract with the California Department of Education: A. Interest Expense Interest expense is only allowable as a reimbursable cost in certain circumstances when it has been preapproved by the administering state department or relates to the lease purchase, acquisition, or repair or renovation of early learning and care facilities owned or leased by the contractor. No interest expense was claimed as a reimbursable expense for the year ended June 30, 2024. B. Related Party Rent Expense All expenses claimed for reimbursement under a related party rent transaction must be supported by a fair market rental estimate from an independent appraiser, licensed by the California Office of Real Estate Appraisers. No related party rent expense was claimed as a reimbursable expense for the year ended June 30, 2024. C. Bad Debt Expense Bad debt expense is unallowable unless it relates to uncollected family fees where documentation of adequate collection attempts exists. No bad debt expense was claimed from a child development contract for the year ended June 30, 2024. 27 This Page Left Intentionally Blank 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) as of and for the year ended June 30, 2024, and have issued our report thereon dated November 12, 2024. 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 weaknesses or significant deficiencies may exist that have not been identified. 29 Accountancy Corporation 3478 Buskirk Avenue, Suite 217 Pleasant Hill, CA 94523 T 925.228.2800 , maze@mazeassociates .com w mazeassociates.com 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. We have also issued a separate Memorandum on Internal Control dated November 4, 2024, which is an integral part of our audit and should be read in conjunction with this report. 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 12, 2024 30 CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM SUMMARY OF FINDINGS AND QUESTIONED COSTS For the Year Ended June 30, 2024 None noted. 31 CITY OF SAN RAFAEL CHILD DEVELOPMENT PROGRAM CURRENT STATUS OF PRIOR YEAR FINDINGS For the Year Ended June 30, 2024 None noted. 32 INDEPENDENT ACCOUNTANT’S REPORT ON APPLYING AGREED UPON PROCEDURES FOR COMPLIANCE WITH THE PROPOSITION 111 2024-2025 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, 2025. 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, 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 2024-2025 Appropriations Limit of $185,036,651 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. B. We recomputed the 2024-2025 Appropriations Limit by multiplying the 2023-2024 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. 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 4, 2024