Calexico City Council
June 5, 2024

AGENDA
ITEM
5 AGENDA
ITEM
CALEXICO California 5

WHERE CALIFORNIA AND MEXICO MEET
DATE: June 5, 2024
TO: Mayor and City Council
APPROVED BY: Esperanza Colio Warren, City Manager [email protected] PREPARED BY: Sandra L. Fonseca, Interim Finance Director SOF SUBJECT: Receive and File 2022-23 Audited Financial Statements CS::

Recommendation:

This report transmits the City's 2022-23 audited financial statements. It is recommended that the City Council receive a presentation from the City's independent auditor with the results of their audit. This report is for information only.

Background:

Each year the City contracts with a Certified Public Accountant to conduct an independent audit of the City's financial statements. The Pun Group has conducted the 2022-23 audit. The audit is now complete and the financial statements have been published.

The City's annual financial statements meet the requirements of Muni Code Section 2.14.050 which requires the Finance Director to submit "a complete financial statement and report for the preceding year." City bond covenants and grant programs also require an annual independent audit of the City's financial statements. The City's financial report is prepared using generally accepted accounting principles established by the Government Accounting Standards Board.

Discussion & Analysis:

The City's auditors have issued the following reports which are included as attachments to this staff report:

1. Basic Financial Statements and Independent Auditor's Report, June 30, 2022 This report includes the City's financial position as of June 2023 and the results of 2022-23 operations for the General Fund and other individual City program funds. The report also includes City-wide financial statements which are presented on the full accrual basis of accounting and include long-term bond, pension, and retiree medical obligations.

2. Transportation Development Act Article 3 and 8e (Non-Transit), June 30, 2023 and 2022 This annual report is required by the State Transportation Development Act. This document reports on the status of the City's Article 3 (pedestrian and bicycle) and Article 8e (other street/non-transit) state grant programs.

3. Single Audit, June 2023
This report provides the information about the City's Federal grant expenditures and compliance with grant requirements. The auditor references two findings in this year's Single Audit report.

First, in Finding #2023-001, the auditor references the long time-line for the City to issue its annual audited financial statements and recommends assigning additional qualified accounting personnel to help process complex accounting transactions. The City's Finance Department continues to operate with interim staff and several vacancies that fall short of best practices.

Despite delays, the City did receive an unmodified audit opinion on its financial statements. The City continues to seek qualified Finance personnel to permanently fill its staff vacancies.

Second, in Finding 2023-002, the auditor identified missing quarterly grant status reports for the Airport Improvement Program. In this case, staff reported inconsistencies between written federal grant reporting requirements and informal direction from grantor personnel. The City administers a wide range of grant programs with very limited administrative staff. As reported on the Schedule of Federal Expenditures within the Single Audit report, the City was fortunate to leverage $7:7 million in city-wide federal grants in 2022-23 to support local services.

4. Report to Those Charged with Governance
This report provides the auditor's annual communication with the City Council about the audit process, accounting policies, use of estimates, and reports issued.

5. Appropriations Limit Schedule
This report provides information about the annual spending limit calculation required by Article XIIIB of the State Constitution (the Gann Initiative).

Fiscal Impact
General Fund
The audited General Fund/Measure H Fund Balance improved during 2022-23 to $3.5 million.

This audited General Fund balance is consistent with the information previously presented to City Council during the 2023-24 3rd quarter budget report on April 15, 2024. 2 Other Significant Long-term Liabilities
The June 30, 2023 financial statements report the following balances for several significant long- term liabilities. These liabilities have arisen over time and are not short-term budget issues but can be expected to impact future year budgets as payments become due. Each of these obligations has an annual amortization schedule to pay down the debt over time. Continued City commitment to continue paying down the pension and retiree medical liabilities, in particular, when funds are available, will improve the City's financial position and increase the City's budget capacity to reinvest and support City services.

Obligations for Past Service/Operating Costs
$35.5 million Net Pension Liability-Unfunded portion of earned service credit $23.6 million Retiree Medical/OPEB-Unfunded portion of earned medical benefits Obligations for Capital-related Long-Term Debt
$ 5.7 million Measure H Bond Principal (matures 2030)
$15.2 million Water Bond Principal (matures 2051)
$21.3 million Wastewater Bond Principal (matures 2051)
$15.8 million Successor Agency Bond Principal (matures 2033) Attachments:

1. Basic Financial Statements and Independent Auditor's Report, June 30, 2023

2. Transportation Development Act Article 3 and 8e (Non-Transit), June 30, 2023 and 2022

3. Single Audit, June 2023

4. Report to Those Charged with Governance, March 28, 2024

5. Appropriations Limit Schedule, June 2024
3 ATTACHMENT #1
City of Calexico
Calexico, California
Basic Financial Statements and
Independent Auditors' Reports
For the Year Ended June 30, 2023
THE

PUN GROUP

ACCOUNTANTS & ADVISORS

City of Calexico
Basic Financial Statements
For the Year Ended June 30, 2023
Table of Contents
Page

FINANCIAL SECTION
Independent Auditors' Report...... ... 1
Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position ...8
Statement of Activities 10
Fund Financial Statements:

Governmental Fund Financial Statements:

Balance Sheet... .. 16
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position.. 19
Statement of Revenues, Expenditures, and Changes in Fund Balances.. 20 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Position . 22 Proprietary Fund Financial Statements:

Statement of Net Position.. 24
Statement of Revenues, Expenses, and Changes in Net Position 27 Statement of Cash Flows ... 28
Fiduciary Fund Financial Statements:

Statement of Fiduciary Net Position... ..33
Statement of Changes in Fiduciary Net Position 34
Notes to the Basic Financial Statements 41
Required Supplementary Information (Unaudited):

Notes to the Budgetary Information ...91
Budgetary Comparison Schedules:

General Fund.... ...92
LTA Measure D Special Revenue Fund. 93
FEMA/ARPA Special Revenue Fund 94
Schedules of the City's Proportionate Share of the Net Pension Liability and Related Ratios... 95 Schedule of Changes in the Net Pension Liability and Related Ratios. 97 Schedule of Contributions... 98
Schedule of Changes in Net OPEB Liability and Related Ratios . 100 Schedule of Plan Contribution - OPEB.. .. 101
i l
City of Calexico
Basic Financial Statements
For the Year Ended June 30, 2023
Table of Contents (Continued)
Page
FINANCIAL SECTION (Continued)
Supplementary Information:

Non-Major Governmental Funds:

Combining Balance Sheet... ... 106
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances.. ... 113 Internal Service Funds:

Statement of Net Position.... ... 122
Statement of Revenues, Expenses, and Changes in Net Position.. 124 Statement of Cash Flows. .. 126
All Agency Funds:

Combining Statement of Fiduciary Net Position. .. 133
Statement of Changes in Fiduciary Assets and Liabilities .. 134 THE

PUN GROUP

ACCOUNTANTS & ADVISORS
4660 La Jolla Village Drive, Suite 100
San Diego, California 9212:

INDEPENDENT AUDITORS' REPORT www.pungroup.cpa
To the Honorable Mayor and Members
of the City Council of the City of Calexico
Calexico. 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, each major fund, and the aggregate remaining fund information of the City of Calexico, California (the "City"), as of and for the year ended June 30, 2023, and the related notes to the basic 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, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2023, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for 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 Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

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.

ORANGE COUNTY • SAN DIEGO • SACRAMENTO • WALNUT CREEK • LAS VEGAS • PHOENIX To the Honorable Mayor and Members
of the City Council of the City of Calexico
Calexico, California

Auditors' 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 auditing standards generally accepted in the United States of America 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 auditing standards generally accepted in the United States of America 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.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Budgetary Comparison Schedules, the Schedule of the City's Proportionate Share of Net Pension Liability and Related Ratios, the Schedule of Changes in Net Pension Liability and Related Ratios, the Schedule of Contributions, and the Schedule of Changes in Total OPEB Liability and Related Ratios, as listed in the accompanying table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the 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. 2 To the Honorable Mayor and Members
of the City Council of the City of Calexico
Calexico, California

Management has omitted the management's discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.

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 Combining Nonmajor Fund Financial Statements are presented for purposes of additional analysis and are 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 Combining and Individual Fund Financial Statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 28, 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.

The fuel Group, Up
San Diego, California
March 28, 2024
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BASIC FINANCIAL STATEMENTS
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GOVERNMENT-WIDE FINANCIAL STATEMENTS
7 City of Calexico
Statement of Net Position
June 30, 2023
Primary Government
Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:

Cash and investments $ 45,948,540 $ 36,052,699 $ 82,001,239 Receivables:

Accounts 1,094,637 3,015,377 4,110,014
Intergovernmental 6,016,354 30,164 6,046,518
Internal balances 10,001 (10,001)
Lease receivable - current 131,021 131,021
Inventories and prepaid items 76,677 24,014 100,691
Deposits 312,900 312,900
Total current assets 53,590,130 39,112,253 92,702,383
Noncurrent assets:

Cash and investments with fiscal agents 1,275,758 36,859,054 38,134,812 Lease receivable - noncurrent 233,584 - 233,584
Capital assets:

Non-depreciable assets 10,760,921 10,891,758 21,652,679 Depreciable assets, net 68,579,839 39,886,090 108,465,929 Total capital assets, net 79,340,760 50,777,848 130,118,608 Total noncurrent assets 80,850,102 87,636,902 168,487,004 Total assets 134,440,232 126,749,155 261,189,387

DEFERRED OUTFLOWS OF RESOURCES
Deferred amount on refunding, net 72,069 72,069
Pension-related deferred outflows of resources 12,622,517 2,481,569 15,104,086 Total deferred outflows of resources 12,622,517 2,553,638 15,176,155 See accompanying Notes to the Basic Financial Statements. 8 City of Calexico
Statement of Net Position (Continued)
June 30, 2023
Primary Government
Governmental Business-Type
Activities Activities Total

LIABILITIES
Current liabilities:

Accounts payable 1,745,710 318,795 2,064,505
Accrued payroll 139,170 33,110 172,280
Interest payable 82,133 203,875 286,008
Compensated absences - due within one year 207,818 21,819 229,637 Claims payable - due within one year 2,227,760 - 2,227,760 Long-term debt - due within one year 952,014 782,264 1,734,278 Total current liabilities 5,505,286 1,359,863 6,865,149 Noncurrent liabilities:

Deposits payable 224,228 233,373 457,601
Compensated absences - due in more than one year 1,491,169 380,146 1,871,315 Claims payable - due in more than one year 2,003,000 2,003,000 Long-term debt - due in more than one year 5,944,235 38,934,674 44,878,909 Aggregate net OPEB liability 17,435,294 6,174,001 23,609,295 Aggregate net pension liability 29,185,096 6,291,039 35,476,135 Total noncurrent liabilities 56,283,022 52,013,233 108,296,255 Total liabilities 61,788,308 53,373,096 115,161,404

DEFERRED INFLOWS OF RESOURCES
Lease-related deferred outflows of resources 353,297 353,297 Pension-related deferred inflows of resources 2,011,454 391,278 2,402,732 OPEB-related deferred inflows of resources 6,206,197 2,197,355 8,403,52 Total deferred inflows of resources 8,570,948 2,588,633 11,159,581

NET POSITION
Net investment in capital assets 72,444,511 47,992,033 120,436,544 Restricted for:

Special projects 13,490,036 13,490,036
Debt service 998,170 998,170
Capital projects 26,561,079 26,561,079
Total restricted 41,049,285 41,049,285
Unrestricted (deficit) (36,790,303) 25,349,031 _(11.441,272) Total net position $ 76,703,493 $ 73,341,064 150,044,557 See accompanying Notes to the Basic Financial Statements. 9 City of Calexico
Statement of Activities
For the Year Ended June 30, 2023
Program Revenues
Charges Operating Capital Total
for Grants and Grants and Program
Functions/Programs Expenses Services Contributions Contributions Revenues Primary government:

Governmental activities:

