Gilroy City Council
August 15, 2022

August 11, 2022 11:30 AM City Council Regular Meeting Agenda Page1 MAYOR Marie Blankley

COUNCIL MEMBERS
Rebeca Armendariz
Dion Bracco
Zach Hilton
Peter Leroe-Muñoz
Carol Marques
Fred Tovar

CITY COUNCIL

AGENDA

CITY OF GILROY

CITY COUNCIL CHAMBERS, CITY HALL
7351 ROSANNA STREET
GILROY, CA 95020
REGULAR MEETING 6:00 P.M.

MONDAY, AUGUST 15, 2022

CITY COUNCIL PACKET MATERIALS ARE AVAILABLE ONLINE AT www.cityofgilroy.org AGENDA CLOSING TIME IS 5:00 P.M. THE TUESDAY PRIOR TO THE MEETING

Due to COVID-19, it is possible that the planned in-person meeting may have to change to a virtual meeting at any time and possibly on short notice. Please check the City of Gilroy website at http://gilroyca.iqm2.com/Citizens/default.aspx for any updates to meeting information.

COMMENTS BY THE PUBLIC WILL BE TAKEN ON AGENDA ITEMS BEFORE ACTION IS TAKEN BY THE CITY COUNCIL. Public testimony is subject to reasonable regulations, including but not limited to time restrictions for each individual speaker. Please limit your comments to 3 minutes.

The amount of time allowed per speaker may vary at the Mayor’s discretion depending on the number of speakers and length of the agenda.

Written comments on any agenda item may be emailed to the City Clerk’s Office at [email protected] or mailed to the Gilroy City Clerk’s Office at City Hall, 7351 Rosanna Street, Gilroy, CA 95020. Comments received by the City Clerk’s Office by 1 p.m. on the day of a Council meeting will be distributed to the City Council prior to or at the meeting and available for public inspection with the agenda packet located in the lobby of Administration at City Hall, 7351 Rosanna Street prior to the meeting. Any correspondence received will be incorporated into the meeting record. Items received after the 1 p.m. deadline will be provided to the City Council as soon as practicable. Written comments are also available on the City’s Public Records Portal at https://bit.ly/3G1vihU .

In compliance with the Americans with Disabilities Act, and Assembly Bill 361, the City will make reasonable arrangements to ensure accessibility to this meeting. If you need special assistance to participate in this meeting, please contact the City Clerk a minimum of 72 hours prior to the meeting at (408) 846-0204.

If you challenge any planning or land use decision made at this meeting in court, you may be limited to raising only those issues you or someone else raised at the public hearing held at this meeting, or in written correspondence delivered to the City Council at, or prior to, the public hearing. Please take notice that the time within which to seek judicial review of any final administrative determination reached at this meeting is governed by Section 1094.6 of the California Code of Civil Procedure.

A Closed Session may be called during this meeting pursuant to Government Code Section 54956.9 (d)(2) if a point has been reached where, in the opinion of the legislative body of the City on the advice of its legal counsel, based on existing facts and circumstances, there is a

City Council Regular Meeting Agenda
08/15/2022 Page2 If you need assistance with translation and would like to speak during public comment, please contact the City Clerk a minimum of 72 hours prior to the meeting at 408-846-0204 or e-mail the City Clerk’s Office at [email protected].

Si necesita un traductor durante la junta y gustaría dar un comentario público, comuníquese con el Secretario de la Ciudad un mínimo de 72 horas antes de la junta al 408-846-0204 o envíe un correo electrónico a la Oficina del Secretario de la Ciudad a [email protected].

significant exposure to litigation against the City.

Materials related to an item on this agenda submitted to the City Council after distribution of the agenda packet are available with the agenda packet on the City website at www.cityofgilroy.org subject to Staff’s ability to post the documents before the meeting.

KNOW YOUR RIGHTS UNDER THE GILROY OPEN GOVERNMENT ORDINANCE

Government's duty is to serve the public, reaching its decisions in full view of the public. Commissions, task forces, councils and other agencies of the City exist to conduct the people's business. This ordinance assures that deliberations are conducted before the people and that City operations are open to the people's review.

FOR MORE INFORMATION ON YOUR RIGHTS UNDER THE OPEN GOVERNMENT

ORDINANCE, TO RECEIVE A FREE COPY OF THE ORDINANCE OR TO REPORT A

VIOLATION OF THE ORDINANCE, CONTACT THE OPEN GOVERNMENT COMMISSION STAFF AT (408) 846-0204

The agenda for this regular meeting is as follows:

1. OPENING

1.1. Call to Order

1. Pledge of Allegiance

2. Invocation

3. City Clerk's Report on Posting the Agenda

4. Roll Call

1.2. Orders of the Day

1.3. Employee Introductions

2. CEREMONIAL ITEMS

2.1. Proclamations, Awards, and Presentations

3. PRESENTATIONS TO THE COUNCIL

3.1. Annual Parks and Recreation Commission Presentation

3.2. Presentation from SCC Office of Supportive Housing

City Council Regular Meeting Agenda
08/15/2022 Page3 3.3. PUBLIC COMMENT BY MEMBERS OF THE PUBLIC ON ITEMS NOT

ON THE AGENDA BUT WITHIN THE SUBJECT MATTER

JURISDICTION OF THE CITY COUNCIL
This portion of the meeting is reserved for persons desiring to address the Council on matters within the Gilroy City Council’s jurisdiction but not on the agenda.

Persons wishing to address the Council are requested to complete a Speaker’s Card located at the entrances and handed to the City Clerk. Speakers are limited to 1 to 3 minutes each, varying at the Mayor’s discretion depending on the number of speakers and length of the agenda. The law does not permit Council action or extended discussion of any item not on the agenda except under special circumstances. If Council action is requested, the Council may place the matter on a future agenda.

Written comments to address the Coun cil on matters not on this agenda may be e- mailed to the City Clerk’s Office at [email protected] or mailed to the Gilroy City Clerk’s Office at City Hall, 7351 Rosanna Street, Gilroy, CA 95020.

Comments received by the City Clerk’s Office by 1:00 pm on the day of a Council meeting will be distributed to the City Council prior to or at the meeting and available for public inspection with the agenda packet located in the lobby of Administration at City Hall, 7351 Rosanna Street, prior to the meeting. Any correspondence received will be incorporated into the meeting record. Items received after the 1:00pm deadline will be provided to the City Council as soon as practicable. Written material provided by public members under this section of the agenda will be limited to 10 pages in hard copy. An unlimited amount of material may be provided electronically.

4. REPORTS OF COUNCIL MEMBERS
Council Member Bracco – Gilroy Sister Cities Association (alternate), Santa Clara Co.

Library JPA, SCVWD Joint Council-SCRWA-Board Water Resources Committee, South County Regional Wastewater Authority Board, Street Naming Committee

Council Member Armendariz – ABAG (Alternate), CalTrain Policy Group, Gilroy Downtown Business Association Board (alternate), Gourmet Alley Ad Ho c Committee, Historic Heritage Committee, Santa Clara Co. Library JPA (alternate), Santa Clara Valley Habitat Agency Implementation Board, Silicon Valley Clean Energy Authority JPA Board (Alternate), Street Naming Committee, VTA Committee for Transit Accessibility (Alternate)

Council Member Marques – Gilroy Downtown Business Association Board, Gilroy Gardens Board of Directors, Gourmet Alley Ad Hoc Committee, Historic Heritage Committee (Alternate), Santa Clara Valley Habitat Agency Governing Board, Santa Clara Valley Habitat Agency Implementation Board, South County Regional Wastewater Authority (Alternate)

Council Member Hilton – Gilroy Economic Development Partnership, Silicon Valley Clean Energy Authority JPA Board, South County United for Health, Visit Gilroy California Welcome Center Board

Council Member Tovar – Economic Development Corporation Board, Gourmet Alley Ad Hoc Committee, Recycling and Waste Reduction Commission, Santa Clara Co.

