East Palo Alto City Council
January 17, 2023

Annual Comprehensive
Financial Report
For the Fiscal Year ended June 30, 2022
City of East Palo Alto, California
City on the Move
East Palo Alto, California
Annual Comprehensive Financial Report
For the year ended June 30, 2022
Prepared by:

Finance Department
City of East Palo Alto
Annual Comprehensive Financial Report
For the year ended June 30, 2022
Table of Contents
Page

INTRODUCTORY SECTION
Table of Contents ...................................................................................................................................................... i Transmittal Letter ..................................................................................................................................................... v Directory of City Officials ....................................................................................................................................... xi Map of City’s Location ........................................................................................................................................... xii Organization Chart ............................................................................................................................................... xiii GFOA Certificate of Excellence in Financial Reporting ................................................................................... xiv

FINANCIAL SECTION
Independent Auditors’ Report .............................................................................................................................. 1 Management’s Discussion and Analysis .............................................................................................................. 5 Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position ............................................................................................................................ 23 Statement of Activities .................................................................................................................................. 24 Fund Financial Statements:

Governmental Fund Financial Statements
Balance Sheet .............................................................................................................................................. 30 Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position ......................................................................... 31 Statement of Revenues, Expenditures and Changes in Fund Balances ............................................. 32 Reconciliation of the Governmental Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities ........................................................................................................................... 33 Proprietary Fund Financial Statements:

Statement of Net Position ......................................................................................................................... 36 Statement of Revenues, Expenses and Changes in Net Position ......................................................... 37 Statement of Cash Flows ............................................................................................................................ 38 Fiduciary Fund Financial Statements:

Statement of Fiduciary Net Position ........................................................................................................ 40 Statement of Changes in Fiduciary Net Position.................................................................................... 41 Notes to Basic Financial Statements ................................................................................................................... 45 i
City of East Palo Alto
Annual Comprehensive Financial Report
For the year ended June 30, 2022
Table of Contents, Continued
Page
FINANCIAL SECTION, Continued
Required Supplementary Information (Unaudited):

Budgets and Budgetary Accounting .................................................................................................................. 88 Budgetary Comparison Schedules:

General Fund ..................................................................................................................................................... 89 Defined Benefit Pension Plan:

Schedule of the City's proportionate share of the Net Pension Liability .................................................. 90 Schedule of Contributions ................................................................................................................................ 92 Supplementary Information:

Non-Major Governmental Funds:

Combining Balance Sheet ................................................................................................................................. 98 Combining Statement of Revenues, Expenditures and Changes in Fund Balances .............................. 102 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual:

NPDES Fees Special Revenue Fund .......................................................................................................... 106 Gas Tax Special Revenue Fund .................................................................................................................. 107 Federal and State Law Enforcement Special Revenue Fund ................................................................. 108 Park in Lieu Special Revenue Fund ........................................................................................................... 109 Rent Stabilization Special Revenue Fund ................................................................................................. 110 Federal and State Grant Special Revenue Fund ....................................................................................... 111 Housing Assistance Special Revenue Fund ............................................................................................. 112 Measure A Special Revenue Fund ............................................................................................................. 113 CYSFF TOT Special Revenue Fund ........................................................................................................... 114 Lighting District Special Revenue Fund ................................................................................................... 115 Drainage District Special Revenue Fund .................................................................................................. 116 Measure C Special Revenue Fund ............................................................................................................. 117 Local Grants Special Revenue Fund .......................................................................................................... 118 Silicon Valley Community Foundation Special Revenue Fund ............................................................ 119 Low and Moderate Income Housing Special Revenue Fund ................................................................ 120 Housing in Lieu Special Revenue Fund .................................................................................................... 121 Housing TOT Special Revenue Fund ........................................................................................................ 122 Measure HH Special Revenue Fund ......................................................................................................... 123 Measure W Special Revenue Fund ............................................................................................................ 124 ARPA Special Revenue Fund ..................................................................................................................... 125 Schedule of Revenues and Expenditures – Local Retail Transactions and Use tax ............................... 126 ii
City of East Palo Alto
Annual Comprehensive Financial Report
For the year ended June 30, 2022
Table of Contents, Continued
Page
STATISTICAL SECTION (Unaudited)
Net Position by Component – Last Ten Fiscal Years ..................................................................................... 128 Changes in Net Position – Last Ten Fiscal Years ........................................................................................... 129 Fund Balances of Governmental Funds – Last Ten Fiscal Years ................................................................. 131 Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years ............................................. 132 Assessed Value of Taxable Property – Last Ten Fiscal Years ....................................................................... 133 Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years ......................................................... 134 Principal Property Tax Payers – Current Year and Nine Years Ago .......................................................... 135 Property Tax Levies and Collections – Last Ten Fiscal Years ...................................................................... 136 Ratios of Outstanding Debt by Type – Last Ten Fiscal Years....................................................................... 138 Computation of Direct and Overlapping Debt .............................................................................................. 139 Computation of Legal Bonded Debt Margin - Last Ten Fiscal Years .......................................................... 140 Bonded Debt Pledged-Revenue Coverage – Last Ten Fiscal Years ............................................................. 141 Demographic and Economic Statistics – Last Ten Fiscal Years ................................................................... 142 Principal Employers – Last Fiscal Year and Six Years Ago .......................................................................... 143 Number of Positions – City Government by Function – Last Ten Fiscal Years ......................................... 144 Operating Indicators by Function – Last Ten Fiscal Years ........................................................................... 145 Capital Asset by Function – Last Ten Fiscal Years......................................................................................... 146 iii
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December 21, 2022

CITY OF EAST PALO ALTO

DEPARTMENT OF FINANCE
Letter of Transmittal
Honorable Mayor Carlos Romero
Honorable Members of the City Council
Residents of the City of East Palo Alto, California

THE ANNUAL COMPREHENSIVE FINANCIAL

REPORT OF THE CITY OF EAST PALO ALTO
We are pleased to present the Annual Comprehensive Financial Report (ACFR) of the City of East Palo Alto for the fiscal year ended June 30, 2022. It is the policy of the City of East Palo Alto to annually publish financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by an independent firm of certified public accountants. This ACFR report is published to fulfill that requirement.

Management assumes full responsibility for the accuracy of the information contained in this report.

We believe this ACFR to be complete and reliable in all material respects. In order to provide a reasonable basis for making this representation, we have established a comprehensive framework of internal controls designed to protect the City’s assets from loss, theft, or misuse and to record and compile the information necessary to produce financial statements in conformity with generally accepted accounting principles. Since the cost of internal controls should not exceed the anticipated benefits, the objective is to provide reasonable rather than absolute assurance that the financial statements are free of any material misstatements.

The City’s financial statements have been audited by an independent firm of Certified Public Accountants, Badawi & Associates, licensed to practice in the State of California. The auditors expressed an opinion that the City’s financial statements for the year ended June 30, 2022 are fairly stated in conformity with accounting principles generally accepted in the United States. This is the most favorable conclusion and is commonly known as an “unmodified” opinion. The auditor’s report is in the Financial Section of this report.
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Generally accepted accounting principles require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of a Management’s Discussion & Analysis (MD&A). The MD&A is designed to complement this letter of transmittal and should be read in conjunction with it. The MD&A can be found immediately following the report of the independent auditors.

REPORTING ENTITY
The City of East Palo Alto was incorporated in 1983 and is in San Mateo County in the Greater San Francisco Bay Area. It is in a desirable setting and is situated among three major metropolitan cities:

San Jose, Oakland, and San Francisco. East Palo Alto currently occupies 2.5 square miles and has a population of 28,963.

East Palo Alto operates under a Council-Manager form of government. Policy-making and legislative authority are vested in the governing body (City Council) consisting of the Mayor, the Vice-mayor and three other members. The City Council appoints the government’s Chief Executive Officer (known as City Manager), who in turn appoints the Directors of City departments; except for the City Attorney who is also appointed by the City Council. City Council members are elected by voters to serve overlapping four-year terms. The Mayor and Vice-Mayor are appointed by majority vote of the City Council on an annual basis to serve a one-year term. There are currently four Advisory Boards and Commissions that are appointed by the City Council: Rent Stabilization Board, Planning Commission, Public Works and Transportation Commission, and Senior Advisory Board.

The City of East Palo Alto provides a range of basic municipal services. These services include public safety police services, public works and maintenance, limited parks and recreation activities, building, planning and zoning, housing and rent stabilization services, community development, streetlighting, drainage, refuse collection, infrastructure construction, and general administrative services. The City also provides community grant programs to support community and socialservices organizations.

The ACFR includes all funds of the City, as well as all governmental organizations and activities for which the City Council has financial and/or fiduciary accountability. The Council serves in separate session as the governing body of the East Palo Alto Public Financing Authority; and, the Successor Agency to the former Redevelopment Agency of the City of East Palo Alto, for which it has fiduciary responsibility.

ECONOMIC CONDITION AND FISCAL OUTLOOK
The City has been impacted by the pandemic since March 2020 in every aspect of operations.

However, the City has been committed to maintain the service level to the community during the pandemic while maintaining the financial stability of the organization aided by federal stimulus. As the City enters the third year of the pandemic, the financial impact has become clearer but new economic challenges have emerged; supply chain disruption, a war and high inflation. Current vL
economic concerns revolve around the Federal Reserve’s approach to the implementation of monetary policy to lower high inflation and how impacting higher interest rates might have on the national and local economy over the next two years. In addition to the impacts by the pandemic and the macroeconomic environment, the City’s economic and fiscal outlook reflect unique challenges including flattening general revenue resources; uncertainty related to certain property tax payments; and extended time-gaps between development project proposal and completion.

The City’s resident population has remained stable over the past five years, with an average of approximately 30,305 over the period. The City’s unemployment rate drastically fell from 8.97% to

2.3% as of June 30, 2021 and June 30, 2022, respectively. It has continued to decline from the peak of the onset of the pandemic but remains slightly higher than the pre-pandemic rate of 1.8% in the fiscal year 2018-19. Bay Area home markets through Spring 2022 generally continued to see home-price gains to new peaks. However, interest rates have more than double in the first nine months of the year, and stock markets have experienced high volatility with very significant declines. The effects of these changes began filtering through to the market toward the end of the fiscal year 2021-22, and median sales prices in the Bay Area were slightly lower than one year ago.

Assessed property values in fiscal year 2021-22 total $3.8 billion. The year over year increase is 3.4% compared to a 6.3% increase in the prior year. Property tax revenues were $16.9 million – an increase of 11.8% compared to the prior fiscal year due primarily to a significant increase in property tax in lieu VLF for $1.3 million. Proposition 13, which governs property taxation in California, ties the annual inflation factor to the California Consumer Price Index (CCPI) issued by the California Industrial Relations Board and limits annual inflation increases of assessed value to no more than 2%. This year an annual inflation factor of 1.01036% was applied to the 2021-22 assessed value of all real property that did not have a change in ownership or any new construction during 2020. Longterm growth potential remains highly positive due to undeveloped land in the Ravenswood Business District, unprecedented development planning activity, consolidation of industrial properties in the Ravenswood Business District, strategies to develop affordable housing, and incentives to intensify housing densities. The City is engaged in addressing the infrastructure, transit, environmental, and community impact challenges and opportunities attendant with the sustained interest in development. Solving these challenges increases the potential gap of time between project proposal and completion.

Sales tax revenues partially recovered in the fiscal year 2021-22 with an increase of 5.8% compared to the prior year but is still $0.2 million less than the highest point of the pre-pandemic figure in the fiscal year 2018-19.

Compared to the pre-pandemic level of $3.0 million from the fiscal year 2018-19, Transient Occupancy Tax (TOT) revenues were $1.4 million in the fiscal year 2021-22; approximately 48% recovery from the pre-pandemic figure. Although we expect some recovery in the TOT revenues in the future years, the trend in the business meeting culture appears to be suppressing the recovery.

The City is focused on socially progressive milestones to support a vibrant, diverse community and workforce. The 2018 Measure HH special parcel tax generated approximately $1.7 million in additional annual taxes for affordable and supportive housing and for programs that facilitate resident access to job opportunities.
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LONG TERM FINANCIAL PLANNING
As part of the strategic resource and budget planning process, management presents a multi-year financial projection to the City Council. The projection provides Council with the opportunity to plan for the management of financial resources and to address forecasted financial challenges.

Maintaining a sustainable budget and prudent fiscal planning is a key strategic priority of the Council supported by citizen survey.

The financial plan also calls for the City to exercise financial “best practices,” including achieving a targeted General Fund contingency reserve of 30% of the adopted General Fund expenditure budget.

The purpose of the reserve is to provide the City with fiscal capacity for responding to emergencies and economic uncertainties and vulnerabilities, thereby minimizing the impact on service levels to the community during such challenging times. Current reserve and unassigned reserve levels exceed the established minimum reserve level.

We also note that California cities are subject to limits on the proceeds of taxes that may be appropriated for spending in a given fiscal year (i.e. the GANN Limit). While voters may approve an override of such limits, it is another important long-term planning factor to consider in long-term strategic resource planning.
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FINANCIAL POLICIES AND INFORMATION
Budgetary Controls
The City Council is required to adopt a budget on an annual basis which is passed by June 30th of each year. In compliance with the City’s municipal ordinance, the Council adopted the Fiscal Year 2021-22 budget through a public hearing process conducted during June 2022. The budget serves as the foundation for the City of East Palo Alto’s financial planning and control. The budget is prepared by fund and division. Transfers between departments require City Manager, or designee, approval.

Unless mandated by regulation, transfers between funds are approved by City Council.

The City maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the Adopted Budget and approved by the City Council. The level of control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established at the fund level. The City also maintains an encumbrance accounting system as one technique of accomplishing budgetary control.

Financial Policies
The City has financial policies related to revenue and expenditure administration, minimum fund balance requirements, grants and debt management, cash and investments, and other financial policies. During the fiscal year 2021-22, the City Council adopted a resolution to establish a reserve management policy which sets forth the principles and objectives that guide the City’s decisions to keep some portion of funds available to the City for future use across a defined spectrum of City operations, including the General Fund, certain asset and capital replacement, risk management and other limited operations. In addition, as discussed in the note to the financial statements, the City adopted new accounting guidance, GASB Statement No. 87, Leases. The adoption resulted in recording right-to-use lease assets and lease liabilities in the government-wide financial statements as well as in the water enterprise fund.

Major Initiatives
The City developed major initiatives for the year through the budget planning process and with the guidance of the City Council as articulated through its Strategic Priorities process, as follows:

Promote Housing, Economic & Workforce Development: includes goals to implement Measure HH employment and First Source Hiring Programs and affordable housing strategy, to provide assistance to small local businesses, and to investigate potential ballot measure to support affordable housing.

Implement the Comprehensive Transportation and Mobility Plan: includes goals to develop a Comprehensive Transportation and Mobility Plan, to expand pedestrian/bicycle facilities and interconnectivity, to begin construction of the University Overpass Project, to investigate University Avenue Improvements/Changes, and to analyze funding strategies for public infrastructure including streets, parks and utilities.

Promote Health & Public Safety: includes goals to effectively respond to the COVID-19 pandemic, to enhance flood protection for residents, businesses, and property owners, and to resolve Sanitation District incorporation matter.
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Ensure Our Financial & Organizational Health: includes goals to address structural deficit through fiscal resiliency measures, to develop 10-year financial projections, to plan and implement an Enterprising Resource Planning (ERP) System, to focus on staff morale, retention, recruitment and succession planning, and to analyze funding strategies for and community perspectives on public infrastructure improvements.

Improve the City's Water Infrastructure: includes goals to improve operations and infrastructure of water system, to advance key water infrastructure projects, and to finalize Veolia lease negotiations.

Develop and Implement a Comprehensive Facilities Master Plan: includes goals to complete the City’s Comprehensive Facilities Master Plan, to investigate potential options for developing County vacant property located on Beech Street, to coordinate with the County Library District regarding the potential new library in East Palo Alto, to develop a detailed strategy for the location of the future police department, and to complete the City Hall tenant improvement project.

AWARDS AND ACKNOWLEDGEMENTS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded the Certificate of Achievement for Excellence in Financial Reporting to the City for its Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2022. This is the twelfth consecutive year the City has achieved this prestigious award. To qualify for the Certificate of Achievement, the governmental entity must publish an easily readable and efficiently organized ACFR, in conformance with program standards. The report also must satisfy generally accepted accounting principles as well as all applicable legal requirements.

The Certificate of Achievement is valid for one year only. The City believes the ACFR conforms to the GFOA Certificate of Achievement Program and will submit the report to the GFOA for consideration of the annual award.

The preparation of the ACFR was made possible by the dedicated staff of the Finance Department.

Sincere appreciation is extended to those staff - each of whom demonstrated exemplary personal dedication and professionalism during this process.

The Finance Department wishes to express our sincere appreciation to the City Council for providing policy direction and support for the pursuit of excellence in attaining the City’s goals.

Sincerely,
Tomohito Oku
Finance Director
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CITY OF EAST PALO ALTO

DIRECTORY OF OFFICIALS
City Council
Ruben Abrica ................................................................................................. Mayor Lisa Gauthier ......................................................................................... Vice Mayor Carlos Romero ............................................................................. Council Member Antonio López ............................................................................. Council Member Regina Wallace-Jones ................................................................. Council Member Administration
Patrick Heisinger ................................................................ Interim City Manager Vacant ............................................................................... Assistant City Manager Valerie J. Armento .............................................................. Interim City Attorney Marie McKenzie ............................................. Administrative Services Director Tomohito Oku .............................................................................. Finance Director Jeff Liu ..................................................................................... Interim Police Chief Humza Javed ..................................................................... Public Works Director [L
Regional Map
ÌEast Palo Alto
ƔNewark
ƔFremont
ƔMenlo Park
ƔAtherton
ƔPalo Alto
ƔMountain View
ƔLos Altos
ƔWoodside
ƔRedwood City
ƔSan Carlos
ƔBelmont
ƔStanford
ƔUnion City
Los Altos Hills
Ɣ
ƔPortola Valley
ƔFoster City
San Mateo County
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CITY OF EAST PALO ALTO

CITY ORGANIZATIONAL CHART
DB-67

RESIDENTS OF EAST PALO ALTO

ASSISTANT CITY MANAGER
OS- 1

CITY COUNCIL

BOARDS & COMMISSIONS
x Planningx Public Works & Transportationx Rent Stabilization Boardx Senior Advisory Board CITY ATTORNEY’S OFFICE

CITY MANAGER

FINANCE POLICE
Administration
Operations
Investigations

ADMINISTRATIVE SERVICES
Administration/Human Resources
Community Services/Information
Technology

PUBLIC WORKS
Administration
Engineering
Maintenance

COMMUNITY & ECONOMIC

DEVELOPMENT
Administration/Building
Planning & Housing
Rent Stabilization
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Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of East Palo Alto
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2021
Executive Director/CEO
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INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of the City Council
of the City of East Palo Alto
East Palo Alto, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of East Palo Alto, California (City) as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2022, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

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

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.

Auditor 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 To the Honorable Mayor and Members of the City Council
of the City of East Palo Alto
East Palo Alto, California

our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about City’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information, and pension plan information on pages 5-17 and 88-93 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
2 To the Honorable Mayor and Members of the City Council of the City of East Palo Alto
East Palo Alto, California

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 and individual nonmajor fund financial statements, and budgetary comparison schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining and individual nonmajor fund financial statements and budgetary comparison schedules on pages 98-126 are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and budgetary comparison schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information Included in the Annual Comprehensive Financial Report Management is responsible for the other information included in the Annual Comprehensive Financial Report. The other information comprises the introductory section and statistical section but does not include the financial statements and our auditor's report thereon. Our opinions on the financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 21, 2022, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of 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.

Badawi & Associates, CPAs
Berkeley, California
December 21, 2022
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4 MANAGEMENT'S DISCUSSION AND ANALYSIS
This section of the City’s Comprehensive Annual Financial Report presents a narrative overview and analysis of the City’s financial activities for the fiscal year ended June 30, 2022. We advise readers to consider the information presented here in conjunction with the accompanying transmittal letter and basic financial statements.

FISCAL YEAR 2021-22 FINANCIAL HIGHLIGHTS
Government-wide Statements
x Total net position equals $193.1 million, an increase of $15.6 million over the prior year balance of $177.5 million. The increase is comprised of $15.2 million in governmental activities and $0.4 million in business-type activities. x Total revenues equal $48.5 million compared to $45.9 million in the prior year; an increase of $2.6 million. Of the total $48.5 million revenues reported, $44.3 million was generated by governmental activities, and $4.2 million was generated by business-type activities. The net increase of $2.6 million is primarily due to increased capital grant and contributions ($3.0M), property tax revenues ($1.8M) and TOT revenues ($1.2M) offset by decreases in investment earnings ($2.3M) and capital grants and contributions ($1.2M). x Total expenses equal $32.9 million compared to $34.6 million in the prior year; a decrease of $1.7 million. Of the total $32.9 million expenses reported, $29.1 million is reported in governmental activities and $3.8 million is reported in business-type activities. The most significant decreases, of was $1.0 million in the community development, $0.8 million in the public safety, and $0.6 million in the general government, are primarily due to salary savings from vacancies and decreased professional services.

Governmental Fund Statements
x Total governmental fund balances equal $108.4 million, an increase of $4.1 million over the prior year balance of $104.3 million. Of the total $108.4 million balance, $82.1 million is comprised of non-spendable, restricted, committed, and assigned balances; and $26.3 million is unassigned balances.
x General Fund total fund balance equals $48.5 million, an increase of $5.7 million over the prior year fund balance of $42.8 million. The net change is comprised of $29.5 million revenues offset by $21.5 million expenditures and $2.4 million net other financing uses.

Net other financing uses are primarily due to major capital transfers and subsidies provided to special revenue funds.
5 OVERVIEW OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT Government-wide Financial Statements
The government-wide financial statements are designed to provide the readers with a broad view of the City’s finances on a similar reporting basis as a private-sector business.

Statement of Net Position: Presents information on all the City’s assets, liabilities and deferred inflows/outflows with the difference reported as net position. Over time, the change in net position may serve as a useful indicator of whether the financial position of the City is improving or declining.

Statement of Activities: Presents information reflecting how the City’s net position changed during the most recent fiscal year. All changes in net position are reported in the period the event giving rise to the change occurs, regardless of timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flow in future fiscal periods.

Non-financial factors, such as changes in the City's property tax base and the condition of the City's infrastructure must be considered to properly assess the overall financial health of the City.

In the Statement of Net Position and the Statement of Activities, activities are divided into two types:
x Governmental activities - Most of the City's basic services are reported here, including police, public works, community development, and general administration. Taxes, user fees, and state and federal grants finance most of these activities. x Business-type activities - The City charges a fee to cover all or most of the cost of certain services it provides. The City's water system and residential garbage collection services are reported in this activity.

Fund Financial Statements
A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other State and local governments, uses fund accounting to ensure and demonstrate financial compliance with legal requirements.

Fund financial statements also report the City's operations in more detail than the governmentwide statements by providing information about the City's most significant funds.

The fund financial statements provide detailed information about the most significant funds, called major funds. Some funds are required to be established by State law and by bond covenants. However, the City establishes many other funds to help control and manage funds for particular purposes (such as the Capital Improvements Fund) or to show that it is meeting legal responsibilities for using certain taxes, grants, and other monies (such as grants received from the Federal government). The City reports the following major funds: General Fund and Capital Improvements Fund. The remaining non-major funds of the City are summarized and presented in a single column. The City's different types of funds – governmental, proprietary, and fiduciary - use different accounting approaches.
6 x Governmental funds - Most of the City's basic services are reported in the governmental funds, where the focus is on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near-term to finance the City's programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is described in detail in a reconciliation located after each of the fund financial statements. x Proprietary funds - the City maintains only one type of proprietary funds, enterprise funds, which are used to report the same functions presented as business-type activities in the government-wide financial statements but provide more detail and additional information, such as a statement of cash flows. The City uses enterprise funds to account for activities related to water system and garbage collection services. x Fiduciary funds – the City maintains a Private Purpose Trust Fund to account for the activity of the former Redevelopment Agency of the City of East Palo Alto. The City’s fiduciary activities such as the Successor Agency are reported in a separate Statement of Fiduciary Net Position and Statement of Changes in Fiduciary Net Position. The accounting basis used for fiduciary funds is comparable to the proprietary funds. These activities are excluded from the City’s other financial statements because the City cannot use the assets to finance its own operations.

Notes to the Financial Statements
The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

GOVERNMENT-WIDE FINANCIAL ANALYSIS
The City provides two-year comparative financial information for the Government-wide financial statements. Net position serves as a useful indicator of a government’s financial position.

Analysis of Net Position
Government-wide assets ($215.3M) and deferred outflows ($4.0M) exceed liabilities ($21.6M) and deferred inflows ($4.5M) by $193.1 million on June 30, 2022. A significant portion of assets ($81.9M) are comprised of capital assets and are not available to pay current and future liabilities of the City. The following table is a summary of the government-wide net position for both governmental and business-type activities:
7 Net Position - Governmental Activities
Total governmental activities assets of $193.8 million consist of current and other assets of $124.0 million and capital assets of $69.9 million. Total governmental activities assets increased $15.9 million and is comprised of increases in current and other assets ($9.0M) and capital assets ($6.9M).

Deferred outflows of $4.0 million consists of $2.4 million deferred employer pension contributions paid after the pension liability measurement date, $1.0 million of differences between expected and actual experience and $0.6 million of City-specific factors such as change in proportional share of multi-employer plan and differences between the actual and proportional share of contributions.

Total liabilities of $17.5 million consist of $7.6 million current liabilities and $10.0 million noncurrent liabilities. Of the non-current liabilities, the most significant portion ($6.5M) relates to net pension liability. Total governmental activities liabilities decreased $4.2 million primarily 8 due to a decrease in in net pension liability ($6.0M) offset by new lease liabilities due to GASB 87 implementation ($1.9M).

Deferred inflows of $4.5 million also relate to GASB #68 due primarily to net differences between projected and actual earnings on plan investments.