General government 3,268,559 237,646 $ 533,256 $ 62,747 $ 833,649 Public safety 11,516,818 2,023,505 5,625,977 59,331 7,708,813 Public works 8,600,214 2,698,322 1,040,896 4,710,787 8,450,005 Culture and recreation 1,436,477 118,926 96,835 254,725 470,486 Planning and building 474,425 993,091 993,091
Housing 71,775 4,000 377,638
381,638
Interest and fiscal charges 245,127
Total governmental activities 25,613,395 6,075,490 7,674,602 5,087,590 18,837,682 Business-type activities:

Water 6,888,999 8,027,695 412,469 8,440,164
Wastewater 4,338,259 6,178,808 349,223 6,528,031
Airport 716,349 373,546 1,074,294 1,447,840
Total business-type activities 11,943,607 14,580,049 1,835,986 16,416,035 Total primary government 37,55,002 20,655,539 7,674,602 $ 6,923,576 35,253,717 See accompanying Notes to the Basic Financial Statements. 10 City of Calexico
Statement of Activities (Continued)
For the Year Ended June 30, 2023
Net (Expense) Revenue and
Changes in Net Position
Primary Government
Governmental Business-Type
Functions/Programs Activities Activities Total
Primary government:

Governmental activities:

General government $ (2,434,910) $ (2,434,910)
Public safety (3,808,005) (3,808,005)
Public works (150,209) (150,209)
Culture and recreation (965,991) (965,991)
Planning and building 518,666 518,666
Housing 309,863 309,863
Interest and fiscal charges (245,127) (245,127)
Total governmental activities (6,775,713) (6,775,713)
Business-type activities:

Water 1,551,165 1,551,165
Wastewater : 2,189,772 2,189,772
Airport 731,491 731,491
Total business-type activities 4,472,428 4,472,428
Total primary government (6,775,713) 4,472,428 (2,303,285) General revenues:

Taxes:

Property taxes 6,589,616 6,589,616
Sales taxes 8,611,052 8,611,052
Transit occupancy taxes 582,508 582,508
Franchise fees 741,532 741,532
Non-regulatory business license tax 883,613 883,613
Other taxes 262,383 262,383
Total taxes 17,670,704 17,670,704
Investment income (loss) 943,569 667,734 1,611,303
Miscellaneous 32,293 25 32,318
Transfers 1,043,760 (1,043,760)
Total general revenues 19,690,326 (376,001) 19,314,325
Changes in net position 12,914,613 4,096,427 17,011,040 Net position - beginning of year 63,788,880 69,244,637 133,033,517 Net position - end of year 76,703,493 $ 73,341,064 $ 150,044,557 See accompanying Notes to the Basic Financial Statements.

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12 FUND FINANCIAL STATEMENTS
13 This page intentionally left blank.
14 GOVERNMENTAL FUND

FINANCIAL STATEMENTS
General Fund - This is the primary operating fund of the City. It is used to account for all revenues and expenditures that are not required to be accounted for in another fund.

LTA Measure D Special Revenue Fund - This fund accounts for revenues from 0.5% retail and use tax used for transportation improvements to repair and rehabilitate existing roadways, reduce congestion and improve safety, and to provide for construction of needed facilities.

FEMA/ARPA Special Revenue Fund - This fund accounts for Federal and State disaster relief and American Rescue Plan Act grants
15 City of Calexico
Balance Sheet
Governmental Funds
June 30, 2023
Major Funds
LTA Measure D FEMA/ARPA
General Special Revenue Special Revenue
Fund Fund Fund
ASSETS
Cash and investments 1,365,595 $ 12,487,277 $ 7,022,813 Cash and investments with fiscal agents
Receivables:

Accounts 1,086,095 -
Intergovernmental 1,851,308 1,321,239
Lease 364,605 -
Deposits -
Inventories and prepaid items 68,715
Total assets $ 4,736,318 $ 12,487,277 $ 8,344,052

LIABILITIES AND

FUND BALANCES
Liabilities:

Accounts payable and accrued liabilities 548,701 $ 2,302 $ 82,105 Accrued payroll 136,575 -
Due to other funds
Deposits payable 176,600 - -
Unearned revenue 28,261
Total liabilities 861,876 2,302 110,366
Deferred Inflows of Resources:

Lease-related deferred inflows of resources 353,297 -
Unavailable revenue 1,321,239
Total deferred inflows of resources 353,297 1,321,239
Fund Balances:

Non-spendable 68,715
Restricted 12,484,975 6,912,447
Assigned 228,569
Unassigned (deficit) 3,223,861
Total fund balances 3,521,145 12,484,975 6,912,447
Total liabilities and fund balances $ 4,736,318 $ 12,487,277 $ 8,344,052 See accompanying Notes to the Basic Financial Statements.

City of Calexico
Balance Sheet (Continued)
Governmental Funds
June 30. 2023
Non-Major Total
Governmental Governmental
Funds Funds
ASSETS
Cash and investments $ 21,939,650 $ 42,815,335
Cash and investments with fiscal agents 1,275,758 1,275,758 Receivables:

Accounts 8,542 1,094,637
Intergovernmental 2,843,807 6,016,354
Lease 364,605
Deposits 137,900 137,900
Inventories and prepaid items 68,715
Total assets $ 26,205,657 $ 51,773,304

LIABILITIES AND

FUND BALANCES
Liabilities:

Accounts payable and accrued liabilities 697,395 $ 1,330,503 Accrued payroll 2,595 139,170
Due to other funds 2,554,757 2,554,757
Deposits payable 47,628 224,228
Unearned revenue 122,420 150,681
Total liabilities 3,424,795 4,399,339
Deferred Inflows of Resources:

Lease-related deferred inflows of resources 353,297
: 1,321,239
Unavailable revenue
Total deferred inflows of resources 1,674,536
Fund Balances:

Non-spendable - 68,715
Restricted 21,651,863 41,049,285
Assigned 1,192,429 1,420,998
Unassigned (deficit) (63,430) 3,160,431
Total fund balances 22,780,862 45,699,429
Total liabilities and fund balances $ 26,205,657 $ 51,773,304 See accompanying Notes to the Basic Financial Statements. 17 This page intentionally left blank.
18 City of Calexico
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position
June 30, 2023
Total Fund Balances - Total Governmental Funds $ 45,699,429 Amounts reported for governmental activities in the Statement of Net Position were different because:

Eepital ases used in govermenal aci were not curent financial esoures and therefore were not reponcd in the Nondepreciable 10,760,921
Depreciable, net of accumulated depreciation 68,579,839 Total capital assets 79,340,760
Long-term liabilities were not due and payable in the current period and therefore were not reported in the governmental funds.

Compensated absences - due within one year (207,818)
Compensated absences - due in more than one year (1,491,169) Long-term liabilities - due within one year (952,014)
Long-term liabilities - due in more than one year (5,944,235) Aggregate net OPEB liability (17,435,294)
Aggregate net pension liability (29,185,096)
Total reported in Government-Wide Statement of Net Position (55,215,626) Pension-related deferred outflows/inflows of resources in the governmental activities were not current financial resources (uses) and therefore were not reported in the Governmental Funds Balance Sheet.

Pension-related deferred outflows of resources 12,622,517 Pension-related deferred inflows of resources (2,011,454) OPEB-related deferred outflows/inflows of resources in the governmental activities were not current financial resources (uses) and therefore were not reported in the Governmental Funds Balance Sheet.

OPEB-related deferred inflows of resources (6,206,197)
Interest payable on long-term debt did not require current financial resources. Therefore, interest payable was not reported as a liability in the governmental funds. (82,133) Unavailable revenues reported on the Governmental Fund Financial Statements resulting from activities in which revenues were carned but were not available are reclassified as revenues in the Government-Wide Financial Statements. 1,321,239 1,234,958
Net Position of Governmental Activities $ 76,703,493
See accompanying Notes to the Basic Financial Statements. 19 City of Calexico
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
For the Year Ended June 30, 2023
Major Funds
LTA Measure D FEMA/ARPA
General Special Revenue Special Revenue
Fund Fund Fund
REVENUES:

Property taxes $ 3,125,032 $
Other taxes 10,030,909
Licenses and permits 1,941,657 -
Intergovernmental 3,790,861 1,847,350 4,763,493
Charges for services 2,063,045
Fines and forfeitures 221,308
Investment income 564,981 216,173
Other revenues 20,527
Total revenues 21,758,320 2,063,523 4,763,493
EXPENDITURES:

Current:

General government 3,160,021 :

Public safety 12,902,297 :

Public works 1,018,893 150,000
Culture and recreation 1,127,772 41,206
Planning and building 843,029 37,308
Housing 133,380 -
Contribution to CFD 2013-1 225,402 -
65639 980,048
Capital outlay -
Debt service:

Principal 235,874 -
Interest and fiscal charges 4,782
Total expenditures 19,651,450 215,639 1,058,562

REVENUES OVER (UNDER)
EXPENDITURES 2,106,870 1,847,884 3,704,931
OTHER FINANCING SOURCES (USES):

Transfers in
Transfers out (1,522,250)
Total other financing sources (uses) (1,522,250)
NET CHANGE IN FUND BALANCE 584,620 1,847,884 3,704,931
FUND BALANCES:

Beginning of year 2,936,525 10,637,091 3,207,516
End of year $ 3,521,145 $ 12,484,975 $ 6,912,447
See accompanying Notes to the Basic Financial Statements. 20 City of Calexico
Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Governmental Funds
For the Year Ended June 30, 2023
Non-Major Total
Governmental Governmental
Funds Funds
REVENUES:

Property taxes $ $ 3,125,032
Other taxes - 10,030,909
Licenses and permits - 1,941,657
Intergovernmental 5,035,674 15,437,378
Charges for services 3,818,449 5,881,494
Fines and forfeitures 221,308
Investment income 264,898 1,046,052
Other revenues 15,007 35,534
Total revenues 9,134,028 37,719,364
EXPENDITURES:

Current:

General government 7,269 3,167,290
Public safety 414,351 13,316,648
Public works 3,894,820 5,063,713
Culture and recreation 92,865 1,261,843
Planning and building 880,337
Housing 15,424 148,804
Contribution to CFD 2013-1 225,402
Capital outlay 3,137,825 4,183,512
Debt service:

Principal 685,000 920,874
Interest and fiscal charges 309,000 313,782
Total expenditures 8,556,554 29,482,205

REVENUES OVER (UNDER)
EXPENDITURES 577,474 8,237,159
OTHER FINANCING SOURCES (USES):

Transfers in 1,609,328 1,609,328
Transfers out (87,078) (1,609,328)
Total other financing sources (uses) 1,522,250
NET CHANGE IN FUND BALANCE 2,099,724 8,237,159
FUND BALANCES:

Beginning of year 20,681,138 37,462,270
End of year $ 22,780,862 $ 45,699,429
See accompanying Notes to the Basic Financial Statements.

City of Calexico
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Position For the Year Ended June 30, 2023
Net Change in Fund Balances - Total Governmental Funds $ 8,237,159 Amounts reported for governmental activities in the Statement of Activities were different because:

Governmental funds reported capital outlay as expenditures. Capital outlay expenditures were included in the Statement of Revenues, Expenditures, and Changes in Fund Balances throughout various departments. However, in the Government- Wide Statement of Activities, the cost of those assets was allocated over the estimated useful lives as depreciation expense. ($230,036 of the governmental fund capital outlay balance were for repairs and maintenance expenditures). 3,953,476 Depreciation expense on capital assets was reported in the Government-Wide Statement of Activities, but it did not require the use of current financial resources. Therefore, depreciation expense was not reported as an expenditure in governmental funds. (4,556,052)
Certain pension expenses reported in the Government-Wide Statement of Activities do not require the use of current financial resources and therefore, are not reported as expenditures in governmental funds.

Changes in pension-related deferred outflows of resources 6,987,496 Changes in net pension liabilities (14,178,844)
Changes in pension-related deferred inflows of resources 9,873,949 Certain OPEB expenses reported in the Government-Wide Statement of Activities do not require the use of current financial resources and therefore, are not reported as expenditures in governmental funds.