Expressway Plan 2040 Policy Advisory Board, SCVWD Water Commission (alternate), South County Joint Recycled Water Advisory Committee, South County Regional

City Council Regular Meeting Agenda
08/15/2022 Page4 Wastewater Authority Board, Street Naming Committee, South County Youth Task Force Policy Team (alternate), VTA Committee for Transit Accessibility

Council Member Leroe-Muñoz – ABAG, CalTrain Policy Group (alternate), Cities Association of Santa Clara County Board of Directors, Economic Development Corporation Board, Gilroy Youth Task Force, SCVWD Water Commission, Silicon Valley Regional Interoperability Authority Board, South County Youth Task Force Policy Team, VTA Mobility Partnership, VTA South County City Group (alternate), VTA Policy Advisory Committee (alternate)

Mayor Blankley – Cities Association of Santa Clara Co. Board of Directors (alternate), Gilroy Economic Development Partnership, Gilroy Sister Cities Association, Gilroy Youth Task Force (alternate), Santa Clara Valley Habitat Agency Governing Board, SCVWD Joint Council-SCRWA-Board Water Resources Committee, South County Joint Recycled Water Advisory Committee, South County Regional Wastewater Authority Board, VTA Board of Directors Alternate, VTA Mobility Partnership, VTA Policy Advisory Committee, VTA South County City Group

5. COUNCIL CORRESPONDENCE

6. FUTURE COUNCIL INITIATED AGENDA ITEMS

7. CONSENT CALENDAR (ROLL CALL VOTE)
All matters listed under the Consent Calendar are considered by the City Council to be routine and will be enacted by one motion. There will be no separate discussion of these items unless a request is made by a member of the City Council or a member of the public. Any person desiring to speak on any item on the consent calendar should ask to have that item removed from the consent calendar prior to the time the Council votes to approve. If removed, the item will be discussed in the order in which it appears.

7.1. City Council - Regular Meeting - Aug 1, 2022 6:00 PM

7.2. Acceptance of the City Fiscal Year 2020-21 Federal Single Audit, and the Amended Annual Comprehensive Financial and Single Audit Reports for Fiscal Year 2019-20

7.3. Adoption of a Resolution Approving Budget Amendments in Fiscal Year 2022-23 Adding $244,000 from the Office of the District Attorney and $172,550 from the Probation Office to the Gang Prevention and Intervention Fund

7.4. Adoption of a Resolution of the City Council of the City of Gilroy to Release Unclaimed Checks to the City's General Fund in Accordance with California Government Code Section 50053 and Section 50055

7.5. Adoption of an Ordinance approving a Planned Unit Development Zoning Amendment (Z 21-04) for property located on Gurries Drive (APN: 790-35-038, 039, & 054)

7.6. Adoption of an Ordinance approving 700 W Sixth Street Rezoning from Professional Office (PO) to Single Family Residential (R1) Zone

7.7. Approval of a Notice of Acceptance of Completion, and Reduction of the Faithful Performance and Payment Security Bonds for Property Improvement Agreement No. 2018-03, Montonico – Tract 10345

City Council Regular Meeting Agenda
08/15/2022 Page5 7.8. Approval of the Annual Evaluation Report for the Santa Clara County Multi-Jurisdictional Program for Public Information Associated with the Community Rating System of the National Flood Insurance Program

7.9. Purchase of Five Dodge Durango Police Pursuit Vehicles Via Alameda County Tag-On Bid Process (Master Contract No. 902035)

8. BIDS AND PROPOSALS

8.1. Award of Contract to CSG Consultants for the Design of the Gourmet Alley and Railroad Alley Pedestrian and Bicycle Beautification Improvements Project (No. 22-RFP-PW-478) in the amount of $343,240 with a Project Contingency of $34,760 (~10%) and Approve a Project Expenditure of $378,000

1. Staff Report: Daryl Jordan, PE, Public Works Director

2. Public Comment

3. Possible Action:
a) Adopt a resolution of the City Council of the City of Gilroy amending the budget for the City of Gilroy for Fiscal Year 2022 -2023 and appropriating proposed expenditure amendments.
b) Award a contract to CSG Consultants in the amount of $343,240 with a project contingency of $34,760 (approximately 10%) for the design of the Gourmet Alley and Railroad Alley Pedestrian and Bicycle Beautification Improvements Project, No. 22-RFP-PW-478 and authorize the City Administrator to execute the contract and associated documents.

9. PUBLIC HEARINGS

9.1. Adoption of An Urgency Ordinance of the City Council of the City of Gilroy Adopting a Short-Term Interim Franchise Agreement with Recology South Valley for Solid Waste Hauling Services and a Finding that Its Action in Adopting the Ordinance is Exempt From Review Under the California Environmental Quality Act (“CEQA”) Pursuant to CEQA Guidelines Section 15061(b)(3) (Common Sense Exemption) In that the Proposed Ordinance Will Continue an Existing State-Mandated Program for the Protection of Public Health and the Environment, and None of the Circumstances in CEQA Guidelines Section 15300.2 Apply.

City Council Regular Meeting Agenda
08/15/2022 Page6 1. Disclosure of Ex-Parte Communications

2. Staff Report: Bryce Atkins, Senior Management Analyst

3. Open Public Hearing

4. Close Public Hearing

5. Possible Action:
a) Motion to read the ordinance by title only and waive any future reading. b) Adopt an Urgency Ordinance of the City Council of the City of Gilroy approving a short-term interim franchise agreement with Recology South Valley for solid waste hauling services.

9.2. Establishment of Application Fees for Flying a Commemorative Flag at City Hall

1. Disclosure of Ex-Parte Communications

2. Staff Report: Bryce Atkins, Senior Management Analyst

3. Open Public Hearing

4. Close Public Hearing

5. Possible Action:

Council adopt the resolution to establish an application fee for flying commemorative flags at City Hall.

10. UNFINISHED BUSINESS

11. INTRODUCTION OF NEW BUSINESS

11.1. Approve a Marketing and Economic Development Agreement with the Gilroy Chamber of Commerce

1. Staff Report: Jimmy Forbis, City Administrator

2. Public Comment

3. Possible Action:

Approve a Marketing and Economic Development Agreement with the Gilroy Chamber of Commerce for an Annual Amount Not to Exceed $50,000, Plus a Percentage of Administrative Grant Funding for the Business Community Received, and Authorize the City Administrator to Execute the Agreement.

11.2. Rename Gilroy Museum's Research Room After the Late Author and Museum Volunteer Claudia Salewske

1. Staff Report: Adam Henig, Recreation Manager

2. Public Comment

3. Possible Action:

Motion to approve the Parks and Recreation Commission's recommendation to rename Gilroy Museum's Research Room to the "Claudia Salewske Research Room."

City Council Regular Meeting Agenda
08/15/2022 Page7 11.3. Gilroy Zoning Ordinance Update Progress Report

1. Staff Report: Kraig Tambornini, Senior Planner

2. Public Comment

3. Possible Action:

Accept the Zoning Ordinance update progress report.