Of the $175.8 million governmental activities net position, $64.0 million (36.4%) represents capital assets net of related debt. The City uses capital assets, such as roadways, storm drains, lighting, parks, and other infrastructure to provide services to residents; therefore, the assets do not provide cash liquidity to pay liabilities. Historically, the City has not issued a significant amount of debt to finance capital assets primarily due to a former focus on redevelopment contracts, grant-funded projects, and a lack of significant capital assets available for leveraged leaseback activity.

Total restricted net position equals $52.7 million (30.0%). Such amounts relate to resources subject to external restrictions on how they may be spent by the City. The restricted balance relates to local and county special taxes, tax districts, capital and grant agreements, housing funds, and other restricted uses. Total unrestricted net position equals $59.1 million (33.6%); however, a significant portion of the unrestricted balances are not liquid or are committed for capital projects and other intended uses.

Net Position - Business-type Activities
Business-type activities assets of $21.4 million consist of current and other assets of $9.4 million and capital assets of $12.1 million. Of the $9.4 million in current and other assets, approximately $2.0 million relates to garbage collection, and $7.4 million relates to water services, a significant portion of which is committed for capital infrastructure replacement. All capital assets are comprised of water-services infrastructure.

Business-type liabilities of $4.1 million primarily consist of garbage collection accounts payable and amounts advanced from developers in connection with certain water service implementation agreements.

Net position of $17.4 million includes $11.3 million of capital assets net of related debt, $1.9 million in restricted for capital projects, and $4.1 million in unrestricted net position.

Unrestricted net position decreased $1.1 million over the prior year due primarily to water services ($1.2M) offset by an insignificant increase from garbage collection activities.

Analysis of Statement of Activities
The statement of activities reports the change in government-wide net position during the fiscal year. The following table indicates the changes in net position for governmental and businesstype activities compared to the previous year. The City’s government-wide net position increased $4.3 million as further described on the following pages. 9 Statement of Activities - Governmental
Governmental activities change in net position equals $15.3 million compared to prior year net change of $10.1 million; an increase of $5.1 million. A depiction of sources and types of governmental activities revenues and expenses are illustrated in the following charts:
10 Statement of Activities - Governmental, continued
x Total revenues before transfers equal $44.3 million; an increase of $2.9 million (7.0%) over the prior year revenues of $41.4 million. The increase in revenues is primarily comprised Charges for services
8%
Grants &
Contributions
27%
Property taxes
37%
Sales taxes
12%
Utility User tax
4%
Business License tax
3%
Other Taxes
5%
Other revenues
-2%
Governmental Activities
Revenues by Source
General
government
20%
Public safety
39%
Public works
18%
Culture and
recreation
6%
Community
development
17%
Interest on longterm debt
0%
Governmental Activities
Expenses by Type
11 of increases in operating grants and contributions ($3.0M), property tax revenues ($1.8M) and TOT revenues ($1.2M) offset by decreases in investment earnings ($2.0M) and capital grants and contributions ($1.0M). The increase in operating grants and contributions are primarily attributable to an award of the first tranche payment from American Rescue Plan Act (ARPA) fund ($3.5M). The increase in property tax revenues is due mainly from an increase in property tax in lieu of VLF ($1.3M). The increase in TOT revenues is as a result of recovery from the pandemic due to the lift of travel restrictions which makes up only about 50% of pre-Covid figure. The decrease in investment earnings is primarily due to unrealized losses reported under GASB 31 as a result of the fixed income market trend.

The decrease in capital grants and contributions are directly attributable to a decrease in reimbursement requests submitted to the granting agencies related to major capital project. x Total expenses equal $29.1 million, a decrease of $2.2 million (7.2%) over the prior year expenses of $31.3 million. Generally, expenses are increasing across most spending categories, and certain categories, such as professional services, fluctuate based on changes in activity. The current year over year decrease is primarily attributable to professional services related to property and capital projects.

Statement of Activities - Business-type
x Business-type activities change in net position totaled $0.4 million compared to previous fiscal year of $1.2 million. The difference in change in net position is primarily comprised of water services ($0.3M).
x Total revenues before transfers equal $4.2 million, a decrease of $0.3 million from prior year revenues of $4.5 million. The change mainly consists of decreases of investment earnings ($0.3M), capital grants and contributions ($0.2M) and miscellaneous revenues ($0.1M) offset by an increase in charges for services ($0.3M). x Total expenses before transfers equal $3.8 million which has increased for $0.5M from the prior year. The increase is attributable to property and capital related professional services as a result of increased activities in water infrastructure projects.

FINANCIAL ANALYSIS OF THE CITY'S FUNDS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental Funds
The focus of the City’s governmental funds is to provide information on near-term inflows, outflows and balances of resources that are available for spending. Such information is useful in assessing the City’s financing requirements. Types of governmental funds reported by the City include the General Fund, Special Revenue Funds, and Capital Project Funds.

At June 30, 2022, the City’s governmental funds reported combined fund balances of $108.4 million, an increase of $4.1 million in comparison with the prior year. Of this amount, $26.3 12 million, or 24.3%, constitutes unassigned fund balance, which is available for spending at the government’s discretion. The remainder of the fund balance is either nonspendable, restricted, committed, or assigned to indicate that it is (1) not in spendable form or not spendable because it is legally required to be maintained intact, $5.3 million; (2), restricted for particular purposes, $45.4 million; (3) committed for particular purposes, $19.1 million; or (4) assigned for particular purposes, $12.3 million.

Analysis of Individual Funds
The general fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund balance of the general fund was $26.4 million, while total fund balance increased to $48.5 million. The remaining fund balance consists of nonspendable ($5.3M), restricted ($0.02M), committed ($10.1M), or assigned ($6.7M). As a measure of the general fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total general fund expenditures. Unassigned fund balance represents 123% of total general fund expenditures, while total fund balance represents 226% of that same amount.

The fund balance of the City’s general fund increased by $5.7 million during the current fiscal year. The increase was due primarily to a combination of the increases in property tax revenues ($1.6M) and TOT revenues ($1.0M) and the decrease in personnel costs because of allocation of PD personnel costs to ARPA fund ($3.4M). The current year revenues over the expenditures before transfers was reported at $8.0 million, an increase of $4.7 million, from the prior year figure of $3.3 million.

The capital projects fund, a major fund, had a $4.5 million decrease in fund balance during the current fiscal year which put the overall fund balance to $15.9 million. The fund reports an assigned fund balance, $5.6 million comprised of encumbrances, restricted by funding sources for $1.3 million, and committed, $9 million for flood preventative projects. The decrease in fund balance was caused mainly by the spending of resources obtained from the reserve attributable from general fund transfers which will be partially made up through grant reimbursements in subsequent years.

Proprietary Funds
The City’s proprietary funds provide the same type of information found in the business‐type activities portion of the government‐wide financial statements, but in more detail. Unrestricted net position of the water service fund at the end of the year was $2.7 million and for the garbage collection was $1.4 million. The total growth in net position for each of the funds was $0.3 million and $0.01 million, respectively. As noted earlier in the discussion of business‐type activities, The difference in change in net position is primarily comprised of water services ($0.3M) and the change in net position in garbage fund remained relatively static from the previous year.

GENERAL FUND BUDGETARY HIGHLIGHTS
Total adopted revenues (before transfers) of $28.9 million increased $1.5 million to final amended revenues of $30.4 million. Major revenue amendments include increases in property tax revenues ($1.6M), TOT revenue ($0.5M) and sales tax revenues ($0.1M) offset by a decrease in 13 miscellaneous revenues ($1.3M). The change in property tax revenue was mainly reflected on a new positive finding related to a projected shortfall of property tax in lieu of VLF revenues which was reduced by the amount from the adopted budget. The changes of TOT and sales tax revenues were due to positive trends in the revenue collection during the year. The amendments also include a decrease in miscellaneous revenues related to developer reimbursement revenues ($1.3M).

Total adopted expenditures (before transfers) of $29.4 million decreased $5.3 million to final amended expenditures of $24.1 million. The amendment is due mainly to a combination of salary saving from vacant positions and allocation of public safety personnel costs to ARPA fund approximately for $3.5M.

Following are the main components of the differences between final amended budget and actual results:
x Actual revenues total $29.5 million, approximately $0.9 million less than the amended budget of $30.4 million. The net budget to actual difference relates to an excess budget of unrealized investment gains (losses) ($1.3M) and charges for service revenues ($0.3M) offset by a short projection of tax revenues ($0.4M). Unrealized investment gains and losses are not factored in development of the budget as it does significantly impact the available deposits. The excess of actual tax revenues is primarily due to conservative approach in projection due to the global pandemic.
x Actual expenditures total $21.5 million, approximately $2.6 million less than the amended budget of $24.1 million. Of this amount, approximately $2.3 million is due to staff vacancies and health benefit savings; $0.8 million is due to planned but incomplete professional and technical services across departments as well as property and capital services in public works department. The planned, but unexpended, service strategies are reflected in higherthan-average contractual encumbrances at year-end ($6.7M) and are indicative of the low staffing to service expectations due to so-called great resignation phenomenon.

CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
The capital assets for governmental and business-type activities balance as of June 30, 2022 total $81.9 million (net of accumulated depreciation), a net increase of $6.9 million (9.1%) over the prior year. The increase is attributable to $6.6 million and $0.2 million from governmental activities and business-type activities, respectively. Total capital assets include land, construction in progress, buildings and improvements, machinery and equipment, and infrastructure.

Capital assets, net of accumulated depreciation, for the governmental and business-type activities are as follows:
14 Major capital assets events during the current fiscal year included the following:

Governmental Activities
Capital assets increased $6.6 million and is primarily comprised of $15.8 million additions to newly completed infrastructure and $2.3 million recognition of right-to-use buildings per GASB 87 implementation related to office leases offset by a reduction/transfer from construction in progress to infrastructure (street and roadways) for $8.9 million and $2.5 million depreciations in total. Capital assets completed are mainly from Bay Road Phase II and III project.

Business-Type Activities
Capital assets increased $0.2 million and is comprised of water meter replacement project ($0.5M) offset by depreciation ($0.3M).

For government-wide financial statements presentation, all depreciable capital assets are depreciated from acquisition date to the end of the current fiscal year utilizing a half-year convention. Fund financial statements record capital assets purchases as expenditures. The City’s infrastructure assets are recorded at historical cost in the government-wide financial statements as required by GASB Statement No. 34.

Additional information about capital assets can be found in Note 5 to the financial statements.

Debt Administration
Historically, the City has engaged in limited debt-financing activity due to reliance on outside grant and former redevelopment funding for major infrastructure improvements. This is due to several factors, including that the City owns minimal property assets that are easily debtleveraged, and has not engaged in ad valorem or assessment district funding or other parcel taxrelated capital funding since Redevelopment dissolution. Additionally, with the dissolution of 15 the former RDA, the Successor Agency fiduciary fund assumed the long-term term debt of the former RDA.

Business-type debt consists of a $0.63M note payable related to funding the Gloria Way Well project.

ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
The economic recovery from the pandemic has been accompanied by higher inflation at the global, national, and local levels fueled by war and climate change which appears to be slowing down rate of growth in City’s overall revenue except for either new voter-approved taxes, fee increases, or development-related services activity. Future revenues remain highly uncertain primarily due to volatility in certain components of property tax revenues caused by changes in the distribution methodology and lingering and unknown negative impacts by the COVID-19 pandemic. The following economic factors were considered in the preparation of the City’s budget for fiscal year 2022-23:
x Near-term general revenue growth trajectory is stagnant as the known, major drivers – such as new taxes, taxable development, and significant property portfolio turnover – are not expected, and as revenue resources are at higher comparative risk of low-growth or decline due to market environment.
x Property tax projection is unusually uncertain primarily due to evolving property tax in lieu issues caused by the County’s negative ERAF condition and unknown recovery by the State’s backfill, and due to recent court decision in RPTTF distribution. x Transient occupancy tax has recognized significant recovery in FY2021-22 yet has barely reached 50% of the pre-pandemic figures. Due to the changes in business meeting culture and office working environment, uncertainty exists in the projection and recovery is expected to continue in slower pace.
x Year over year base wages will increase due to negotiated agreements to address belowmarket wages and retention issues. City will experience long-term cost pressures across various activity due to historical under-investment in aged infrastructure; staff resource challenges, such as need for increased technology and maintenance staffing, and rising personnel costs; operational costs of new infrastructure and facilities; and increases in professional and outside services due to high inflation. x The City has reserves available to maintain stable service delivery during FY 2022-23 and enable implementation of a strategic, prioritized budget plan. Additionally, temporary suspension of certain capital and operating transfers; limited hiring freeze; delay of nonessential project initiation, and strategic utilization of general fund unassigned reserves will provide near-term stability required to plan for more durable service delivery decisions in order to address resource constraints and uncertainty over an extended period.
16 CONTACTING THE CITY'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City's finances and to ensure transparency relative to city fiscal operations. If you have questions about this report or need additional financial information, contact the City’s Finance Department, East Palo Alto Government Center, 2415 University Avenue, East Palo Alto, CA 94303.
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18 BASIC

FINANCIAL STATEMENTS
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20 GOVERNMENT-WIDE

FINANCIAL STATEMENTS
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22 City of East Palo Alto
Statement of Net Position
June 30, 2022
Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:

Cash and investments $ 11,335,857 99,094,822 $ 110,430,67 $ 9 Restricted cash and investments with fiscal agents 297,280 187,161 484,441 Receivables:

Accounts receivable 880,024 121,726 1,001,750
Interest receivable 593,968 28,996 622,964
Taxes receivable 1,411,612 - 1,411,612
Intergovermental receivables 7,493,397 89,289 7,582,686 Deposits and prepayments 161,257 - 161,257
Internal balances 2,410,393 (2,410,393) -
Total current assets 112,342,753 9,352,636 121,695,389
Noncurrent assets:

Loans to Successor Agency 4,662,428 - 4,662,428
Loans and notes receivable 6,950,227 - 6,950,227
Capital assets:

Non-depreciable 6,094,079 6,105,796 12,199,875
Depreciable, net 63,768,103 5,975,088 69,743,191
Total capital assets 69,862,182 12,080,884 81,943,066
Total noncurrent assets 81,474,837 12,080,884 93,555,721 Total assets 193,817,590 21,433,520 215,251,110

DEFERRED OUTFLOWS OF RESOURCES
Deferred employer pension contributions 2,366,071 - 2,366,071 Deferred outflows of resources - pension 1,597,246 - 1,597,246 Total deferred outflows of resources 3,963,317 - 3,963,317

LIABILITIES
Current liabilities:

Accounts payable 4,802,433 749,995 5,552,428
Accrued liabilities 992,132 339 992,471
Retention payable 691,731 41,144 732,875
Unearned revenue 297,280 - 297,280
Compensated absences 235,149 - 235,149
Claims payable 96,656 - 96,656
Note payable - due in less than one year - 23,333 23,333 Lease payable - due in less than one year 452,677 25,547 478,224 Total current liabilities 7,568,058 840,358 8,408,416
Noncurrent liabilities:

Deposits payable 1,142,944 26,360 1,169,304
Advances from developers 100,891 2,511,822 2,612,713
Compensated absences 677,893 - 677,893
Claims payable 83,344 - 83,344
Note payable - 606,668 606,668
Lease payable - due in more than one year 1,427,847 77,372 1,505,219 Net pension liablity 6,526,289 - 6,526,289
Total noncurrent liabilities 9,959,208 3,222,222 13,181,430 Total liabilities 17,527,266 4,062,580 21,589,846

DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources - pension 4,484,568 - 4,484,568 Total deferred inflows of resources 4,484,568 - 4,484,568

NET POSITION
Net investment in capital assets 64,005,813 11,306,820 75,312,633 Restricted for:

Streets and Infrastructure 14,736,889 - 14,736,889
Parks and Recreation 334,082 - 334,082
Measure C Program 217,659 - 217,659
Housing Programs 26,780,234 - 26,780,234
Special Programs 2,010,100 - 2,010,100
Capital Projects 8,602,288 1,943,955 10,546,243
Total restricted 52,681,252 1,943,955 54,625,207
Unrestricted 59,082,008 4,120,165 63,202,173
$ 175,769,073 $ 17,370,940 $ 193,140,013
Primary Government
Total net position
See accompanying Notes to Basic Financial Statements.
23 Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Total Primary Government:

Governmental activities:

General government 5,779,679 $ $ 7,851 $ 40,850 $ - $ 48,701 Public safety 11,242,720 248,561 3,851,678 - 4,100,239
Public works 5,275,133 129,159 1,255,729 6,783,094 8,167,982 Culture and recreation 1,822,711 11,080 279,606 - 290,686 Community Development 4,943,100 3,211,876 182,782 - 3,394,658 Interest on long-term debt 6,561 - - - -
Total governmental activities 29,069,904 3,608,527 5,610,645 6,783,094 16,002,266 Business-type activities:

Garbage Collections 2,789,343 2,905,566 - - 2,905,566
Water Services 1,054,839 1,256,458 186,919 291,112 1,734,489 Total business-type activities 3,844,182 4,162,024 186,919 291,112 4,640,055 Total primary government $ 32,914,086 $ 7,770,551 $ 5,797,564 $ 7,074,206 $ 20,642,321 General Revenues:

Taxes:

Property taxes
Sales taxes
Utility users tax
Transient occupancy tax
Business license tax
Parcel taxes
Total taxes
Investment earnings
Miscellaneous
Total general revenues
Change in net position
Net position - beginning of year
Net position - end of year
Program Revenues
City of East Palo
Statement of Activities
For the year ended June 30, 2022
24 Governmental Business-Type
Activities Activities Total
$ (5,730,978) $ (5,730,978) - $
(7,142,481) (7,142,481) -
2,892,849 2,892,849 -
(1,532,025) (1,532,025) -
(1,548,442) (1,548,442) -
(6,561) - (6,561)
(13,067,638) (13,067,638) -
- 116,223 116,223
- 679,650 679,650
- 795,873 795,873
(13,067,638) 795,873 (12,271,765)
17,295,600 17,295,600 -
5,738,443 5,738,443 -
1,631,049 1,631,049 -
1,447,892 1,447,892 -
1,269,802 1,269,802 -
1,677,265 1,677,265 -
29,060,051 29,060,051 -
(2,010,393) (298,202) (2,308,595)
1,273,166 (140,423) 1,132,743
28,322,824 (438,625) 27,884,199
15,255,186 357,248 15,612,434
160,513,887 17,013,692 177,527,579
$ 175,769,073 $ 17,370,940 $ 193,140,013
$ 17,370,940
Net (Expense) Revenue
and Changes in Net Position
See accompanying Notes to Basic Financial Statements.
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26 FUND

FINANCIAL STATEMENTS
Governmental Fund Financial Statements
Proprietary Fund Financial Statements
Fiduciary Fund Financial Statements
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28 GOVERNMENTAL FUND FINANCIAL STATEMENTS
General Fund is the primary operating fund of the City and accounts for the revenues and expenditures to carry out basic governmental activities of the City such as general government, public safety, highway and street, culture and recreation, and community development. This fund accounts for all financial transactions not accounted for in other governmental funds.

Capital Improvements Capital Projects Fund accounts for capital project improvement revenues and expenditures financed by various sources primarily Federal and State grants, General Fund transfers, and community benefit payments for related capital projects.

Non-Major Governmental Funds is the aggregate of all the non-major governmental funds. 29 City of East Palo Alto
Balance Sheet
Governmental Funds
June 30, 2022
Capital
Improvements Non-Major Total
Capital Governmental Governmental
General Projects Fund Funds Funds
ASSETS
Cash and investments 44,347,918 $ 19,833,826 $ $ 34,913,078 $ 99,094,822 Restricted cash and investments - 297,280 - 297,280
Receivables:

Accrued interest 115,010 47,810 431,148 593,968
Taxes 1,291,987 - 119,625 1,411,612
Intergovernmental 157,845 6,724,850 610,702 7,493,397
Accounts receivable 708,106 - 171,918 880,024
Deposits and prepayments 161,257 - - 161,257
Due from other funds 303,294 - - 303,294
Advances to other funds 458,480 - 1,951,913 2,410,393
Loans to Successor Agency 4,662,428 - - 4,662,428
Loans and notes receivable - 6,950,227 - 6,950,227
Total assets $ 52,206,325 $ 26,903,766 $ 45,148,611 $ 124,258,702

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable $ 1,381,440 $ 3,284,114 $ 136,879 $ 4,802,433 Retentions payable - 616,895 74,836 691,731
Deposits payable 1,137,944 5,000 - 1,142,944
Other accrued liabilities 938,509 - 53,623 992,132
Unearned revenue - 297,280 - 297,280
Due to other funds - - 303,294 303,294
Advances from developers - 100,891 - 100,891
Total liabilities 3,457,893 4,304,180 568,632 8,330,705 Deferred inflows of resources:

Unavailable revenues 276,272 6,724,851 575,720 7,576,843 Fund Balances: (Note 8)
Nonspendable 5,282,165 - 5,282,165 -
Restricted 27,297 1,273,906 44,115,630 45,416,833
Committed 10,097,589 9,000,000 - 19,097,589
Assigned 6,658,000 5,600,829 - 12,258,829
Unassigned 26,407,109 - (111,371) 26,295,738
Total fund balances 48,472,160 15,874,735 44,004,259 108,351,154 Total liabilities, deferred inflows of
resources, and fund balances $ 52,206,325 $ 26,903,766 $ 45,148,611 $ 124,258,702 Major Funds
See accompanying Notes to Basic Financial Statements.
30 Total Fund Balances - Governmental Funds $ 108,351,154 Non-depreciable 6,094,079
Depreciable, net 63,768,103
Total capital assets 69,862,182
Employer pension contributions are recorded as expenditures in the Governmental funds when paid based upon recommended actuarial contributions. In the Government-wide financial statements, these employer pension contributions are reported as deferred outflows of resources, to be applied against the net pension liability in the following fiscal year. 2,366,071 In the Government-Wide Financial Statements certain differences between actuarial estimates and actual results for pension, changes in assumptions, differences between actual and projected investment earnings, and differences resulting from changes in allocation percentages are deferred and amortized over a period of time, however in the governmental funds no transactions are recorded.

Deferred outflows of resources - pension 1,597,246
Deferred inflows of resources - pension (4,484,568)
Unavailable revenue recorded in the fund financial statements resulting from activities in which revenues were earned but funds were not available are reclassified as revenues in the GovernmentWide Financial Statements. 7,576,843 Long-term liabilities are not due and payablein the current period;therefore, they are not reported in the Governmental Funds Balance Sheet.

Compensated absences (913,042)
Claims payable (180,000)
Lease payable (1,880,524)
Net pension liability (6,526,289)
Total long-term liabilities (9,499,855)
Net Position of Governmental Activities $ 175,769,073
Governmental funds report capital outlays as expenditures. In the Government-wide financial statements, the cost of assets are capitalized and depreciated over the estimated useful lives of the assets and reported as depreciation expense. The capital assets, net of depreciation, are adjusted as follows:

City of East Palo Alto
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position
June 30, 2022
Amounts reported for governmental activities in the Statement of Net Position are different from those reported in the Total Fund Balances - Governmental Funds above due to the following:

See accompanying Notes to Basic Financial Statements.
31 Statement of Revenues, Expenditures and Changes in Fund Balances Capital
Improvements Non-Major Total
General Capital Governmental Governmental
Fund Projects Fund Funds Funds
REVENUES:

Property taxes 15,843,008 $ - $ 1,039,433 $ $ 16,882,441 Sales taxes 5,738,443 1,084,770 - 6,823,213
Transient occupancy tax 1,158,314 289,578 - 1,447,892
Utility users tax 1,631,049 - - 1,631,049
Other taxes 1,692,627 3,011,226 - 4,703,853
Licenses, fees and permits 1,583,769 719,770 41,411 2,344,950 Charges for services 683,819 656,947 - 1,340,766
Fines and forfeitures 263,437 - - 263,437
Use of money and property (1,001,012) (494,242) (828,033) (2,323,287) Grants and intergovernmental 220,361 571,000 4,106,038 4,897,399 Miscellaneous 1,697,367 - 2,919 1,700,286
Total revenues 29,511,182 796,528 9,404,289 39,711,999
EXPENDITURES:

Current:

General government 5,444,582 54,963 833,445 6,332,990
Public safety 8,109,725 3,657,585 - 11,767,310
Public works 3,310,437 61,814 724,902 4,097,153
Culture and recreation 727,276 350,576 141,913 1,219,765 Community development 3,760,833 3,470 1,381,942 5,146,245 Capital outlay 101,966 6,577,818 387,388 7,067,172
Debt service:

Interest, and fiscal charges 6,561 - - 6,561
Total expenditures 21,461,380 7,048,641 7,127,175 35,637,196 REVENUES OVER (UNDER) EXPENDITURES 8,049,802 (6,252,113) 2,277,114 4,074,803 OTHER FINANCING SOURCES (USES):

Transfers in 1,778,660 - 602,340 2,381,000
Transfers out (2,381,000) - (2,381,000) -
Total other financing sources (uses) (2,381,000) 1,778,660 602,340 - Net change in fund balances 5,668,802 (4,473,453) 2,879,454 4,074,803 FUND BALANCES:

Beginning of year 42,803,358 20,348,188 41,124,805 104,276,351 End of year $ 48,472,160 $ 15,874,735 $ 44,004,259 $ 108,351,154 City of East Palo Alto
Governmental Funds
For the year ended June 30, 2022
Major Funds
See accompanying Notes to Basic Financial Statements.
32 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes Net Change in Fund Balances - Total Governmental Funds $ 4,074,803 Governmental funds reported capital outlay as expenditures. However, in the Government-Wide Statement of Activities, the cost of those assets was allocated over the estimated useful lives as depreciation expense. This was the amount of capital assets recorded in the current period. 7,169,314 Depreciation expense on capital assets is reported in the Government-Wide Statement of Activities, but does not require the use of current financial resources. Therefore, depreciation expense is not reported as expenditures in the governmental funds. (2,820,987) In the statement of activities, only the gain or (loss) on the sale of capital assets is reported, whereas in the governmental funds, proceeds from the sales increases financial resources. The differences between the proceeds and the loss on disposal of capital assets. (19,897) Accrued compensated absences is reported as an expenditure in the Governmental funds when paid, but the accrued payable decreased compensated leave liabilities in the Government-Wide Statement of Net Position. 261,819
Payments on existing claims against the City are recorded as expenditures in governmental funds, but the payment reduced long-term liabilities in the Government-Wide Statement of Net Position.