Changes in total net OPEB liabilities 589,961
Changes in OPEB-related deferred inflows of resources 1,215,469 Long-term compensated absences were reported in the Government-Wide Statement of Activities, but they did not require the use of current financial resources. Therefore, the change in long-term compensated absences was not reported as an expenditure in governmental funds. 12,686
Repayment of bond principal was an expenditure in governmental funds, but the repayment reduced long-term liabilities in the Government-Wide Statement of Net Position.

Bond payment 685,000
Finance purchase agreement payment 235,874
Amortization expenses were reported in the Government-Wide Statement of Activities and Changes in Net Position, but they did not require the use of current financial resources. Therefore, amortization expenses were not reported as expenditures in the Governmental Funds.

Bond premiums 60,663
Revenues in the Government-Wide Statement of Activities that do not provide current financial resources and are not reported as revenue in the governmental funds. (265,000) Interest expense on long-term debt was reported in the Government-Wide Statement of Activities, but it did not require the use of current financial resources. The following amount represents the change in accrued interest from the prior year. 7,992 Internal service funds were used by management to charge the costs of certain activities to individual funds. The net revenue of internal service funds was reported with governmental activities. 54,784 Change in Net Position of Governmental Activities $ 12,914,613 See accompanying Notes to the Basic Financial Statements. 22 PROPRIETARY FUND

FINANCIAL STATEMENTS
Water Enterprise Fund - This fund accounts for the operation, maintenance, debt service, and capital improvements of the City's water distribution system.

Wastewater Enterprise Fund - This fund accounts for the operation, maintenance, debt service, and capital improvements of the City's wastewater collection system, the wastewater treatment facility, and the recycled water disposal system.

Airport Enterprise Fund - The fund is used to account for the operation, maintenance, and capital improvements of the City's airport.
23 City of Calexico
Statement of Net Position
Proprietary Funds
June 30, 2023
Non-Major Internal
Fund Service
Major Pinascalc Funds
Water Airport Total
ASSETS
Current assets:

Cash and investments $ 8,800,069 $ 27,252,380 $ 250 $ 36,052,699 $ 3,133,205 Accounts receivable, net 3,015,377 - 3,015,377
Intergovernmental receivables 30,164 30,164
Due from other funds - 2,564,758
Deposits 175,000
Inventories and prepaid items 780 780 22,454 24,014 7,962 Total current assets 11,816,226 27,253,160 52,868 39,122,254 5,880,925 -
Noncurrent assets:

Cash and investments with fiscal agents 14,256,478 22,602,576 - 36,859,054 - Capital assets:

Non-depreciable 2,756,198 4,240,473 3,895,087 10,891,758 Depreciable, net 30,101,031 6,981,315 2,803,744 39,886,090 Total net capital assets 32,857,229 11,221,788 6,698,831 50,777,848 Total noncurrent assets 47,113,707 33,824,364 6,698,831 87,636,902 Total assets 58,929,933 61,077,524 6,751,699 126,759,156 5,880,925

DEFERRED OUTFLOWS OF RESOURCES
Deferred amount on refunding, net 72,069 72,069
Pension-related deferred outflows of resources 1,490,224 991,345 2,481,569 Total deferred outflows of resources 1,562,293 991,345 2,553,638 See accompanying Notes to the Basic Financial Statements. 24 City of Calexico
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2023
Non-Major Internal
Major Funds Fund Service
Water Wastewater Airport Total Funds

LIABILITIES
Current liabilities:

Accounts payable 165,176 115,804 37,815 318,795 415,207 Accrued payroll 17,911 13,326 1,873 33,110
Interest payable 85,008 118,867 - 203,875
Due to other funds 10,001 10,001
Compensated absences - due within one year 15,589 6,230 21,819 Claims payable - due within one year 2,227,760
Long-term debt - due within one year 326,013 456,251 782,264 Total current liabilities 609,697 710,478 49,689 1,369,864 2,642,967 Noncurrent liabilities:

Deposits payable 232,972 401 233,373
Compensated absences - due in more than one year 239,082 141,064 380,146 Total OPEB liability 3,769,275 2,404,726 6,174,001 -
Aggregate net pension liability 3,777,875 2,513,164 6,291,039 Claims payable - due in more than one year 2,003,000
Long term debt - due in more than one year 16,242,573 22,692,101 38,934,674 Total noncurrent liabilities 24,261,777 27,751,055 401 52,013,233 2,003,000 Total liabilities 24,871,474 28,461,533 50,090 53,383,097 4,645,967

DEFERRED INFLOWS OF RESOURCES
Pension-related deferred inflows of resources 234,969 156,309 391,278 OPEB-related deferred inflows of resources 1,341,502 855,853 2,197,355 = Total deferred inflows of resources 1,576,471 1,012,162 2,588,633

NET POSITION
Net investment in capital assets 30,617,190 10,676,012 6,698,831 47,992,033 - Unrestricted 3,427,091 21,919,162 2,778 25,349,031 1,234,958 Total net position $ 34,044,281 $ 32,595,174 $ 6,701,609 $ 73,341,064 $ 1,234,958 See accompanying Notes to the Basic Financial Statements. 25 This page intentionally left blank.
26 City of Calexico
Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds
For the Year Ended June 30, 2023
Non-Major Internal
Major Fun astewater Fund Service
Water Airport Total Funds
OPERATING REVENUES:

Charges for services $ 8,027,695 $ 6,178,808 $ 373,546 $ 14,580,049 $ 5,872,920 Other revenue 25 25 473,740
Total operating revenues 8,027,695 6,178,808 373,571 14,580,074 6,346,660 OPERATING EXPENSES:

Salaries and benefits 2,173,230 1,243,675 143,640 3,560,545 712,000 Material, supplies, and operational expenses 2,735,019 1,962,316 306,457 5,003,792 242,851 Insurance - 6,705 6,705 1,005,162
Claim payments 4,040,696
Claims administration 1,364,880
177325
Depreciation 1,505,893 2,242,765
Total operating expenses 6,414,142 3,683,316 716,349 10,813,807 7,365,589 OPERATING INCOME (LOSS) 1,613,553 2,495,492 (342,778) 3,766,267 (,018,929) NONOPERATING REVENUES (EXPENSES):

Capital grants and contributions 412,469 349,223 1,074,294 1,835,986 Investment income 178,508 489,226 667,734 29953
Interest expense (474,857) (654,943) - (1,129,800)
Total nonoperating revenues (expenses) 116,120 183,506 1,074,294 1,373,920 29,953 INCOME (LOSS) BEFORE TRANSFERS 1729,673 2,678,998 731,516 5,140,187 (988,976) TRANSFERS:

Transfers in - - 1,393,760
Transfers out (1,043,760) (1,043,760) (350,000)
Total transfers (1,043,760) (1,043,760) 1,043,760
Change in net position 685,913 2,678,998 731,516 4,096,427 54,784 NET POSITION:

Beginning of year 33,358,368 29,916,176 5,970,093 69,244,637 1,180,174 End of year $ 34,044,281 $ 32,595,174 $ 6,701,609 $ 73,341,064 $ 1,234,958 See accompanying Notes to the Basic Financial Statements. 27 City of Calexico
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2023
Non-Major Internal
Major Funds Fund Service
Water Wastewater Airport Total Funds
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers and users $ 7,878,961 $ 6,178,808 $ 370,655 $ 14,428,424 $ 6,420,399 Cash payments to suppliers for goods and services (2,712,866) (1,988,219) (363,584) (5,064,669) (2,346,070) Cash payments to employees for services (2,836,338) (1,900,944) (142,547) (4,879,829) (4,342,344) Net cash provided by (used in) operating activities 2,329,757 2,289,645 (135,476) 4,483,926 (268,015)

CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:

Cash received from other funds 267,122
Cash payments to other funds - (815,393) (815,393) (1,020) Transfers in 1,393,760
Transfers out (1,043,760) (1,043,760) (350,000)
-
Net cash provided by (used in) noncapital
financing activities (631,291) (815,393) (1,446,684) 1,309,862 -

CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:

Acquisition of capital assets (70,813) (284,324) (2,002,740) (2,357,877) Capital grants and contributions 412,469 349,223 2,908,330 3,670,022 Principal payınents on bonds (305,000) (425,000) (730,000) Principal payments on capital leases (64,518) (41,547) (106,065) Interest payments on debt (519,685) (724,491) (1,244,176) Net cash provided by (used in) capital and
related financing activities (547,547) (1,126,139) 905,590 (768,096) -
CASH FLOWS FROM INVESTING ACTIVITIES:

Interest income (loss) 178,508 489,226 667,734 29,953
Net cash provided by (used in) investing activities 178,508 489,226 667,734 29,953 Net increase (decrease) in cash and cash equivalents 1,329,427 1,652,732 (45,279) 2,936,880 1,071,800 CASH AND CASH EQUIVALENTS:

Beginning of year 22,139,589 48,202,224 45,529 70,387,342 2,061,405 End of year $ 23,469,016 $ 49,854,956 $ 250 $73,324,222 $ 3,133,205

RECONCILIATION OF CASH AND INVESTMENTS
TO STATEMENT OF NET POSITION:

Cash and investments $ 8,800,069 $ 27,252,380 $ 250 $ 36,052,699 $ 3,133,205 Cash and investments with fiscal agents 14,256,478 22,602,576 36,859,054 Total cash and investments $ 23,056,547 $ 49,854,956 $ 250 $ 72,911,753 $ 3,133,205 See accompanying Notes to the Basic Financial Statements. 28 City of Calexico
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2023
Internal
Major Funds Service
Water Wastewater Airport Total Funds

RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED
BY (USED IN) OPERATING ACTIVITIES:

Operating income (loss) $ 1,613,553 $ 2,495,492 $ (342,778) $ 3,766,267 $ (1,018,929) Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:

Depreciation 1,505,893 477,325 259,547 2,242,765 -
Changes in operating assets and liabilities:

Accounts receivable (150,727) - - (150,727) 73,739
Inventories, prepaid items, and deposits 1,620 - 58,606 60,226 209,951 Pension-related deferred outflows (817,600) (540,268) (1,357,868) Accounts payable 20,533 (25,903) (109,028) (114,398) (389,736) Accrued payroll 6,185 4,845 1,093 12,123 -
Deposits payable 1,993 (2,916) (923)
Compensated absences 38,240 22,449 60,689
Aggregate net pension liability 1,766,485 1,164,277 2,930,762 Total OPEB liability 221,529 4,526 ..... 226,055
Claims payable 856,960
Pension-related deferred inflows (1,758,710) (1,180,700) (2,939,410) - OPE-related deferred inflows (119,237) (132,398) (251,635) Total adjustments 716,204 (205,847) 207,302 717,659 750,914 Net cash provided by (used in)
operating activities $ 2,329,757 $ 2,289,645 (135,476) $ 4,483,926 $ (268,015)

SCHEDULE OF NONCASH
NONCAPITAL FINANCING ACTIVITIES:

Amortization of bond premiums
Total noncash noncapital financing activities
See accompanying Notes to the Basic Financial Statements. 29 This page intentionally left blank.

FIDUCIARY FUND

FINANCIAL STATEMENTS
Custodial Funds - These funds are used to account for money and property held by the City as trustee or custodian.

Such funds include 2013-1 Gran Plaza CFD and Hearthstone 2005-1 CFD.