11.4. Consideration of Formal Council Position On the Proposed Sargent Ranch Quarry Project in South Santa Clara County

1. Staff Report: Sharon Goei, Community Development Director

2. Public Comment

3. Possible Action:

Council consider adopting a formal position on the p roposed Sargent Ranch Quarry Project in South Santa Clara County.

12. CITY ADMINISTRATOR'S REPORTS

12.1. Report on the City’s Grant Applications and Awards

13. CITY ATTORNEY'S REPORTS

14. CLOSED SESSION

15. ADJOURNMENT

FUTURE MEETING DATES

AUGUST 2022
29* Joint Special Study Session with Planning Commission - 6:00 p.m.

SEPTEMBER 2022
12* Regular Meeting - 6:00 p.m.
19* Regular Meeting - 6:00 p.m.

OCTOBER 2022
3* Regular Meeting - 6:00 p.m.
17* Regular Meeting - 6:00 p.m.

NOVEMBER 2022
7* Regular Meeting - 6:00 p.m.
21* Regular Meeting - 6:00 p.m.

DECEMBER 2022
5* Regular Meeting - 6:00 p.m.

*Meeting is webstreamed

City Council Regular Meeting Minutes
August 1, 2022

City Council Regular Meeting Minutes
08/1/2022
City of Gilroy
City Council Regular Meeting Minutes
August 1, 2022

1. OPENING

1.1. Call to Order
The meeting was called to order at 6:00 PM by Mayor Marie Blankley.

1. Pledge of Allegiance
Council Member Hilton led the Pledge of Allegiance.

2. Invocation
There was none.

3. City Clerk's Report on Posting the Agenda
City Clerk Pham declared the posting of the agenda.

Attendee Name Title Status
Marie Blankley Mayor Present
Rebeca Armendariz Council Member Present
Dion Bracco Council Member Present
Zach Hilton Council Member Present
Peter Leroe-Muñoz Vice Mayor Present
Carol Marques Council Member Present
Fred Tovar Council Member Present

1.2. Orders of the Day
There were none.

1.3. Employee Introductions
City Administrator Forbis introduced Community Development Director Sharon Goei.

Police Chief Espinoza introduced Officer Gadge Farris.

City Clerk Pham introduced Deputy City Clerk Christina Ruiz.

2. CEREMONIAL ITEMS

2.1. Proclamations, Awards, and Presentations
There were none.

3. PRESENTATIONS TO THE COUNCIL

3.1. Annual Arts and Culture Commission Presentation
Arts and Culture Vice Chair Perdew provided the presentation to Council.

7.1 Packet Pg. 8 Minutes Acceptance: Minutes of Aug 1, 2022 6:00 PM (CONSENT CALENDAR (ROLL CALL VOTE))

City Council Regular Meeting Minutes
August 1, 2022

City Council Regular Meeting Minutes
08/1/2022

2. PUBLIC COMMENT BY MEMBERS OF THE PUBLIC ON ITEMS NOT ON THE

AGENDA BUT WITHIN THE SUBJECT MATTER JURISDICTION OF THE CITY

COUNCIL
The following individuals spoke on items that were not on the agenda:

The following individuals spoke in favor of a youth center in Gilroy:

Hazel Quintero
Xavier Garcia
Isabel Santos
Leanna Rivera
Dela Sandoval
Delia Hernandez
Donny Ramirez
Raymundo Armendariz
Manny Estrada
Gabriela Mendoza
Michelle Nelson requested Council to take a position on the Sargent Ranch Quarry.

Jane Howard introduced Visit Gilroy President and CEO Ella Petrosova to Council.

Araceli Vaquera requested Council to address the issues that occur in her neighborhood.

There being no further speakers, Mayor Blankley closed Public Comment.

4. REPORTS OF COUNCIL MEMBERS
Council Member Bracco had nothing to report.

Council Member Armendáriz had nothing to report.

Council Member Marques reported on Gilroy Garden Board of Directors, Gilroy Downtown Business Association Boar.

Council Member Hilton reported on Visit Gilroy California Welcome Center Board.

Council Member Tovar had nothing to report.

Vice Mayor Leroe-Muñoz reported on town hall meeting with Council Member Tovar, Santa Clara Valley Water District, and Gilroy Youth Task Force.

Mayor Blankley reported on the Gilroy Youth Task Force.

5. COUNCIL CORRESPONDENCE
There were none.

6. FUTURE COUNCIL INITIATED AGENDA ITEMS
There were none requested.

7.1 Packet Pg. 9 Minutes Acceptance: Minutes of Aug 1, 2022 6:00 PM (CONSENT CALENDAR (ROLL CALL VOTE))

City Council Regular Meeting Minutes
August 1, 2022

City Council Regular Meeting Minutes
08/1/2022

7. CONSENT CALENDAR (ROLL CALL VOTE)
Mayor Blankley opened Public Comment.

There being no speakers, Mayor Blankley closed Public Comment.

RESULT: APPROVE [UNANIMOUS]
MOVER: Peter Leroe-Muñoz, Vice Mayor
SECONDER: Fred Tovar, Council Member
AYES: Blankley, Armendariz, Bracco, Hilton, Leroe-Muñoz, Marques, Tovar

7.1. City Council - Regular Meeting - Jul 5, 2022 6:00 PM A motion was made to approve the minutes.

7.2. Approval of a Fourth Amendment to the Agreement with Lynx Technologies in the Amount of $25,490 for Geographic Information System (GIS) Support and Maintenance
A motion was made to approve the agreement, authorize City Administrator to execute the agreement, and add $25,490 to the current contract.

7.3. Emergency Sewer Line Repairs at Old City Hall Restaurant A motion was made to ratify the emergency procurement and adopt a resolution.

Enactment No.: Resolution No. 2022-53

7.4. Argument in favor of the Public Projects Bidding, Contracting, and Notification Charter Amendment Ballot Measure
A motion was made to adopt the resolution.

Enactment No.: Resolution No. 2022-54

8. BIDS AND PROPOSALS
There were none.

9. PUBLIC HEARINGS

9.1. Consideration of the Report of Abatement of Weeds and Refuse Within the City of Gilroy and Adoption of a Resolution of the City Council of the City of Gilroy Confirming the Imposition of Assessment Liens Against the Land Mayor Blankley asked the Council if they have any ex-parte communications to disclose. There were none disclosed.

Deputy Fire Marshal Crick gave staff presentation and responded to Council Member questions.

Mayor Blankley opened the Public Hearing at 6:44 PM

There being no comments, Mayor Blankley closed the public hearing at 6:44 PM.

7.1 Packet Pg. 10 Minutes Acceptance: Minutes of Aug 1, 2022 6:00 PM (CONSENT CALENDAR (ROLL CALL VOTE))

City Council Regular Meeting Minutes
August 1, 2022

City Council Regular Meeting Minutes
08/1/2022
Possible Action:

It is recommended that Council adopt a resolution allowing the assessment of fees, minus any qualifying objections, as reported by the Santa Clara County Weed Abatement Program.

RESULT: APPROVE [UNANIMOUS]
MOVER: Fred Tovar, Council Member
SECONDER: Dion Bracco, Council Member
AYES: Blankley, Armendariz, Bracco, Hilton, Leroe-Muñoz, Marques, Tovar

Enactment No.: Resolution No. 2022-55

9.2. Tentative Map, Planned Unit Development Zoning Amendment, and Architectural and Site Review Permit for 4-unit Townhome Development on Gurries Drive
Mayor Blankley asked the Council if they have any ex -parte communications to disclose. There were none.