Expenses related to new claims and changes in claim estimates do not require the use of current financial resources and therefore are not reported as an expenditure in Governmental funds. (47,000) Principal payments on lease liabilities are current expenditures in the fund financials, but reduce the lease liability in the Government-Wide Statement of Net Position 425,999 Current year employer pension contributions are recorded as expenditures in the Governmental funds, however these amounts are reported as a deferred outflow of resources in the GovernmentWide Statement of Net Position. 2,366,071 Pension expense is recorded as incurred in the Government-Wide Statement of Activities, however pension expense is not recognized in the governmental funds. (768,031) Grant and tax revenues that do not meet the revenue recognition criteria in the governmental funds but are recognized as revenue in the Government-Wide Financial Statements. 4,613,095 Change in Net Position of Governmental Activities $ 15,255,186 City of East Palo Alto
in Fund Balances to the Government-Wide Statement of Activities For the year ended June 30, 2022
Amounts reported as Change in Net Position of governmental activities in the Statement of Activities are different from those reported as Net Change in Fund Balances - Total Governmental Funds above due to the following:

See accompanying Notes to Basic Financial Statements.
33 This page intentionally left blank
34 PROPRIETARY FUND FINANCIAL STATEMENTS
Garbage Collection Fund accounts for the certain activities associated with garbage collection services.

Water Service Fund accounts for activities related to water lease and capital improvement surcharge revenues utilized to improve and expand the City's water system infrastructure. 35 City of East Palo Alto
Statement of Net Position
Proprietary Funds
June 30, 2022
Garbage Water
Collection Service Total
ASSETS
Current assets:

Cash and investments 2,004,532 $ 9,331,325 $ 11,335,857 $ Cash with fiscal agents - 187,161 187,161
Accrued interest 4,925 24,071 28,996
Intergovernmental receivable - 89,289 89,289
Accounts receivable, net 23,333 98,393 121,726
Total current assets 2,032,790 9,730,239 11,763,029
Noncurrent assets:

Capital assets:

Non-depreciable - 6,105,796 6,105,796
Depreciable, net - 5,975,088 5,975,088
Total capital assets - 12,080,884 12,080,884
Total noncurrent assets - 12,080,884 12,080,884
Total assets 2,032,790 21,811,123 23,843,913

LIABILITIES
Current liabilities:

Accounts payable 670,317 79,678 749,995
Retentions payable - 41,144 41,144
Other accrued liabilities -339 339
Note payable - 23,333 23,333
Lease payable - 25,547 25,547
Total current liabilities 670,317 170,041 840,358
Noncurrent liabilities:

Deposits payable - 26,360 26,360
Advances from developers 2,511,822 - 2,511,822
Advances from other funds 2,410,393 - 2,410,393
Note payable 606,668 - 606,668
Lease payable - 77,372 77,372
Total noncurrent liabilities 5,632,615 - 5,632,615
Total liabilities 670,317 5,802,656 6,472,973

NET POSITION
Net investment in capital assets 11,306,820 - 11,306,820 Restricted for:

Capital projects 1,943,955 - 1,943,955
Unrestricted 1,362,473 2,757,692 4,120,165
Total net position $ 1,362,473 $ 16,008,467 $ 17,370,940 Enterprise Funds
See accompanying Notes to Basic Financial Statements.
36 City of East Palo Alto
Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds
For the year ended June 30, 2022
Garbage Water
Collection Service Total
OPERATING REVENUES:

Charges for services and other fees $ 853,986 2,617,483 $ 3,471,469 $ Other 288,083 402,472 690,555
Total operating revenues 2,905,566 1,256,458 4,162,024
OPERATING EXPENSES:

Outside services 2,689,091 641,992 3,331,083
Administration 100,252 111,584 211,836
Depreciation - 301,263 301,263
Total operating expenses 2,789,343 1,054,839 3,844,182
OPERATING INCOME 116,223 201,619 317,842
NONOPERATING REVENUES (EXPENSES):

Federal and State grants 186,919 - 186,919
Gain (loss) on disposal of assets (140,423) - (140,423) Interest income (53,746) (244,456) (298,202)
Total nonoperating revenues (expenses) (53,746) (197,960) (251,706) INCOME (LOSS) BEFORE CONTRIBUTIONS 3,659 62,477 66,136
Capital contributions - 291,112 291,112
Total contributions 291,112 - 291,112
Change in net position 62,477 294,771 357,248

NET POSITION
Beginning of year 1,299,996 15,713,696 17,013,692
End of year $ 16,008,467 1,362,473 $ 17,370,940 $
Enterprise Funds
See accompanying Notes to Basic Financial Statements.
37 City of East Palo Alto
Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2022
Garbage Water
Collection Service Total
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from others $ 288,083 $ 402,472 $ 690,555 Cash received from customers 2,684,787 947,783 3,632,570 Cash payments to suppliers for goods and services (2,635,675) (696,266) (3,331,941) Cash paid to employees and city administration (100,252) (111,584) (211,836) Net cash provided by operating activities 236,943 542,405 779,348 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Federal grants 186,919 - 186,919
Net cash provided by noncapital financing activities 186,919 - 186,919 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Capital contributions - 267,779 267,779
Acquisition of capital assets - (915,141) (915,141)
Payments on leases (60,344) - (60,344)
Repayments on advances from developers (240,928) - (240,928) Net cash used by capital and related financing activities (948,634) - (948,634) CASH FLOWS FROM INVESTING ACTIVITIES:

Investment income received 12,207 78,973 91,180
Unrealized loss on investments (66,987) (326,801) (393,788) Net cash provided (used) by investing activities (54,780) (247,828) (302,608)

NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 182,163 (467,138) (284,975)
CASH AND CASH EQUIVALENTS - Beginning of year 1,822,369 9,985,624 11,807,993 CASH AND CASH EQUIVALENTS - End of year $ 2,004,532 $ 9,518,486 $ 11,523,018 FINANCIAL STATEMENT PRESENTATION:

Cash and investments $ 2,004,532 $ 9,331,325 $ 11,335,857 Cash with fiscal agents 187,161 - 187,161
Total $ 2,004,532 $ 9,518,486 $ 11,523,018

RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:

Operating income $ 116,223 $ 201,619 $ 317,842
Adjustments to reconcile operating income
to net cash provided by operating activities:

Depreciation - 301,263 301,263
Changes in assets and liabilities:

Accounts receivable 67,304 93,797 161,101
Accounts payable 53,416 (54,274) (858)
Total adjustments 120,720 340,786 461,506
Net cash provided by operating activities $ 542 236,943 $ ,405 $ 779,348 NON-CASH INVESTMENT AND FINANCING ACTIVITY:

Forgiveness of long term debt - $ 23,333 $ $ 23,333
Enterprise Funds
See accompanying Notes to Basic Financial Statements.
38 FIDUCIARY FUND FINANCIAL STATEMENTS
Private Purpose Trust Funds
Successor Agency Trust to the Redevelopment Agency Private-Purpose Trust Fund accounts for the accumulation of resources held and administered under trust for the benefit of others. In January 2012, all California Redevelopment Agencies were dissolved pursuant to the Dissolution Act. As such, the City elected to serve as the Successor Agency (SA) of the former Redevelopment Agency. The SA is responsible for winding down the affairs of the former agency. This fund accounts for receipts and payments related to an Enforceable Obligation Schedule; and the disposition of assets and property of the former Redevelopment Agency for the benefit of taxing agencies. The financial activities of the fund are excluded from the Government-wide financial statements, but are presented in the separate Fiduciary Fund financial statements.
39 City of East Palo Alto
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2022
Successor Agency
Trust Fund
ASSETS
Current assets
Cash and investments $ 2,273,776
Receivables:

Interest receivable 7,922
Total current assets 2,281,698
Noncurrent assets
Prepaid items 49,385
Total noncurrent assets 49,385
Total assets 2,331,083

LIABILITIES
Liabilities:

Current liabilities
Other accrued liabilities 136,513
Loans payable to City 2,313,621
Bonds payable 1,030,000
Total current liabilities 3,480,134
Noncurrent liabilities
Loans payable to City 2,348,807
Bonds payable 13,110,318
Total noncurrent liabilities 15,459,125
Total liabilities 18,939,259

DEFERRED INFLOWS OF RESOURCES
Deferred gain on refunding 153,892

NET POSITION
Held in trust for dissolution of RDA (16,762,068)
Total net position $ (16,762,068)
See accompanying Notes to Basic Financial Statements.
40 City of East Palo Alto
Statement of Changes in Fiduciary Net Position
All Fiduciary Funds - Private Purpose Trust Funds
For the year ended June 30, 2022
Successor Agency
Trust Fund
ADDITIONS:

RDA property tax trust fund distribution 2,913,703 $
Use of money and property (43,413)
Total additions 2,870,290
DEDUCTIONS:

General government 23,421
Interest and fiscal charges 487,142
Total Deductions 510,563
Change in net position 2,359,727
NET POSITION:

Beginning of year (19,121,795)
End of year $ (16,762,068)
See accompanying Notes to Basic Financial Statements.
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42 NOTES TO BASIC

FINANCIAL STATEMENTS
43 This page intentionally left blank
44 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of East Palo Alto, California (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below.

A. Financial Reporting Entity
The City of East Palo Alto (City) was incorporated in 1983, under the General Laws of the State of California and enjoys all the rights and privileges pertaining to "General Law" cities. The City uses the City Council/Manager form of government. The local government is comprised of five Council members who are elected every four years and act under powers granted under State law. The City provides a variety of services including general administration; police public safety; street/highway, storm drain, streetlight, and park maintenance; community development, and community services, including rent control services.

The basic financial statements present the City and its component units, entities for which the City is financially accountable. Blended component units, although legally separate entities are, in substance, part of the City’s operations and data from these units are combined with data of the City. The City has no discretely presented component units. The blended component unit has a June 30 year-end. The following entity is reported as a blended component unit:

The East Palo Alto Public Financing Authority - The East Palo Alto Public Financing Authority (Authority) was organized in October 1999 under a joint exercise of power agreement to provide financing for public improvements for the City and the former East Palo Alto Redevelopment Agency (former Agency). The Authority and the City have a financial and operational relationship, which requires that the Authority’s financial statements be blended into the City’s financial statements. The Authority’s Board consists exclusively of all members of the City Council. Separate financial statements of the Authority are not prepared. There are currently no reportable financial transactions of the Authority.

B. Basis of Accounting and Measurement Focus
The accounts of the City are organized on a fund basis, each of which is considered a separate accounting entity with its own self-balancing set of accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses. These funds are established for the purpose of carrying out activities or certain objectives in accordance with specific regulations, restrictions, or limitation. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and how spending activities are controlled.

Government-Wide Financial Statements
The City’s Government-Wide Financial Statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of Governmental and Business-Type Activities for the City accompanied by a total column.
45 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Government-Wide Financial Statements, Continued
The financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all the City’s assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liabilities are incurred.

Certain types of transactions reported as program revenues for the City are reported in three categories:
x Charges for services
x Operating grants and contributions
x Capital grants and contributions
Certain eliminations have been made related to inter-fund activities, payables, and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal 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:
x Due to/from other funds
x Transfers in/out
The City applies all applicable GASB pronouncements including all NCGA Statements and Interpretations currently in effect.

Governmental Fund Financial Statements
Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in 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 meet specific qualifications.

All governmental funds are accounted for on a spending or “current financial resources” measurement focus and the modified accrual basis of accounting. Revenues are recognized when they have been earned and they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. 46 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Governmental Fund Financial Statements, Continued
The City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. The primary revenue sources that have been treated as susceptible to accrual by the City are property taxes, taxpayer-assessed tax revenues (sales taxes, transient occupancy taxes, franchise taxes, etc.), grant revenues and earnings on investments. Expenditures are generally recorded when a liability is incurred, as under accrual accounting.

The City reports the following funds as major governmental funds of the City:

General Fund accounts for resources traditionally associated with governmental activities that are not required legally or by sound financial management to be accounted for in another fund.

Capital Improvements Capital Projects Fund accounts for capital project improvement revenues and expenditures financed by various sources, primarily Federal and State grants, General Fund transfers, and capital-related community benefit receipts.

The City reports the following governmental funds as non-major governmental funds of the City:

NPDES Fees Special Revenue Fund accounts for the revenues and expenditures from assessments levied on property in the City in compliance with the provisions of the National Pollutant Discharge Elimination System for prevention of storm water and flood related damage.

Gas Tax Special Revenue Fund accounts for funds received from the State of California to use for street and highway related projects.

Federal and State Law Enforcement Special Revenue Fund accounts for the receipt and use of State and Federal law enforcement related grant money.

Park in Lieu Special Revenue Fund accounts for park in lieu fees collected from developers.

Rent Stabilization Special Revenue Fund accounts for revenues and expenditures to support rent stabilization activities.

Federal and State Grants Special Revenue Fund accounts for grant money received and expended from various Federal and State government grants.

Housing Assistance Special Revenue Fund accounts for first time home buyer assistance program activities.

Measure A Special Revenue Fund accounts for the City's share of Measure A revenues and expenditures.

Measure A is a half-cent sales tax to support countywide (San Mateo County) transportation projects and programs.

CYSFF TOT Special Revenue Fund accounts for 10% of transient occupancy taxes collected as approved by voters and the City Council approved funding for various non-profit organizations related to Children/Youth/Seniors/Family programs.
47 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Governmental Fund Financial Statements, Continued
Lighting District Special Revenue Fund accounts for revenues (property taxes) and expenditures for the Ravenswood Highway Lighting District.

Drainage District Special Revenue Fund accounts for revenues (property taxes) and expenditures for the East Palo Alto Maintenance Drainage District.

Measure C Special Revenue Fund accounts for activities related to the Measure C Parcel tax. Measure C was an annual tax approved by the voters in November 2006 for a period of ten years. The remaining funds are to be used to support violence prevention and public safety intervention.

Local Grants Special Revenue Fund accounts for revenues and expenditures from local public and private grants including the C/CAG Shuttle and the CA Endowment grants.

Silicon Valley Community Foundation (SVCF) Special Revenue Fund accounts for gift monies from the Silicon Valley Community Foundation to be used for the purpose of incentivizing the development of affordable housing within the City. Up to $2,000,000 was authorized for an inter-fund Advance to provide monies to purchase certain water rights. Remaining funds are restricted to pay a minimum amount of $500,000 for an affordable housing manager over a minimum period of five years.

Low and Moderate Income Housing Successor Special Revenue Fund accounts for the activities related to the housing assets assumed by the City as Housing Successor to the former Redevelopment Agency.

The activities are governed by California redevelopment law and must be used to provide housing for people with low and moderate incomes.

Housing in Lieu Special Revenue Fund accounts for developer fees in lieu of providing affordable housing and the expenditures related to affordable housing development activities.

Housing TOT Special Revenue Fund accounts for 10% set-aside of transient occupancy taxes collected as approved by voters, and the expenditures related to affordable housing development activities.

Measure HH Special Revenue Fund accounts for the revenues and expenditures of Measure HH-Parcel tax. Measure HH was approved by the voters in November 2018. The tax is annual parcel tax and the funds are to be used for affordable and supportive housing programs, programs that facilitate access to job opportunities in the S.T.E.M. sectors, building trades, and strengthen First Source Hiring.

Measure W Special Revenue Fund accounts for the City’s share of San Mateo County Measure W revenues and expenditures. Measure W is a half-cent sales tax to support countywide transportation projects and programs.
48 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Governmental Fund Financial Statements, Continued
CIP Impact Fees Capital Project Fund accounts for various development impact fees collected by the City for capital related activities.

ARPA Fund accounts for the federal payments to the City from the American Rescue Plan Act passed in March 2021.

Proprietary Fund Financial Statements
Proprietary fund financial statements include a Statement of Net Position, a Statement of Revenues, Expenses and Change in Net Position, and a Statement of Cash Flows for all proprietary funds.

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 a liability is incurred.

Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses.

The City reports the Garbage Collection and Water Service enterprise funds as proprietary funds of the City.

Garbage Collection Fund accounts for the activities associated with garbage collection services.

Water Service Fund accounts for the certain activities related to water lease and capital surcharge revenues utilized to improve and expand the City’s water system infrastructure.

Fiduciary Fund Financial Statements
Fiduciary fund financial statements consist of a Statement of Fiduciary Net Position and a Statement of Changes in Fiduciary Net Position. Private-purpose trust funds account for resources of all other trust arrangements in which principal and income benefit individuals, private organizations, or other governments (i.e. unclaimed property/escheat property). Fiduciary funds are accounted for using the accrual basis of accounting. The City reports the following fiduciary funds:
49 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Fiduciary Fund Financial Statements, Continued
Successor Agency Private Purpose Trust Fund – accounts for assets and liabilities held by the City pursuant to California Redevelopment Dissolution Law whereby the City elected to serve as the Successor Agency of the former Agency effective February 1, 2012. The Successor Agency serves as custodian for the assets of, and winding down affairs related to, the former Agency. The Successor Agency is allocated revenues necessary to pay enforceable obligations of the former Agency. The activities of the fund are excluded from the Government-wide financial statements but are presented in the separate Fiduciary fund financial statements.

C. Cash, Cash Equivalents, and Investments
The City pools cash resources from all funds to facilitate the management of cash. The balance in the pooled cash account is available to meet current operating requirements. Cash in excess of current requirements is invested in various interest-bearing accounts and other investments for varying terms.

In accordance with GASB Statement No. 40, Deposit and Investment Disclosures (Amendment of GASB No. 31), certain disclosure requirements for Deposits and Investment Risks were made in the following areas:
• Interest Rate Risk
• Credit Risk
o Overall
o Custodial Credit Risk
o Concentrations of Credit Risk
In addition, other disclosures are specified including use of certain methods to present deposits and investments, highly sensitive investments, credit quality at year-end, and other disclosures.

In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, 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. The City categorizes the fair value measurements of its investments based on the hierarchy established by generally accepted accounting principles. The fair value hierarchy, which has three levels, is based on the valuation inputs used to measure an asset’s fair value: Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The City does not have any investments that are measured using Level 3 inputs.

The City participates in an investment pool managed by the State of California entitled Local Agency Investment Fund (LAIF) which has invested a portion of the pooled funds in structured notes and assetbacked securities. LAIF 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 the change in interest rates. 50 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Cash, Cash Equivalents, and Investments, Continued
Cash equivalents are considered amounts in demand deposits and short-term investments with a maturity date within three months of the date acquired by the City and are presented as “Cash and Investments” in the accompanying Basic Financial Statements.

The City considers all pooled cash and investments (consisting of cash and investments and restricted cash and investments) held by the City as cash and cash equivalents because the pool is used essentially as a demand deposit account from the standpoint of the funds. The City also considers all non-pooled cash and investments (consisting of cash with fiscal agent and restricted cash and investments held by fiscal agent) as cash and cash equivalents because investments meet the criteria for cash equivalents defined above.

D. Restricted Cash and Investments
Certain restricted cash and investments are held by fiscal agents under the provisions of bond indentures or trust arrangements. The City’s Investment Policy does not apply to trust accounts held by the fiscal agents, which are invested as directed by separate trust arrangements.

E. Prepayments
Payments made for services that will benefit periods beyond fiscal year end are recorded as prepaid items.

In the governmental fund types, there is a portion of non-spendable fund balance equal to the total prepaid items since these are not available for appropriation.

F. Capital Assets
Capital assets used in governmental fund operations, including infrastructure assets (i.e. roads, curbs, gutters, bridges, sidewalks, drainage systems, lighting systems, and other assets) are reflected in the government-wide financial statements, along with related depreciation. Capital assets are defined by the City as assets with an initial individual cost of more than $5,000 and an estimated life more than one year.

Purchased capital assets are valued at historical cost or estimated historical cost. Donated capital assets are valued at their acquisition value on the date donated. Capital assets acquired under lease or purchase agreements are capitalized when the City accumulates an ownership equity in the assets acquired.

The purpose of depreciation is to allocate the cost of capital assets equitably among all users over the life of these assets. The amount charged to depreciation expense each year represents that year’s pro rata share of the cost of capital assets.

Depreciation is provided using the straight-line method whereby the cost of the asset is divided by its expected useful life in years and the result is charged to expense each year until the asset is fully depreciated. The City has assigned the useful lives listed below to capital assets:

Infrastructure 7-55 years
Buildings and Improvements 30 years
Furniture, Fixture, and Equipment 5-10 years
Automobiles and Trucks 10 years
51 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued F. Capital Assets, Continued
Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period.

G. Unearned revenue
Unearned revenue is recognized for transactions for which revenue has not yet been earned. Typical transactions recorded as unearned revenues in the Government-wide Financial Statements are prepaid fees and charges for services.

H. Long-Term Debt
Government-wide Financial Statements – Long-term debt and other long-term obligations are reported as liabilities in the appropriate activities.

Bond premiums and discounts are amortized over the life of the bonds using straight line method. Bonds payable are reported net of the applicable bond premium or discount.

Fund Financial Statements – The governmental fund financial statements do not report long-term debt.

As such, long-term debt is shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-wide Statement of Net Position.

Bond premiums and discounts, as well as certain issuance costs, are recognized during the current period as other financing sources or uses. Bond proceeds are reported as other financing sources.

Proprietary Fund Financial Statements use the same principles as those used in the Government-wide Financial Statements.

I. Property Taxes
State Constitution Article XIIIA provides for a maximum general property tax rate statewide of $1.00 per $100, or one percent (1%) of assessed value unless an additional override tax rate is levied to pay voterapproved indebtedness. At the time of transfer of ownership, assessed value is calculated at 100% of market value as defined by Article XIIIA; otherwise assessed value is applied to the adjusted 1975-76 value of the property plus new construction value added after the 1975-76 valuation. Taxable values on properties can rise or be adjusted at the lesser 2% per year or the inflation rate as determined by the Board of Equalization California Consumer Price Index. The State Legislature has determined the method of distribution of receipts from a $1.00 tax levy among the counties, cities, school districts and other districts.

Counties, cities, school districts and other special districts, may levy such additional tax rate as is necessary to provide for voter-approved debt.
52 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued I. Property Taxes, Continued
The County of San Mateo assesses properties and bills for and collects property taxes as follows:

J. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position (balance sheet) may report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period(s) and will not be recognized as an outflow of resources (expense/expenditure) until then.

In addition to liabilities, the statement of financial position may report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time.

K. Net Position
Government-Wide Financial Statements
In the Government-wide Financial Statements, net position is classified in the following categories:

Net Investment in Capital Assets – This amount consists of capital assets, net of accumulated depreciation and reduced by outstanding debt, that is attributed to the acquisition, construction, or improvement of the assets.

Restricted – This amount is restricted by external creditors, grantors, contributors, or laws or regulations of governments.

Unrestricted – This amount is the net position balance that does not meet the definition of “net investment in capital assets” or “restricted net position” as defined above.

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.

L. Fund Balances
In February 2009, the Governmental Accounting Standards Board (GASB) issued Statement 54, Fund Balance Reporting and Governmental Fund Type Definitions (GASB 54). The new classifications of fund balances are listed below:
53 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued L. Fund Balances, Continued
Nonspendable Fund Balances
Non-spendable balances consist of amounts that do not represent available, spendable resources even though they are a component of assets. Fund balances required to be maintained intact, such as Permanent Funds, and assets not expected to be converted to cash, such as prepaids, notes receivable, and land held for resale are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed, or assigned, then non-spendable amounts are required to be presented as a component of the applicable category.

Restricted Fund Balances
Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation which requires the resources to be used only for specific purpose.

Encumbrances and nonspendable amounts subject to restrictions are included with spendable resources.

Committed Fund Balances
Committed fund balances have constraints imposed by resolution of the City Council which may be altered only by resolution of the City Council. Encumbrances and nonspendable amounts subject to Council commitments are included with spendable resources.

Assigned Fund Balances
Assigned fund balances are amounts constrained by the City’s intent to be used for a specific purpose but are neither restricted nor committed. Intent is expressed by the City Council or its designee and may be changed at the discretion of the City Council or its designee. This category includes encumbrances and non-spendable balance when it is the City’s intent to use proceeds or collections for a specific purpose.

The City Council is the only entity that has authority to make assignments of fund balance. The City Council has not delegated the authority to make assignments of fund balance.

Unassigned Fund Balance
Unassigned fund balance represents residual amounts that have not been restricted, committed, or assigned. This includes the residual general fund balance and residual fund deficits, if any, of other governmental funds.

Hierarchy of Expenditures to Classify Fund Balance Amounts For expenditures made in any governmental fund, the restricted amounts will be reduced first, followed by committed amounts, assigned amounts, and then unassigned amounts.

Minimum Fund Balance Policies
The City's Reserve Management Policy requires that the City maintain a contingency reserve balance targeting 30% of adopted general fund expenditures including recurring transfers in the unassigned general fund balance.
54 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued L. Fund Balances, Continued
On June 30, 2022, the General Fund reported $26,407,109 in reserve which meets the City’s minimum 30% requirement level of $8,572,482. The General Fund reserve fund balance is $17,834,627 above this requirement.

M. Compensated Leave Payable
Compensated absences are primarily comprised of unpaid vacation leave which is accrued as earned. All full-time, regular employees are entitled to earn a minimum of 80-hours of vacation per year. The accrual rate increases as length of related service exceeds five years. Maximum accrual of vacation ranges from 288 hours to 320 hours depending on length of related service. For governmental funds, compensated leave payable is recorded as current and noncurrent liabilities and as expenses only on the Governmentwide Financial Statements. Compensated absences are reported in governmental funds only if they have matured.

N. Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) plan (Plan) and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. The liability for pension‐related debt is primarily liquidated by the General Fund.

O. Use of Estimates
The preparation of the Basic Financial Statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. In addition, estimates affect the reported amount of expenses. Actual results could differ from these estimates and assumptions.