Successor Agency to the Calexico Redevelopment Agency Private Purpose Trust Fund - This fund is used to ccount for monies received from the Imperial County Auditor-Controller for the repayment of the enforceab. bligations of the former Redevelopment Agency of the City of Calexico. These funds are restricted for the sole purpos of payment of items on an approved Recognized Payment Obligation Schedule (ROPS). 31 This page intentionally left blank.
32 City of Calexico
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2023
Successor Agency
to the Calexico
Custodial Redevelopment
Funds Agency
ASSETS
Current assets:

Cash and investments $ 518,409 $ 3,519,999
Cash and investments with fiscal agents 828,406 435,180 Due from other governments 55,146
Total current assets 1,401,961 3,955,179
Noncurrent assets:

Capital assets:

Nondepreciable 1,106,663
Depreciable, net accumulated depreciation 1,571,297
Total noncurrent assets 2,677,960
Total assets 1,401,961 6,633,139

DEFERRED OUTFLOWS OF RESOURCES
Deferred amount on refunding, net 594,418
Total deferred outflows of resources 594,418

LIABILITIES
Current liabilities:

Accounts payable 4,541 1,158,019
Interest payable 237,153
Long-term debt - due within one year 1,710,000
Total current liabilities 4,541 3,105,172
Noncurrent liabilities:

Long term debt - due in more than one year - 14,834,632 Total noncurrent liabilities 14,834,632
Total liabilities 4,541 17,939,804

NET POSITION (DEFICIT)
Restricted for:

Individuals, organizations, and other governments 1,397,420 Held in trust for dissolution of RDA (10.712,247)
Total net position (deficit) $ 1,397,420 $ (0,712,247)
See accompanying Notes to the Basic Financial Statements.

City of Calexico
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Year Ended June 30, 2023
Successor Agency
to the Calexico
Custodial Redevelopment
Funds Agency
ADDITIONS:

Property taxes - Redevelopment Property Tax Trust Fund (RPTTF) $ - $ 2,352,825 Fee collections for other governments - 204,942
Special assessments for other governments 1,090,027
Investment income 29,328 109,677
Contribution from City 225,402
Other revenue 120,000
Total additions 1,344,757 2,787,444
DEDUCTIONS:

Administration 68,081
Public safety 141,617
Depreciation 45,877
: 258,459
Enforceable obligations
Payments - principal 295,000 -
Payments - interest 1,000,438
Interest expense and fiscal charges 788,206
Total deductions 1,505,136 1,092,542
Change in net position (160,379) 1,694,902
NET POSITION (DEFICIT):

Beginning of year 1,557,799 (12,407,149)
End of year 1,397,420 $ (10,712,247)
See accompanying Notes to the Basic Financial Statements. 34 NOTES TO THE BASIC FINANCIAL STATEMENTS
35 This page intentionally left blank.
36 City of Calexico
Index to the Notes to the Basic Financial Statements
For the Year Ended June 30, 2023
Note 1 - Reporting Entity and Summary of Significant Accounting Policies... .. 41 A. Financial Reporting Entity.. 41
B. Basis of Accounting and Measurement Focus... 42
C. Deferred Outflows and Inflows of Resources 46
D. Cash, Cash Equivalents and Investments... 46
E. Restricted Cash and Investments 46
F. Fair Value Measurement. 47
G. Interfund Transactions 47
H. Inventories and Prepaid Items.. 47
I. Leases. 47
J. Capital Assets... 49
K. Pensions
L. Other Postemployment Benefits ("ОРЕB")...

M. Compensated Absences ..

N. Unearned Revenue
O. Long-Term Debt..

P. Net Position ...

Q. Fund Balances..

R. Spending Policy 52.

S. Property Taxes
T. Use of Accounting Estimates 53
U. Implementation of New GASB Pronouncements for the
Year Ended June 30, 2023 54
V. Upcoming Governmental Accounting Standards Implementation 55 Note 2 - Cash and Investments.. ... 55
A. Demand Deposits.. 56
B. Investments Authorized by the California Government Code and the City's Investment Policy..... 57
C. Investments Authorized by Debt Agreements. 57
D. External Investment Pool.. .57
E. Risk Disclosures 58
Note 3 - Lease Receivable. .. 59
A. Governmental Activities 59
Note 4 - Notes and Loans Receivable and Allowance for Doubtful Accounts.. .. 60 Note 5 - Interfund Transactions .. 62
A. Due To and Due From Other Funds 62
B. Transfers In/Out. 62
Note 6 - Capital Assets. .. 63
A. Governmental Activities 63
B. Business-Type Activities 64
C. Fiduciary Funds ... 64
37 City of Calexico
Index to the Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2023
Note 7 - Long-Term Debt........... 65
A. Governmental Activities 65
B. Business-Type Activities. 66
C. Fiduciary Funds. 68
D. Conduit Debt. 71
Note 8 - Compensated Absences.... 72
72 B. Busies Type Acite..
72 Note 9 - Risk Management. .. 72
A. Summary. 72
Public Risk Innovation, Solutions, and Management - Excess Insurance Authority 73 Note 10 - Pension Plans.. .. 74
A. Summary. 74
B. General Information about Pension Plans.... 75
C. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions .. 77
D. Payable to the Pension Plan 81
Note 11 - Other Postemployment Benefits. .. 81
A. Summary.. 81
B. General Information about OPEB 82
C. Net OPEB Liability, OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB 82
Note 12 - Commitments and Contingencies... .. 85
A. Litigation. 85
B. Grants. 86
C. Construction 86
D. CFD 2013-1 86
Note 13 - Deferred Compensation Plan ...... .... 86
Note 14 - Self-Funded Medical, Dental and Vision Plan.. ... 87 Note 15 - Other Required Disclosures.... .. 87
A. Deficit Fund Balances/Net Position.. 87
B. Expenditures Exceeding Appropriations.. 87
38 City of Calexico
Index to the Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2023
Note 16 - Fund Balance Classification.................... ............... 88 Note 17 - Net Investment in Capital Assets ......... ...... 88 39 This page intentionally left blank.
40 City of Calexico
Notes to the Basic Financial Statements
For the Year Ended June 30, 2023
Note 1 - Reporting Entity and Summary of Significant Accounting Policies The basic financial statements of the City of Calexico, California (the "City") have been prepared in conformity with City's accounting policies are described below.

A. Financial Reporting Entity
The City was incorporated in April, 1908, under the General Laws of the State of California and enjoys all the rights and privileges pertaining to such "General Law" cities. It is governed by an elected five-member council. The City operates under a Council-Manager form of government and provides the following services: public safety (police and fire), highways and streets, culture-recreation, public improvements, planning and building (planning, building and zoning), airport, public utilities (water and wastewater), and general administrative services.

In evaluating how to define the City for financial reporting purposes, management has considered all potential component units. The primary criteria for including a potential component unit within the reporting entity are the governing body's financial accountability and a financial benefit or burden relationship and whether it is misleading to exclude. A primary government is financially accountable and shares a financial benefit or burden relationship if it appoints a voting majority of an organization's governing body and it is able to impose its will on the organization, or if there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on the primary government. A primary government may also be financially accountable if an organization is fiscally dependent on the primary government regardless of whether the organization has a separately elected governing board, a governing board appointed by a higher level of government, or a jointly appointed board, and there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on the primary government.

Blended Component Units
The financial reporting entity consists of the primary government, the City, and its component units. Component units are legally separate entities for which the elected officials of the primary government are financially accountable. In addition, component units can be other organizations for which the primary government is accountable and their exclusion would cause the reporting entity's financial statements to be misleading or incomplete.

Blended component units, although legally separate entities, are, in substance part of the government's operation and so data from these units are combined with data of the primary government. Discretely presents component units, on the other hand, are reported in a separate column in the combined financial statements to emphasize that they are legally separate from the government.

Although the following are legally separate from the City, they have been "blended" as though they are part of the City because the component unit's governing body is substantially the same as the City's and there is a financial benefit or burden relationship between the City and the component unit; management of the City has operational responsibilities for the component units; and/or the component units provide services entirely, or almost entirely, to the City or otherwise exclusively, or almost exclusively, benefits the City, even though it does not provide services directly to it.

City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 1 - Reporting Entity and Summary of Significant Accounting Policies (Continued) A. Financial Reporting Entity (Continued)
Calexico Financing Authority (the "Financing Authority") Agreement, dated as of December 1, 1990 (the "Joint Powers Agreement") by and between the Successor Agency the Community Redevelopment Agency of the City of alexico a successor y. interest to the Cammunic, redevelonment Agencv of the Citv of Calexico) (the
bonds issued by any local agency at public or negotiated sale and may sell bonds to public or private purchasers at public or negotiated sale. The Financing Authority is governed by a five-member board of directors, which consists of the members of the City Council of the City. The Mayor acts as the Chair of the Financing Authority, the City Manager as its Executive Director, the City Clerk as its Secretary and the Finance Director of the City as the Treasurer of the Financing Authority. The Authority, the City, and the Successor Agency are each separate and distinct legal entities, and the debts and obligations of each such entity are not debts or obligations of the other entity.

Under the provisions of State law, the Community Redevelopment Agency of the City of Calexico was statutorily dissolved and succeeded by the Successor Agency with respect to the Joint Powers Agreement. The Financing Authority reasonably expects that the existence of the Successor Agency will continue through at least August 1, 2033, which is later than the last maturity of the Bonds. Nonetheless, under the Trust Agreement, the Financing Authority has covenanted to take or cause to be taken all actions reasonably necessary to continue the Financing Authority's existence until such time as the Bonds are no longer Outstanding under the Trust Agreement, including but not limited to the addition of one or more new members to the Joint Powers Agreement.

Calexico Housing Authority (the "Housing Authority")
The Housing Authority was formed on January 31, 2012 to develop or acquire and subsequently operate rental housing projects within the City. The Housing Authority does not issue separate financial statements.

B. Basis of Accounting and Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds is maintained in accordance with legal and managerial requirements.

Government-Wide Financial Statements
The City's Government-Wide Financial Statements include a Statement of Net Position and a Statement of Activities and Changes in Net Position. These statements present summaries of governmental and business-type activities for the City accompanied by a total column. Fiduciary activities of the City are not included in these statements.

These financial statements are presented on an "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all of the City's assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in Net Position.
42 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 1 - Reporting Entity and Summary of Significant Accounting Policies (Continued) B. Basis of Accounting and Measurement Focus (Continued) Government-Wide Financial Statements (Continued)
Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities and deferred inflows of resources resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues. expenses, gains, losses, assets, deferred outflows of resources, liabilities and deferred inflows of resources resulting from non-exchange transactions are recognized in accordance with the requirements of GASB Statement No. 33.

Program revenues include charges for services, special assessments, and payments made by parties outside of the reporting government's citizenry if that money is restricted to a particular program. Program revenues are netted with program expenses in the statement of activities to present the net cost of each program. Program revenues for the City are classified in three categories:
• Charges for services
• Operating grants and contributions
» Capital grants and contributions
Certain eliminations have been made in regards to interfund activities, payables and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities and Changes in Net Position, internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. The following interfund activities have been eliminated:
• Due to/from other funds
• Transfers in/out
Government Fund Financial Statements
Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances. An accompanying schedule is presented to reconcile and explain the differences in Net Position as presented in these statements to the Net Position presented in the Government-Wide Financial Statements. The City has presented all major funds that met the applicable criteria.

All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in Fund Balances presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets.

Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Measurable means that the amounts can be estimated, or otherwise determined. Available means that the amounts were collected during the reporting period or soon enough thereafter to be available to finance the expenditures accrued for the reporting period. The City uses an availability period of 90 days for all revenues, with the exception of grant revenues, for which the availability period is one year.
43 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 1- Reporting Entity and Summary of Significant Accounting Policies (Continued) B. Basis of Accounting and Measurement Focus (Continued) Government Fund Financial Statements (Continued)
Sales taxes, property taxes, franchise taxes, gas taxes, motor vehicle in-lieu, transient occupancy taxes, grants and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period to the extent normally collected within the availability period Other revenue items are considered to be measurable and available when cash is received by the government.

Revenue recognition is subject to the measurable and available criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction upon which they are based takes place. Imposed non- exchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the revenues arises or when they are received, whichever occurs first. Government-mandated and voluntary non-exchange transactions have been recognized as revenues when all applicable eligibility requirements have been met.

The Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34.

The City reports the following major governmental funds:

General Fund - This fund accounts for all revenues and expenditures to finance the traditional services associated with a municipal government which are not accounted for in the other funds.

LTA Measure D Special Revenue Fund - This fund accounts for revenues from 0.5% retail and use tax used for transportation improvements to repair and rehabilitate existing roadways, reduce congestion and improve safety, and to provide for construction of needed facilities. The reported tax revenue amounts are net of amounts deposited directly to the Measure D Debt service fund which are pledged for the payment of Measure D Sales Tax Revenue Bonds.