Customer Service Manager McCormick gave staff presentation and responded to Council Member questions.

Mayor Blankley opened the Public Hearing at 6:48 PM

Michael Davis, representative of the Applicant DZ Design Associates, Inc., spoke about the project.

There being no comments, Mayor Blankley closed the public hearing at 6:49 PM.

Possible Action:
a) Motion to read the ordinance by title only and waive further reading City Clerk Pham read aloud the title of the ordinance.

RESULT: READ THE ORDINANCE BY TITLE ONLY AND WAIVE
FURTHER READING [UNANIMOUS]
MOVER: Dion Bracco, Council Member
SECONDER: Carol Marques, Council Member
AYES: Blankley, Armendariz, Bracco, Hilton, Leroe-Muñoz, Marques, Tovar
b) Introduce an Ordinance of the City Council approving a Planned Unit Development Zoning Amendment on property currently located on Gurries Drive, identified as assessor parcel numbers 790 -35-038, 039, and 054 (file number Z 21-04); and

7.1 Packet Pg. 11 Minutes Acceptance: Minutes of Aug 1, 2022 6:00 PM (CONSENT CALENDAR (ROLL CALL VOTE))

City Council Regular Meeting Minutes
August 1, 2022

City Council Regular Meeting Minutes
08/1/2022
RESULT: INTRODUCE AN ORDINANCE
MOVER: Fred Tovar, Council Member
SECONDER: Rebeca Armendariz, Council Member
AYES: Blankley, Armendariz, Bracco, Hilton, Leroe-Muñoz, Marques, Tovar
c) Adopt a Resolution approving a Tentative Map to adjust the lot lines and subdivide three (3) parcels on Gurries Drive (APN: 790 -35-038, 039, & 054) into a total of four (4) parcels (file number TM 21 -03); and

RESULT: APPROVE [UNANIMOUS]
MOVER: Rebeca Armendariz, Council Member
SECONDER: Dion Bracco, Council Member
AYES: Blankley, Armendariz, Bracco, Hilton, Leroe-Muñoz, Marques, Tovar

Enactment No: Resolution No. 2022-56
d) Adopt a resolution approving an Architectural and Site Review Permit to allow construction of four (4) townhomes on the subject property (file number AS 21-14), following approval of the associated PUD Zoning Amendment and Tentative Map.

RESULT: APPROVE [UNANIMOUS]
MOVER: Dion Bracco, Council Member
SECONDER: Peter Leroe-Muñoz, Vice Mayor
AYES: Blankley, Armendariz, Bracco, Hilton, Leroe-Muñoz, Marques, Tovar

Enactment No: Resolution No. 2022-57

9.3. Approval of a Zoning Amendment and Tentative Map for 700 W 6th St.

Residential Subdivision Project
Mayor Blankley asked the Council if they have any ex -parte communications to disclose. Council Member Armendariz disclosed that she spoke with residents about the project. Mayor Blankley disclosed she communicated with two individuals; one via email and one via telephone.

Senior Planner Tamborini gave staff presentation and responded to Council Member questions.

Mayor Blankley opened the Public Hearing at 7:15 PM.

Applicant Adam Peterson provided a brief presentation to Council.

Marc Ziegler voiced concern about the time of operation of construction and requested for a lockable gate at the south side Princevalle Street.

Matt Morley requested to add a red curb on Princevalle, add nine additional laurel trees to the south side of project, and install a lockable gate.

Christel Morley reiterated Matt's request.

7.1 Packet Pg. 12 Minutes Acceptance: Minutes of Aug 1, 2022 6:00 PM (CONSENT CALENDAR (ROLL CALL VOTE))

City Council Regular Meeting Minutes
August 1, 2022

City Council Regular Meeting Minutes
08/1/2022
There being no further comments, Mayor Blankley closed the public hearing at 7:22 PM.

Possible Action:
a) Motion to read the ordinance by title only and waive further reading (Z22-01).

RESULT: READ THE ORDINANCE BY TITLE ONLY AND WAIVE
FURTHER READING [UNANIMOUS]
MOVER: Rebeca Armendariz, Council Member
SECONDER: Fred Tovar, Council Member
AYES: Blankley, Armendariz, Bracco, Hilton, Leroe-Muñoz, Marques, Tovar
City Clerk Pham read aloud the title of the ordinance.
b) Introduce an Ordinance of the City Council approving Zoning Amendment application Z 22-01 to redesignate a 3.7 acre site from Professional Office (PO) Zone to Single Family (R1) Zone, consistent with the 2040 General Plan.

RESULT: INTRODUCE AN ORDINANCE [UNANIMOUS]
MOVER: Rebeca Armendariz, Council Member
SECONDER: Fred Tovar, Council Member
AYES: Blankley, Armendariz, Bracco, Hilton, Leroe-Muñoz, Marques, Tovar
c) Adopt a Resolution approving Tentative Map application TM 22-01 to subdivide the property into 19 single family residential lots with a gate with a secure access code controlling access from Princevalle Street to the proposed pedestrian walkway along the south side of the project, add up to additional nine trees placed along south project boundary in order to provide additional privacy for the neighboring properties on Georgetown place, and direct staff to evaluate a red curb.

RESULT: APPROVE AS AMENDED [UNANIMOUS]
MOVER: Dion Bracco, Council Member
SECONDER: Fred Tovar, Council Member
AYES: Blankley, Armendariz, Bracco, Hilton, Leroe-Muñoz, Marques, Tovar

Enactment No.: Resolution No. 2022-58

10. UNFINISHED BUSINESS
There were none.

11. INTRODUCTION OF NEW BUSINESS

11.1. Selection of Designated Voting Delegate and Alternate Voting Delegates for the League of California Cities 2022 Annual Conference

7.1 Packet Pg. 13 Minutes Acceptance: Minutes of Aug 1, 2022 6:00 PM (CONSENT CALENDAR (ROLL CALL VOTE))

City Council Regular Meeting Minutes
August 1, 2022

City Council Regular Meeting Minutes
08/1/2022
City Clerk Pham gave a brief presentation and responded to Council Member questions.

Mayor Blankley opened Public Comment.

There being no comments, Mayor Blankley closed Public Comment.

A motion was made by Council Member Leroe -Munoz, seconded by Council Member Bracco, to designate Council Member Tovar as the delegate voter and Mayor Blankley as the alternate voter at the League of California Cities Annual Conference.

RESULT: APPROVE [6 TO 0]
MOVER: Peter Leroe-Muñoz, Vice Mayor
SECONDER: Dion Bracco, Council Member
AYES: Blankley, Bracco, Hilton, Leroe-Muñoz, Marques, Tovar AWAY: Rebeca Armendariz

11.2. Clarification and Potential Amendment to Attendance Policy for City Boards, Commissions and Committees
City Clerk Pham gave staff presentation and responded to Council Member questions.

Mayor Blankley opened Public Comment.

There being no comments, Mayor Blankley closed Public Comment.