P. New Pronouncements
The City adopted new accounting standards in order to conform to the following Governmental Accounting Standards Board Statements:
¾ GASB Statement No. 87, Leases – The objective of this statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. The City added several building leases to the Proprietary Fund and GovernmentWide Financial Statements, changing the beginning balances of lease liabilities and capital assets, as well as updating the note disclosures as a result of implementing this statement. 55 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued P. New Pronouncements, Continued
¾ GASB Statement No. 89, Construction-period interest – The objectives of this Statement are (1) to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and (2) to simplify accounting for interest cost incurred before the end of a construction period. The requirements of this statement did not apply to the City for the current fiscal year.
¾ GASB Statement No. 92, Omnibus 2020 – The objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing practice issues that have been identified during implementation and application of certain GASB Statements. The requirements of this statement did not apply to the City for the current fiscal year.
¾ GASB Statement No. 93, Interbank offered rates (LIBOR removal and lease modifications) – The objective of this Statement is to address those and other accounting and financial reporting implications that result from the replacement of an interbank offered rate. The requirements of this statement did not apply to the City for the current fiscal year.
¾ GASB 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.. The requirements of this statement did not apply to the City for the current fiscal year.

2. CASH AND INVESTMENTS
The City maintains a cash and investment pool for all funds. Certain restricted funds that are held and invested by independent outside custodians through contractual agreements are not pooled. These restricted funds include cash and investment held by trustees.

A. Summary of Cash and Investments
The following is a summary of cash and investments at June 30, 2022:
56 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

2. CASH AND INVESTMENTS, Continued
A. Summary of Cash and Investments, Continued
Cash and investments as of June 30, 2022 consist of the following:

B. Deposits
The carrying amount of the City’s cash deposits was $2,437,750 at June 30, 2022. Bank balances before reconciling items were a positive amount of $3,300,410 at June 30, 2022. The City has waived the collateral requirements for cash deposits up to the fully insured up to $250,000 by the Federal Deposit Insurance Corporation. The remaining amount was collateralized with securities held by the pledging financial institutions in the City’s name.

The California Government Code (Code) requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. The 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 held in the City's name. The fair 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 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 or trust arrangements. Interest income earned on pooled cash and investments is allocated 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.

Deposits:

Cash on hand 10,800 $
Deposits with financial institution 2,437,750
Total deposits 2,448,550
Investments:

Local Agency Investment funds 9,884,349
San Mateo Investment Pool 100,371,556
Total investments 110,255,905
Total City Treasury 112,704,455
Restricted cash and investments:

Cash with fiscal agent 484,441
Total restricted cash and investments 484,441
Total cash and investments $ 113,188,896
57 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022
C. Authorized Investments by the City
The City's Investment Policy and the California Government Code allow the City to invest in the following, provided the credit ratings of the issuers are acceptable to the City. The following also identifies certain provisions of the City and California Government Code that address interest rate risk, credit risk, and concentration of credit risk. This does not address the City's investments of debt proceeds held by fiscal agents that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the Entity's investment policy. Under the provisions of the City’s investment policy, and in accordance with the Code, the following investments are authorized:

Maximum Maximum % Maximum % Minimum
Authorized Investment Type**** Maturity Holdings* per Issuer Rating** Municipal Bonds 5 years 100% 5% N/A
U.S. Treasuries and General Obligations 5 years 100% 100% N/A Federal Agency or
U.S. Government sponsored Enterprise (GSE)
Bankers' Acceptance 180 days 40% 5% N/A
Commercial Paper*** 270 days 25% 5% A-1/P-1 plus
A Long Term
Negotiable Certificates of Deposit 5 years 30% 5%
Medium Term (Corporate) Notes 5 years 30% 5%
Mutual and Money Market Funds 2(A)7 Eligible 20% 10% AAA/AAA Shares of Beneficial Interest by a JPA 5 years 100% 50% N/A Supranationals (IBRD, IFC and IDB) 5 years 30% 5% AA
Collateralized Bank Deposits 5 years 100% 20% N/A
County Investment Pool N/A Max permitted by
County Treasurer
Max permitted by
County Treasurer N/A
Local Agency Investment Fund (LAIF) N/A Max permitted by State Treasurer
Max permitted by
State Treasurer N/A
***A-1 or equivalent plus A long term; total assets in excess of $500MM; no more than 10% outstanding from a single issuer. *** Excluding amounts held by bond trustee that are not subject to California Government Code restrictions. * Percentages are in compliance if within limits at time of purchase. Recommended maximum % is more restrictive than allowed by code. Combine issuer types to determine maximum counterparty risk. ** Rating category are inclusive of rating modifiers such as "+/-" or numbers from one NRSRO unless two ratings are noted. 5 years 100% 50% N/A
N/A
58 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

2. CASH AND INVESTMENTS, Continued
D. Investments
Investments are stated at fair value using the aggregate method in all funds, resulting in the following investment income in all funds:

The City’s portfolio value fluctuates in an inverse relationship to any change in interest rate. Accordingly, if interest rates rise, the portfolio value will decline. If interest rates fall, the portfolio value will rise. The portfolio for year-end reporting purposes is treated as if it were all sold. Therefore, fund balance must reflect the portfolio’s change in value. These portfolio value changes are unrealized unless sold.

The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California.

The City’s investments with LAIF at June 30, 2022, include a portion of the pool funds invested in Structured Notes and Asset-Backed Securities. These investments include the following:

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 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 a 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, 2022, the City had $9,884,349 invested in LAIF, which had invested 1.88% of the pool investment funds in Structured Notes and Asset-Backed Securities as compared to 2.31% in the previous year. The LAIF fair value factor of 0.987125414 was used to calculate the fair value of the investments in LAIF.

The City is also a voluntary participant in the San Mateo County Investment Fund (County Pool) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the County. The City reports its investment in the County Pool at the fair value amount provided by the County. Included in the County Pool’s investment portfolio are US Treasury Notes, Obligations issued by agencies of the United States Government, LAIF, Corporate Notes, Commercial Paper, collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, and floating rate securities issued by federal agencies, government-sponsored enterprises, and corporations. The fair value factor of 0.9688 was used to calculate the fair value of the investments in the County Pool. 59 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

2. CASH AND INVESTMENTS, Continued
E. Risk Disclosures
Interest Risk: Interest rate risk is the fair value fluctuation due to overall changes in the interest rates. It is mitigated by limiting the average maturity of the City’s portfolio not to exceed three years.

Investments held in the City Treasury grouped by maturity date at June 30, 2022, are shown below:

Credit Risk: Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the actual rating as of June 30, 2022 for each investment type:

Custodial Credit Risk: For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City’s Investment Policy limits its exposure to custodial credit risk by requiring that all security transactions entered into by the City, be conducted on a deliveryversus-payment basis.

F. Investment Valuation
Investments (except for money market accounts, time deposits, and commercial paper) are measured at fair value on a recurring basis. Recurring fair value measurements are those that Governmental Accounting Standards Board (GASB) Statements require or permit in the statement of net position at the end of each reporting period. Fair value measurements are categorized based on the valuation inputs used to measure an asset’s fair value: Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs.

Investments in LAIF and San Mateo County Pool and restricted cash and investments included money market accounts and guaranteed investment contracts are not subject to levelling disclosure requirements.
60 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

3. INTERFUND TRANSACTIONS
A. Transfers
At June 30, 2022, the City had the following transfers in/out which arose in the normal course of operations:

Transfers from the General Fund were made to 1) the Capital Improvements Fund to fund various capital projects including water infrastructure improvements, and 2) to non-major funds for gas tax, storm drain and street sweeping operations, and for housing successor share of loan reimbursements.

B. Due to/from Other Funds
At June 30, 2022, the City had the following due to/from other funds:

The amounts due to the General Fund from other non-major funds represent reclassified temporary negative cash balances pending grant reimbursements or other receivables. Current interfund balances arise in the normal course of operations and are expected to be repaid shortly after the end of the fiscal year.

C. Advances to/from Other Funds
Advances from the General Fund and Non-Major Governmental Funds (the SVCF Fund) were made to the Water Services Enterprise Fund to provide liquidity for the purchase of water assurance rights. The advances are repaid upon collection of development impact fees related to the cost of the water assurance rights acquired to increase development capacity within the City. No advances were repaid during the year.
61 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

3. INTERFUND TRANSACTIONS, CONTINUED
C. Advances to/from Other Funds, Continued
At June 30, 2022, the City had the following advances to/from other funds:

4. LOANS AND NOTES RECEIVABLE
Loans receivable as of June 30, 2022, composed of the following, were held by the City:

A. Nairobi Housing Associates Loan
On June 1, 1999, the former Agency entered into a loan agreement with Nairobi Housing Associates (Nairobi), a California Limited Partnership. The $5,500,000 loan was used by Nairobi used to develop 129 affordable multi-family rental housing units, ancillary landscaping, and other improvements known as Peninsula Park Apartments (the Project). In February 2019, the City agreed to a $714,000 loan repayment and approved certain regulatory and loan agreement amendments in connection with developerrefinancing of the Project, including extending the loan maturity. The loan accrues simple interest at the rate of 1% per annum, commencing February 1, 2001. The amended loan matures on July 31, 2056 and is secured by a subordinated note and deed of trust on the property. 62 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

4. LOANS AND NOTES RECEIVABLE, Continued
B. Nugent Square Partners Loan
On August 1, 2003, the former Agency entered into a loan agreement in the amount of $1,100,000 with Nugent Square Partners, L.P. (Nugent), a California Limited Partnership to develop 32 affordable multifamily rental housing units, ancillary landscaping, and other improvements known as Nugent Square Apartments. In March 2020, the City agreed to a $50,000 loan prepayment and approved certain regulatory and loan subordination amendments in connection with developer-refinancing of the Project.

The loan accrues simple interest at the rate of 1% per annum. The loan matures in February 2045 and is secured by a deed of trust on the property.

C. Bay Road Housing Loan
In December 2004, the former Agency entered into a loan agreement with Bay Road Housing, L.P., a California Limited Partnership to provide annual maximum operating gap subsidies related to the development and subsequent operation of 77 affordable multi-family rental housing units known as Courtyard at Bay Road Apartments. The loan provides a maximum annual operating subsidy of $60,000 over a period of twenty years, or a maximum loan of $1.2 million. The loan accrues simple interest at the rate of 2% per annum. The loan matures in January 2027 and is secured by a deed of trust on the property.

D. First Time Home Buyer Assistance Loans
On December 21, 2004, the City approved a program for a down payment assistance loans to qualified homebuyers who met the criterion to purchase a below-market rate (BMR) home in East Palo Alto.

Generally, the assistance consists of 30-year loans at a fixed rate of 3% interest with payments deferred for the first five years.

E. University Senior Apartments Loan
On November 25, 2015, the City entered into a loan agreement in the amount of $700,000 with University Senior Apartments, L.P., a California limited partnership to develop 41 affordable multi-family senior housing units known as Serenity Senior Apartments. The loan bears an interest rate of 3% simple interest per annum, commencing on September 5, 2017. The loan is due on November 25, 2072 and is secured by a deed of trust on the property.

F. Loans to Successor Agency
At June 30, 2022, the outstanding balance of $4,662,428 is comprised of two advances to the former Agency which were assumed by the Successor Agency on February 1, 2012. Repayment of the loans were subject to approval as enforceable obligations of the Successor Agency under California Dissolution Law. In April 2016, the Department of Finance approved the loans as enforceable obligations. The repayment amounts are subject to annual limits in available property tax increment:
63 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

4. LOANS AND NOTES RECEIVABLE, Continued
F. Loans to Successor Agency, Continued
a. Ravenswood Repayment Agreement ($970,936) provided for the ongoing assistance and services in connection with the implementation of the redevelopment plan for the Ravenswood Project Area.

Repayment terms are subject to a formula outlined in the California Health and Safety Code and approved on an annual recognized obligation schedule (ROPS) under Dissolution Law. Interest on the outstanding principal is calculated at 3% simple interest per quarter from the inception of the loan.
b. Gateway/101Purchase and Sale Agreement ($3,691,492) – provided for the sale of the Ravenswood High School Site to the former Redevelopment Agency. This property was developed into a retail shopping center in the Gateway 101 Project Area. Repayment terms are subject to a formula outlined in the California Health and Safety Code and approved on an annual recognized obligation schedule (ROPS) under Dissolution Law. There is no interest provision. 64 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

5. CAPITAL ASSETS
Changes in capital assets during the year ended June 30, 2022, are comprised of the following:

Balance at Deletions/ Balance at
July 1, 2021 Additions Reclassification June 30, 2022
Government activities
Capital assets not being depreciated
Land $ 4,058,724 $ - $ 4,058,724 - $
Construction in progress 10,973,046 455,398 (9,393,089) 2,035,355 Total capital assets not being dep. 15,031,770 455,398 (9,393,089) 6,094,079 Capital assets being depreciated:

Infrastructure:

Streets and roadways 63,169,793 6,421,773 9,393,089 78,984,655 Storm drain system 6,738,214 - 6,738,214 -
Building and Improvements 10,609,486 42,758 10,652,244 - Right-to-use Buildings 2,306,523 - 2,306,523 -
Improvements other than bldg 9,538,432 73,396 (11,738) 9,600,090 Furniture, Fixtures and Equipment 2,161,797 43,331 (22,116) 2,183,012 Vehicles 3,155,586 132,658 (304,441) 2,983,803
Total capital assets being depreciated, as
restated 97,679,831 6,713,916 9,054,794 113,448,541
Less accumulated depreciation for:

Infrastructure:

Streets and roadways (33,340,778) (1,180,248) (34,521,026) - Storm drain system (2,661,665) (162,701) (2,824,366) -
Building and Improvements (4,036,193) (345,819) (4,382,012) - Right-to-use Buildings (482,285) - (482,285) -
Improvements other than buildings (3,354,407) (385,612) (3,739,628) 391 Furniture, Fixtures and Equipment (2,042,578) (39,329) 18,679 (2,063,228) Vehicles (1,742,228) (224,993) 299,328 (1,667,893)
Total accumulated depreciation (47,177,849) (2,820,987) 318,398 (49,680,438) Total capital assets being depreciated, as
restated, net 50,501,982 3,892,929 9,373,192 63,768,103 Governmental activities capital assets, as
restated, net $ 65,533,752 $ 4,348,327 $ (19,897) $ 69,862,182 65 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

5. CAPITAL ASSETS, Continued
A. Capital Asset Contributions
Some capital assets may be acquired using federal and State grant funds, or they may be contributed by developers or other governments. GASB Statement 34 requires that these contributions be accounted for as revenues at the time the capital assets are contributed.

B. Depreciation Allocation
Depreciation expense is charged to functions and programs based on their usage of the related assets. The amounts allocated to each function or programs are as follows:

Balance as of Balance at
July 1, 2021 Additions Deletions June 30, 2022
Business-type activities
Capital assets not being depreciated:

Land $ 5,263,674 $ - $ 5,263,674 - $
Construction in Progress 822,506 487,881 (468,265) 842,122 Total capital assets not being depreciated 6,086,180 487,881 (468,265) 6,105,796 Capital assets being depreciated:

Improvements other than buildings 10,863,521 516,979 (168,439) 11,212,061 Right-to-use buildings 127,066 - - 127,066
Total capital assets being depreciated, as restated 10,990,587 516,979 (168,439) 11,339,127 Less accumulated depreciation for:

Improvements other than building (5,090,792) (274,034) 28,016 (5,336,810) Right-to-use buildings - (27,229) - (27,229)
Total accumulated depreciation (5,090,792) (301,263) 28,016 (5,364,039) Total capital assets, being depreciated, net, as restated 5,899,795 215,716 (140,423) 5,975,088 Business-type activities capital assets, net, as restated 11,985,975 $ $ 703,597 $ (608,688) $ 12,080,884 66 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

5. CAPITAL ASSETS, Continued
C. Capital Project Commitments
The City has commitments under the following significant capital infrastructure projects and programs:

6. LONG-TERM DEBT
The City’s debt issues and transactions are summarized below and discussed in detail thereafter:
67 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

6. LONG-TERM DEBT, Continued
A. San Mateo County Housing Promissory Note
In March 2018, the City entered into an agreement with the County of San Mateo Department of Housing (the County) whereby the County awarded a Community Development Block Grant (CDBG) Program assistance loan in the amount of $700,000 for the Gloria Way Well Rehabilitation project (the Project).

Annual principal of $23,333 is forgiven upon each full year of operation, or each July 3rd, provided the Project remains in compliance with CDBG Program requirements and the use is as originally intended.

The Note bears zero interest if the intended use requirements are met throughout the Note term and matures on July 3rd, 2048. If the Gloria Way Well property is sold or discontinued as a City water treatment well before the end of the Note term (unless to a non-profit for the same use); then the entire Note amount plus three percent (3%) accrued simple interest is due and payable to the County.

B. Leases
The City leases three major building facility sites under non-cancellable leases. The sites leased include two police facilities, and the maintenance corporation yard. Below is a summary of the these leases and the corresponding principal and interest schedules.
68 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

6. LONG-TERM DEBT, Continued
B. Leases, Continued
C. Legal Debt Margin
The City is subject to a statutory legal debt limit whereby the City may not incur indebtedness for public improvements which exceeds in the aggregate 3.75 percent of the taxable assessed value of all real and personal property of the City. This limit applies only to bonded indebtedness payable from the proceeds of taxes levied on taxable property. For the year ended June 30, 2022, the City’s maximum legal debt margin was $143,966,409 and the City had no outstanding debt subject to the margin.

7. COMPENSATED ABSENCES
Compensated absences are primarily comprised of unpaid vacation which is accrued as earned. The City’s liability for compensated absences is determined annually. Compensated absences are reported in governmental funds only if they have matured. The matured portion of governmental activities compensated absences is liquidated primarily by the General Fund.
69 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

8. FUND BALANCES
Detailed classifications of the City's Fund Balances, as of June 30, 2022, are below:

Capital
Improvements Other
General Capital Projects Government
Fund Fund Funds Total
Nonspendable fund balance:

Loans to Successor Agency $ 4,662,428 $ - $ 4,662,428 - $ Advance to other funds 458,480 - 458,480 -
Deposits and prepayments 161,257 - 161,257 -
5,282,165 - 5,282,165 -
Restricted fund balance for:

NPDES Fees - 375,035 - 375,035
Gas Tax - 3,724,789 - 3,724,789
Park in Lieu - 334,082 - 334,082
Rent Stabilization - 692,922 - 692,922
Housing Assistance - 464,217 - 464,217
Measure A/W - 5,595,378 - 5,595,378
CYSFF TOT Fund - 1,001,532 - 1,001,532
Lighting District - 4,314,525 - 4,314,525
Drainage District - 727,162 - 727,162
Measure C - 217,659 - 217,659
Silicon Valley Community Fd - 2,014,585 - 2,014,585
Low and Moderate Income Housing - - 8,553,257 8,553,257 Housing in Lieu - - 6,643,975 6,643,975
Housing TOT - 3,331,172 - 3,331,172
Measure HH - 4,742,718 - 4,742,718
Capital projects 1,273,906 - 603,531 1,877,437
Other Purposes 27,297 779,091 - 806,388
27,297 1,273,906 44,115,630 45,416,833
Committed fund balance for:

CalPERS prefunding 3,000,000 - 3,000,000 -
Community benefits reserve 299,770 - 299,770 -
Information Technology Reserve 3,497,284 - 3,497,284 -
Vehicles and Equipment Reserve 1,251,731 - 1,251,731 -
Self Insurance Reserve 2,048,804 - 2,048,804 -
Capital projects 9,000,000 - 9,000,000 -
10,097,589 9,000,000 19,097,589 -
Assigned fund balance for:

Capital projects 5,600,829 - 5,600,829 -
Other Purposes 6,658,000 - 6,658,000 -
6,658,000 5,600,829 12,258,829 -
Unassigned fund balance
Contingency reserve 8,572,482 - 8,572,482 -
Other 17,834,627 (111,371) - 17,723,256
26,407,109 (111,371) - 26,295,738
Total Fund Balances $ 48,472,160 $ 15,874,735 $ 44,004,259 $ 108,351,154 Major Governmental Funds
70 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

9. RETIREMENT BENEFITS
A. City Employees’ Retirement Plan (Defined Benefit Pension Plan) Plan Description
All qualified permanent and probationary employees are eligible to participate in the Public Agency CostSharing Multiple-Employer Defined Benefit Pension Plan (Plan) administered by the California Public Employees’ Retirement System (CalPERS). The Plan consists of individual rate plans (benefit tiers) within a safety risk pool (police and fire) and a miscellaneous risk pool (all other). Plan assets may be used to pay benefits for any employer rate plan of the safety and miscellaneous risk pools. Accordingly, rate plans within the safety or miscellaneous pools are not separate plans under GASB Statement No. 68. Individual employers may sponsor more than one rate plan in the miscellaneous or safety risk pools. The City sponsors four rate plans (two miscellaneous and two safety).

Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions, and membership information that can be found on the CalPERS website.

Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: Basic Death Benefit, 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The City contracted for 2% cost of living adjustments.
71 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

9. RETIREMENT BENEFITS, Continued
A. City Employees’ Retirement Plan (Defined Benefit Pension Plan), Continued The rate plan provisions and benefits in effect at June 30, 2022 are summarized as follows:

Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plan is determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.

For the measurement period ended June 30, 2021, the contribution to the plan was $2,261,018, consisting of $1,258,175 for Safety and $1,002,843 for Miscellaneous.

Safety Miscellaneous
Hire Date Prior to January 1, 2013 Prior to January 1, 2013 Benefit vesting schedule 5 years service 5 years service Benefit Formula 3.0% @ 55 2.5% @ 55
Benefit payment Monthly for life Monthly for life
Retirement age 50 50
Monthly benefits, as a % of annual salary 2.4 - 3% 2 - 2.5% Required employee contribution rates 9.00% 8.000%
Required employer contribution rates 20.640% 11.590%
Required unfunded accrued liability payment (UAL) $680,457 $419,096 Safety Miscellaneous
Hire Date On or after January 1, 2013 On or after January 1, 2013 Benefit vesting schedule 5 years service 5 years service Benefit payments Monthly for life Monthly for life
Retirement age 57 62
Monthly benefits, as a % of annual salary 2.70% 2.00%
Required employee contribution rates 13.000% 6.750%
Required employer contribution rates 13.130% 7.590%
Required unfunded accrued liability payment (UAL) $23,344 $26,925 72 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

9. RETIREMENT BENEFITS, Continued
A. City Employees’ Retirement Plan (Defined Benefit Pension Plan), Continued Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions
As of June 30, 2022, the City reported a net pension liability for its proportionate share of the net pension liability of the Plan of $6,526,289.

The City’s net pension liability for the Plan is measured as the proportionate share of the total net pension liability of the Plan. The net pension liability of the Plans is measured as of June 30, 2021, and the total pension liability for the Plan used to calculate the net pension liability was determined by actuarial valuations as of June 30, 2020 rolled forward to June 30, 2021 using standard update procedures. The City’s proportionate share of the net pension liability was based on the City’s plan liability and assetrelated information where available, and proportional allocations of individual plan amounts as of the valuation date where not available.

The City’s proportionate share of the net pension liability for the Plan as of measurement date June 30, 2020 and 2021 were as follows:

For the year ended June 30, 2022, the City recognized pension expense of $768,031. At June 30, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
73 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

9. RETIREMENT BENEFITS, Continued
A. City Employees’ Retirement Plan (Defined Benefit Pension Plan), Continued Pension contributions subsequent to the measurement date in the amount of $2,366,071 and reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Actuarial Assumptions – The total pension liabilities in the June 30, 2020 actuarial valuations were determined using the following actuarial assumptions:

Deferred
Fiscal Year Outflows/(Inflows)
Ending June 30: of Resources
2023 $ (285,335)
2024 (518,492)
2025 (852,641)
2026 (1,230,854)
74 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

9. RETIREMENT BENEFITS, Continued
A. City Employees’ Retirement Plan (Defined Benefit Pension Plan), Continued Discount Rate – The discount rate used to measure the total pension liability for the Plan was 7.15%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability. A detailed report testing these projections can be obtained from the CalPERS website.

The long-term expected rate of return on pension plan investments was determined using a buildingblock method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical and forecasted information for all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.

The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These rates of return are net of administrative expenses.

Assumed Asset Real Return Real Return
Asset Class (1) Allocation Years 1 - 10 (2) Years 11+ (3) Global Equity 50.00% 4.80% 5.98%
Global Fixed Income 28.00% 1.00% 2.62%
Inflation Sensitive 0.00% 0.77% 1.81%
Private Equity 8.00% 6.30% 7.23%
Real Estate 13.00% 3.75% 4.93%
Liquidity 1.00% 0.00% -0.92%
Total 100.00%
(3) An expected inflation of 2.92% used for this period. (2)
An expected inflation of 2.00% used for this period.
(1) In the System’s ACFR, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-term Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities. 75 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

9. RETIREMENT BENEFITS, Continued
A. City Employees’ Retirement Plan (Defined Benefit Pension Plan), Continued Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate – The following presents the City’s proportionate share of the net pension liability for the Plan, calculated using the discount rate for the Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

Payable to the Pension Plan
At June 30, 2022 the City reported a payable of $81,884 for outstanding amount of contributions to the pension plan required for the year ended June 30, 2022. All amounts were paid in July 2022 in a timely manner.

B. Deferred Compensation Plan
City employees may defer a portion of their compensation under optional City-sponsored deferred compensation plans created in accordance with Internal Revenue Code Section 457. Under the plan, participants are not taxed on the deferred portion of their compensation until it is distributed to them; distributions may be made only at termination, retirement, death, or in an emergency defined by governing documents of the plan. The City does not make contributions to the plan on behalf of the employees.

The laws governing deferred compensation plan assets require plan assets to be held by a Trust for the exclusive benefit of plan participants and their beneficiaries. The City has contracts with an outside thirdparty administrator to manage and invest the assets of the plan.