FEMA/ARPA Special Revenue Fund - This fund accounts for Federal and State disaster relief and American Rescue Plan Act grants
Proprietary Fund Financial Statements
Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Fund Net Position presents increases (revenues) and decreases (expenses) in total Net Position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. In these funds, receivables have been recorded as revenue and provisions have been made for uncollectible amounts.

City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 1 - Reporting Entity and Summary of Significant Accounting Policies (Continued) B. Basis of Accounting and Measurement Focus (Continued) Proprietary Fund Financial Statements (Continued)
Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the und. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that ar ssential to the primary operations of the fund. All other expenses are reported as non-operating expense Proprietary funds are supported by user fees or other restricted grant revenues and their resources in the funds are not available for general city operations. In California, voters have enacted limitations on the ability of local governments to assess taxes for general operations. User fees are an important alternate revenue tool that is available to local governments to finance specific municipal services. Because user rates are set with a nexus to the cost of service supporting the fee, they may be set by the local government outside of tax limitations. However, if user fees are redirected outside of their source program, they would no longer have a nexus to the cost of service, and would cause the revenue to become an unauthorized general tax.

The City reports the following major proprietary funds:

Water Enterprise Fund - This fund accounts for the operation, maintenance, debt service, and capital improvements of the City's water distribution system.

Wastewater Enterprise Fund - This fund accounts for the operation, maintenance, debt service, and capital improvements of the City's wastewater collection system, the wastewater treatment facility, and the recycled water disposal system.

Fiduciary Fund Financial Statements
Fiduciary fund financial statements include a Statement of Net Position and a Statement of Changes in Fiduciary Net Position. The City's fiduciary funds represent custodial funds and private purpose trust funds. Both custodial funds and the private purpose trust funds are accounted for on the full accrual basis of accounting.

Fiduciary fund types are accounted for according to the nature of the fund. The City's custodial funds are purely custodial in nature (assets equal liabilities) and thus do not involve measurement of results of operations. These funds are used to account for money and property held by the City as trustee or custodian. The City established Custodial funds and used to account for money and property held by the City as trustee or custodian.

The City's private purpose trust fund is a fiduciary fund type used by the City to report assets, liabilities and activities of the Successor Agency to the Redevelopment Agency for the City of Calexico. Its results of operations are presented on the Statement of Changes of Fiduciary Net Position.

Successor Agency of the Redevelopment Agency for the City of Calexico The Redevelopment Obligation Retirement Fund (Successor Agency) was created to serve as a custodian for the assets and to wind down the affairs of the Redevelopment Agency (RDA) on February 1, 2012, pursuant to Assembly Bill x1 26. Its purpose is to expeditiously wind down the affairs of the dissolved RDA. The Successor Agency is a separate public entity from the City, subject to the direction of an oversight board. The City Council serves as the governing board of the Successor Agency. In general, the Successor Agency's assets can only be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments). 45 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 1 - Reporting Entity and Summary of Significant Accounting Policies (Continued) B. Basis of Accounting and Measurement Focus (Continued) Successor Agency of the Redevelopment Agency for the City of Calexico (Continued) In future fiscal years, the Successor Agency will only be allocated revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of the former RDA until all enforceable obligations of the former RDA have been paid in full and all assets have been liquidated. Based upon the nature of the Successor Agency's custodial role, the Successor Agency has been included in the accompanying basic financial statements as a private purpose trust fund.

C. Deferred Outflows and Inflows of Resources
The Statement of Net Position and Balance Sheet - Governmental Funds reports separate sections for Deferred Outflows of Resources, and Deferred Inflows of Resources, when applicable.

Deferred Outflows of Resources represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/ expenditure) until then. The City reports Deferred Outflows of Resources for pension contributions made after the measurement date and for other pension actuarial losses being amortized over time. See more information relating to these items in Note 10 - Pension Plans. Gains and losses on long-term debt refunding are reported as either deferred outflows of resources or deferred inflows of resources and amortized over the term of the related debt.

Deferred Inflows of Resources represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City reports Deferred Inflows of Resources for grant and lease revenues not collected within the availability period. The City also reports Deferred Inflows of Resources for pension and OPEB actuarial losses being amortized over time. See more information relating to these items in Note 3 - Lease Receivable, Note 10 - Pension Plans, and Note 11 - Other Postemployment Benefits.

D. Cash, Cash Equivalents and Investments
The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund.

The City participates in an investment pool managed by the State of California titled Local Agency Investment Fund (LAIF) which has invested a portion of the pool funds in structured notes and asset-backed securities. LAIF's investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these structured notes and asset-backed securities are subject to market risk as to change in interest rates.

Highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost.

All other investments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available.

E. Restricted Cash and Investments
Certain restricted cash and investments are held by a fiscal agent for the redemption of bonded debt and for acquisition and construction of capital projects.
46 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 1 - Reporting Entity and Summary of Significant Accounting Policies (Continued) F. Fair Value Measurement
U.S. GAAP defines fair valuc, establishes a framework for measuring fair value, and establishes disclosures about fair value measurement. Investments, unless otherwise specified, recorded at fair value in the Statements of Net Position, are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

Levels of inputs are as follows:

Level 1 - Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.

Level 2 - Inputs, other than quoted prices included in Level 1, which are observable for the assets or liabilities through corroboration with market data at the measurement date.

Level 3 - Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the assets or liabilities at the measurement date.

G. Interfund Transactions
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" or "advances to/from other funds". Any residual balances outstanding between the governmental activities and business-type activities are reported in the Government-Wide Financial Statements as "internal balances."
H. Inventories and Prepaid Items
Inventories within the proprietary fund types consist of materials and supplies which are valued at cost on a first-in, first-out basis. Prepaid items are items that the City has paid for in advance and will provide a future benefit.

I. Leases
Lessee
The City has a policy to recognize a lease liability and a right-to-use lease asset (lease asset) in the government-wide financial statements. The City recognizes lease liabilities with an initial, individual value of $25,000 or more.

At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made.

Lease assets are recorded at the amount of the initial measurement of the lease liabilities and modified by any lease payments made to the lessor at or before the commencement of the lease term, less any lease incentives received from the lessor at or before the commencement of the lease term along with any initial direct costs that are ancillary charges necessary to place the lease assets into service. Lease assets are amortized using the straight-line method over the shorter of the lease term or the useful life of the underlying asset, unless the lease contains a purchase option that the City has determined is reasonably certain of being exercised. In this case, the lease asset is amortized over the useful life of the underlying asset.

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. 47 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 1 - Reporting Entity and Summary of Significant Accounting Policies (Continued) I. Leases (Continued)
Lessee (Continued)
• 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 • The lease term includes the noncancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise.

The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure any lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability.

Lease assets are reported as right to use along with other capital assets and lease liabilities are reported with long- term debt on the Statement of Net Position.

Lessor
The City is a lessor for leases of special purpose facilities, office and commercial space, and land. The City recognizes leases receivable and deferred inflows of resources in the 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 inflows of resources are 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 inflows of resources are recognized as revenue over the life of the lease term in a systematic and rational method.

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.

The City uses its estimated incremental borrowing rate as the discount rate for leases.

The lease term includes the noncancellable period of the lease. Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee.

The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.
48 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 1 - Reporting Entity and Summary of Significant Accounting Policies (Continued) J. Capital Assets
Capital assets, which include property, plant, equipment, infrastructure assets, and the right to use leased equipment and buildings, are reported in the applicable governmental or business-type activities columns in the government- wide financial statements. Such assets are recorded at historical cost (except for intangible right-to-use lease assets) or estimated historical cost if purchased or constructed. Donated capital assets are valued at their estimated acquisition value on the date donated. City policy has set the capitalization threshold for reporting capital assets at $10,000. Depreciation is recorded on a straight-line basis over estimated useful lives of the assets as follows:

Asset Type Years
Land improvements 20 years
Buildings and improvements 25-50 years
Machinery and equipment 5-20 years
Infrastructure 15-65 years
The City defines infrastructure as the basic physical assets that allow the City to function. The assets include streets, water, sewer, and park lands. Each major infrastructure system can be divided into subsystems. For example, the street system can be subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, landscaping and land. These subsystems were not delineated in the basic financial statements. The appropriate operating department maintains information regarding the subsystems.

For all infrastructure systems, the City estimated the original historical cost, defined as the actual cost to acquire new property in accordance with market prices at the time of first construction/acquisition for all property in existence when the City first reported infrastructure assets. The City estimated the original historical cost, which is defined as the actual cost to acquire new property in accordance with market prices at the time of first construction/acquisition. Estimated original historical costs were developed in one of three ways: (1) historical records; (2) standard unit costs appropriate for the construction/acquisition date; or (3) present cost indexed by a reciprocal factor of the price increase from the construction/acquisition date to the current date. The accumulated depreciation, defined as the total depreciation from the date of construction/acquisition to the current date on a straight line, was computed using industry accepted life expectancies for each infrastructure subsystem. The book value was then computed by deducting the accumulated depreciation from the estimated original historical cost.

Major outlays for capital assets and improvements are capitalized as projects are constructed. Capital assets acquired under capital leases are capitalized at the net present value of the total lease payments.

Capital Assets Acquired Under Finance Purchase Agreements The long-term principal portion of debt on capital assets acquired through finance purchase agreements is accounted for in the government-wide financial statements as "long-term debt - due within one year" or "long-term debt - due in more than one year". A capital asset is recorded at the net present value of the total lease payments in the government-wide financial statements.

K. Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the plans and additions to/deductions from the plans' fiduciary net position have been determined on the same basis as they are reported by the plans (Note 10). For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with benefit terms. Investments are reported at fair value. 49 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 1 - Reporting Entity and Summary of Significant Accounting Policies (Continued) K. Pensions (Continued)
The following timeframes are used for pension reporting:

Valuation Date June 30, 2021
Measurement Date June 30, 2022
Measurement Period: July 1, 2021 to June 30, 2022
Gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension Caine as cous the remain thou are aced in as are red eir and dece into so eares related to pensions and are to be recognized in future pension expense. The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is amortized straight-line over 5 years. All other amounts are amortized straight-line over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period.

I. Other Postemployment Benefits ("OPEB")
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City's Retiree Benefits Plan ("OPEB Plan") and additions to/deductions from OPEB Plan's fiduciary net position have been determined on the same basis as they are reported by the Plan (Note 11). For this purpose, the OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments are reported at fair value, except for money market investments, which are reported at amortized cost.

The following timeframes are used for OPEB reporting:

Valuation Date June 30, 2023
Measurement Date June 30, 2023
Measurement Period: July 1, 2022 to June 30, 2023
Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time. The first amortized amounts are recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense. The amortization period differs depending on the source of gain or loss. The difference between projected and actual earnings is amortized on a straight-line basis over five years. All other amounts are amortized on a straight-line basis over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) at the beginning of the measurement period M. Compensated Absences
It is the City's policy to accrue annual leave when incurred in the government-wide financial statements and in proprietary funds.

A liability is recorded for unused sick leave and unpaid vacation balances if it is probable that the unused balances will result in termination payments. This is estimated by including in the liability the unused leave balances of employees currently entitled to receive termination benefits, as well as those who are expected to become eligible to receive termination benefits as a result of continuing their employment with the City. The amounts accrued for financial statement purposes represent 100 percent of the vacation pay liability at June 30, 2023. No liability is recorded for non-vesting accumulating rights to receive sick pay benefits. However, a liability is recognized for that portion of accumulating sick leave benefit that is estimated will be paid at termination or retirement. 50 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 1- Reporting Entity and Summary of Significant Accounting Policies (Continued) N. Unearned Revenue
Unearned revenue recorded in the Government-Wide Statement of Net Position for governmental activities, business-type activities, the governmental fund financial statements, and the proprietary fund financial statements, consist of federal and state capital grants, representing voluntary nonexchange transactions, for which advance payments have been received from the provider for which eligibility requirements, other than timing requirements have not been satisfied as well as rents received in advance.