Possible Action:

Council Discuss Issues Related to Current Attendance Policy for City Boards, Commissions, and Committees and Consider Adoption of a Resolution to Amend Policy
RESULT: APPROVE [6 TO 1]
MOVER: Peter Leroe-Muñoz, Vice Mayor
SECONDER: Fred Tovar, Council Member
AYES: Blankley, Bracco, Hilton, Leroe-Muñoz, Marques, Tovar NAYS: Rebeca Armendariz

Enactment No.: Resolution No. 2022-59

11.3. Consideration of a Council Correspondence Policy for Council Agendas City Administrator Forbis gave staff presentation and responded to Council Member questions.

Mayor Blankley opened Public Comment.

There being no comments, Mayor Blankley closed Public Comment.

7.1 Packet Pg. 14 Minutes Acceptance: Minutes of Aug 1, 2022 6:00 PM (CONSENT CALENDAR (ROLL CALL VOTE))

City Council Regular Meeting Minutes
August 1, 2022

City Council Regular Meeting Minutes
08/1/2022
Possible Action:

Council to approve a Council Correspondence Policy and authorize the City Administrator to implement the policy in future City Council meeting agendas.

RESULT: APPROVE [UNANIMOUS]
MOVER: Fred Tovar, Council Member
SECONDER: Rebeca Armendariz, Council Member
AYES: Blankley, Armendariz, Bracco, Hilton, Leroe-Muñoz, Marques, Tovar

11.4. Council Discussion and Direction Regarding Potential 2022 Reach Codes
Building Official Olmos gave staff presentation and responded to Council Member questions.

Mayor Blankley opened Public Comment.

Enrique Navarro-Donnellan, Santa Clara County Association of REALTORS, endorsed staff’s recommendation of option A.

Anthony Eulo, Silicon Valley Clean Energy, requested Council to adopt all electric code and provided further clarification on electric vs. gas savings.

James Pullo, resident of Gilroy, voiced disappointment that he was not able to obtain solar panels at his house due to current codes.

There being no further comments, Mayor Blankley closed Public Comment.

A motion was made by Mayor Blankley, seconded by Council Member Bracco, to direct staff to return to a future City Council meeting for formal adoption of final reach code language as recommended by staff and incorporate such language into the adoption of the 2022 California Green Building Code Update.

A substitute motion was made by Council Member Hilton, seconded by Council Member Armendariz, to adopt option #2 (all electric construction) and staff’s recommendation for EV charging and bicycle.

The substitute motion failed by the following vote:

RESULT: FAILED [3 TO 4]
MOVER: Zach Hilton, Council Member
SECONDER: Rebeca Armendariz, Council Member
AYES: Rebeca Armendariz, Zach Hilton, Peter Leroe-Muñoz NAYS: Marie Blankley, Dion Bracco, Carol Marques, Fred Tovar The original motion by Mayor Blankley was then voted upon and was carried by the following vote:

7.1 Packet Pg. 15 Minutes Acceptance: Minutes of Aug 1, 2022 6:00 PM (CONSENT CALENDAR (ROLL CALL VOTE))

City Council Regular Meeting Minutes
August 1, 2022

City Council Regular Meeting Minutes
08/1/2022
RESULT: APPROVE [5 TO 2]
MOVER: Marie Blankley, Mayor
SECONDER: Dion Bracco, Council Member
AYES: Blankley, Bracco, Leroe-Muñoz, Marques, Tovar
NAYS: Rebeca Armendariz, Zach Hilton

11.5. Approval of Gilroy Management Association Memorandum of Understanding and Adoption of a Resolution Approving Associated Salary Schedules for the Period of July 1, 2022 Through June 30, 2025 HR Director McPhillips gave staff presentation and responded to Council Member questions responded to Council member questions.

Mayor Blankley opened Public Comment.

There being no further comments, Mayor Blankley closed public comment.

Possible Action:
a) Adopt a resolution of the City Council of the City of Gilroy amending the budget for FY 23 to implement the terms of the Gilroy Management Association Memorandum of Understanding for FY 23 and authorizing the inclusion of appropriate funds in the future FY 24 and FY 25 budgets for salary and benefit expenditures related to the implementation of the MOU.

RESULT: APPROVE [UNANIMOUS]
MOVER: Peter Leroe-Muñoz, Vice Mayor
SECONDER: Fred Tovar, Council Member
AYES: Blankley, Armendariz, Bracco, Hilton, Leroe-Muñoz, Marques, Tovar

Enactment No.: Resolution No. 2022-60
b) Approve a Memorandum of Understanding between the City and Gilroy Management Association for the period July 1, 2022 - June 30, 2025.

RESULT: APPROVE [UNANIMOUS]
MOVER: Fred Tovar, Council Member
SECONDER: Rebeca Armendariz, Council Member
AYES: Blankley, Armendariz, Bracco, Hilton, Leroe-Muñoz, Marques, Tovar
c) Adopt a Resolution of the City Council of the City of Gilroy approving the July 1, 2022, July 1, 2023 and July 1, 2024 salary schedules associated with the Gilroy Management Association Memorandum of Understanding.

7.1 Packet Pg. 16 Minutes Acceptance: Minutes of Aug 1, 2022 6:00 PM (CONSENT CALENDAR (ROLL CALL VOTE))

City Council Regular Meeting Minutes
August 1, 2022

City Council Regular Meeting Minutes
08/1/2022
Possible Action:

RESULT: APPROVE [UNANIMOUS]
MOVER: Carol Marques, Council Member
SECONDER: Rebeca Armendariz, Council Member
AYES: Blankley, Armendariz, Bracco, Hilton, Leroe-Muñoz, Marques, Tovar

Enactment No.: Resolution No. 2022-61

11.6. Approval of July 1, 2022, July 1, 2023, and July 1, 2024 Salary Schedules for Full-Time/ Unrepresented/Confidential/Exempt Employees, Part- Time/Temporary/Unrepresented/Exempt Employees, and Full- Time/Unrepresented/Exempt/At-Will/Department Head Employees HR Director McPhillips and City Administrator Forbis gave staff presentation and responded to Council Member questions responded to Council member questions.

Mayor Blankley opened Public Comment.

There being no further comments, Mayor Blankley closed public comment.

Possible Action:
a) Adopt a resolution of the City Council of the City of Gilroy amending the budget for FY 23 to implement the terms of the salary resolutions for the Full-Time/Unrepresented/Confidential/Exempt/Mid-Management Employees, Part-Time/Temporary/Unrepresented/Temporary/Exempt Employees, and Full-Time/Unrepresented/Exempt/At-Will/Department Head Employees for FY 23 and authorizing the inclusion of appropriate funds in the future FY 24 and FY 25 budgets for salary and benefit expenditures related to the implementation of the salary resolutions.

RESULT: APPROVE [UNANIMOUS]
MOVER: Peter Leroe-Muñoz, Vice Mayor
SECONDER: Carol Marques, Council Member
AYES: Blankley, Armendariz, Bracco, Hilton, Leroe-Muñoz, Marques, Tovar

Enactment No.: Resolution No. 2022-62
x b) Adopt a Resolution of the City Council of the City of Gilroy approving the July 1, 2022, July 1, 2023 and July 1, 2024 salary schedules for Unrepresented Exempt Mid-Management Employees, Unrepresented Exempt Part-Time/Temporary Employees, and Unrepresented Department Heads.