In the year 2021, the City evaluated the requirements of GASB Statement No. 84, Fiduciary Activities and GASB Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensations Plans and determined that the plan didn’t meet the criteria to be reported as a fiduciary activity as required by the above mentioned GASB Statements since the assets held under this plan are not the City's property and are not subject to City control. Moreover, the plan is classified as other employee benefits for financial reporting purposes. 76 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

10. RISK MANAGEMENT
A. Insurance Coverage
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters.

The City participates in the Pooled Liability Assurance Network (PLAN), a joint powers authority established to provide liability insurance coverage, claims and risk management, and legal defense to its participating members. PLAN self-insures and purchases general and auto liability coverage for claims in an amount up to $30 million (subject to policy exclusions and sub-limits), and first-party property liability claims up to $1 billion (subject to policy exclusions and sub-limits). The City has a deductible or uninsured liability of up to $100,000 per liability claim and $5,000 per property claim. Once the City's deductible is met, PLAN becomes responsible for payment of all claims up to the limit.

The State Compensation Insurance Fund provides workers' compensation insurance with a $1 million per occurrence coverage. The City has no deductible for the worker's compensation insurance.

Liabilities are reported when it is probable that a loss has occurred, and the amount of the loss can be reasonably estimated. Claim liabilities are actuarially determined considering recent claim settlement trends including the frequency and costs of payouts and other economic and social factors.

B. Liability for Uninsured Claims
The City provides for the uninsured portion of claims and judgments in the Workers' Compensation and General Liability. Claims and judgments, including a provision for claims incurred but not reported, are recorded when a loss is deemed probable of assertion and the amount of the loss is reasonably determinable. As discussed above, the City has coverage for such claims, but it has retained the risk for the deductible or uninsured portion of these claims.

The City's liability for uninsured claims including a provision for claims incurred but not reported was computed as follows based on claims experience for the years ended June 30, 2020, 20201, and 2022:

During the past three fiscal years none of the above programs of protection have had settlements or judgments that exceeded pooled or insured coverage. There have been no significant reductions in pooled or insured liability coverage from the prior year.
77 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

11. JOINT VENTURES
The City participates in the joint ventures discussed below through formally organized and separate entities established under the Joint Exercise of Powers Act of the State of California. As separate legal entities, these entities exercise full powers and authorities within the scope of the related Joint Powers Agreements; including, the preparation of annual budgets, accountability for all funds, the power to make and execute contracts and the right to sue and be sued. Each joint venture is governed by a board consisting of representatives from member municipalities. Each board controls the operations of the respective joint venture, including selection of management and approval of operating budgets, independent of any influence by member municipalities beyond their representation on that Board. Obligations and liabilities of these joint ventures are not the City's responsibility and the City does not have an equity interest in the assets of each joint venture except upon dissolution of the joint venture.

A. City/County Association of Governments of San Mateo County (C/CAG) The City/County Association of Governments of San Mateo County is a joint powers agency formed in 1990 between the various cities and transportation agencies in San Mateo County to prepare, adopt, monitor and enforce state mandated plans related to transportation, airport land use, storm water pollution prevention, and climate protection. For the year ended June 30, 2022, the City contributed $84,122 for annual operations. An annual report may be obtained at 555 County Center 5th Floor, Redwood City, CA 94063.

B. Housing Endowment and Regional Trust of San Mateo County (HEART) The Housing Endowment and Regional Trust of San Mateo County (HEART) is a joint powers agency formed in 2003 as a public/private partnership comprised of the County of San Mateo, all twenty cities/towns within San Mateo County, and private sector members from business, nonprofit, and labor organizations. HEART is governed by a Board of Directors consisting of eleven elected officials from government member agencies and ten private sector members. HEART was established for the purpose of creating more affordable housing opportunities in the County. For the year ended June 30, 2022, the City contributed $9,261 for annual administrative operations. An annual report may be obtained at 2905 S. El Camino Real, San Mateo, CA 94403.

C. Peninsula Clean Energy
Peninsula Clean Energy (PCE) is a joint powers authority formed in 2016 and is comprised of the County of San Mateo and all twenty cities/towns in San Mateo County. The PCE is governed by a Board of Directors consisting of an elected representative from each member jurisdiction. PCE was established to provide electric power at competitive costs, as well as provide other benefits such as greenhouse gas emission reduction, development of local renewable resources, and promotion of long-term electric rate stability and energy reliability. PCE operates as a Community Choice Aggregation Program and derives no financial support from member agencies. Information may be obtained at 2075 Woodside Road, Redwood City, CA 94061.
78 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

11. JOINT VENTURES, Continued
D. Peninsula Traffic Congestion Relief Alliance
The Peninsula Traffic Congestion Relief Alliance (Alliance) is a joint powers authority formed in 2000 and is comprised of the County of San Mateo and seventeen cities/towns in San Mateo County. Alliance is governed by an eighteen-member Board of Directors consisting of an elected representative from each member jurisdiction. Alliance was established to perform transit systems management efforts to mitigate traffic congestion in member communities. The operations are funded by countywide Measure A transportation funds, grants, and contributions from members of a shuttle consortium. For the year ended June 30, 2022, the City did not make any member contribution to Alliance. An annual report may be obtained at 400 Oyster Point Blvd. Suite 409, South San Francisco, CA 94080.

E. San Francisquito Creek Joint Powers Authority
The City is one of five members of the San Francisquito Creek Joint Powers Authority (SFCJPA) formed in 1999 to manage and provide policy direction related to flood control measures, emergency response, stabilization and maintenance, and other environmental issues regarding the San Francisquito Creek. The City has no equity interest in the SFCJPA. For the year ended June 30, 2022, the City contributed $337,240 for annual SFCJPA administrative operations. Financial statements may be obtained by mailing a request to 2100 Geng Road Suite 210, Palo Alto, CA 94303.

F. South Bayside Waste Management Authority
The City is one of twelve members of the South Bayside Waste Management Authority (SBWMA), which is a joint powers authority that the City commenced on March 1, 2000. The SBWMA was formed in 1982 to provide cost-effective waste reduction, recycling, and solid waste programs to member agencies to meet and sustain a minimum 50% diversion of waste from landfill as mandated by California State Law, AB939. SBWMA owns the Shoreway Environmental Center which serves as a regional solid waste and recycling facility and is operated by South Bay Recycling (SBR) on behalf of the SBWMA. The City has no equity interest in SBWMA. Through the operation of franchise agreements with each member, RECOLOGY collects fees charged for the use of the facilities and remits them to the SBWMA. Pursuant to an Operations Agreement with the SBWMA, RECOLOGY is compensated based on costs, a provision for profit and incentives for cost savings and performance. For the year ended June 30, 2022, the City made payments to Recology in the amount of $2,624,384. Financial statements may be obtained by mailing a request to 610 Elm Street, Suite 202, San Carlos, CA 94070.

12. SERVICE CONCESSION ARRANGEMENT FOR WATER SERVICES
A. Lease Agreement and Assignment from American Water Service, Inc. to Veolia Water North America Services, LLC.

In April 2001, the City entered into a twenty-five (25) year lease agreement with American Water Services, Inc. (American Water) whereby the City agreed to lease the water system to American Water for the purpose of furnishing potable water service and water service fire protection to all customers within the City’s water service area.
79 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

12. SERVICE CONCESSION ARRANGEMENT FOR WATER SERVICES, Continued A. Lease Agreement and Assignment from American Water Service, Inc. to Veolia Water North America Services, LLC, Continued
In November 2018, at American Water’s request, the City authorized the assignment of all terms and conditions of the lease agreement from American Water to Veolia Water North America Operating Services LLC (Veolia) subject to certain conditions of approval, including State of California approval and issuance of a water permit to Veolia to operate the City’s water system. On June 1, 2020, the City entered into a consent to assignment of the lease agreement with American Water whereby Veolia assumed all the terms and conditions of lease agreement from American Water.

During the term of the lease, the lessee is responsible for operating, maintaining and managing the water system, as well as fulfilling customer services, emergency services, water quality testing, and other service operations related to the water system.

If total annual system maintenance and repair costs exceed $110,000, the excess costs are considered system improvements and paid through additional capital charges. The lessee bills and collects water services charges, capital surcharges, and utility tax from the City's water customers. Utility users’ taxes and capital-related surcharges billed and collected by the lessee are passed-through to the City.

The lessee may request water rate relief from the City to recover necessary and reasonable costs related to performing the water system services, including earning an operational rate of return of eight percent (8%) after-tax on defined, contractual gross revenues. The City agrees to enact water rates based upon such requirements and in accordance with applicable State Law regarding water rate increases. No water rate relief request was submitted to the City during the year ended June 30, 2022. Any fees or taxes billed and passed through to the City are not considered contractual gross revenues of the water system operation. Contractual gross revenues, as defined, for the year ended June 30, 2022 total approximately $6.0 million.

The City has retained title of the Water System and related capital assets under the terms of the lease. Title for system improvements performed immediately vests with the City. The lessee may not retire, sell, transfer; convey, or encumber any real property or personal property of the Water System without the prior written consent of City. The City is not obligated to pay any costs or expense in connection with or related to the management, operation, improvement, repair, or maintenance of the water system during the lease term, except for costs related to environmental liabilities. The City currently has undertaken certain system improvements which are funded from grants, system impact fees, and water capital surcharges; of the system improvements authorized, approximately $205,615 is authorized to be performed by the lessee for distribution system improvements, and $500,000 is authorized to be performed for meter replacement labor costs. For the fiscal year ended June 30, 2022, water system assets total $12,098,983 net of depreciation.
80 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

12. SERVICE CONCESSION ARRANGEMENT FOR WATER SERVICES, Continued A. Lease Agreement and Assignment from American Water Service, Inc. to Veolia Water North America Services, LLC, Continued
In consideration for the lease of the water system assets, the lessee agrees to pay the City a monthly lease payment equal to 6% and a monthly franchise fee equal to 5% of the annual gross revenues generated by the water system. For the year ended June 30, 2022, Veolia paid lease payments and franchise fees to the City in amount of $402,472 and $309,023, respectively. Further, for the year ended June 30, 2022, the City reported passed-through utility taxes and capital-related surcharges of $295,459 and $518,160, respectively.

13. CONTINGENT LIABILITIES AND COMMITMENTS
A. Contingent Liabilities
The City is subject to litigation arising in the normal course of operations. In the opinion of the City Attorney there is no pending litigation which is likely to have a material adverse effect on the financial position of the City.

B. Federal and State Grants
The City has received federal and state grants for specific purposes that are subject to reviews by the grantor agencies. Such reviews could lead to requests for reimbursements to the grantor agency for expenditures disallowed under the terms of the grant. The amount, if any, of expenditures that may be disallowed by the granting agencies cannot be determined at this time, although City expects such amounts, if any, to be immaterial.

C. California State Water Resources Control Board Corrective Action Plan On April 21, 2015 the City, along with several other regional water system (RWS) customers of the San Francisco Public Utilities Commission (SFPUC), was cited by the State Water Resources Control Board (SWRCB) for not providing multi-barrier treatment to raw surface water. This citation was due to an incident occurring in March of 2015, whereby untreated water was inadvertently allowed to flow into the RWS. The incident did not result in any adverse effects; however, the SWRCB citation directed that the City prepare a Corrective Action Plan. The CAP includes several corrective actions developed to prevent another similar incident.

On August 15, 2015 the SWRCB acknowledged the City’s Corrective Action Plan (CAP) whereby the City will take steps to ensure the water supply and/or storage of water is safe and sustainable in the event SFPUC water becomes unavailable. The critical elements of the CAP are the new groundwater wells, the construction of water system interties, and the construction of storage tanks over an estimated period of seven (7) years. However, the CAP recognizes that the timing for the construction of the storage tanks is less certain due to the prioritization of the groundwater wells, staffing limitations and complexities securing site control. The highest priority water system improvements have estimated costs of roughly $15.5 million. The City enacted a capital improvement surcharge, contributed general and community benefit funds to the water system, secured grant funding and completed refurbishment of the Gloria Way Water Well, and has funding for the water system interties. As of June 30, 2022, the City has capital water reserves of approximately $4.7 million.
81 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

13. CONTINGENT LIABILITIES AND COMMITMENTS, Continued
D. Water Rights Acquisition and Related Agreements
Water Rights Acquisition Agreements
In August 2018, the City entered into an agreement with the City of Mountain View to transfer all right, title, and interest to 1,000,000 gallons per day (1 MGD) of its guaranteed water supply (ISG) under the City and County of San Francisco Water Supply Agreement. The acquisition price of $5,000,000 was funded from the following sources:

Silicon Valley Community Foundation (SVCF) Gift Agreement/Advance $2.0 Million– In June 2017, the City entered into a gift agreement with the SVCF for $2.5 million whereby the gift is restricted for the purpose of incentivizing the development of affordable housing within the City. Up to $2,000,000 was authorized and utilized for an inter-fund advance from SVCF special revenue fund to acquire permanent water rights. The advance is repaid upon the receipt of related water capacity charge or related impact or charge imposed by the City. The remaining funds are restricted to fund not less than $500,000 for an affordable housing manager over a minimum period of five years. As of June 30, 2022, the inter-fund advance amount totaled $1,951,913.

General Fund Advance $0.47 Million - The City approved a long-term inter-fund advance to the Water Service Enterprise Fund for purpose of facilitating the permanent water rights transfer. Reimbursement of the funds advanced will be made solely from capacity charges established by the City, as allowed, to cover the entire cost the water rights transfer and charged for new or expanded water connections to its water system. As of June 30, 2022, the inter-fund advance amount totaled $458,480.

Amendment to Water Supply Implementation Agreement $1.53 Million – In June 2017, the City approved an amendment to the Water Supply Implementation Agreement (Amended WSIA) in order establish terms for payment of the attributed share of the costs of the permanent water rights transfer. Under the terms of the amendment; 2020 Bay Road LLC, the Primary School LLC, and the Sobrato Organization LLC (collectively “developers”) agreed to advance a collective total of $1.53 million as the developers’ attributed share of the cost of the water rights transfer. For a period of eight (8) years after the effective date of the water rights transfer, if entitlement for a developer site is approved in accordance with the City’s laws and policies, any payments made under the Amended WSIA will be credited against a water capacity charge or related impact or buy-in charge imposed by the City typically upon issuance of building permits. As of June 30, 2022, the Primary School and Sobrato development projects were entitled; however, no building permits have been issued. 82 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

13. CONTINGENT LIABILITIES AND COMMITMENTS, Continued
D. Water Rights Acquisition and Related Agreements, Continued Water Rights Acquisition Agreements, Continued
Sobrato Organization LLC Reimbursement Agreement $1.0 Million - The City approved a reimbursement agreement (Agreement) with the Sobrato Organization LLC (Sobrato) to provide funds in the amount of $1,000,000 for the purpose of facilitating the permanent water rights transfer. Reimbursement of the funds advanced will be made solely from capacity charges established by the City, as allowed, to cover the entire cost the water rights transfer and charged for new or expanded water connections to its water system.

The Agreement expires upon the earlier of the date of full reimbursement of the advance or August 4, 2037 (twenty years from Agreement effective date). Upon expiration, the City’s commitments under the agreement terminate. In December 2019, in accordance with approved project entitlements and conditions of approval, Sobrato agreed to forego all outstanding amounts advanced under the Agreement upon the issuance of a building certificate of occupancy, which did not occur as of year-end. As of June 30, 2022, the balance of the advance totaled $975,957.

As of June 30, 2022, the advance from the Developers was outstanding for a collective total of $2,505,957.

E. Affordable Housing and Sustainable Communities Grant Commitments In June 2019, the City received a jointly submitted grant award of $20 million in partnership with Eden Housing, EPA CAN DO, and the San Mateo County Transit District (SamTrans). The grant funding consists of $13.5 million in loans for affordable housing development, and $6.5 million for transit and infrastructure improvements. Under the terms of the grant award, applicants are held jointly and severally liable to provide accountability and ensure the full scope of the project application is implemented. The City entered into cooperation and indemnification agreements with the grant coapplicants to mitigate risks among the parties. Of the $20 million, the City is responsible for completing $3.75 million in sustainable transportation infrastructure, and transit-related amenities in a timely manner. As of June 30, 2022, no projects have been completed.

F. CalOES Grant Commitment for SAFER Bay Project
In September 2018, the City authorized the San Francisquito Creek Joint Powers Authority (SFCJPA) to submit an application on behalf of the City to the California Office of Emergency Services (CalOES), Hazard Mitigation Grant Program for $22 million for the East Palo Alto Safer Bay Project, Phase I, protecting East Palo Alto with a levee from San Francisquito Creek through Bay Road and constructing related and necessary environmental mitigations. The grant required the City to reserve the required local funding match (25%) which was equal to $5.5 million, and the City of East Palo Alto has committed $5.5M in capital funding to construct the portion of the project in East Palo Alto. The engineering and design phase of the project was approved and awarded for $3.5 million by FEMA in September 2022. 83 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

13. CONTINGENT LIABILITIES AND COMMITMENTS, Continued
G. Flood and Sea Level Rise Resiliency Agency
In March 2019, in conjunction with the County of San Mateo, C/CAG and other cities and towns in San Mateo County, the City agreed to fund the startup costs to modify the existing San Mateo County Flood Control District including expanding the scope and modifying the governance structure. The estimated startup costs approved total $1.1 million, of which the City agreed to fund $40,000 per year for a threeyear period. For the year ended June 30, 2022, the City paid its final $40,000 commitment.

14. REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITIES A. Redevelopment Dissolution
On June 28, 2011 the State of California adopted ABx1 26 (AB 26) which, in Late December 2011, was upheld by the California Supreme Court to be largely constitutional. This action, together with AB 1484 enacted on June 27, 2012, are referred to as “Dissolution Law” as related to former redevelopment agencies. Under the existing Dissolution Laws, California redevelopment agencies were dissolved as of February 1, 2012 and cannot engage in new projects, obligations, or commitments. Beginning in February 2012, Successor Agencies, together with other designated entities, initiated the process under AB 26 to unwind the affairs of the dissolved agencies. This action impacted the reporting entity of the City of East Palo Alto in that the City had previously reported a redevelopment agency (former Agency) as a blended component unit of the City.

On January 10, 2012, the City Council elected to serve as the Successor Agency to the former Agency whereby the Successor Agency holds assets, reports obligations, and otherwise oversees the wind-down of the affairs of the former Agency as dictated by the Dissolution Laws and subject to control and approval of an established Oversight Board and the California Department of Finance.

Furthermore, on January 10, 2012, the City also elected to serve as the former Agency’s Housing Successor and retain the housing assets of the former Agency. On February 1, 2012 certain housing assets were transferred to the City's Housing Successor Special Revenue Fund.

Since February 1, 2012, the Successor Agency has complied with existing Dissolution Laws, including completing a due diligence review, obtaining a finding of completion, obtaining approval of the longrange property management plan, completing timely reporting of recognized obligation schedules. The Successor Agency continues to conduct the fiduciary activities of the Dissolution Laws until such time the affairs and obligations of the former Agency are complete.

Cash and investments of the Successor Agency as of June 30, 2022 are discussed in Note 2. Information presented in the following footnotes represents other assets and liabilities of the Successor Agency as of June 30, 2022.
84 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

14. REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITIES, Continued
B. Long-Term Debt
The Successor Agency’s debt issues and transactions are summarized below and discussed in detail thereafter.
2015 Tax Allocation Refunding Bonds
On September 1, 2015, the Successor Agency issued $16,950,000 Tax Allocation Refunding Bonds, Series 2015A and $2,500,000 Taxable Tax Allocation Refunding Bonds, Series 2015B. The bonds were issued to refund the 1999 Tax Allocation Bonds, the 2003 Series A Bonds, and the 2003 Series B Bonds. Certain proceeds of the refunding bonds were subsequently used to call the East Palo Alto Public Financing Authority 2005 Revenue Bonds on October 1, 2015. The economic gain on refunding of these bonds was $2,560,798. The Series 2015B Refunding Bonds had been paid off in the fiscal year ending June 30, 2019.

Series 2015A Refunding Bonds
The 2015A Refunding Bonds mature annually starting October 1, 2018 through 2032, with semi-annual installments ranging from $45,000 to $1,515,000. The interest on the 2015A Refunding Bonds is payable semi-annually on each April 1 and October 1, with coupon rates ranging from 3.00% to 5.00%. The Series 2015A Bonds maturing on or after Octobers 1, 2026, are subject to redemption, at the option of the Successor Agency on any date on or after October 1, 2025, in whole or in part, by such maturities as are determined by the Successor Agency and by lot within a maturity, from any available source of funds, at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium.
85 City of East Palo Alto
Notes to Basic Financial Statements
For the year ended June 30, 2022

14. REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITIES, Continued
B. Long-Term Debt, Continued
The annual debt service requirements of the Series 2015A bonds are as follows:

Pledged Revenues
The 2015 Tax Allocation Refunding Bonds of the Successor Agency are payable solely from and secured by tax revenues deposited into Redevelopment Property Tax Trust Fund. Principal and interest on the Series 2015A bonds are guaranteed under an insurance policy.

C. Deferred Inflows of Resources
The Successor Agency recorded the following item as deferred inflows of resources as of June 30, 2022. 86 REQUIRED SUPPLEMENTARY

INFORMATION
87 The City adopts a budget annually for all governmental fund types, except for capital projects. This budget is effective July 1 for the ensuing fiscal year. From the effective date of the budget, which is adopted at the fund level, the amounts stated therein as proposed expenditures become appropriations to the various City departments. The legal level of budgetary control is the fund level. The City Council may amend the budget by resolution during the fiscal year. The City Manager has the authority to make adjustments to the operating budget between departments within the same fund. Transfers of operating budgets between funds, use of unappropriated fund balances, and significant changes in capital improvement project budgets require the approval of the City Council.

Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States except for the Housing Assistance Fund and the Capital Improvements Capital Projects Fund which are adopted on a project length basis.

The City uses an encumbrance accounting system under which purchase orders, contracts and other commitments for the expenditure of moneys are recorded in order to set aside that portion of the applicable appropriation. Encumbrance accounting is employed as an extension of formal budgetary integration in all budgeted funds. Encumbrances outstanding at year end are reappropriated in the following year. Unexpended appropriations lapse at year end and must be reappropriated in the following year.

1. BUDGETS AND BUDGETARY ACCOUNTING
A. Budgetary Procedures
City of East Palo Alto
Notes to Required Supplementary Information
For the year ended June 30, 2022
B. Encumbrances
88 1. BUDGETS AND BUDGETARY ACCOUNTING, Continued
C. Budgetary Comparison Schedules
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Property taxes 13,935,000 $ 15,735,000 $ 15,843,008 $ 108,008 $ Sales taxes 5,575,000 5,675,000 5,738,443 63,443
Transient occupancy tax 550,000 1,010,000 1,158,314 148,314 Utility users tax 1,535,000 1,665,000 1,631,049 (33,951) Other taxes 1,380,000 1,580,000 1,692,627 112,627
Licenses, fees and permits 1,450,000 1,450,000 1,583,769 133,769 Charges for services 940,000 940,000 683,819 (256,181)
Fines and forfeitures 307,500 307,500 263,437 (44,063)
Use of money and property 332,500 332,500 (1,001,012) (1,333,512) Grants and intergovernmental 65,000 230,000 220,361 (9,639) Miscellaneous 2,850,000 1,509,040 1,697,367 188,327
Total revenues 30,434,040 28,920,000 29,511,182 (922,858) EXPENDITURES:

Current:

General government 5,739,400 5,875,120 5,444,582 430,538 Public safety 13,011,410 8,500,378 8,109,725 390,653
Public works 4,051,150 3,819,245 3,310,437 508,808
Culture and recreation 707,600 829,871 727,276 102,595
Community development 5,309,550 4,623,998 3,760,833 863,165 Capital outlay 579,085 458,375 101,966 356,409
Debt service:

Principal - - - -
Interest, and fiscal charges - - 6,561 (6,561)
Total expenditures 24,106,987 29,398,195 21,461,380 2,645,607 REVENUES OVER (UNDER) EXPENDITURES 6,327,053 (478,195) 8,049,802 1,722,749 OTHER FINANCING SOURCES (USES):

Transfer in 1,301,450 - - -
Transfer out (823,255) (2,381,000) (2,381,000) -
Total other financing sources (uses) 478,195 (2,381,000) (2,381,000) - Net change in fund balance $ 3,946,053 - $ 5,668,802 $ 1,722,749 FUND BALANCE:

Beginning of year 42,803,358
End of year $ 48,472,160
Budget Amounts
Budgetary Comparison Schedule, General Fund
City of East Palo Alto
Required Supplementary Information
For the year ended June 30, 2022
89 2. DEFINED BENEFIT PENSION PLAN
6/30/2022 6/30/2021 6/30/2020 6/30/2019
Measurement date 6/30/2021 6/30/2020 6/30/2019 6/30/2018 Proportion of the net pension liability 0.120670% 0.115570% 0.112300% 0.110450% Proportionate share of the net pension liability 6,526,289 $ $ 12,574,721 $ 11,507,754 $ 10,642,902 Covered payroll $ 10,344,561 $ 9,673,702 $ 9,577,025 $ 9,257,855 Proportionate share of the net pension liability
as a percentage of covered payroll 63.09% 129.99% 120.16% 114.96% Plan fiduciary net position as a
percentage of the total pension liability 88.29% 75.10% 75.26% 75.26% Notes to Schedule:
* Fiscal year 2015 was the first year of implementation, therefore only seven years are shown.

The CalPERS discount rate was increased from 7.5% to 7.65% in fiscal year 2016, and then decreased from 7.65% to 7.15% in fiscal year 2018.

The CalPERS mortality assumptions were adjusted in fiscal year 2019.