O. Long-Term Debt
Government-Wide Financial Statements
In the government-wide financial statements and the proprietary fund financial statements, long-term liabilities, and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type Statement of Net Position. Initial issue bond premiums and discounts, are deferred and amortized over the life of the bonds using the straight-line method. The difference between the reacquisition price of refunding bonds and the net carrying amount of refunded debt (deferred amount on refunding) is amortized over the shorter of the lives of the refunding debt or remaining life of the refunded debt. Bond issuance costs except for insurance, are expenses in the period incurred. Amortization of bond premiums or discounts, issuance costs, and deferred amounts on refunding is included in interest expense.

Fund Financial Statements
In the fund financial statements, governmental fund types recognize bond premiums, discounts, and issuance costs during the period issued. The face amount of debt issued is reported as other financing sources. Premiums received are reported as other financing sources, while discounts are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Long-term debt obligations are reported as liabilities in the appropriate activities.

P. Net Position
For government-wide and proprietary fund financial statements, net position is categorized as follows:

Net Investment in Capital Assets - This component of net position consists of capital assets, net of accumulated depreciation, increased by an unspent capital-related debt proceeds and capital-related debt deferred inflows of resources, reduced by the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of those assets.

Restricted - This component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets.

Unrestricted - This component of net position is the amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position.

City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 1- Reporting Entity and Summary of Significant Accounting Policies (Continued) Q. Fund Balances
For governmental fund financial statements, fund balances are categorized as follows:

Nonspendable - Items that cannot be spent because they are not in spendable form, such as prepaid items and invents pis and on anem receivables ries tatare legally or contractually required to be maintained intact, Restricted - Restricted fund balances encompass the portion of net fund resources subject to externally enforceable legal restrictions. This includes externally imposed restrictions by creditors, such as through debt covenants, grantors, contributors, laws or regulations of other governments, as well as restrictions imposed by law through constitutional provisions or enabling legislation.

Committed - Committed fund balances encompass the portion of net fund resources which are constrained, the use of which is constrained by limitations imposed by the formal action of the government's highest level of decision-making authority normally through resolutions, etc., and that remain binding unless rescinded or modified in the same manner. The City Council is considered the highest authority for the City.

Assigned - Assigned fund balances encompass the portion of net fund resources reflecting the government's intended use of resources. Assignment of resources can be done by the highest level of decision making or by a committee or official designated for that purpose. On June 29, 2011, the City Council adopted Resolution 2011 77 adopting the fund balance policy authorizing the Finance Director; with concurrence of the Unassigned - This amount is for any portion of the fund balances that do not fall into one of the above categories.

The General Fund is the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it is not appropriate to report a positive unassigned fund balance amount. However, in governmental funds other than the General Fund, if expenditures incurred for specific purposes exceed the amounts that are restricted, committed or assigned for those purposes, it may be necessary to report negative unassigned fund balance in that particular fund.

R. Spending Policy
Government-Wide Financial Statements and the Proprietary Fund Financial Statements When an expense is incurred for purposes for which both restricted and unrestricted net position are available, the City's policy is to apply restricted net position first.

Governmental Fund Financial Statements
When expenditures are incurred for purposes where only unrestricted fund balances are available, the City uses the unrestricted resources in the following order: committed, assigned, and unassigned. 52 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 1- Reporting Entity and Summary of Significant Accounting Policies (Continued) S. Property Taxes
Property taxes in the State of California are administered for all local agencies at the county level and consist of secured, unsecured, and utility tax rolls. The following is a summary of major policies and practices relating to property taxes:

Property valuations - are established by the Assessor of the County of Imperial (County) for the secured and unsecured property tax roll; the utility property tax rolls are valued by the State Board of Equalization. Under the rovisions of Article XIIIA of the State Constitution (Proposition 13 adopted by the voters on June 6, 1978), propert s assessed at 100 percent of purchase price or value in 1978 whichever is later. From this base of assessmen subsequent annual increases in valuation are limited to a maximum of 2 percent per year. However, increases to current value are allowed for property improvements or upon change in ownership. Personal property is excluded from these limitations, and is subject to annual reappraisal.

Tax levies - are limited to 1 percent of full value which results in a tax rate of $1 per $100 assessed valuation, under the provision of Proposition 13. Tax rates for voter-approved indebtedness are excluded from this limitation.

Tax levy dates - are attached annually on January 1 of the preceding fiscal year for which the taxes are levied. The fiscal year begins July 1 and ends June 30 of the following year. Taxes are levied on both real and unsecured personal property and are not relieved by subsequent renewal or change in ownership.

Tax collections - are the responsibility of the County Tax Collector. Taxes and assessments on secured and utility tax rolls constitute a lien against the property and may be paid in two installments; the first installment is due on November 1 of the fiscal year and is delinquent if not paid by December 10; and the second installment is due on March 1 of the fiscal year and is delinquent if not paid by April 10. Unsecured personal property taxes do not constitute a lien against real property unless the taxes become delinquent. Payment must be made in one installment, which is delinquent if not paid by August 31 of the fiscal year. Penalties are imposed by the County for late payment.

Tax levy apportionments - Under State legislation adopted subsequent to the passage of Proposition 13, apportionments to local agencies are made by the County Auditor-Controller based primarily on the ratio that each agency represented by the total City-wide levy compared to the total County for the three years prior to fiscal year Property tax administration fees - the State's Fiscal Year 1990-91 Budget Act authorized counties to collect administrative fees for collection and distribution of property taxes.

I. Use of Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions, in some cases when applicable, that affect the amounts in the financial statements and the accompanying notes. Actual results could differ from the estimates.

City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 1- Reporting Entity and Summary of Significant Accounting Policies (Continued) U. Implementation of New GASB Pronouncements for the Year Ended June 30, 2023 The requirements of the following accounting standards are effective for the purpose of implementation, if applicable to the City, for the year ended June 30, 2023. The financial statements included herein apply the requirements and provisions of these statements, including necessary retroactive adjustments to financial statement classifications and presentations.

GASB Statement No. 91
In May 2019, GASB issued Statement No. 91, Conduit Debt Obligations. The primary objectives of this Statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. This Statement achieves those objectives by clarifying the existing definition of a conduit debt obligation; establishing that a conduit debt obligation is not a liability of the issuer; establishing standards for accounting and financial reporting of additional commitments and voluntary commitments extended by issuers and arrangements associated with conduit debt obligations; and improving required note disclosures.

Implementation of this Statement did not have a significant effect on the City's financial statements for the fiscal year ended June 30, 2023.

GASB Statement No. 94
In March 2020, GASB issued Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The primary objective of this Statement is to improve financial reporting by addressing issues related to public-private and public-public partnership arrangements (PPPs). As used in this Statement, a PPP is an arrangement in which a government (the transferor) contracts with an operator (a governmental or nongovernmental entity) to provide public services by conveying control of the right to operate or use a nonfinancial asset, such as infrastructure or other capital asset (the underlying PPP asset), for a period of time in an exchange or exchange-like transaction. Implementation of this statement did not have a significant effect on the City's financial statements for the fiscal year ended June 30, 2023.

GASB Statement No. 96
In May 2020, GASB issued Statement No. 96, Subscription-Based Information Technology Arrangements. This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset—an intangible asset—-and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. Implementation of this Statement did not have a significant effect on the City's financial statements for the fiscal year ended June 30, 2023.

GASB Statement No. 99
In April 2022, GASB issued Statement No. 99, Omnibus 2022. The objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing (1) practice issues that have been identified during implementation and application of certain GASB Statements and (2) accounting and financial reporting for financial guarantees. Implementation of this Statement did not have a significant effect on the City's financial statements for the fiscal year ended June 30, 2023. 54 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 1 - Summary of Significant Accounting Policies (Continued) V. Upcoming Government Accounting Standards Implementations The City is currently analyzing its accounting practices to determine the potential impact on the financial statements for the following GASB statements.

GASB Statement No. 100
In June 2022, GASB issued Statement No. 100, Accounting Changes and Error Corrections - an Amendment of GASB Statement No. 62. The primary objective of this Statement is to enhance accounting and financial reporting equirements for accounting changes and error corrections to provide more understandable, reliable, relevant consistent, and comparable information for making decisions or assessing accountability. Application of this statement is effective for the Authority's fiscal year ending June 30, 2024.

GASB Statement No. 101
In June 2022, GASB issued Statement No. 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. Application of this statement is effective for the Authority's fiscal year ending June 30, 2025.

GASB Statement No. 102
In December 2023, GASB issued Statement No. 102, Certain Risk Disclosures. 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. That objective is achieved by requiring governments 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. The statement also 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. Application of this statement is effective for the City's fiscal year ending June 30, 2025. Earlier application is encouraged.

Note 2 - Cash and Investments
The following is a summary of pooled cash and investments and restricted cash and investments at June 30, 2023:

Primary Government
Governmental Business-type Fiduciary
Activities Activities Total Funds Total
Cash and investments $ 45,948,540 $ 36,052,699 82,001,239 $ 4,038,408 $ 86,039,647 Cash and investments with fiscal agent 1,275,758 36,859,054 38,134,812 1,263,586 39,398,398 Total $ 47,224,298 $ 72,911,753 $ 120,136,051 $ 5,301,994 $ 125,438,045 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 2 - Cash and Investments (Continued)
Cash and investments consisted of the following at June 30, 2023:

Cash and cash equivalents:

Petty cash $ 6,350
Demand deposits 12,229,617
Investments:

Local Agency Investment Fund 73,803,680
Money market funds 39,398,398
Total $ 125,438,045
At June 30, 2023, cash and investments, are reported at fair value based on quoted market prices. The following table represents the fair value measurements of investments recognized in the accompanying Statement of Net Position measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2023:

Investments measured by fair value level: June 30, 2023 Level 1 Level 2 Level 3 Held by bond trustee:

Money market mutual funds $ 39,398,398 $ - $ 39,398,398 $ - Total investments by fair value level $ 39,398,398 $ $ 39,398,398 $ Investments not subject to the fair value hierarchy:

Local Agency Investment Fund - State of CA $ 73,803,680 Total investments not subject to the fair value hierarchy $ 73,803,680 Total investments $113,202,078
A. Demand Deposits
The carrying amounts of the City's demand deposits were $12,229,617 at June 30, 2023. Bank balances were $13,307,984 at that date. The total amount of which was collateralized or insured with securities held by the pledging financial institutions in the City's name is discussed below.

The California Government Code requires California banks and savings and loan associations to secure the City's cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City's name.

The market value of pledged securities must equal at least 110% of the City's cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City's total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation. The City, however, has not waived the collateralization requirements.
56 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 2 - Cash and Investments (Continued)
B. Investments Authorized by the California Government Code and the City's Investment Policy The table below identifies the investment types that are authorized for the City by the California Government Code (or the City's investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City's investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City's investment policy.
aximı
Authorized Maximum
Investment Type Maturity of Portfolic
Certificates of Deposit Tyear Unlimited
State of California Local Agency Investment Fund N/A N/A $75,000,000 Savings Accounts Unlimited Unlimited None
U.S. Treasury Obligations 3 years Unlimited None
U.S. Government Agency Issues 3 years Unlimited None
3 years Unlimited None
Repurchase Agreements
C. Investments Authorized by Debt Agreements
Investment of debt proceeds held by bond trustees are governed by provisions of the debt agreements rather than the general provisions of the California Government Code or the City's investment policy. The table below identifies the investment types that are authorized for investments held by the bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of risk.

Maximum Maximum
So Portale
Certificates of Deposit None None
U.S. Treasury Obligations None None None
U.S. Agency Securities None None None
Municipal Obligations, Prime Quality None None None
Banker's Acceptances, Prime Quality 360 days None None
Commercial Paper, Prime Quality 270 days None None
Money Market Funds, Prime Quality N/A None None
Investment Contracts None None None
Repurchase Agreements, Approve by Bond Issuer None None None D. External Investment Pool
The City is a participant in LAIF which is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City's investments in LAIF at June 30, 2023 included a portion of pool funds invested in Structure Notes and Asset-Backed Securities:

Structured Notes are debt securities (other than asset-backed securities) whose cash-flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options.