7.1 Packet Pg. 17 Minutes Acceptance: Minutes of Aug 1, 2022 6:00 PM (CONSENT CALENDAR (ROLL CALL VOTE))

City Council Regular Meeting Minutes
August 1, 2022

City Council Regular Meeting Minutes
08/1/2022
RESULT: APPROVE [UNANIMOUS]
MOVER: Carol Marques, Council Member
SECONDER: Peter Leroe-Muñoz, Vice Mayor
AYES: Blankley, Armendariz, Bracco, Hilton, Leroe-Muñoz, Marques, Tovar

Enactment No.: Resolution No. 2022-63

12. CITY ADMINISTRATOR'S REPORTS

12.1. International City Management Association Economic Development Video
City Administrator Forbis provided a brief report and responded to Council Member questions.

13. CITY ATTORNEY'S REPORTS
There were none.

14. CLOSED SESSION
Mayor Blankley opened Public Comment.

There being no further speakers, Mayor Blankley closed Public Comment.

Mayor Blankley adjourned Regular Meeting to Closed Session at 9:05 p.m.

The City Council convened in Closed Session at 9:08 p.m.

The Council voted to stay in closed session was unanimous.

14.1. PUBLIC EMPLOYEE PERFORMANCE EVALUATION Pursuant to Government Code Section 54957 and Gilroy City Code Section 17A.11 (2);
Employee Name/Title: Andy Faber, City Attorney
No reportable action.

15. ADJOURN TO OPEN SESSION
Mayor Blankley reported out of Closed Session as shown above.

16. ADJOURNMENT
The meeting was adjourned at 9:20 PM by Mayor Blankley.

I HEREBY CERTIFY that the foregoing minutes were duly and regularly adopted at a regular meeting of the City Council of the City of Gilroy.

/s/ Thai Pham, CMC, CPMC
City Clerk

7.1 Packet Pg. 18 Minutes Acceptance: Minutes of Aug 1, 2022 6:00 PM (CONSENT CALENDAR (ROLL CALL VOTE))

City of Gilroy

STAFF REPORT
Agenda Item Title: Approval of the Annual Evaluation Report for the Santa Clara County Multi-Jurisdictional Program for Public
Information Associated with the Community Rating System of the National Flood Insurance Program
Meeting Date: August 15, 2022
From: Jimmy Forbis, City Administrator
Department: Public Works Department
Submitted By: Daryl Jordan, PE, Public Works Director
Prepared By: Daryl Jordan, PE, Public Works Director

Strategic Plan Goals

☐ Develop a Financially
Resilient Organization

☐ Ensure Neighborhood
Equity from City
Services
☐ Promote Economic
Development
Activities

☐ Promote Safe,
Affordable Housing for All

☐ Maintain and Improve
City Infrastructure

RECOMMENDATION

Approve the implementation of the 5-year plan for the Santa Clara County Multi- Jurisdictional Program for Public Information (PPI) Associated with the Community Rating System (CRS) of the National Flood Insurance Program. (Roll Call Vote)

EXECUTIVE SUMMARY

The Santa Clara Valley Water District (Valley Water) and the ten (10) Santa Clara County communities (Cupertino, Gilroy, Los Altos, Milpitas, Morgan Hill, Mountain View, Palo Alto, San Jose, Santa Clara, and Sunnyvale) that participate in the Community

7.2 Packet Pg. 19

Rating System (CRS) Program of the Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program worked together to develop this Multi - Jurisdictional Program for Public Information (PPI).

Developing a Multi-Jurisdictional PPI in the County was a way to earn significant CRS credits which may translate into greater discounts on flood insurance premiums for the community. The PPI also rewards participating communities for developing messages that are tailored to local needs. The PPI was developed jointly, and it must be individually approved by each community’s elected body for that community to receive CRS credits for its implementation.

POLICY DISCUSSION

This proposal supports the City’s participation in both the CRS Program and National Flood Insurance Program (NFIP) with the goal of reducing flood damage s to the community.

BACKGROUND

The City has been a participating community in the CRS Program of FEMA’s National Flood Insurance Program (NFIP) since May 1, 2007. CRS is a voluntary program that allows communities to earn flood insurance premium discounts for their residents and businesses. Communities earn CRS credits for activities that promote good flood risk reduction practices and that encourage purchase of flood insurance. These credits translate to flood insurance premium discounts for policy holders within the community.

Currently, the City has a CRS class rating of 8 which provides 10% flood insurance discounts for properties located within the special flood hazard area or 100 -year floodplain and 5% discount for non-floodplain properties. The total number of flood insurance policies in force within the City are 123 for 100-year floodplain properties and 17 for non-floodplain properties. The estimated discount per flood insurance policy is $174 for 100-year floodplain properties and $95 for non-floodplain properties. This results in $23,017 of total annual savings to policy holders within the City.

ANALYSIS

The CRS Program provides credits for designing and carrying out public outreach projects. CRS credits for individual outreach projects can be increased if a community has a Program for Public Information (PPI). The PPI can help design an entire public information program, not just outreach projects.

The City joined the Santa Clara Valley Water District (Valley Water) and other agencies in 2013 to develop a Multi-Jurisdictional PPI. The PPI committee was comprised of both staff and non-governmental representatives who brought different perspectives and suggestions for a better outreach plan. For Gilroy, Public Works staff and a stakeholder representative, Ms. Merna Leal as a Gilroy Resident and past District CRS program manager, are the committee members.

7.2 Packet Pg. 20

In February 2020, Valley Water hosted the start of the 5 -year PPI process, in which fifteen (15) communities worked together to review and update the 2015 PPI. These communities included the current eleven (11) participating CRS communities (the Cities of Cupertino, Gilroy, Los Altos, Milpitas, Morgan Hill, Mountain View, Palo Alto, San Jose, Santa Clara, Sunnyvale, and Valley Water) and four (4) communities that were interested in applying to become a CRS community (the Town of Los Gatos , the Town of Los Altos Hills, the City of Saratoga, and the County of Santa Clara). Staff and external stakeholders from each of the communities participated in the drafting of the document. Due to the COVID-19 pandemic, many communities had to shift priorities to respond to the public health crisis; therefore, FEMA provided an extension of completing of the PPI to early 2021. Valley Water reconvened the participating communities and stakeholders in October 2020 to begin developing the new 5 -year PPI for Santa Clara County.

The attached PPI was reviewed by FEMA to ensure its provisions fully comply with FEMA requirements. FEMA has informed the participating agencies that this is one of the first multi-jurisdictional PPIs to be completed and it involves the largest number of participating communities to date.

As required by the terms of the PPI, the PPI committee must re-convene annually to evaluate whether the flood risk reduction messages are still appropriate and adjust the PPI as needed. A report to FEMA must be submitted annually describing the PPI implementation. Every five years, the elected bodies of all participating communities must re-approve the PPI in order to continue receiving CRS credit. Attached is a copy of the 5-Year Plan PPI that was submitted to FEMA.

Approval of this Multi-Jurisdictional PPI by the City Council will allow the City to receive increased CRS credits which translates to greater discounts on flood insurance premiums for the community.

ALTERNATIVES

Council may choose to not adopt the Multi-Jurisdictional PPI. This would require staff to develop separate outreach projects and/or develop a public information program for the City or implement other CRS activities to increase the City’s CRS credits.

FISCAL IMPACT/ FUNDING SOURCE

The expense for creating this PPI was included in the Santa Clara Valley Water District’s adopted budget; therefore, there are no City fiscal impacts from approval of this PPI. The PPI projects will be included within the current budget for the Floodplain Management Program activities. There are no expected additional costs in staff’s continued participation in the PPI process.