A. Schedule of the City's proportionate share of the Net Pension Liability - Last 10 Years* City of East Palo Alto
Required Supplementary Information, Continued
For the year ended June 30, 2022
90 6/30/2018 6/30/2017 6/30/2016 6/30/2015
6/30/2017 6/30/2016 6/30/2015 6/30/2014

0.109441% 0.109310% 0.118190% 0.126260%
$ 9,458,584 10,853,587 $ 8,112,375 $ 7,856,469 $
$ 8,078,420 8,464,356 $ 7,962,595 $ 7,773,690 $
128.23% 117.08% 101.88% 101.06%

73.31% 74.06% 78.40% 79.82%
91 2. DEFINED BENEFIT PENSION PLAN, Continued
B. Schedule of Contributions – Last 10 Years*
Fiscal year 2022 2021 2020 2019
Contractually required contribution (actuarially
determined) $ 2,366,071 $ 2,261,018 $ 1,976,048 $ 1,812,899 Contribution in relation to the actuarially determined
contributions (2,366,071) (2,261,018) (1,976,048) (1,812,899) Contribution deficiency (excess) $ - $ - $ - $ -
Covered payroll $ 10,120,545 $ 10,344,561 $ 9,673,702 $ 9,577,025 Contributions as a percentage of covered payroll 23.38% 21.86% 20.43% 18.93% Notes to Schedule:

Valuation date
(for contractually required contribution): 6/30/2019 6/30/2018 6/30/2017 6/30/2016 Actuarial cost method: Entry Age Entry Age Entry Age Entry Age Amortization method: (1) (1) (1) (1)
Assets valuation method: Market Value Market Value Market Value Market Value Inflation: 2.50% 2.50% 2.63% 2.75%
Salary increases: (2) (2) (2) (2)
Investment rate of return: 7.00% 7.00% 7.25% 7.375%
Retirement age: (3) (3) (3) (3)
Mortality: (4) (4) (4) (4)
(1) Level percentage oLevel percentage of payroll, closed (2) Depending on age, service, and type of employment
(3)
(4)
50 for all plans, with the exception of 52 for Miscellaneous PEPRA 2%@62
Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board.

City of East Palo Alto
Required Supplementary Information, Continued
For the year ended June 30, 2022
* Fiscal year 2015 was the first year of implementation, therefore only seven years are shown 92 2018 2017 2016 2015
$ 1,642,560 $ 1,493,218 $ 1,371,578 $ 1,477,383
(1,642,560) (1,493,218) (1,371,578) (1,477,383)
$ - $ - $ - $ -
$ 9,257,855 $ 8,464,356 $ 8,078,420 $ 7,962,595

17.74% 17.64% 16.98% 18.55%
6/30/2015 6/30/2014 6/30/2013 6/30/2012
Entry Age Entry Age Entry Age Entry Age
(1) (1) (1) (1)
Market Value Market Value Market Value 15 Year
Smoothed
Market Method

2.75% 2.75% 2.75% 2.75%
(2) (2) (2) (2)

7.50% 7.50% 7.50% 7.50%
(3) (3) (3) (3)
(4) (4) (4) (4)
93 This page intentionally left blank
94 SUPPLEMENTARY INFORMATION
95 NPDES Fees Fund accounts for the revenues and expenditures from assessments levied on property in the City in compliance with the provisions of the National Pollutant Discharge Elimination System for prevention of storm water and flood related damage.

Gas Tax Fund accounts for funds received from the State of California to use for street and highway related projects.

Federal and State Law Enforcement Fund accounts for the receipt and use of State and Federal law enforcement related grant money.

Park in Lieu Fund accounts for park in lieu fees collected from developers.

Rent Stabilization Fund accounts for revenues and expenditures to support rent stabilization activities.

Federal and State Grants Fund accounts for grant money received and expended from various Federal and State government grants.

Housing Assistance Fund accounts for first time home buyer assistance program activities.

Measure A Fund accounts for the City's Measure A revenues and expenditures. Measure A is a half-cent sales tax to support countywide (San Mateo County) transportation projects and programs.

CYSFF TOT Fund accounts for 10% of TOT taxes collected as approved by voters and the City Council approved funding for various non-profit organizations related to Children/Youth/Seniors/Family programs.

Lighting District Fund accounts for revenues (property taxes) and expenditures for the Ravenswood Highway Lighting District.

Drainage District Fund accounts for revenues (property taxes) and expenditures for the East Palo Alto Maintenance Drainage District.

Measure C Fund accounts for activities related to the Measure C Parcel tax. Measure C was an annual tax approved by the voters in November 2006 for a period of ten years. The remaining funds are to be used to support violence prevention and public safety intervention.

Local Grants Fund accounts for revenues and expenditures from local public and private grants.

Silicon Valley Community Foundation (SVCF) Special Revenue Fund accounts for gift monies from the Silicon Valley Community Foundation to be used for the purpose of incentivizing the development of affordable housing within the City. Up to $2,000,000 was authorized for an inter-fund advance to provide monies to purchase certain water rights. Remaining funds are restricted to pay a minimum amount of $500,000 for an affordable housing manager position over a minimum period of five years.

NON-MAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS
96 Low and Moderate Income Housing Successor Fund accounts for the activities related to the housing assets assumed by the City as Housing Successor to the former Redevelopment Agency. The activities are governed by California redevelopment law and must be used to provide housing for those with low and moderate incomes.

Housing in Lieu Special Revenue Fund accounts for developer fees and deposits in lieu of providing affordable housing and the expenditures related to allowable affordable housing activities.

Housing TOT Special Revenue Fund accounts for 10% set-aside of transient occupancy taxes collected as approved by voters, and the expenditures related to affordable housing development activities.

Measure HH Special Revenue Fund accounts for the revenues and expenditures of Measure HH Parcel tax. Measure HH was approved by the voters in November 2018. The tax is an annual parcel tax and the funds are to be used for affordable and supportive housing programs, programs that facilitate access to job opportunities in the S.T.E.M. sectors, building trades, and strengthen First Source Hiring.

Measure W Special Revenue Fund accounts for the City’s share of San Mateo County Measure W revenues and expenditures. Measure W is a half-cent sales tax to support countywide transportation projects and programs.

American Rescue Plan Act Fund accounts for the funds received from the Department of the Treasury relating to the American Rescue Plan Act passed in March 2021.

CIP Impact Fees Capital Project Fund accounts for various development impact fees collected by the City for capital related activities.

CAPITAL PROJECT FUND

NON-MAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS (CONTINUED)
97 City of East Palo Alto
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2022
Federal and Rent
NPDES State Law Park in Stabilization
Fees Gas Tax Enforcement Lieu Fund
ASSETS
Cash and investments $ 387,644 $ 3,629,849 $ 256,714 $ 333,211 $ 694,546 Receivables:

Accrued interest 1,081 9,238 703 871 1,901
Taxes - - - - -
Intergovernmental - 161,116 32,226 - -
Accounts receivable - - - - -
Advances to other funds - - - - -
Loans and notes receivable - - - - -
Total assets $ 388,725 $ 3,800,203 $ 289,643 $ 334,082 $ 696,447

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable $ 13,690 $ 16,964 $ 1,005 $ 3,525 - $
Retentions payable - 55,141 - - -
Other accrued liabilities - 3,309 - - -
Due to other funds - - - - -
Total liabilities 13,690 75,414 1,005 - 3,525
Deferred inflows of resources:

Unavailable revenue - 32,226 - - -
Fund Balances:

Restricted 375,035 3,724,789 256,412 334,082 692,922
Unassigned - - - - -
Total fund balances 375,035 3,724,789 256,412 334,082 692,922 Total liabilities, deferred inflows
of resources, and fund balances $ 388,725 $ 3,800,203 $ 289,643 $ 334,082 $ 696,447 Special Revenue
98 Federal
and State Housing CYSFF Lighting Drainage Local
Grants Assistance Measure A TOT District District Measure C Grants $ 326,113 - $ $ 4,672,354 $ 973,952 $ 4,223,289 $ 730,124 $ 217,093 $ 584,746 - 861 11,977 2,489 11,019 2,042 566 1,558
- - - 112,649 - 6,976 - -
417,360 - - - - - - -
- 837 55,701 25,091 - - - -
- - - - - - - -
137,175 - - - - - - -
$ 417,360 $ 464,986 $ 4,740,032 $ 1,001,532 $ 4,346,957 $ 739,142 $ 217,659 $ 586,304 $ 17,999 $ 769 $ - $ 26,199 - $ $ 11,980 $ 17,320 - $
- 13,462 - 6,233 - - - -
4,009 - - - - - 46,305 -
256,373 - - - - - - -
278,381 769 13,462 32,432 - 11,980 63,625 -
205,693 - - - - - - -
464,217 - 4,726,570 1,001,532 4,314,525 727,162 217,659 522,679 (66,714) - - - - - - -
(66,714) 464,217 4,726,570 1,001,532 4,314,525 727,162 217,659 522,679 $ 417,360 $ 464,986 $ 4,740,032 $ 1,001,532 $ 4,346,957 $ 739,142 $ 217,659 $ 586,304 Special Revenue
99 City of East Palo Alto
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2022
Low and
Moderate
Income
Housing Housing Housing Measure
SVCF Successor in Lieu TOT HH
ASSETS
Cash and investments $ 62,513 $ 2,423,914 $ 6,626,695 $ 2,635,752 $ 4,730,557 Receivables:

Accrued interest 159 340,252 17,280 10,130 12,161
Taxes - - - - -
Intergovernmental - - - - -
Accounts receivable - - 25,091 - -
Advances to other funds 1,951,913 - - - -
Loans and notes receivable - 6,149,516 - 663,536 -
Total assets $ 2,014,585 $ 8,913,682 $ 6,643,975 $ 3,334,509 $ 4,742,718

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable $ 26,374 - $ $ - $ - $ -
Retentions payable - - - - -
Other accrued liabilities - - - - -
Due to other funds - - - - -
Total liabilities - 26,374 - - -
Deferred inflows of resources:

Unavailable revenue - 334,051 - 3,337 -
Fund Balances:

Restricted 2,014,585 8,553,257 6,643,975 3,331,172 4,742,718 Unassigned - - - - -
Total fund balances 2,014,585 8,553,257 6,643,975 3,331,172 4,742,718 Total liabilities, deferred inflows
of resources, and fund balances $ 2,014,585 $ 8,913,682 $ 6,643,975 $ 3,334,509 $ 4,742,718 Special Revenue
100
Capital
Project
Total
Non-Major
Measure CIP Governmental
W ARPA Impact Fees Funds
$ 802,049 $ 601,963 - $ $ 34,913,078
1,974 3,318 1,568 431,148
- - 119,625 -
- - 610,702 -
64,785 413 171,918 -
- - 1,951,913 -
- - 6,950,227 -
$ 868,808 $ 3,731 $ 603,531 $ 45,148,611
$ 1,054 - $ $ 136,879 - $
- - 74,836 -
- - 53,623 -
46,921 - 303,294 -
47,975 - 568,632 -
- 413 575,720 -
868,808 603,531 - 44,115,630
(44,657) - (111,371) -
868,808 (44,657) 603,531 44,004,259
$ 868,808 $ 3,731 $ 603,531 $ 45,148,611
Special Revenue
101
City of East Palo Alto
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds
For the year ended June 30, 2022
Federal and Rent
NPDES State Law Park in Stabilization
Fees Gas Tax Enforcement Lieu Fund
REVENUES:

Property taxes $ - - $ - $ - $ - $
Sales taxes - ----
Transient occupancy tax - ----
Other taxes - 1,333,961 ---
Licenses, fees and permits - ----
Charges for services 129,971 - - - 526,825
Use of money and property (14,030) (86,484) (6,144) (8,881) (16,634) Grants and intergovernmental - - 161,285 - -
Miscellaneous - ----
Total revenues 115,941 1,247,477 155,141 (8,881) 510,191 EXPENDITURES:

Current:

General government 80,496 196,309 - - 244,095
Public safety - - 105,783 - -
Public works 113,681 338,113 - - -
Culture and recreation - ----
Community development 160,797 - - - 304,596
Capital outlay 98,202 46,547 1,131 - -
Total expenditures 453,176 580,969 105,783 1,131 548,691

REVENUES OVER
(UNDER) EXPENDITURES (337,235) 666,508 49,358 (10,012) (38,500) OTHER FINANCING SOURCES (USES):

Transfers in 156,570 64,500 - - -
Total other financing sources (uses) 156,570 64,500 - - - Net change in fund balances (180,665) 731,008 49,358 (10,012) (38,500) FUND BALANCES:

Beginning of the year 555,700 2,993,781 207,054 344,094 731,422 End of year $ 375,035 $ 3,724,789 $ 256,412 $ 334,082 $ 692,922 Special Revenue
102
Federal
and State Housing CYSFF Lighting DrainageLocal
Grants Assistance Measure A TOT District District Measure C Grants $ - - $ - $ - $ 771,242 $ 268,19 $ 1 $ - $ -
- - 746,951 - ----
- - - 144,789 - - - -
---- ----
---- ----
- 151 -- ----
(149) (5,115) (114,954) (24,800) (106,685) (17,970) (5,501) (17,107) 288,487 - - - - - - 150,000
-1 - - - - - -
288,338 (4,963) 631,997 119,989 664,557 250,221 (5,501) 132,893 - 1,520 1,583 43,040 45,849 87,533 - 7,851
- 5,654 - - - - - 137,519
828 - - - 113,771 67,004 - -
44,472 - - - - - - 97,441
247,829 1,485 - - - - - 65,361
- - 20,681 - 147,431 73,396 - -
293,129 8,659 22,264 43,040 307,051 227,933 - 308,172
(4,791) (13,622) 609,733 76,949 357,506 22,288 (5,501) (175,279) - - - - -100,140--
- - - - -100,140--
(4,791) (13,622) 609,733 76,949 357,506 122,428 (5,501) (175,279) (61,923) 477,839 4,116,837 924,583 3,957,019 604,734 223,160 697,958 $ (66,714) $ 464,217 $ 4,726,570 $ 1,001,532 $ 4,314,525 $ 727,162 $ 217,659 $ 522,679 Special Revenue
103
City of East Palo Alto
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds
For the year ended June 30, 2022
Low and
Moderate
Income
Housing Housing Housing Measure
SVCF Successor in Lieu TOT HH
REVENUES:

Property taxes $ - - $ - $ - $ - $
Sales taxes -----
Transient occupancy tax - - - 144,789 -
Other taxes - - - -1,677,265
Licenses, fees and permits -----
Charges for services -----
Use of money and property (3,796) (63,002) (176,475) (12,340) (101,281) Grants and intergovernmental -----
Miscellaneous - 2,918---
Total revenues (3,796) (60,084) (176,475) 132,449 1,575,984 EXPENDITURES:

Current:

General government - 33,369 28,665 28,666 6
Public safety -----
Public works -----
Culture and recreation - - - - -
Community development 149,792 330,103 360 - 121,619
Capital outlay - - - - -
Total expenditures 149,792 363,472 29,025 28,666 121,625

REVENUES OVER
(UNDER) EXPENDITURES (153,588) (423,556) (205,500) 103,783 1,454,359 OTHER FINANCING SOURCES (USES):

Transfers in - 281,130 - - -
Total other financing sources (uses) - 281,130 - - -
Net change in fund balances (153,588) (142,426) (205,500) 103,783 1,454,359 FUND BALANCES:

Beginning of the year 2,168,173 8,695,683 6,849,475 3,227,389 3,288,359 End of year $ 2,014,585 $ 8,553,257 $ 6,643,975 $ 3,331,172 $ 4,742,718 Special Revenue
104
Capital
Project
Total
Non-Major
Measure CIP Governmental
W ARPA Impact Fees Funds
$ - - $ - $ 1,039,433 $
337,819 - - 1,084,770
- - - 289,578
- - - 3,011,226
- - 41,411 41,411
- - - 656,947
(15,621) (16,326) (14,738) (828,033)
- 3,506,266 - 4,106,038
- - -2,919
322,198 3,489,940 26,673 9,404,289
- 34,463 - 833,445
- 3,408,629 - 3,657,585
- 91,505 - 724,902
- - - 141,913
- - - 1,381,942
- - 387,388 -
- 3,534,597 - 7,127,175
322,198 (44,657) 26,673 2,277,114
- - - 602,340
- - - 602,340
322,198 (44,657) 26,673 2,879,454
546,610 - 576,858 41,124,805
$ 868,808 $ (44,657) $ 603,531 $ 44,004,259
Special Revenue
105
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual NPDES Fees Special Revenue Fund
For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Charges for services 144,000 $ 144,000 $ 129,971 $ (14,029) $ Use of money and property 4,000 4,000 (14,030) (18,030) Grants and intergovernmental revenue 173,500 297,405 - (297,405) Total revenues 445,405 321,500 115,941 (329,464)
EXPENDITURES:

Current:

General government 80,680 80,680 80,496 184
Public works 133,335 205,051 113,681 91,370
Community development 264,055 264,055 160,797 103,258
Capital outlay - 123,905 98,202 25,703
Total expenditures 673,691 478,070 453,176 220,515
REVENUES OVER (UNDER) EXPENDITURES (228,286) (156,570) (337,235) (108,949) OTHER FINANCING SOURCES (USES):

Transfer in 156,570 156,570 156,570 -
Total other financing sources (uses) 156,570 156,570 156,570 - Net change in fund balance $ (71,716) - $ (180,665) (108,949) $ FUND BALANCE:

Beginning of year 555,700
End of year $ 375,035
Budget Amounts
106
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Gas Tax Special Revenue Fund
For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Other taxes 1,385,460 $ 1,385,460 $ 1,333,961 $ (51,499) $ Use of money and property 11,000 11,000 (86,484) (97,484) Total revenues 1,396,460 1,396,460 1,247,477 (148,983)
EXPENDITURES:

Current:

General government 196,315 196,315 196,309 6
Public works 516,450 616,450 338,113 278,337
Capital outlay 550,000 550,000 46,547 503,453
Total expenditures 1,262,765 1,362,765 580,969 781,796
REVENUES OVER (UNDER) EXPENDITURES 133,695 33,695 666,508 632,813 OTHER FINANCING SOURCES (USES):

Transfer in 64,500 64,500 64,500 -
Total other financing sources (uses) 64,500 64,500 64,500 - Net change in fund balance $ 198,195 $ 98,195 731,008 $ 632,813 FUND BALANCE:

Beginning of year 2,993,781
End of year $ 3,724,789
Budget Amounts
107
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Federal and State Law Enforcement Special Revenue Fund
For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Use of money and property 2,000 $ 2,000 $ (6,144) $ (8,144) $ Grants and intergovernmental 155,000 155,000 161,285 6,285 Total revenues 157,000 157,000 155,141 (1,859)
EXPENDITURES:

Current:

Public safety 153,575 153,575 105,783 47,792
Total expenditures 153,575 153,575 105,783 47,792
Net change in fund balance $ 3,425 3,425 $ 49,358 45,933 $ FUND BALANCE:

Beginning of year 207,054
End of year $ 256,412
Budget Amounts
108
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Park in Lieu Special Revenue Fund
For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Use of money and property - $ - $ (8,881) $ (8,881) $
Total revenues - - (8,881) (8,881)
EXPENDITURES:

Current:

Capital outlay - 1,131 1,131 -
Total expenditures 1,131 - 1,131 -
Net change in fund balance $ (1,131) - $ (10,012) (8,881) $ FUND BALANCE:

Beginning of year 344,094
End of year $ 334,082
Budget Amounts
109
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Rent Stabilization Fund Special Revenue Fund
For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Charges for services 530,000 $ 530,000 $ 526,825 $ (3,175) $ Fines and forfeitures 2,500 2,500 - (2,500)
Use of money and property 6,000 6,000 (16,634) (22,634) Total revenues 538,500 538,500 510,191 (28,309)
EXPENDITURES:

Current:

General government 244,095 244,095 244,095 -
Community development 490,930 490,930 304,596 186,334
Total expenditures 735,025 735,025 548,691 186,334
Net change in fund balance $ (196,525) (196,525) $ (38,500) 158,025 $ FUND BALANCE:

Beginning of year 731,422
End of year $ 692,922
Budget Amounts
110
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Federal and State Grants Special Revenue Fund
For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Use of money and property - $ - $ (149) $ (149) $
Grants and intergovernmental 155,500 170,500 288,486 117,986 Total revenues 170,500 155,500 288,337 117,837
EXPENDITURES:

Current:

General government - 15,000 - 15,000
Public works - - 827 (827)
Culture and recreation 40,000 40,000 44,472 (4,472)
Community development 115,500 322,859 247,829 75,030
Total expenditures 377,859 155,500 293,128 84,731
Net change in fund balance $ (207,359) - $ (4,791) 202,568 $ FUND BALANCE:

Beginning of year (61,923)
End of year $ (66,714)
Budget Amounts
111
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Housing Assistance Special Revenue Fund
For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Charges for services 2,500 $ 2,500 $ 151 $ (2,349) $
Use of money and property 2,000 2,000 (5,115) (7,115)
Miscellaneous - - 1 1
Total revenues 4,500 4,500 (4,963) (9,463)
EXPENDITURES:

Current:

General government 1,520 1,520 1,520 -
Public safety - - 5,654 (5,654)
Community development 14,500 14,500 1,485 13,015
Total expenditures 16,020 16,020 8,659 7,361
Net change in fund balance $ (11,520) (11,520) $ (13,622) (2,102) $ FUND BALANCE:

Beginning of year 477,839
End of year $ 464,217
Budget Amounts
112
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Measure A Special Revenue Fund
For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Sales taxes 575,000 $ 575,000 $ 746,951 $ 171,951 $
Use of money and property 36,000 36,000 (114,954) (150,954) Total revenues 611,000 611,000 631,997 20,997
EXPENDITURES:

Current:

General government 3,125 3,125 1,583 1,542
Capital outlay 500,000 500,000 20,681 479,319
Total expenditures 503,125 503,125 22,264 480,861
Net change in fund balance $ 107,875 107,875 $ 609,733 501,858 $ FUND BALANCE:

Beginning of year 4,116,837
End of year $ 4,726,570
Budget Amounts
113
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual CYSFF TOT Special Revenue Fund
For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Transient occupancy tax 68,750 $ 93,750 $ 144,789 $ 51,039 $ Use of money and property 6,000 6,000 (24,800) (30,800) Total revenues 99,750 74,750 119,989 20,239
EXPENDITURES:

Current:

General government 43,040 43,040 43,040 -
Culture and recreation 245,000 245,000 - 245,000
Total expenditures 288,040 288,040 43,040 245,000
Net change in fund balance $ (188,290) (213,290) $ 76,949 265,239 $ FUND BALANCE:

Beginning of year 924,583
End of year $ 1,001,532
Budget Amounts
114
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Lighting District Special Revenue Fund
For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Property taxes 667,700 $ 667,700 $ 771,242 $ 103,542 $
Use of money and property 31,000 31,000 (106,685) (137,685) Total revenues 698,700 698,700 664,557 (34,143)
EXPENDITURES:

Current:

General government 48,030 48,030 45,849 2,181
Public works 172,995 172,995 113,771 59,224
Capital outlay - 264,098 147,431 116,667
Total expenditures 485,123 221,025 307,051 178,072
Net change in fund balance $ 213,577 477,675 $ 357,506 143,929 $ FUND BALANCE:

Beginning of year 3,957,019
End of year $ 4,314,525
Budget Amounts
115
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Drainage District Special Revenue Fund
For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Property taxes 137,900 $ 137,900 $ 268,191 $ 130,291 $
Use of money and property 4,000 4,000 (17,970) (21,970) Total revenues 141,900 141,900 250,221 108,321
EXPENDITURES:

Current:

General government 87,545 87,545 87,533 12
Public works 239,495 239,495 67,004 172,491
Capital outlay - 73,395 73,396 (1)
Total expenditures 400,435 327,040 227,933 172,502
REVENUES OVER (UNDER) EXPENDITURES (258,535) (185,140) 22,288 280,823 OTHER FINANCING SOURCES (USES):

Transfer in 100,140 100,140 100,140 -
Total other financing sources (uses) 100,140 100,140 100,140 - Net change in fund balance $ (158,395) (85,000) $ 122,428 280,823 $ FUND BALANCE:

Beginning of year 604,734
End of year $ 727,162
Budget Amounts
116
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Measure C Special Revenue Fund
For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Use of money and property 1,000 $ 1,000 $ (5,501) $ (6,501) $ Total revenues 1,000 1,000 (5,501) (6,501)
EXPENDITURES:

Current:

General government 800 800 - 800
Culture and recreation 206,500 206,500 - 206,500
Total expenditures 207,300 207,300 - 207,300
Net change in fund balance $ (206,300) (206,300) $ (5,501) 200,799 $ FUND BALANCE:

Beginning of year 223,160
End of year $ 217,659
Budget Amounts
117
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Local Grants Special Revenue Fund
For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Use of money and property 3,000 $ 3,000 $ (17,107) $ (20,107) $ Grants and intergovernmental - 150,000 150,000 -
Total revenues 153,000 3,000 132,893 (20,107)
EXPENDITURES:

Current:

General government - - 7,851 (7,851)
Public safety - 205,270 137,519 67,751
Culture and recreation - 100,000 97,441 2,559
Community development - 74,246 65,361 8,885
Total expenditures 379,516 - 308,172 71,344
Net change in fund balance $ (226,516) 3,000 $ (175,279) 51,237 $ FUND BALANCE:

Beginning of year 697,958
End of year $ 522,679
Budget Amounts
118
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Silicon Valley Community Foundation (SVCF) Special Revenue Fund For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Use of money and property 1,000 $ 1,000 $ (3,796) $ (4,796) $ Total revenues 1,000 1,000 (3,796) (4,796)
EXPENDITURES:

Current:

Community development 149,420 149,420 149,792 (372)
Total expenditures 149,420 149,420 149,792 (372)
Net change in fund balance $ (148,420) (148,420) $ (153,588) (5,168) $ FUND BALANCE:

Beginning of year 2,168,173
End of year $ 2,014,585
Budget Amounts
119
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Low and Moderate Income Housing Fund Special Revenue Fund For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Use of money and property 20,000 $ 20,000 $ (63,002) $ (83,002) $ Miscellaneous - - 2,918 2,918
Total revenues 20,000 20,000 (60,084) (80,084)
EXPENDITURES:

Current:

General government 60,935 60,935 33,369 27,566
Community development 485,115 510,115 330,103 180,012
Total expenditures 571,050 546,050 363,472 207,578
REVENUES OVER (UNDER) EXPENDITURES (551,050) (526,050) (423,556) 127,494 OTHER FINANCING SOURCES (USES):

Proceeds from loans 60,000 60,000 - (60,000)
Transfer in 281,130 281,130 281,130 -
Total other financing sources (uses) 341,130 341,130 281,130 (60,000) Net change in fund balance $ (209,920) (184,920) $ (142,426) 67,494 $ FUND BALANCE:

