TO: City Council DATE: March 23, 2026 DEPARTMENT: Finance Department
PREPARED BY: Isaac Whippy, City Manager
PRESENTER: Isaac Whippy, City Manager
AGENDA TITLE: RECEIVE PRESENTATION ON THE ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR) FOR THE YEAR ENDED JUNE 30, 2025, FOR THE CITY OF FORT BRAGG AND CONSIDER ACCEPTING THE ACFR AS PRESENTED
RECOMMENDATION
Adopt a motion accepting the Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2025.
BACKGROUND
The Annual Comprehensive Financial Report (ACFR) is a comprehensive presentation of the City of Fort Bragg’s financial condition and results of operations for the fiscal year ended June 30, 2025. The report has been prepared in accordance with Generally Accepted Accounting Principles (GAAP) and in compliance with standards established by the Governmental Accounting Standards Board (GASB).
The ACFR includes:
Introductory Section (including the Transmittal Letter) Financial Section (including Management’s Discussion and Analysis, Basic Financial Statements, and Notes) Statistical Section (providing historical and contextual financial data) The City is required to prepare annual audited financial statements. The ACFR serves as an important transparency and accountability tool for the City Council, residents, investors, and regulatory agencies
DISCUSSION AND ANALYSIS
Audit Results
The City’s independent auditor, JJACPA, Inc., conducted the audit in accordance with generally accepted auditing standards and Government Auditing Standards.
The auditors issued an unmodified (“clean”) opinion, indicating that the financial statements are fairly presented in all material respects and in conformity with GAAP.
Financial Highlights
Key financial outcomes for Fiscal Year 2024/25 include:
Total net position increased by $14.33 million, reaching $124.19 million Governmental activities net position increased by $949,884 Business-type activities net position increased by $13.38 million Total governmental fund balances increased by $669,615, ending at $16.19 million General Fund balance remained strong at $8.83 million
Enterprise fund net position increased to $72.94 million Establishment of the Broadband Fund, ending with $535,445 in net position General revenues increased by $1.81 million, or 15%, ending the fiscal year at $14,211,501. The City’s three primary general revenue sources—property tax, sales and use tax, and transient occupancy tax (TOT)—were key contributors to this growth and continue to provide a stable foundation for General Fund operations.
Property tax revenues increased by $88,106 (6%), reflecting continued stability and predictable growth in the City’s assessed valuation.
Sales and use tax revenues increased by $633,000 (14%) compared to fiscal year 2024. Of this increase, approximately $226,000 is attributable to the voter-approved Measure T, which became effective April 1, 2025. The remaining $407,000 reflects organic growth in taxable sales activity and inflationary price impacts.
Transient occupancy tax (TOT) increased by $66,528, primarily due to the partial-year implementation of Measure U, which increased the TOT rate from 12% to 14% effective April 1, 2025. Because the rate adjustment applied to only one quarter of the fiscal year and lodging activity remained stable, the overall impact was modest during this reporting period.
Overall, these results demonstrate the City’s continued revenue stability, effective voter-supported funding measures, and resilience of key local economic drivers, particularly tourism and retail activity.
General Fund expenses were $1.48 million below the final budget. The variance was driven largely by the deferral of planned capital outlay, lower internal service cost allocations, and savings within public safety and public works operations. Most departments remained within their appropriations, and several achieved meaningful operational efficiencies during the year. Other financing uses exceeded the budget due to higher transfers out to support other City funds; however, this impact was partially offset by higher-than-expected transfers in.
Overall, the City’s conservative spending and stronger-than-anticipated revenue performance contributed to a year-end fund balance that positions the General Fund favorably for the upcoming fiscal year.
Enterprise Funds
The City operates four business-type activities: Water, Wastewater, the C.V. Starr Community Center, and the newly established Broadband Fund. As of June 30, 2025, total enterprise fund net position increased from $59.57 million to $72.94 million, an increase of $13.38 million. This increase is driven primarily by major capital investment in the Water Fund, including the Water Treatment Plant Overhaul ($8.37 million), Raw Water Line Replacement ($2.87 million), and Water Meter Replacement ($2.56 million). These projects represent significant reinvestment in the City’s core utility infrastructure and are expected to enhance long-term system reliability.
The Water Fund’s net position increased significantly to $30.02 million, up from $16.67 million. The increase is primarily attributable to the major capital projects noted above. Current assets decreased due to the use of cash for capital construction, while long-term liabilities decreased. A $13.04 million transfer in supported capital activity, resulting in a total increase in net position of $13.35 million.
The Sewer Fund’s net position decreased from $22.84 million to $21.47 million. Current assets declined slightly, and long-term liabilities decreased due to scheduled debt payments. The fund reported an operating loss of $1.31 million, primarily driven by changes in cost allocation methodology following an outsourced true-up process that applied a more streamlined approach.
The C.V. Starr Center Fund’s net position increased to $20.93 million, up from $20.06 million. Current assets increased, while capital assets remained stable. The fund reported an operating loss of $2.73 million, driven by higher personnel, administrative, and utility costs. Strong non-operating revenues including $1.35 million in sales tax, $326,804 in property tax, and $2.08 million in other non-operating revenues, offset the operating deficit. After a $393,794 transfer out, net position increased by $869,480.
The Broadband Fund was newly established in fiscal year 2025 and ended the year with a net position of $535,445, all restricted for debt service. The fund reflects initial capitalization of the broadband infrastructure program, including $8.42 million in restricted cash. No operating activity occurred, and capital assets have not yet been placed into service.
These results reflect continued fiscal stability, strong capital investment, and effective financial management.
Other Major Accomplishments Reflected in the Financials The fiscal year reflects significant progress aligned with the City Council’s strategic priorities, including:
Approval of Measures T and U, generating over $1.4 million in new ongoing revenue Achievement of a 30% General Fund reserve level, exceeding best practice standards Investment of $3.5 million into the Section 115 Trust to address long-term pension obligations Advancement of the Municipal Broadband Project, including major capital investment Approval of the largest housing project in decades (83 units) Completion of a Nexus Study for Capacity Fees
Implementation of Accela permitting software and outsourcing of plan checks to improve service delivery Long-Term Financial Planning
The City continues to prioritize long-term financial sustainability through:
Maintenance of strong reserve policies (30% of GFOA)
Multi-year financial forecasting
Strategic debt issuance aligned with infrastructure investment Pension liability management through the Section 115 Trust Bottom of Form
ENVIRONMENTAL ANALYSIS
This action is not a project under the California Environmental Quality Act (CEQA) and is therefore not subject to environmental review.
FISCAL IMPACT
There is no direct fiscal impact associated with the acceptance of the ACFR. The report reflects the City’s audited financial position for the fiscal year ended June 30, 2025.
ALTERNATIVES
Do not accept the ACFR and provide direction to staff for revisions or additional information.
Continue the item to a future meeting.
ATTACHMENTS
Annual Comprehensive Financial Report (ACFR) – Fiscal Year Ended June 30, 2025 Auditor’s Communication Letter 2025
Representation Letter 2025
AGENDA ITEM NO. 8B
CITY COUNCIL STAFF REPORT