7.2 Packet Pg. 21

CONCLUSION

This Multi-Jurisdictional PPI will allow the City to earn additional CRS credits to increase the flood insurance policy discounts for the citizens of Gilroy and will be an additional tool the City can use to reduce flood risks. The City’s participation in this on-going PPI process also allows the City to maintain good partnerships with other CRS communities of Santa Clara County, the County of Santa Clara, and the Santa Clara Valley Water District, and provides opportunities to leverage resources and to share best practices.

NEXT STEPS

Staff will continue to participate in the PPI committee which will re-convene annually to evaluate the PPI and to make appropriate adjustments as needed. At the City’s next CRS Verification visit, on August 9, 2022, staff will submit a copy of the PPI to receive CRS credit.

PUBLIC OUTREACH

A copy of the 5-Year PPI will be posted in the Public Works’ Flood Management webpage.

Attachments:

1. Santa Clara County PPI Annual Evaluation Report for FY22

7.2 Packet Pg. 22

City of Gilroy
Gilroy, California
Single Audit
and Independent Auditors’ Reports
For the Year Ended June 30, 2021

7.2.a
Packet Pg. 23 Attachment: FY21 Single Audit Final (3699 : Acceptance of FY21 Federal Single Audit)

7.2.a
Packet Pg. 24 Attachment: FY21 Single Audit Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Single Audit Report
For the Year Ended June 30, 2021
Table of Contents

Page
Independent Auditors’ Reports:

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ................................................................ 1

Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance, and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance .............................................................................. 3

Schedule of Expenditures of Federal Awards ............................................................................................................ 7

Notes to the Schedule of Expenditures of Federal Awards ........................................................................................ 8

Schedule of Findings and Questioned Costs .............................................................................................................. 9

7.2.a
Packet Pg. 25 Attachment: FY21 Single Audit Final (3699 : Acceptance of FY21 Federal Single Audit)

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7.2.a
Packet Pg. 26 Attachment: FY21 Single Audit Final (3699 : Acceptance of FY21 Federal Single Audit)

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND

OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Independent Auditors’ Report
To the Honorable Mayor and Members of City Council
of the City of Gilroy
Gilroy, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Gilroy, California (the “City”), as of and for the year ended June 30, 2021, and the related notes to the basic financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated January 4, 2022.

Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (“internal control”) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the basic financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the City’s basic financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that were not identified.

Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's basic financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are require to be reported under Government Auditing Standards.

7.2.a
Packet Pg. 27 Attachment: FY21 Single Audit Final (3699 : Acceptance of FY21 Federal Single Audit)

To the Honorable Mayor and Members of City Council
of the City of Gilroy
Gilroy, California

2 Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Santa Ana, California
January 4, 2022

7.2.a
Packet Pg. 28 Attachment: FY21 Single Audit Final (3699 : Acceptance of FY21 Federal Single Audit)

REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL

CONTROL OVER COMPLIANCE, AND REPORT ON THE SCHEDULE OF EXPENDITURES OF

FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE

Independent Auditors’ Report

To the Honorable Mayor and Members of City Council
of the City of Gilroy
Gilroy, California

Report on Compliance for Each Major Federal Program

We have audited the City of Gilroy, California’s (the “City”) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2021. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying Schedule of Findings and Questioned Costs.

Management’s Responsibility

Management is responsible for compliance with federal statutes, regulations, and the terms and condition of its federal awards applicable to its federal programs.

Auditors’ Responsibility

Our responsibility is to express an opinion on compliance for each of the City’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirement for Federal Awards (the “Uniform Guidance”). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program.

However, our audit does not provide a legal determination of the City’s compliance.

7.2.a
Packet Pg. 29 Attachment: FY21 Single Audit Final (3699 : Acceptance of FY21 Federal Single Audit)

To the Honorable Mayor and Members of City Council
of the City of Gilroy
Gilroy, California

4 Opinion on Each Major Federal Program

In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2021.

Report on Internal Control Over Compliance

Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance.

Accordingly, this report is not suitable for any other purpose.

7.2.a
Packet Pg. 30 Attachment: FY21 Single Audit Final (3699 : Acceptance of FY21 Federal Single Audit)

To the Honorable Mayor and Members of City Council
of the City of Gilroy
Gilroy, California

5 Report on the Schedule of Expenditures of Federal Awards Required by Uniform Guidance We have audited the financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City, as of and for the year ended June 30, 2021, and the related notes to the basic financial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon dated January 4, 2022 which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming our opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain other 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 Schedule of Expenditure of Federal Awards is fairly stated in all material respects in relation to the basic financial statements as a whole.

Santa Ana, California
July 25, 2022, except for the Schedule of Expenditures of Federal Awards, which is as of January 4, 2022.

7.2.a
Packet Pg. 31 Attachment: FY21 Single Audit Final (3699 : Acceptance of FY21 Federal Single Audit)

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7.2.a
Packet Pg. 32 Attachment: FY21 Single Audit Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2021

See accompanying Notes to the Schedule of Expenditures of Federal Awards.

7 Assistance Amount
Federal Grantor/Pass-Through Grantor Listing Grant Award Federal Provided to Program Title Number Number Expenditures Subrecipients
U.S. Department of Housing and Urban Development
Direct Program:

CDBG - Entitlement Grants Cluster:

Community Development block Grants/Entitlement Grants 14.218 B-20-MC-06-0048 552,161$ 156,354$ Community Development block Grants/Entitlement Grants 14.218 B-20-MW-06-0048 583,957 - Total U.S. Department of Housing and Urban Development 1,136,118 156,354 U.S. Department of Justice
Direct Program:

Bulletproof Vest Partnership Program 16.607 N/A 1,275 - Total U.S. Department of Justice 1,275 - U.S. Department of Transportation
Passed through the State of California Office of Traffic and Safety Highway Safety Cluster
Selective Traffic Enforcement Program 20.600/20.608 PT20053 21,439 - Selective Traffic Enforcement Program 20.600/20.608 PT21160 68,030 - Total Selective Traffic Enforcement Program 89,469 - Passed through the State of California Department of Transportation Highway Planning and Construction Cluster:

Monterey Rd. Rehab 20.205 STPL-5034 (027) 76,712 - HBRR 20.205 CML-5034(023) 139,911 -
Total Highway Planning and Construction Cluster 216,623 - Total U.S. Department of Transportation 306,092 - U.S. Department of Treasury
Direct Program:

Coronavirus Relief Fund 21.019 N/A 704,824 - Total U.S. Department of Treasury 704,824 -
Total Expenditures of Federal Awards 2,148,309$ 156,354$

7.2.a
Packet Pg. 33 Attachment: FY21 Single Audit Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2021

8 Note 1 – Reporting Entity
The financial reporting entity consists of the primary government, City of Gilroy (the “City”), organizations for which the primary government is financially accountable, and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. The City consists of the primary government, including the Gilroy Public Facilities Financing Authority, a blended component unit as defined in Note 1.A to the basic financial statements.

Note 2 – Basis of Accounting

Funds received under the various grant programs have been recorded within the special revenue and capital projects funds of the City. The City utilizes the modified accrual basis of accounting for the special revenue and capital projects funds. The accompanying Schedule of Expenditures of Federal Awards (the “Schedule”) is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 2, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the “Uniform Guidance”). Therefore, some amounts presented in the Schedule may differ from amounts presented in, or used in, the preparation of City’s basic financial statements.