Beginning of year 8,695,683
End of year $ 8,553,257
Budget Amounts
120
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Housing in Lieu Special Revenue Fund
For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Use of money and property 41,000 $ 41,000 $ (176,475) $ (217,475) $ Grants and intergovernmental - 240,000 - (240,000)
Total revenues 281,000 41,000 (176,475) (457,475)
EXPENDITURES:

Current:

General government 28,665 28,665 28,665 -
Community development 1,200,000 290,000 360 289,640
Capital outlay - - - -
Total expenditures 318,665 1,228,665 29,025 289,640
Net change in fund balance $ (37,665) (1,187,665) $ (205,500) (167,835) $ FUND BALANCE:

Beginning of year 6,849,475
End of year $ 6,643,975
Budget Amounts
121
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Housing TOT Special Revenue Fund
For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Transient occupancy tax 68,750 $ 93,750 $ 144,789 $ 51,039 $ Use of money and property 20,000 20,000 (12,340) (32,340) Total revenues 113,750 88,750 132,449 18,699
EXPENDITURES:

Current:

General government 28,665 28,665 28,666 (1)
Total expenditures 28,665 28,665 28,666 (1)
Net change in fund balance $ 85,085 60,085 $ 103,783 18,698 $ FUND BALANCE:

Beginning of year 3,227,389
End of year $ 3,331,172
Budget Amounts
122
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Measure HH Special Revenue Fund
For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Other taxes 1,677,280 $ 1,677,280 $ 1,677,265 $ (15) $
Use of money and property 25,000 25,000 (101,281) (126,281) Total revenues 1,702,280 1,702,280 1,575,984 (126,296)
EXPENDITURES:

Current:

General government 3,010 3,010 6 3,004
Community development 628,335 218,712 121,619 97,093
Total expenditures 221,722 631,345 121,625 100,097
Net change in fund balance $ 1,480,558 1,070,935 $ 1,454,359 (26,199) $ FUND BALANCE:

Beginning of year 3,288,359
End of year $ 4,742,718
Budget Amounts
123
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Measure W Special Revenue Fund
For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Sales taxes 250,000 $ 421,815 $ 337,819 $ (83,996) $
Use of money and property 4,000 4,000 (15,621) (19,621) Total revenues 425,815 254,000 322,198 (103,617)
EXPENDITURES:

Current:

General government 1,500 1,500 - 1,500
Public works 30,000 30,000 - 30,000
Capital outlay 200,000 371,815 - 371,815
Total expenditures 403,315 231,500 - 403,315
Net change in fund balance $ 22,500 22,500 $ 322,198 299,698 $ FUND BALANCE:

Beginning of year 546,610
End of year $ 868,808
Budget Amounts
124
City of East Palo Alto
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual ARPA Special Revenue Fund
For the year ended June 30, 2022
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Use of money and property 25,000 $ 12,500 $ (16,326) $ (28,826) $ Grants and intergovernmental 3,506,250 3,506,250 3,506,266 16 Total revenues 3,518,750 3,531,250 3,489,940 (28,810)
EXPENDITURES:

Current:

General government 187,635 38,135 34,463 3,672
Public safety 11,280 3,400,512 3,408,629 (8,117)
Public works 115,640 91,505 91,505 -
Community development 350,000 - - -
Total expenditures 3,530,152 664,555 3,534,597 (4,445)
Net change in fund balance $ (11,402) 1,565,245 $ (44,657) (33,255) $ FUND BALANCE:

Beginning of year -
End of year $ (44,657)
Budget Amounts
125
City of East Palo Alto
Schedule of Revenues and Expenditures - Budget and Actual Local Retail Transactions and Use Tax
For the year ended June 30, 2022
Adopted
Budget
Amended
Budget Actual Difference
Committed
and
Encumbered
Net Available
for Other
General Uses
Tax Revenues 2,025,000 2,155,000 2,159,381 4,381 $ - $ 4,381 $ Expenditures:

CD Director 189,170 189,170 187,165 (2,005) - (2,005)
FIT-Clean Zones:

Community Service Aides 44,560 44,560 - (44,560) - (44,560) Capital Transfers:

Unallocated 579,085 458,375 101,878 (356,497) - (356,497) 692,105 812,815 289,043 (403,062) (403,062)
Net Available - Other
General Purposes $ 1,462,895 1,212,185 $ 1,870,338 $ 407,443 $ - $ 407,443 $ 126
Financial Trends

1. Net Position by Component

2. Changes in Net Position

3. Fund Balances - Governmental Funds

4. Changes in Fund Balances - Governmental Funds
Revenue Capacity

1. Assessed Value of Taxable Property

2. Direct and Overlapping Property Tax Rates

3. Principal Property Taxpayers

4. Property Tax Levies and Collections
Debt Capacity

1. Ratio of Outstanding Debt by Type

2. Computation of Direct and Overlapping Debt

3. Computation of Legal Bonded Debt Margin

4. Bonded Debt Pledged Revenue Coverage - Successor Agency Demographic and Economic Information

1. Demographic and Economic Statistics

2. Principal Employers
Operating Information

1. Number of Positions - City Government by Function

2. Operating Indicators by Function

3. Capital Asset Statistics by Function
Operating Information
These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs:

Unless otherwise noted, the information in these schedules is derived from the Comprehensive Annual Financial Reports for the relevant year. The City Implemented GASB Statement 34 in 2003; schedules presenting government-wide information include information beginning in that year.

STATISTICAL

SECTION
This part of the City's Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, noted disclosures, and required supplementary information says about the City's overall financial health. In contrast to the financial section, the statistical section information is not subject to independent audit.

These schedules contain trend information to help the reader understand how the City's financial performance and well being have changed over time:

These schedules contain information to help the reader assess the City's most significant local revenue source, the property tax:

These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future:

These schedues offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place:
127
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Government activities
Net investment in capital assets 29,816,204 $ 31,132,522 $ 35,561,630 $ 41,044,530 $ 42,278,404 $ 48,784,281 $ 55,197,664 $ 56,070,993 $ 63,227,229 $ 64,005,813 $ Restricted For:

Debt Service - - - - - - - - --
Low and moderate income housing - - - - - - - - --Streets and Infrastructure 3,017,783 4,971,963 5,538,340 5,816,534 6,411,718 7,700,051 9,885,470 11,354,052 12,774,681 14,736,889 Parks and Recreation 358,473 496,583 550,014 1,120,082 1,117,148 1,089,920 340,827 348,880 344,094 334,082 Measure C programs 1,505,044 1,483,198 1,464,460 1,405,053 1,510,846 1,015,232 592,734 253,401 223,160 217,659 Housing Programs 12,421,954 13,108,951 14,012,643 17,325,494 20,518,013 20,824,081 21,669,184 24,277,027 25,891,744 26,780,234 Special Programs - 726,772 954,220 1,168,856 853,741 1,262,039 1,522,452 1,755,499 2,012,599 2,010,100 Capital projects - 209,247 188,644 279,184 3,796,398 3,012,787 9,816,132 10,159,391 6,707,412 8,602,288 Total restricted 17,303,254 20,996,714 22,708,321 27,115,203 34,207,864 34,904,110 43,826,799 48,148,250 47,953,690 52,681,252 Unrestricted 27,113,528 26,832,636 23,123,638 28,798,504 33,919,154 40,774,262 40,040,582 46,185,712 49,482,293 59,082,008 Total governmental activities net position 74,232,986 $ 78,961,872 $ 81,393,589 $ 96,958,237 $ 110,405,422 $ 124,462,653 $ 139,065,045 $ 150,404,955 $ 160,663,212 $ 175,769,073 $ Business-type activities
Net investment in capital assets 3,938,884 3,743,594 3,548,303 3,353,012 4,050,566 11,161,837 10,964,954 10,880,048 11,205,575 11,306,820 Restricted For:

Capital Projects¹ 836,720 834,882 835,114 926,770 928,562 682,991 585,636 591,828 591,909 1,943,955 Total restricted 836,720 834,882 835,114 926,770 928,562 682,991 585,636 591,828 591,909 1,943,955Unrestricted¹ 1,453,874 1,685,818 1,889,840 4,919,239 5,592,490 1,949,538 3,292,824 4,362,698 5,216,208 4,120,165 Total business-type activities net position 6,229,478 $ 6,264,294 $ 6,273,257 $ 9,199,021 $ 10,571,618 $ 13,794,366 $ 14,843,414 $ 15,834,574 $ 17,013,692 $ 17,370,940 $ Primary Government
Net investment in capital assets 33,755,088 34,876,116 39,109,933 44,397,542 46,328,970 59,946,118 66,162,618 66,951,041 74,432,804 75,312,633 Restricted 18,139,974 21,831,596 23,543,435 28,041,973 38,624,491 34,904,110 43,826,799 48,740,078 48,545,599 54,625,207 Unrestricted 28,567,402 28,518,454 25,013,478 33,717,743 36,023,579 43,406,791 43,919,042 50,548,410 54,698,501 63,202,173 Total primary government net position 80,462,464 $ 85,226,166 $ 87,666,846 $ 106,157,258 $ 120,977,040 $ 138,257,019 $ 153,908,459 $ 166,239,529 $ 177,676,904 $ 193,140,013 $ ¹ Certain amounts have been reclassified to present historical information in conformance with current classification.

City of East Palo Alto, California
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
128
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Expenses
Governmental Activities:

General government 4,396,506 $ 4,055,087 $ 3,660,815 $ 3,857,915 $ 4,183,768 $ 4,550,835 $ 4,811,440 $ 5,309,119 $ 6,356,058 $ 5,779,679 $ Public safety 10,408,814 10,806,440 10,303,086 9,653,248 9,313,300 10,694,568 11,860,715 11,681,076 12,076,770 11,242,720 Public works 3,521,107 3,371,899 4,622,878 4,947,019 4,734,883 4,925,199 5,103,756 4,943,077 5,598,607 5,275,133Culture and recreation 513,923 775,115 786,238 1,181,861 1,183,150 1,712,237 1,805,560 1,654,667 1,349,016 1,822,711Community development 2,608,543 3,147,112 2,419,345 2,748,306 2,426,699 3,129,327 3,720,981 4,984,488 5,939,827 4,943,100 Interest on long-term debt 1,306 3,281 4,180 4,325 2,347 1,214 154 - - 6,561 Total governmental activities 21,450,199 22,158,934 21,796,542 22,392,674 21,844,147 25,013,380 27,302,606 28,572,427 31,320,278 29,069,904 Business-type activities
Water Service 340,916 402,914 357,769 342,263 378,893 320,163 423,315 637,581 687,250 2,789,343 Garbage collection 2,174,074 2,353,590 2,420,314 2,490,862 2,501,535 2,320,786 2,583,092 2,702,159 2,618,989 1,054,839 Total business-type activities 2,514,990 2,756,504 2,778,083 2,833,125 2,880,428 2,640,949 3,006,407 3,339,740 3,306,239 3,844,182 Total primary government expenses 23,965,189 24,915,438 24,574,625 25,225,799 24,724,575 27,654,329 30,309,013 31,912,167 34,626,517 32,914,086 Program Revenues
Governmental Activities:

Charges for Service:

General government 5,153 6,549 11,512 22,278 26,441 51,117 82,963 45,297 5,666 7,851 Public safety 242,704 283,271 392,781 574,595 480,048 595,725 430,611 353,229 246,218 248,561 Public works 114,107 337,426 129,437 221,994 298,451 258,277 521,338 251,126 232,121 129,159 Culture and recreation 11,429 - - - 4,731 5,956 4,762 14,361 3,049 11,080 Community Development 1,427,453 1,440,886 1,660,988 2,088,395 1,989,755 1,808,234 1,697,655 3,078,503 3,540,707 3,211,876 Operating Grants and Contributions 4,616,972 2,794,311 3,353,230 2,643,028 4,969,735 1,740,657 1,948,262 2,542,025 2,757,114 5,610,645 Capital Grants and Contributions 1,414,317 2,767,803 4,289,620 8,348,064 4,229,323 5,930,378 5,770,566 2,037,536 7,797,945 6,783,094 Total governmental activities program revenues 7,832,135 7,630,246 9,837,568 13,898,354 11,998,484 10,390,344 10,456,157 8,322,077 14,582,820 16,002,266 Business-type activities
Charges for Service:

Water Service 259,353 258,045 275,339 980,296 1,227,649 1,149,827 1,184,789 1,222,502 1,142,586 2,905,566 Garbage collection 2,465,513 2,523,718 2,498,723 2,482,434 2,461,388 2,433,093 2,636,619 2,762,229 2,733,951 1,256,458 Operating Grants and Contributions - - - -- - - - - 186,919 Capital Grants and Contributions - - - - - 1,963,050 - 31,480 622,565 291,112 Total business-type activities program revenues 2,724,866 2,781,763 2,774,062 3,462,730 3,689,037 5,545,970 3,821,408 4,016,211 4,499,102 4,640,055 Total primary government revenues 10,557,001 10,412,009 12,611,630 17,361,084 15,687,521 15,936,314 14,277,565 12,338,288 19,081,922 20,642,321 Net Revenue (Expenses):

Governmental Activities (13,618,064) (14,528,688) (11,958,974) (8,494,320) (9,845,663) (14,623,036) (16,846,449) (20,250,350) (16,737,458) (13,067,638)Business-type Activities 209,876 25,259 (4,021) 629,605 808,609 2,905,021 815,001 676,471 1,192,863 795,873Total Net Revenue (Expenses) (13,408,188) $ (14,503,429) $ (11,962,995) $ (7,864,715) $ (9,037,054) $ (11,718,015) $ (16,031,448) $ (19,573,879) $ (15,544,595) $ (12,271,765) $ Fiscal Year Ending June 30
City of East Palo Alto, California
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
129
(continued)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
General Revenues and Other Changes in Net Position
Governmental activities:

Taxes
Property Taxes 10,752,244 $ 9,411,575 $ 10,260,689 $ 11,428,331 $ 12,288,670 $ 14,642,402 $ 16,411,143 $ 16,099,035 $ 15,097,898 $ 15,097,898 $ Sales Taxes 3,022,310 3,113,705 3,798,237 4,364,562 4,078,803 5,923,229 5,793,668 5,171,001 5,422,953 5,422,953 Utility Users Tax 1,434,208 1,464,049 1,513,088 1,516,104 1,520,017 1,680,279 1,537,991 1,584,592 1,630,879 1,630,879Transient Occupancy Tax 2,127,859 2,452,951 2,803,542 2,809,127 2,906,241 3,089,942 2,990,217 1,962,256 200,886 200,886 Business License Tax¹ 531,325 576,084 668,138 602,245 616,653 1,428,860 1,452,963 1,585,841 1,223,696 1,223,696 Other Taxes¹ 1,595,384 1,614,030 1,741,988 1,621,994 1,824,599 1,254,845 86,410 1,796,955 1,833,719 1,833,719 Investment earnings 240,412 194,682 232,001 312,707 394,890 849,716 2,029,009 2,113,187 (9,692) (9,692) Miscellaneous 303,188 430,498 493,864 719,437 194,024 49,306 1,147,440 1,277,393 1,595,376 1,595,376 Transfers - - - - (531,049) (238,312) - - --
Extraordinary Items - - -3,246,461- - - - - -
Total Governmental activities 20,006,930 19,257,574 21,511,547 26,620,968 23,292,848 28,680,267 31,448,841 31,590,260 26,995,715 26,995,715 Business-type activities:

Investment earnings 13,652 9,557 12,984 34,159 32,939 79,415 234,047 314,689 (13,745) (13,745) Transfers - - - - 531,049 238,312 - - - -
Total Business-type activities 13,652 9,557 12,984 34,159 563,988 317,727 234,047 314,689 (13,745) (13,745) Total Primary Government 20,020,582 19,267,131 21,524,531 26,655,127 23,856,836 28,997,994 31,682,888 31,904,949 26,981,970 26,981,970 Change in Net Position
Governmental Activites 6,388,866 4,728,886 9,552,573 18,126,648 13,447,185 14,057,231 14,602,392 11,339,910 10,258,257 13,928,077Business-type Activities 223,528 34,816 8,963 663,764 1,372,597 3,222,748 1,049,048 991,160 1,179,118 782,128 Change in Net Position 6,612,394 $ 4,763,702 $ 9,561,536 $ 18,790,412 $ 14,819,782 $ 17,279,979 $ 15,651,440 $ 12,331,070 $ 11,437,375 $ 14,710,205 $ ¹ Certain amounts have been reclassified to present historical information in conformance with current classification descriptions.

City of East Palo Alto, California
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year Ending June 30
130
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
General Fund
Nonspendable 11,760,041 $ 11,776,028 $ 11,769,991 $ 11,932,475 $ 12,066,847 $ 11,743,001 $ 10,938,871 $ 8,826,647 $ 6,554,760 $ 5,282,165 $ Restricted - - - - - - - 20,065 23,784 27,297
Committed - - - - - - - 980,355 980,355 10,097,589
Assigned 2,187,004 77,915 187,141 383,658 1,188,899 1,886,415 1,839,551 2,183,599 4,128,219 6,658,000 Unassigned 9,114,594 12,305,114 13,221,866 16,293,653 17,235,337 24,191,919 26,426,148 30,996,166 31,116,240 26,407,109 Total General Fund 23,061,639 24,159,057 25,178,998 28,609,786 30,491,083 37,821,335 39,204,570 43,006,832 42,803,358 48,472,160 All Other Governmental Funds
Restricted 19,093,787 21,304,289 22,684,977 26,537,401 34,122,255 34,904,110 43,826,799 47,339,670 45,250,665 45,389,536 Committed - - - - - - - - 5,500,000 9,000,000
Nonspendable 57,051 - - - - - - - - -
Assigned 1,449,121 703,226 1,913,459 4,803,773 7,289,475 6,772,150 7,874,189 11,936,316 10,908,746 5,600,829 Unassigned (242,822) (340,922) (233,356) (197,068) - - - - (61,923) (111,371) Total all other governmental funds 20,357,137 21,666,593 24,365,080 31,144,106 41,411,730 41,676,260 51,700,988 59,275,986 61,597,488 59,878,994Total Governmental Funds 43,418,776 $ 45,825,650 $ 49,544,078 $ 59,753,892 $ 71,902,813 $ 79,497,595 $ 90,905,558 $ 102,282,818 $ 104,400,846 $ 108,351,154 $ Fiscal Year Ended June 30
Fund Balances-Governmental Funds
City of East Palo Alto, California
Last Ten Fiscal Years
(modified accrual basis of accounting)
131
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Revenues
Taxes 18,545,522 $ 18,700,903 $ 20,271,896 $ 22,015,184 $ 22,570,573 $ 26,465,002 $ 28,911,799 $ 30,593,515 $ 27,551,942 $ 31,488,448 $ Licenses, fees, and permits 1,637,444 927,194 932,302 8,225,539 2,276,892 2,945,418 2,816,522 1,425,267 2,665,772 2,344,950 Charges for services 1,345,024 2,110,075 2,638,045 2,778,293 2,090,795 1,942,517 2,027,506 2,901,680 1,487,373 1,340,766Fines and fortfeitures 225,680 261,440 368,621 532,143 442,911 745,766 421,661 401,717 242,042 263,437 Use of money and property 189,795 207,461 245,602 474,624 410,003 878,892 2,082,517 2,730,055 207,416 (2,323,287) Grants and intergovernmental 4,091,814 3,181,804 4,941,401 3,589,152 8,724,241 5,177,790 7,459,093 1,285,504 5,659,603 4,897,399 Miscellaneous 372,686 607,906 609,570 1,212,731 205,096 119,862 385,940 260,257 1,915,735 1,700,286 Total revenues 26,407,965 25,996,783 30,007,437 38,827,666 36,720,511 38,275,247 44,105,038 39,597,995 39,729,883 39,711,999 CurrentExpenditures
General Government 4,361,346 4,050,248 3,804,928 4,037,015 4,270,123 4,286,525 4,696,638 5,126,419 6,144,761 6,332,990Public Safety 10,089,238 10,673,461 10,237,181 10,200,118 10,159,814 10,165,174 11,240,702 10,920,002 11,629,425 11,767,310Public Works 3,338,504 2,421,820 2,698,224 3,106,375 3,560,158 4,251,301 4,150,097 3,844,254 4,134,384 4,097,153 Culture and recreation 509,561 774,662 789,369 1,036,572 959,888 1,243,981 1,203,631 1,001,494 700,691 1,219,765 Community Development 2,486,567 3,969,143 2,263,113 2,257,570 2,397,396 2,984,606 3,589,412 4,823,525 5,758,006 5,146,245Capital Outlay 2,124,427 1,668,320 6,877,626 2,524,109 3,290,362 7,716,265 7,800,356 2,505,041 9,244,588 7,067,172Debt Service (a) Principal repayment 9,718 29,914 45,254 61,347 52,302 31,399 16,085 --- Interest & fiscal charges 1,306 3,281 4,180 4,325 2,347 1,214 154 - - 6,561 Total expenditures 22,920,667 23,590,849 26,719,875 23,227,431 24,692,390 30,680,465 32,697,075 28,220,735 37,611,855 35,637,196 Excess of revenues
over (under) expenditures 3,487,298 2,405,934 3,287,562 15,600,235 12,028,121 7,594,782 11,407,963 11,377,260 2,118,028 4,074,803 Other financing sources (uses)
Transfers in 795,353 1,225,985 4,024,730 1,236,787 3,876,948 2,121,910 8,637,770 8,266,603 3,506,089 2,381,000Transfers (out) (795,353) (1,225,985) (4,024,730) (3,498,787) (3,811,148) (2,121,910) (8,637,770) (8,266,603) (3,506,089) (2,381,000)Capital leases 124,353 - 121,666 ------- Total other financing sources(uses) 124,353 - 121,666 (2,262,000) 65,800 -----Special item and extraordinary item ---------- Net change in fund balances 3,611,651 2,405,934 3,409,228 13,338,235 12,093,921 7,594,782 11,407,963 11,377,260 2,118,028 4,074,803 Debt service as a percentage of noncapital
expenditures 0.05% 0.15% 0.25% 0.32% 0.26% 0.14% 0.07% 0.00% 0.00% 0.02% exDebt service as a percentage of total expenditures
penditures 0.05% 0.14% 0.19% 0.28% 0.22% 0.11% 0.05% 0.00% 0.00% 0.02% (a) During FY 2011-12, debt service activity related to liabilities of the Former Agency were transferred and are reported in a Successor Agency Trust Fund due to State dissolution of the Former Agency effective 01/10/2012.

City of East Palo Alto, California
Changes in Fund Balances-Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
132
Secured Total Unsecured Factor of
Fiscal Gateway 101 University Secured Gateway 101 University Unsecured Total Taxable Estimated Taxable Assessed Year City Corridor Circle Ravenswood Property City Corridor Circle Ravenswood Property Assessed (1) Actual Value (2) Value (3)2013 1,104,501,164 317,394,502 369,327,260 79,254,165 1,870,477,091 6,898,342 19,933,559 28,078,757 3,282,000 58,192,658 1,928,669,749 $1,928,669,749 1.000000 2014 1,173,993,111 330,429,999 376,804,050 81,596,056 1,962,823,216 6,125,013 18,274,858 22,893,647 3,370,914 50,664,432 2,013,487,648 $2,013,487,648 1.000000 2015 1,272,051,647 341,894,816 378,514,734 83,231,935 2,075,693,132 6,198,106 18,472,810 25,681,636 4,601,336 54,953,888 2,130,647,020 $3,549,905,090 1.000000 2016 1,387,303,962 366,869,951 386,077,451 89,606,753 2,229,858,117 5,895,578 21,087,072 32,434,814 5,307,991 64,725,455 2,294,583,572 $4,990,019,421 1.000000 2017 1,496,819,954 383,867,913 391,965,125 128,424,119 2,401,077,111 5,357,954 21,336,520 31,608,639 6,300,157 64,603,270 2,465,680,381 $4,932,990,577 1.000000 2018 1,860,043,257 493,901,959 399,943,872 139,127,273 2,893,016,361 5,568,741 21,568,793 28,727,193 3,838,839 59,703,566 2,952,719,927 $7,145,582,223 1.000000 2019 1,987,717,844 589,570,833 491,664,014 149,310,365 3,218,263,056 16,763,127 24,130,526 26,264,047 3,792,066 70,949,766 3,289,212,822 $7,232,431,631 1.000000 2020 2,141,077,211 610,407,047 501,497,289 167,894,435 3,420,875,982 16,924,357 24,269,647 25,817,541 3,956,073 70,967,618 3,491,843,600 $6,049,029,684 1.0000002021 2,256,060,762 626,312,724 511,628,461 247,209,411 3,641,211,358 5,172,050 36,754,744 23,863,678 4,876,777 70,667,249 3,711,878,607 $7,490,106,321 1.0000002022 2,334,992,280 647,462,524 520,340,698 261,727,649 3,764,523,151 17,480,486 36,132,686 17,381,330 4,386,585 75,381,087 3,839,904,238 $7,074,714,408 1.000000

3.449%
Source: 2013-14 and Prior, Prior
Source: San Mateo County Assessors, MuniServices, LLC / an Avenu Insights & Analytics Company published CAFR
(1) Total Assessed Taxable Value is net of aNotes:
ll exemptions, including homeowners' exemption.
(2) Estimated Actual Value is derived from a series of calculations comparing median assessed values from 1940 to current median sale prices. (3) California cities do not set their own direct tax rate. The State constitution establishes the rate at 1% and allocates Based on these calculations a factor was extrapolated and applied to current assessed values. a portion of that
amount to all the taxing entities within a tax rate area.