Asset-Backed Securities, the bulk of which are mortgage-backed securities, entitle their purchasers to receive a share of the cash flows from pool of assets such as principal and interest repayments from a pool of mortgages (such as Collateralized Mortgage Obligations) or credit card receivables.

As of June 30, 2023, the City had $73,803,680 invested in LAIF, which had invested 1.46% of the pool investment funds in Structured Notes and Asset-Back Securities. LAIF determines fair value on its investment portfolio based on market quotations for those securities where market quotations are readily available and based on amortized cost or best estimate for those securities where market value is not readily available. The City valued its investments in LAIF as of June 30, 2023, by multiplying its account balance with LAIF times a fair value factor determined by LAIF. This fair value factor was determined by dividing all LAIF participants' total aggregate amortized cost by total aggregate fair value. The credit quality rating of LAIF is unrated as of June 30, 2023. 57 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 2 - Cash and Investments (Continued)
E. Risk Disclosures
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. enerally, the longer the maturity, the greater the sensitivity its fair value is to changes in market interest rates. A rovides fat ma mia ries of scates a lot excid five years spectre matrice investment depend o liquidity needs.

Information about the sensitivity of the fair values of the City's investments to market rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity as of June 30, 2023:

Maturities
Amount year or less
Investments:

Local Agency Investment Fund $ 73,803,680 $ 73,803,680
Money market funds 39,398,398 39,398,398
Total $ 113,202,078 $ 113,202,078
The City has no investments (including investments held by bond trustees) that are highly sensitive to interest rate fluctuations.

Disclosures Relating to Credit Risk
Generally, 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.

However, some issuers do not seek a credit rating. For instance, the California Local Agency Investment Fund (LAIF) has not sought or received a credit rating. In these cases, the purchaser is solely responsible for performing their own due diligence before purchasing an investment or participating in an external investment pool. Certificates of deposit of $250,000 or less are fully insured by the Federal Deposit Insurance Corporation (FDIC), and therefore, do not seek a credit rating.

Presented below is the minimum rating required by (where applicable) the California Government Code, the City's investment policy, or debt agreements, and the actual rating as of year-end for each investment type.

Credit Quality Ratings
Standard &
Amount Moody's Poor's
Investments:

Local Agency Investment Fund $ 73,803,680 Not Rated Not Rated Money market funds 39,398,398 Not Rated Not Rated
Total $ 113,202,078
Disclosures Relating to Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (c.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party.

City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 2 - Cash and Investments (Continued)
E. Risk Disclosures (Continued)
Disclosures Relating to Custodial Credit Risk (Continued) At June 30, 2023, the City's deposits (bank balances) were collateralized under California Law. All securities, with the exception of LAIF and other pooled investments, are held by a third-party custodian (BNY Mellon, UBS, and US Bank). BNY is a registered member of the Federal Reserve Bank.

The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated in the Gov't Code. GASB Statement No. 40 requires disclosure by amount and issuer, of investments in any one issuer that represent 5% or more of total investments. Investments in any one issuer (other than U.S.

Treasury securities, mutual funds, and external investment pools) that represents 5% or more of the City's total investments are as follows:

Total Percentage
as of of
Investment Type June 30, 2023 Investments
Investments:

Local Agency Investment Fund $ 73,803,680 65.20%
Money market funds 39,398,398 34.80%
Total $ 113,202,078
Note 3 - Lease Receivable
A. Governmental Activities
The portion of the City's property is leased to others. Such property includes special purpose facilities, office and commercial space, and land. Lease receivable consists of agreements with other for the right-to-use of the underlying assets at various locations owned by the City. The terms of the arrangements range from 2 to 10 years. The calculated interest rates used vary depending on the length of the lease. For the fiscal year ended June 30, 2023, the City recognized $160,872 in lease revenue and $4,201 in interest revenue.

A summary of changes in lease receivable for the fiscal year ended June 30, 2023 Is as follows:

Classification
Balance Due within Due in More
July 1, 2022 Additions Deletions June 30, 2023 One Year Than One Year Leases receivable 521,451 $ (156,846) 364,605 $ 131,021 $ 233,584 Total 521,451 $ $ (156,846) $ 364,605 $ 131,021 $ 233,584 As of June 30, 2023, the required payments for these leases, including interest, are:

Year Ending
June 30, Principal Interest Total
2024 131,021 $ 3,304 134,325
2025 61,915 2,537 64,452
2026 30,259 2,093 32,352
2027 31,639 1,683 33,322
2028 33,067 1,255 34,322
2029-2031 76,704 1,159 77,863
Total $ 364,605 12,031 $ 376,636
City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 3 - Lease Receivable (Continued)
A. Governmental Activities (Continued)
As of June 30, 2023, the amounts reported as deferred inflows of resources will be recognized as lease revenue as follows:

Year Ending Amortization
June 30, Schedule
2024 $ 132,137
2025 63,288
2026 30,556
2027 30,556
2028 30,556
2029-2031 66,204
Total $ 353,297
Note 4- Notes and Loans Receivable and Allowance for Doubtful Accounts The City and Successor Agency have issued various long-term notes and loans receivable to support affordable housing and development objectives. The City reports its long-term notes and related interest receivable fully offset with an allowance on the Government-Wide Statement of Net Position, the Governmental Funds Balance Sheet, and the Statement of Fiduciary Net Position due to the uncertain nature of long-term affordable housing and development loans.

At June 30, 2023, notes and loans receivable consisted of the following:

Notes/Loans Notes/Loans i Allowance for Financial
Receivable Receivable Doubtful Accounts Statement
Balance Balance Balance Balance
7//2022 Additions Deletions 6/30/2023 6/30/2023 6/30/2023 City:

Calexico Community Action Council 306,377 $ 306,377 $ (306,377) $ De Anza Limited Partnership #1 422,977 422,977 (422,977) De Anza Limited Partnership #3 5,000,000 5,000,000 (5,000,000) De Anza Renovation 759,332 "....... 759,332 (759,332)
Victoria ManorSenior Apartments 200,000 200,000 (200,000) Califom ia Family Apartments I, LP 3,400,000 3,400,000 (3,400,000) HPD Villa DelEste, LP 1,363,887 1,363,887 (1,363,887)
Villa Prima ve ra Family Apartments lan 5,100,000 5,100,000 (5,100,000) Otherloans 10,323,897 10,032,448 (10,032,448)
City notes and loans receivable total 26,876,470 (291,449) 26,585,021 (26,585,021) Successor Agency:

Otherloans 320,757 320,757 (320,757)
Successor Agency notes and bans receivable total 320,757 320,757 (320,757) Totalnotes and loans receivable $ 27,197,227 $ (291,449) $ 26,905,778 $ (26,905,778) $ Calexico Community Action Council
On September 11, 1996, the City issued a promissory note to Calexico Community Action Council to supersede a prior note for development of the Alejandro Rivera Senior Citizens Apartments II. The note bears an interest rate of 6.5% per annum. Annual payments are based on an estimated amount of the profit and shall be due and payable on December 31 of each year until the entire principal amount is paid off. At June 30, 2023, the outstanding balance was $306,377. 60 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 4 - Notes and Loans Receivable and Allowance for Doubtful Accounts (Continued) De Anza Limited Partnership #1
In 1997, the City loaned De Anza Limited Partnership the amount of $422,977 for the De Anza Hotel construction project. The note is secured by property. The note bears interest at a rate of 3% per annum and is due on the 16' inniversary of the date the project was placed in service. At June 30, 2023, the outstanding balance of the note was $422,977.

De Anza Limited Partnership #3
On February 12, 2012, the City loaned De Anza Limited Partnership $5,000,000 for the construction of a 54-unit apartment complex, subject to the completion of the project. The note is secured by a first assignment of leases and rents, and a deed of trust. The note bears an interest rate of 3% per annum and is due and payable in full in 55 years from the completion of the project. The City received the notice of project completion on December 12, 2012. At June 30, 2023, the outstanding balance of the note was $5,000,000.

De Anza Renovation
On September 21, 2010, the City authorized the De Anza Limited Partnership to borrow up to $760,000 for the De Anza Hotel earthquake rehabilitation and repair project. Borrowings are secured by a first assignment of leases and rents, and a deed of trust. Borrowings bear an interest rate of 3% per annum and are payable from residual receipts in the amount of 40% of the residual receipts and in no event less than $1,000 per year beginning March 30, 2011. At June 30, 2023, the outstanding balance of the note was $759,332.

Victoria Manor Senior Apartments
On October 19, 2010, the City loaned the Housing Authority of the City of Calexico ("Authority") $200,000 in order for the Authority to purchase certain real property. The note is secured by a deed of trust on the property. The note bears an interest rate of 6.25% per annum and is due at the earlier of the commencement of the term for the option agreement included with the note or nine years from the execution of the note. At June 30, 2023, the outstanding balance of the note was $200,000.

California Family Apartments II, LP
On November 1, 2006, the Agency loaned Calexico II, LP $3,400,000 for affordable housing projects. The note bears interest at 3% and is payable annually within 90 days following the end of each calendar year, contingent upon the LP realizing a profit. At June 30, 2023, the outstanding balance of the note was $3,400,000.

HPD Villa Del Este, LP
On June 30, 2008, the Agency loaned HPD Villa Del Este, LP $1,363,887 for affordable housing projects. The note is secured by a deed of trust. The note bears interest at 3% per annum. Principal and accrued interest shall be repaid beginning January 1, 2018, for each preceding calendar year in which there was a cash flow balance, and continuing annually on the first day of each and every year thereafter for the remainder of the term in which there is a cash flow balance. At June 30, 2023, the outstanding balance of the note was $1,363,887.

Villa Primavera, LLP
On November 4', 2014, the City approved a loan to Villa Primavera CIC, LP an amount not to exceed $5,100,000 for an affordable housing project for low income and senior citizens. The note is secured by a deed of trust. This promissory note bears interest at a rate of 3% per annum with a term of 55 years. Principal and accrued interest shall be repaid beginning from the date of Project Completion as defined by 24CFT 92.2, wherein the project must meet the affordability requirements contained herein. At June 30, 2023, the outstanding balance of the note was $5,100,000.. 61 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 4 - Notes and Loans Receivable and Allowance for Doubtful Accounts (Continued) Other Loans
The City and Successor Agency have established various loan programs that assist residents of the City in purchasing and/or rehabilitating their homes and for business development. These loans are in the form of fully amortized or deferred loans. The deferred loans are usually due upon sale of property. At June 30, 2023, the outstanding balance of the City and Successor Agency loans were $10,032,448 and $320,757, respectively Note 5 - Interfund Transactions
A. Due To and Due From Other Funds
Due from and to other funds as of June 30, 2023, for short-term borrowing pending subsequent grant, tax, or fee reimbursement, were as follows:

Receivable Fund Payable Fund Amount Purpose
General Liability Internal Service Fund Prop 172 Public Safety Sales Tax Special Revenue Fund 564,758 Overdrawn Cash (A) Subtotal 564,758
Workers' Compensation Internal Service Fund Prop 172 Public Safety Sales Tax Special Revenue Fund 14,248 Overdrawn Cash (A) Workers' Compensation Internal Service Fund State COPS Grant Special Revenuc Fund 188,739 Overdrawn Cash (A) Workers' Compensation Internal Service Fund Opcration Stonegarden Special Revenuc Func 13,282 Overdrawn Cash (A) Workers' Compensation Internal Service Fund HIDA Special Revenue Func 4,307 Overdrawn Cash (A) Workers Compensation Internal Service Fund Capital Grants Capital Projects Fund 907,442 Overdrawn Cash (A) Workers' Compensation Internal Service Fund New River Grants Capital Projects Fund 798,551 Overdrawn Cash (A) Workers' Compensation Internal Service Fund DIF - Fire Capital Projects Fund 63,430 Overdrawn Cash (B) Subtotal 1,989,999
Workers' Compensation Internal Service Fund Airport Capital Fund 10,001 Overdrawn Cash (A) Subtotal 10,001
Total 2,564,758
(A) Reimbursement is pending grants/intergovernmental receivable. (B) Reimbursement is pending receipt of developer fees.

B. Transfers In/Out
Transfers in and out for the year ended June 30, 2023, were as follows:

Transfers In Transfers Out Amount Purpose
jeneral Capital Projects Fun General Fund 527,000 Capital projects Measure H Debt Service Fun General Fund 995,250 Debt Service Subtotal 11522,250
General Liability Internal Service Fund Water Enterprise Fund 1,043,760 Operations General Liability Internal Service Fund Workers' Compensation Internal Service Fund 20,000 Operations General Liability Internal Service Fund Unemployment Insurance Internal Service Fund 30,000 Operations Subtotal 1,093,760
Local Housing Programs Special Revenue Fund Successor Housing Special Revenue Fund 87,000 Operations Measure H Debt Service Fund Measure H Capital Projects Fund 78 Debt Service Employees Benefits Internal Service Fund Medical Retirees Internal Service Fund 300,000 Operations Total $ 3,003,088
62 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 6 - Capital Assets
A. Governmental Activities
The following is a summary of changes in capital assets for the governmental activities:

Balance Balance
July 1, 2022 Additions Deletions Transfers June 30, 2023 Non-depreciable Assets:

Land $ 5,511,772 $ $ $ - $ 5,511,772
Construction in progress 10,316,118 3337,338 (8,404,307) 5,249,149 Total non-depreciable assets 15,827,890 3,337,338 (8,404,307) 10,760,921 Depreciable Assets:

Building and improvements 21,984,374 27,484 8,404,307 30,416,165 Machinery and equipment 12,693,153 536,211 - 13,229,364 Infrastructure 136,632,092 52,443 136,684,535
Total depreciable assets, at cost 171,309,619 616,138 8,404,307 180,330,064 Less accumulated depreciation:

Building and improvements (12,519,268) (694,888) (13,214,156) Machinery and equipment (9,871,612) (648,892) (10,520,504) (84,803,293) (3,212,272) (88,015,565)
Total accumulated depreciation (107,194,173) (4,556,052) Total depreciable assets, net 64,115,446 (3,939,914) 8,404,307 68,579,839 Total governmental activities $ 79,943,336 $ (602,576) $ - $ $ 79,340,760 Governmental activities depreciation expenses for capital assets for the year ended June 30, 2023 are as follows:

General government $ 212,570
Public safety 697,508
Public works 3,474,813
Community services 168,358
Planning and building 2,703
Housing 100
Total depreciation expense 4,556,052
63 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 6 - Capital Assets (Continued)
B. Business-Type Activities
The following is a summary of changes in capital assets for business-type activities:

Balance Adjustments/ Balance
July 1, 2022 Additions Deletions Transfers June 30, 2023 Non-depreciable Assets:

Land $ 281,615 $ $ - $ 281,615
Construction in progress 9,159,708 1,450,435 10,610,143 Total non-depreciable assets 9,441,323 1,450,435 10,891,758 Depreciable Assets:

Building and improvements 37,017,197 37,017,197
Machinery and equipment 20,592,482 11,862 20,604,344
Infrastructure 23,333,475 23,333,475
Total depreciable assets, at cost 80,943,154 11,862 80,955,016 Less accumulated depreciation:

Building and improvements (18,336,852) (608,307) (18,945,159) Machinery and equipment (11,388,902) (1,110,272) : (12,499,174) Infrastructure (9,100,407) (524,186) (9,624,593)
Total accumulated depreciation (38,826,161) (2,242,765) (41,068,926) Total depreciable assets, net 42,116,993 (2,230,903) 39,886,090 Total business-type activities $ 51,558,316 $ (780,468) $ 50,777,848 Depreciation expense for capital assets of the business-type activities for the year ended June 30, 2023 was as follows:

Water $ 1,505,893
Wastewater 477,325
Airport 259,547
Total depreciation expense $ 2,242,765
C. Fiduciary Funds
The following is a summary of changes in capital assets for the Fiduciary Funds:

Balance Balance
July 1, 2022 Additions Deletions June 30, 2023
Non-depreciable Assets:

Land $ 1,106,663 $ - $ 1,106,663
Total non-depreciable assets 1,106,663 :. 1,106,663
Depreciable Assets:

Building and improvements 2,293,864 2,293,864
Total depreciable assets, at cost 2,293,864 2,293,864
Less accumulated depreciation:

Building and improvements (676,690) (45,877) • | (722,567) Total accumulated depreciation (676,690) (45,877) (22,567) Total depreciable assets, net 1617,174 (45,877) 1,571,297 Total fiduciary funds $ 2,723,837 $ (45,877) S $ 2,677,960 Depreciation expense for capital assets of the fiduciary funds for the year ended June 30, 2023 was $45,877. 64 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 7 - Long-Term Debt
A. Governmental Activities
Summary of changes in long-term liabilities for the governmental activities for the year ended June 30, 2023 is as follows:

Classification
Balance Debt Debt Balance Due in Due in more
July 1, 2022 Issued Retired June 30, 2023 One Year than One Year Governmental Activities:

Publicly Offered:

Measure H Lease Revenue Bonds $ 6,460,000 $ (685,000) $ 5,775,000 $ 715,000 $ 5,060,000 Bond premium 424,639 (60,663) 363,976 363,976
Privately Offered:

Finance purchase agreement 520,259
23983) 5 699273 252014 20255
Total governmental activities $ 7,877,786
Measure H Lease Revenue Bonds
On April 1, 2014, Calexico Financing Authority (the "Authority") issued its Measure "H" Sales Tax/Lease Revenue Bonds, Issue of 2014 (the "Bonds") pursuant to a trust agreement, dated as of June 1, 2014 (the "Trust Agreement"), by and among the City of Calexico (the "City"), the Authority and U.S. Bank National Association, as trustee (the "Trustee"). Proceeds of the Bonds are being used to (i) finance a portion of the costs of a new fire station headquarters and various park and recreation improvements; (ii) fund a deposit to the Reserve Account in an amount equal to the Reserve Requirement; and (iii) pay costs of issuance of the Bonds. The Bonds are payable solely from, and secured by, the trust estate and certain funds and accounts held under the Trust Agreement.

The issue consisted of serial bonds in the amount $11,200,000 payable annually on June 1 of each year, commencing on April 1, 2013 and maturing in 2030 with interest rates ranging from 3% to 4% per annum. Interest payments are due on April 1 and October 1 of each year until the bonds are paid off. At June 30, 2023, the outstanding balance of the bonds was $5,775,000. Total principal and interest remaining on the bond is $6,978,100, payable through 2030.

The annual debt service requirements for the bonds are as follows:

Year Ending
June 30, Principal Interest Total
2024 $ 715,000 $ 281,600 $ 996,600
2025 745,000 253,000 998,000
2026 780,000 215,750 995,750
2027 820,000 176,750 996,750
2028 860,000 135,750 995,750
2029-2030 1,855,000 140,250 1,995,250
Total $ 5,775,000 $ 1,203,100 $ 6,978,100
Finance Purchase Agreements
The City has entered into several finance purchase agreements for the financing of vehicles and other equipment.

The lease agreements qualify as finance purchase agreements for accounting purposes and, therefore, have been recorded at the present value of future minimum lease payments as of the date of inception. 65 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 7 - Long-Term Debt (Continued)
A. Governmental Activities (Continued)
Finance Purchase Agreements (Continued)
The annual debt service requirements for the capital leases payable outstanding at June 30, 2023 are as follows:

Year Ending
June 30, Principal Interest Total
2024 $ 237,014 $ 14,815 $ 251,829
2025 201,673 10,864 212,537
2026 103,492 8,251 111,743
2027 106,172 5,571 111,743
2028 108,922 2,821 111,743
Total $ 757,273 $ 42,322 $ 799,595
The leased assets are included in capital assets and are summarized by major asset class below:

Machinery and equipment $ 1,226,784
Less: accumulated depreciation (580,443)
Total $ 646,341
B. Business-Type Activities
Summary of changes in long-term liabilities for the business-type activities for the year ended June 30, 2023 is as follows:

Classification
Balance Debt Debt Balance Due in Due in more
July 1,2022 Issued Retired June 30, 2023 One Year than One Year Business-Type Activities:

Publicly Offered:

Water Revenue Bonds, Series 2020A $ 15,535,000 $ - $ (305,000) $ 15,230,000 315,000 $ 14,915,000 Bond premium 1,337,379 (47,764) 1,289,615 1,289,615
Wastewater Revenue Bonds, Series 2020A 21,725,000 (425,000) 21,300,000 445,000 20,855,000 Bond premium 1,868,010 (66,715) 1,801,295 - 1,801,295
Privately Offered:

Finance purchase agreement 202,093 (106,065) 96,028 22,264 73,764 Total business-type activities $ 40,667,482 $ $ (950,544) $ 39,716,938 $ 782,264 $ 38,934,674 Water and Wastewater 2020 Refunding Revenue Bonds
In July 2020, the Calexico Financing Authority (the "Authority") issued its Water Revenue Bonds Series 2020A (the "Water Bonds") in the principal amount of $16,255,000 and Wastewater Revenue Bonds Series 2020A (the "Wastewater Bonds" - collectively "the Bonds") in the principal amount of $22,715,000 under an Indenture of Trust, dated as of July 1, 2020. The Bonds mature annually on November 1 beginning in 2020 and bear interest at rates ranging from 3% to 4% per annum. Interest payments are due on May 1 and November 1 of each year until the bonds are paid off. Proceeds of the Water Bonds were used to (i) refund the community Redevelopment Agency of the City of Calexico Water System Lease Revenue Bonds Issue of 2007, (ii) to finance certain improvement to the water for the Wastewater Bonds, and (iii) to pay costs of issuance of the Wastewater Bonds. 66 City of Calexico
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
Note 7 - Long-Term Debt (Continued)
B. Business-Type Activities (Continued)
Water and Wastewater 2020 Refunding Revenue Bonds (Continued) The issues consist of serial bonds maturing from 2020 to 2050 in combined annual installments of $1,005,000 to $1,940,000. The bonds carry interest rates ranging from 3.0% to 4.0% and mature in 2050. Interest payments are due on May 1 and November 1 of each year until the bonds are paid off The annual debt service requirements for the bonds are as follows:

Water Revenue Bonds, Series 2020A
Year Ending
June 30, Principal Interest Total
2024 $ 315,000 $ 503,750 $ 818,750
2025 330,000 490,850 820,850
2026 345,000 477,350 822,350
2027 360,000 463,250 823,250
2028 375,000 448,550 823,550
2029-2033 2,105,000 2,001,150 4,106,150
2034-2038 2,565,000 1,545,850 4,110,850
2039-2043 3,000,000 1,105,650 4,105,650
2044-2048 3,480,000 620,550 4,100,550
2049-2051 2,355,000 107,475 2,462,475
Total $ 15,230,000 $ 7,764,425 $ 22,994,425
Wastewater Revenue Bonds, Series 2020A
Year Ending
June 30, Principal Interest Total
2024 $ 445,000 $ 704,300 $ 1,149,300
2025 460,000 686,200 1,146,200
2026 480,000 667,400 1,147,400
2027 500,000 647,800 1,147,800
2028 520,000 627,400 1,147,400
2029-2033 2,945,000 2,799,500 5,744,500
2034-2038 3,580,000 2,163,600 5,743,600
2039-2043 4,200,000 1,548,000 5,748,000
2044-2048 4,875,000 868,875 5,743,875
2049-2051 3,295,000 150,225 3,445,225
Total $ 21,300,000 $ 10,863,300 32,163,300
Finance Purchase Agreements
The City has entered into several lease agreements for the financing of water and wastewater vehicles. The lease agreements qualify as finance purchases for accounting purposes and, therefore, have been recorded at the present value of future minimum lease payments as of the date of inception. 67