Assessed Value of Taxable Property
City of East Palo Alto, California
Last Ten Fiscal Years
$0
$500
$1,000$1,500$2,000$2,500$3,000$3,500$4,000$4,500
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Unsecured Property Secured Property
133
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Basic County-wide Rate 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 Override Assessments
Ravenswood School District 0.0417 0.0415 0.0360 0.0304 0.0376 0.0352 0.0616 0.0522 0.0341 0.0369 Sequoia Union High School District 0.0356 0.0313 0.0433 0.0434 0.0391 0.0383 0.0365 0.0340 0.0315 0.0290 San Mateo Community College District 0.0194 0.0194 0.0190 0.0250 0.0247 0.0235 0.0175 0.0266 0.0213 0.0227 Midpeninsula Open Space District 0.0000 0.0000 0.0000 0.0008 0.0006 0.0009 0.0018 0.0016 0.0015 0.0015TOTAL 0.0967 0.0922 0.0983 0.0996 0.1020 0.0979 0.1174 0.1144 0.0884 0.0901 Total Tax Rate 1.0967 1.0922 1.0983 1.0996 1.1020 1.0979 1.1174 1.1144 1.0884 1.0901 Tax Rate as represented by TRA 021-000Source: 2013-14 and prior, previously published CAFR Report Source: County Auditor data, MuniServices, LLC / Avenu Insights & Analytics City of East Palo Alto, California
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
134
Taxpayer Taxable Value ($) Percent of Total City Taxable Value (%) Taxable Value ($) Percent of Total City Taxable Value (%) Woodland Park LLC 459,320,937 $ 11.96%Wells REIT II-University Circle 261,467,128 6.81% 318,783,454 $ 16.66% University Plaza EPA LLC 204,977,263 5.34%
SHR Palo Alto LLC 145,819,486 3.80% 49,821,900 2.60%
Columbia REIT University Circle 108,545,878 2.83%
Ikea Home Furnishings 100,051,241 2.61% 81,969,777 4.28% Four Corners EPA Property Owner 42,435,120 1.11%HPI ASVRF 1990 Bay LLC 36,610,690 0.95%East Palo Alto Youth Arts & Mu 35,827,758 0.93% Sycamore Real Estate Investment 33,261,544 0.87%EQR-Woodland Park L P - 156,862,519 8.20% Gateway 101 LLC - 25,323,547 1.32%
HD Devel Of Maryland Inc - 19,178,597 1.00%
Nairobi Housing Inc & Housing - 13,053,100 0.68%
Avery H Smith & Co - 12,076,800 0.63%
East Palo Alto At 101 LLC - 11,322,000 0.59%
DKB Homes LLC - 9,472,933 0.50%
Principal Taxpayers 1,428,317,045 $ 37.20% 697,864,627 $ 36.47% Total Taxable Value 3,839,904,238 $ 100.00% 1,913,475,009 $ 100.00% Source: County Assessor data, MuniServices, LLC / Avenu Insights & Analytics 2020-21 2011-12
City of East Palo Alto, California
Principal Property Taxpayers
Current Fiscal Year and Nine Years Ago
135
for Fiscal Year (1) Collections (2) of Levy Collections (3) Collections of Levy Total Tax Levied Current Tax Percentage Delinquent Tax Total Tax Percentage 2013 4,661,146 4,403,745 94.5
% 4,403,745 94.5
%
2014 4,915,330 4,668,248 95.0% 4,668,248 95.0%2015 5,326,772 5,197,898 97.5 % 5,197,898 97.5
%
2016 5,751,125 5,515,510 95.9
% 5,515,510 95.9
%
2017 6,158,288 5,864,760 95.2
% 5,864,760 95.2
%
2018 7,498,588 7,137,824 95.2
% 7,137,824 95.2
%
2019 8,006,496 7,755,634 96.9% 7,755,634 96.9%2020 8,571,769 8,357,638 97.5% 8,357,638 97.5%2021 8,941,750 8,660,036 96.8% 8,660,036 96.8%2022 9,304,588 9,847,946 105.8% 9,847,946 105.8% (1) Prior to the dissolution of the former Redevelopment Agency effective January 2012, the tablNotes:Source: San Mateo County Controller, City General Ledger e
Redevelopment Agency. Beginning in FY 2012-13, the amounts levied are related to the Citdata includes secured and unsecured tax levies for the City, City districts, and the former y
and City districts only.
(2) Beginning in 1993, Current Tax Collections are reduced by a mandatory tax allocation imposed by the State of California (Educational Revenue Augmentation Fund (ERAF)). During FY 2011-12,the total $7.76M levied for the former Redevelopment Agency.as a result of the dissolution of the former Agency, the City collected approximately one-half of (3) The County of San Mateo collects and allocates property taxes under the Teeter Plan whereby therefore, the City has no direct delinquent tax collections.the City receives property tax revenues based on the total amount assessed, but not collected; Property Tax Levies and Collections
City of East Palo Alto, California
Last Ten Fiscal Years
June 30
Fiscal Year Ended
Fiscal Year of the Levy
Collected Within the
Total Collections To Date
136
Property Tax Levies - Includes Unitary Revenue

LEVY LETTER GL
Drainage Lighting Gate101 UC Ravenswood CITY TOTAL TOTAL Secured 50,231 261,603 4,005,949 4,317,783
Unsecured 2,815 14,647 228,084 245,546
HOPTR 384 2,858 41,679 44,921
Est. Unitary Rev 260 2,495 50,141 52,896
Shift to ERAF -
12-13 53,689 281,603 - - - 4,325,853 4,661,146 -
Secured 55,125 273,739 4,216,038 4,544,902
Unsecured 3,092 16,464 254,040 273,595
HOPTR 386 2,755 40,344 43,486
Est. Unitary Rev 262 2,516 50,568 53,346
Shift to ERAF -
13-14 58,865 295,474 - - - 4,560,990 4,915,330 -
Secured 61,830 295,192 4,599,664 4,956,686 4,382,762.5
Unsecured 3,281 15,803 249,687 268,771 227,600.0
HOPTR 399 2,715 40,116 43,229 40,377.3
Est. Unitary Rev 295 2,724 55,068 58,087 58,595.1
ERAF Received - 488,562.9
Less PY Adjustment -
14-15 65,804 316,433 - - - 4,944,535 5,326,772 5,197,898 Secured 70,227 318,305 5,000,171 5,388,703 4,749,322.7
Unsecured 3,521 14,584 237,071 255,176 203,464.9
HOPTR 411 2,672 39,640 42,723 39,853.8
Est. Unitary Rev 368 2,963 61,192 64,523 64,905.3
ERAF Received - 457,963.4
Less PY Adjustment -
15-16 74,527 338,524 - - - 5,338,074 5,751,125 5,515,510 Secured 76,939 339,259 5,359,720 5,775,918 5,080,507.8
Unsecured 3,802 15,609 254,046 273,457 212,858.3
HOPTR 412 2,621 39,015 42,048 38,965.3
Est. Unitary Rev 389 3,059 63,417 66,865 67,728.5
ERAF Received - 464,700.3
Less PY Adjustment --
16-17 81,542 360,548 - - - 5,716,198 6,158,288 5,864,760 Secured 100,322 402,583 6,475,852 6,978,757 6,111,573.2 Unsecured 5,443 23,415 374,849 403,707 365,206.9
HOPTR 489 2,824 42,590 45,903 46,369.8
Est. Unitary Rev 425 3,190 66,606 70,221 42,348.7
ERAF Received - 572,325.8
Less PY Adjustment --
17-18 106,679 432,012 - - - 6,959,897 7,498,588 7,137,824 Secured 108,050 426,735 6,901,505 7,436,290 6,481,451.2 Unsecured 5,832 26,320 417,454 449,606 360,604.6
HOPTR 490 2,883 43,389 46,762 43,336.7
Est. Unitary Rev 466 3,329 70,044 73,839 74,721.2
ERAF Received - 795,519.9
Less PY Adjustment --
18-19 114,837 459,267 - - - 7,432,392 8,006,496 7,755,634 Secured 119,295 456,941 7,417,192 7,993,427 7,300,546.9 Unsecured 6,141 26,646 426,297 459,084 384,569.3
HOPTR 496 2,809 42,549 45,853 42,256.5
Est. Unitary Rev 463 3,310 69,632 73,404 71,832.4
ERAF Received - 838,740.0
Less PY Adjustment (280,307.0)
19-20 126,394 489,705 - - - 7,955,670 8,571,769 8,357,638.1 Secured 127,562 485,311 7,848,223 8,461,095 7,333,360.6 Unsecured 5,538 21,602 352,886 380,025 324,397.3
HOPTR 485 2,768 41,767 45,020 42,055.3
Est. Unitary Rev 485 3,405 71,862 75,752 77,570.2
ERAF Received - 877,756.8
Less PY Adjustment (20,143) 4,896.0
20-21 134,069 513,086 - - - 8,294,594 8,941,750 8,660,036.2 Secured 134,393 505,409 8,192,070 8,831,872 7,678,008.1 Unsecured 5,030 19,586 320,064 344,680 377,393.1
HOPTR 482 2,724 41,186 44,393 41,406.4
Est. Unitary Rev 592 3,689 79,362 83,643 84,399.3
ERAF Received - 1,666,738.9
Less PY Adjustment -
21-22 140,497 531,409 - - - 8,632,682 9,304,588 9,847,945.6 Includes Unitary Revenue
137
Business-Type
Activities
Year
Fiscal
End
Lease Debt
Capitalized
(1)
Tax Allocation
Redevelopment
Bonds (2) Bonds
Revenue
(2) Bonds Held
Less: Restricted
(3) Notes Payable Government
Total Primary
Debt
Percentage of
Personal
Income (5)
Outstanding
Capita
Debt Per
(5)
Outstanding
Value
Assessed
Taxable
Debt to
2012 - - - - - - 0.00% - #REF!2013 114,635 $ - - - - 114,635 0.02% 3.96 0.01% 2014 84,721 - - - - 84,721 0.01% 2.91 0.00%
2015 161,133 - - - - 161,133 0.03% 5.28 0.01%
2012017 47,484 - - - - 47,484 0.01% 1.54 0.00%2016 99,786 - - - - 99,786 0.02% 3.29 0.00% 8 16,085 - - - 700,000 $ 716,085 0.10% 23.48 0.02%
2019 - - - - 700,000 700,000 0.09% 22.73 0.02%2021 - - - - 653,334 653,334 0.08% 21.52020 - - - - 676,667 676,667 0.08% 22.30 0.02% 3 0.02%
2022 - - - - 630,001 630,001 0.07% 21.75 0.02%
(3) Bond proceeds invested and, in October of 2010, used as part of a purchase in lieu of redemption structure. In 2009 the (2) Tax Allocation Bonds and Revenue Bonds related to financing Redevelopment Agency projects and activities.(1) Capitalized Lease Debt due to Police Vehicles acquired in 2013 and 2015.Notes:

Public Finance Authority proceeds were used to purchase, and hold as investment, the 1999 Tax Allocation Bonds. (4) During FY 2011-12, the former Redevelopment Agency was dissolved and all debts transferred to a Successor Trust.(5) Population Projections prepared by State of California Department of Finance, Personal Income Data by MuniServcies LLC Governmental Activities
Ratios of Outstanding Debt by Type
City of East Palo Alto, California
138
2021-22 Assessed Valuation $ 3,853,202,838
City's Share
Total Debt Percentage of Debt
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT 6/30/2022 Applicable (1) 6/30/2022 City of East Palo Alto $ - 100.000% $ -
Total Direct Debt $ - $ -
San Mateo Community College District $ 733,897,184 1.447% $ 10,619,492 Sequoia Union High School District 475,140,000 3.325% 15,798,405 Ravenswood School District 86,230,000 39.631% 34,173,811 Midpeninsula Regional Open Space District 84,575,000 1.090% 921,868 California Statewide Communities Development Authority 1915 Act Bonds 2,447,685 100.000% 2,447,685 Total Overlapping Debt 1,382,289,869 63,961,261
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $ 1,382,289,869 $ 63,961,261

OVERLAPPING GENERAL FUND DEBT
San Mateo County General Fund Obligations $ 1.447 612,605,687 % $ 8,864,404 San Mateo County Board of Education Certificates of Participation 6,490,000 1.447% $ 93,910 Menlo Park Fire Protection District Certificates of Participation 9,275,000 8.128% $ 753,872 Midpeninsula Regional Open Space District General Fund Obligations 99,705,600 1.090% $ 1,086,791 San Mateo County Mosquito and Vector Control District General Fund Obligations 3,825,000 1.447% $ 55,348 TOTAL OVERLAPPING GENERAL FUND DEBT $ 731,901,287 $ 10,854,325 OVERLAPPING TAX INCREMENT DEBT (Successor Agency)
2015A Refunding Tax Allocation Bonds $ 100.000 14,095,000 % $ 14,095,000 COMBINED TOTAL DEBT $ 88,910,586 (2)
Ratios to 2021-22 Assessed Valuation:

Direct Debt 0.000%
Direct and Overlapping Tax and Assessment Debt 1.660%
Direct and Overlapping Tax, Assessment and Increment Debt 2.030% Combined Total Debt 2.310%
Ratios to Redevelopment Successor Agency Incremental Valuation ($1,427,707,876):

Overlapping Tax Increment Debt 0.990%
Source: Avenu Insights & Analytics, California Municipal Statistics, Inc.

Notes:
(1) The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value.
(2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and non-bonded capital lease obligations.

City of East Palo Alto, California
Computation of Direct and Overlapping Debt
June 30, 2022
139
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Taxable Assessed Valuation 1,928,669,749 $ 2,013,487,648 $ 2,130,647,020 $ 2,294,583,572 2,465,680,381 $ Conversion Percentage 25% 25% 25% 25% 25%
Adjusted Assessed Valuation 482,167,437 503,371,912 532,661,755 573,645,893 616,420,095 Debt service limit percentage 15% 15% 15% 15% 15%
Debt Limit 72,325,116 75,505,787 79,899,263 86,046,884 92,463,014 Debt Applicable to Limit:

Less: Outstanding General Obligations - - -- -
Legal Debt Margin 72,325,116 $ 75,505,787 $ 79,899,263 $ 86,046,884 $ 92,463,014 $ 2017-2018 2018-2019 2019-2020 2020-21 2021-22
Taxable Assessed Valuation 2,952,719,927 $ 3,289,212,822 $ 3,491,843,600 $ 3,711,878,607 $ 3,839,904,238 $ Conversion Percentage 25% 25% 25% 25% 25% Adjusted Assessed Valuation 738,179,982 822,303,206 872,960,900 927,969,652 959,976,060 Debt service limit percentage 15% 15% 15% 15% 15%
Debt Limit 110,726,997 123,345,481 130,944,135 139,195,448 143,996,409 Debt Applicable to Limit:

Less: Outstanding General Obligations - - -- -
Legal Debt Margin 110,726,997 $ 123,345,481 $ 130,944,135 $ 139,195,448 $ 143,996,409 $ 15% of 25% is the equivalent of 3.75% of Total Taxable Valuation. Amounts are calculated accordingly.the change in basing assessed value to full market value when it was previously 25% of market value.California Government Code, Section 43605 sets the debt limit at 15%. The Code section was enacted prior toNote:Source: San Mateo County Assessors, MuniServices, LLC / an Avenu Insights & Analytics Company City of East Palo Alto, California
Computation of Legal Bonded Debt Margin
Last Ten Fiscal Years
140
Fiscal Increment Payments to
Year ( Gross RPTTF) Principal Interest Total Coverage PFA Principal Interest Total Coverage 2013 7,376,779 550,000 1,394,064 1,944,064 3.8 1,416,938 620,000 796,938 1,416,938 1.02014 7,601,754 585,000 1,360,764 1,945,764 3.9 1,415,438 645,000 770,438 1,415,438 1.02015 7,635,260 620,000 1,325,004 1,945,004 3.9 1,415,138 670,000 745,138 1,415,138 1.0 2016 8,369,650 655,000 1,037,717 1,692,717 4.9 15,242,245 ³ 14,880,000 362,245 15,242,245 1.0 2017 9,214,713 795,000 732,249 1,527,249 6.0 - - - - -
2018 10,573,336 865,000 703,178 1,568,178 6.7 - - - - - 2019 ⁴ 14,617,765 885,000 686,850 1,571,850 9.3 - - - - - 2020 13,545,644 900,000 659,550 1,559,550 8.7 - - - - - 2021 14,396,863 935,000 618,175 1,553,175 9.3 - - - --
2022 14,414,377 975,000 570,425 1,545,425 9.3 - - - --
Notes:
¹ Proceeds from the 2005 East Palo Alto Public Financing Authority revenue bonds were used to purchase the outstanding 1999 Tax Allocation bonds (TABs) on October 01, 2009. The 1999 TABS were held with a fiscalThe 2015 Refunding Bonds were issued to defeasagent and recorded as an asset in the Public Financing Authority (PFA); a blended component unit. e the 1999, 2003A, and 2003B TABS and subsequently
redeem the 2005 PFA Revenue Bonds.
²
obligations of the former Redevelopment Agency. a Redevelopment Property Tax Trust Fund (RPTTF) and are only available to pay approved, enforceableEffective January 10, 2012, tax increments of the former Redevelopment Agency are deposited into a ³ Payments from 1999 TABS includes proceeds from 2015 Refunding Bonds paid to PFA.  Total increment includes approximately $2.3 million in supplemental tax payments for prior activity.

Public Financing Authority (PFA) Revenue Bonds¹ RDA Tax Allocation (Refunding) Bonds Debt Service Debt Service
City of East Palo Alto, California
Bonded Debt Pledged Revenue Coverage
Successor Agency (Including Former Redevelopment and Authority Bonds) Last Ten Fiscal Years
141
Fiscal Year Population (1)
City
Unemployment
Rate (2)
City Per Capita
Personal Income (3)
County
Unemployment
Rate (2)
County Per Capita
Personal Income (3) Enrollment
Public School
(4)
2012-13 28,675 13.20% 19,978 5.50% 75,674 4,0772013-14 28,934 11.20% 20,302 4.60% 76,901 4,0302014-15 29,137 5.10% 20,438 3.20% 77,414 4,2162015-16 30,545 5.40% 20,785 3.40% 78,728 4,0582016-17 30,340 4.80% 21,785 3.00% 82,517 3,8532017-18 30,917 2.70% 23,171 2.20% 87,767 3,6322018-19 30,499 1.80% 24,440 1.70% 92,576 3,4362019-20 30,794 11.90% 25,419 11.10% 96,285 3,269 2020-21 30,350 8.97% 27,437 6.84% 103,929 2,993
2021-22 28,963 2.30% 31,515 1.70% 119,375 2,793
Source: 2013-14 and prior, previousl
Source: San Mateo County Assessors, MuniServices, LLC / an Avenu Insights & Analytics Company y published CAFR Report
The California Department of Finance demographics estimates now incorporate 2010 Census counts as the benchmark. (4)(3)(2)(1)Notes:

Student Enrollment reflects the total number of students enrolled in the Ravenswood Elementary School.Income Data is provided by the U.S. Census Bureau City of East Palo Alto, California
Last Ten Fiscal Years
Demographic and Economic Statistics
Unemployment Data provided by Employment Development Department Bureau of Labor Statistics.Population Projections are provided by the California Department of Finance Projections. 26,000 27,000 28,000 29,000 30,000 31,000 32,000
City Population
0%5%
10%15%20%25%30%
142
Business Name Employees Number of Percent of Total Employment Employees Number of Percent of Total Employment Amazon Web Services 1,300 8.78%Ravenswood City School District 345 2.33% 538 3.90% Ravenswood Family Health Center* 344 2.32% 163 1.18%
Ikea* 262 1.77% 343 2.49%
Four Seasons Hotel - Silicon Valley 188 1.27% 285 2.07% Home Depot 184 1.24% 175 1.27%
DLA Piper LLP 165 1.11%
Target 120 0.81%
City of East Palo Alto* 118 0.80% 102 0.74%
Eastside College Preparatory School 64 0.43%US Post Office 150 1.09% NTT i3 120 0.87%
Nordstrom Rack 77 0.56%
Ropes and Gray Law Firm 63 0.46%
Total Top Employers 3,090 20.88% 2,016 14.61%
Total City Employment (1) 14,800 13,800
Source: 2013-14 count is from prior published ACF
Source: MuniServices, LLC / Avenu Insights & Analytics
R
Results based on direct correspondence with city’s local businesses.

Note: Amazon Web Services has not responded with th(1) Total City Labor Force provided by EDD Labor Force Data. *Includes full and part time. e employee headcount. Prior year number applied.
2021-22 2013-14
City of East Palo Alto, California
Principal Employers
Last Fiscal Year and Seven Years ago
143
Function 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-20 2020-21 2021-22 General Government 24.6 27.6 25.1 21.0 23.0 23.0 23.0 24.0 24.0 21.0 Public Safety 47.5 47.5 44.0 45.5 45.5 46.0 46.3 47.2 48.2 48.2 Officers 38.0Police

38.0 36.0 36.0 36.0 36.5 37.3 36.5 37.5 37.5
Civilians 9.5 9.5 8.0 9.5 9.5 9.5 9.0 10.7 10.7 10.7
Public Works¹ - - - 19.0 19.0 19.0 19.0 19.0 20.3 21.5
Culture & Recreation² - - - 4.4 4.4 4.4 4.2 4.2 3.7 8.2 Community Development 32.5 34.0 36.0 15.0 17.0 19.9 20.5 20.5 17.5 19.0 Administration 5.5 7.0 8.0 4.0 4.0 5.9 6.5 6.5 3.5 4.0
Economic Development/Redevelopment Agency 5.0 2.0 - - - - - - - - Planning Division 3.0 4.0 3.0 3.0 4.0 4.0 4.0 4.0 4.0 4.0 Building Services Division 3.0 4.0 5.0 6.0 7.0 7.0 7.0 7.0 7.0 7.0 Housing Division ( includes Rent Stabilization) - - 2.0 2.0 2.0 3.0 3.0 3.0 3.0 4.0 Engineering Services (To Public Works FY2015-16) 5.0 6.0 6.0 - - - - - - - Maintenance Division (To Public Works FY2015-16) 11.0 11.0 12.0 - - - - - - - Administration Division - - - 2.0 2.0 2.0 2.0 2.0 4.5 4.5 Engineering Services Division - - - 5.0 5.0 5.0 5.0 5.0 3.8 5.0 Maintenance Division - - - 12.0 12.0 12.0 12.0 12.0 12.0 12.0 Administration - - - 1.8 1.0 1.0 1.0 1.0 1.0 3.0
Recreation - - - 1.0 1.0 1.0 1.0 1.0 0.9 2.9
Senior Services - - - 1.6 2.4 2.4 2.2 2.2 1.8 2.3
Total 104.6 109.1 105.1 104.9 108.9 112.3 112.9 114.8 113.6 117.8 ¹
Source: City of East Palo Alto Adopted Budget
Public Works transferred to Community Development during Great Recession. ² Culture and Recreation transferred to General Government during Great Recession.

City of East Palo Alto, California
Number of Positions - City Government by Function
Last Ten Fiscal Years
144
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-20212 Function
Public Safety
Calls for Service 28,443 29,123 28,253 31,312 30,745 28,087 29,375 26,344 24,969 20,855 Number of serious crimes ¹ 572 510 387 174 116 319 164 129 172 359 Number of burglaries 285 213 180 93 97 78 82 64 92 80
Number of assaults 460 436 306 284 239 238 276 323 292 284Number of auto thefts reported 134 174 132 393 86 101 192 110 212 158Number of homicides 8464 1 1 3 2 7 6 Number of robberies 87 60 65 77 48 69 57 49 65 55
Number of physical arrests 635 640 965 1,462 1,433 984 904 602 481 465 Public Works
Streets
Street Resurfacing (lane miles) - 2.5 0.8 - - - - 2.2 2.5 6.3 Potholes repaired 29 16 61 94 98 159 152 159 89 75
Engineering
Encroachment permits 41 49 57 109 67 - 44 101 150 87
Culture & recreation
Facility Rentals 35 74 24 41 67 58 55 101 24 106
Senior Lunches 6,842 5,784 3,471 6,662 9,112 6,509 3,094 5,742 8,548 10,155 Senior Transportation 2,743 2,183 3,012 3,020 2,996 2,606 2,349 2,041 - 7,854 Community Event participants 5,200 4,900 3,300 2,600 3,762 3,600 3,820 426 - 1,700 Fit Zone/Clean Zone Participants 10,074 5,436 6,300 1,116 2,655 194 500 130 - - Community Development
Building Permits
Residential - Count 408 324 297 391 590 506 442 397 397 352Commercial Count 36 126 49 43 60 29 31 31 44 34 Transportation 2
Shuttle Passengers
Caltrain/Commuter Shuttle 72,878 76,879 85,259 28,901 7,978 - - - - - Shopper Shuttle (now Redwood City #4) 4,197 4,076 - - - - - - - - Youth Shuttle (now MidTown #3) 7,185 4,539 - - - - - - - - Weekend Shuttle 12,865 23,582 - - - - - - - -
Water Service³
Hydrant Breaks 9 9 8 12 3 4 7 15 - 10
Water main breaks 21 518 19 7 313161014
Average daily consumption per family (in gallons) 385.1 238.7 201.0 200.0 217.0 222.7 258.0 226.0 229.0 258.0 Notes:
¹ Crimes against a person (homicide, rape, robbery, assault) ² Services reduced in FY2014-15 and all routes eliminated September 2016.³ customers comprising approximately 90% of all water customers in East Palo Alto.Data obtained from American Water/Veolia Companies serving City water Source: City Departments
Operating Indicators by FunctionCity of East Palo Alto, California Last Ten Fiscal Years
145
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-20 2020-21 2021-22 General GovernmentFUNCTION
Community Development - HousinPublic Works/Community Development 1 1 1 1 1 1 1 1 1 1 g 1111111111
Highways & Streets
Streets (miles) 38 38 38 38 38 38 38 38 38 38
Streetlights 827 827 846 846 846 846 846 846 846 846
Traffic Signals 14 14 14 14 14 14 14 14 14 14
Culture & recreation
Parks (number of parks) 6 6 6 6 6 6 6 6 6 6
Parks acreage (acres) 25 25 25 25 25 25 25 25 25 25
Senior Center 1 1 1 1 1 1 1 1 1 1
Cooley Landing Learning Center - - - - 1 1 1 1 1 1
Water Service¹
Water pipelines (miles) 39 39 39 39 39 39 39 39 39 40
Fire hydrants 283 283 283 290 330 330 330 330 330 272
Maximum daily capacity 2.1 2.0 2.0 2.0 2.0 3.0 3.0 3.0 3.0 1.5 (millions of gallons per day)
¹Notes:
customers comprising approximately 90% of Data obtained from American Water/Veolia Companies serving City water allwater customers in East Palo Alto.

Capital Asset Statistics by Function
City of East Palo Alto, California
Last Ten Fiscal Years
146