Note 3 – Schedule of Expenditures of Federal Awards

The accompanying Schedule presents the activity of all federal financial assistance programs of the City. Federal financial assistance received directly from federal agencies, as well as federal financial assistance passed through the State of California, is included in the Schedule. The Schedule was prepared only from the accounts of various grant programs and, therefore, does not present the financial position or results of operations of the City.

Note 4 – Indirect Cost Rate

The City has not elected to use the 10-percent de minimis indirect rate as allowed under Uniform Guidance.

Note 5 - Subrecipients

During the year ended June 30, 2021, the City provided federal funds to the following subrecipients:

Assistance Amount
Listing Provided to
Number(s) Program Name / Subrecipient Names Subrecipients

14.218 Community Development Block Grants / Entitlement Grants Rebuilding Together Silicon Valley 131,236$
Live Oak Adult Day Services 11,549
Gilroy Compassion Center 13,569
Total Community Development Block Grants / Entitlement Grants 156,354 Total Amount Provided to Subrecipients 156,354$

7.2.a
Packet Pg. 34 Attachment: FY21 Single Audit Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2021
9 Section I – Summary of Auditor’s Results
Financial Statements

Types of report the auditors issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified

Internal control over financial reporting:

Material weakness(es) identified? No

Significant deficiency(ies) identified? None noted

Noncompliance material to financial statements noted? No

Federal Awards
Internal control over major federal programs:

Material weakness(es) identified? No

Significant deficiency(ies) identified? None noted

Type of auditor’s report issued on compliance for major federal programs: Unmodified

Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? No

Identification of major federal programs:

Assistance
Listing
Number(s) Name of Federal Program or Cluster Expenditures

14.218 Community Development block Grants/Entitlement Grants 1,136,118$

21.019 Coronavirus Relief Fund 704,824
Total Expenditures of All Major Federal Programs 1,136,118$ Total Expenditures of Federal Awards 2,148,309$
Percentage of Total Expenditures of Federal Awards 52.88%

Dollar threshold used to distinguish between type A and type B programs: $750,000

Auditee qualified as low-risk auditee under 2 CFR 500.520? Yes

7.2.a
Packet Pg. 35 Attachment: FY21 Single Audit Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2021

10 Section II – Financial Statements Findings
A. Current Year Findings – Financial Statement Findings

No current year financial statement findings were noted.

B. Prior Year Findings – Financial Statement Findings

Finding 2020-001 Internal Control Over Financial Reporting/Accounting Close and Accuracy in Financial Reporting

Criteria:

Management is responsible for the preparation and fair presentation of financial statements in accordance with U.S. generally accepted accounting principles. Management is also responsible for designing, implementing, and maintaining appropriate internal control over financial reporting and compliance. Effective internal control over financial reporting provides reasonable assurance for the completeness and accuracy of accounting records, proper year-end closing, and accurate financial reporting. Internal control is defined as a process implemented and monitored by the City Council, management, and other personnel that provides reasonable assurance that the objectives of the City will be achieved. Internal control is not one event, but a series of events that occur throughout an entity’s operations. The City’s internal control system should be designed to provide reasonable assurance regarding the achievement of the following objectives:

Reliability of financial reporting for internal and external use; Effectiveness and efficiency of operations; and
Compliance with applicable laws and regulations.

Condition:

Significant errors were found requiring adjustment to the City’s issued Comprehensive Annual Financial Report for fiscal year ended June 30, 2020 and restatement of the June 30, 2019 net position as previously reported in its audited financial statements. These errors included the omission of the discretely presented component unit, a material component unit to the primary government, from the Government-wide reporting Statement of Net Position and Statement of Activities, and audit entries made to correct prior reporting of the City’s Investment in the DCU, to correct allocations of the net pension and OPEB liabilities, and other asset balances which were understated.

Cause:

During the audit, the City experienced the following impacts to the Finance Department’s operations which we believe significantly impacted its financial close and reporting processes:

There was turnover of key employees in the Finance Department causing delays in the City’s closing process and audit.

The global COVID-19 pandemic caused the closure of City Hall, which impacted and/or reduced staff hours for both the City and the firm.

A new ERP system was still implemented requiring additional training which impacted employee availability.

Existing staff workload increased due to start up activities with a new audit firm.

The City had previously been charging the costs of pension and OPEB liabilities solely to governmental activities, which required additional staff time for analysis to correct the allocation accounting.

Even with efforts to address the above issues, there was continued pressure on City staff to meet its deadline and submission for the GFOA certification, which was met.

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Packet Pg. 36 Attachment: FY21 Single Audit Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Stockton
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2021

11 Section II – Financial Statements Findings (Continued)

B. Prior Year Findings – Financial Statement Findings (Continued)

Finding 2020-001 Internal Control Over Financial Reporting/Accounting Close and Accuracy in Financial Reporting (Continued)

Effect:

Delays in processing transactions timely and closing accounting periods coupled with undue pressure to meet deadlines, can create an environment where accounting errors are not prevented or detected timely. In addition, turnover can cause errors to occur and go undetected without a formal internal control hierarchy in place for review and approval of published financial data. When errors occur and go undetected it can create further delays in the release of audited financial statements.

Recommendation:

We recommend the City establish effective internal control procedures designed to reduce the risk of accounting errors through adequate review and supervision. These should include timely review and approval by management of account reconciliations, sub-ledger transactions, existence/occurrence, completeness, rights or obligations, valuation or allocation, accuracy or classification, and cut-off of accounts at the fund and overall government-wide level. We also recommended the City establish a systemic review process over both internal and external financial reporting.

View of Responsible Officials:

The City concurs with the finding.

Status:

Finding has been implemented.

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Packet Pg. 37 Attachment: FY21 Single Audit Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2021

12 Section III – Federal Awards Finding and Questioned Costs A. Current Year Findings and Questioned Costs – Major Federal Award Program Audit

No findings or questioned costs were noted on the City’s major federal programs for the year ended June 30, 2021.

B. Prior Year Findings and Questioned Costs – Major Federal Award Program Audit

No findings or questioned costs were noted on the City’s major federal programs for the year ended June 30, 2020.

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City of Gilroy
California
Year Ended June 30, 2020
Comprehensive Annual
Financial Report

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Comprehensive Annual Financial Report
Fiscal Year Ended June 30, 2020
Prepared By
Finance Department

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INTRODUCTORY

SECTION

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City of Gilroy
Comprehensive Annual Financial Report
For the Year Ended June 30, 2020
Table of Contents

Page

INTRODUCTORY SECTION (Unaudited)

Letter of Transmittal ...................................................................................................................................................... i Elected Officials & City Staff ....................................................................................................................................... v Organizational Chart .................................................................................................................................................... vi Map ............................................................................................................................................................................. vii GFOA Certificate of Achievement for Excellence in Financial Reporting ............................................................... viii

FINANCIAL SECTION

Independent Auditors’ Report on Financial Statements ......................................................................................... 1

Management’s Discussion and Analysis (Required Supplementary Information) (Unaudited) ......................... 5

Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position .............................................................................................................................. 18 Statement of Activities ................................................................................................................................... 20

Fund Financial Statements:

Governmental Fund Financial Statements:

Balance Sheet .......................................................................................................................................... 27 Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position ......................................................................... 28 Statement of Revenues, Expenditures, and
Changes in Fund Balances ................................................................................................................ 29 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities ...................................................................................................................... 30

Proprietary Fund Financial Statements:

Statement of Net Position ........................................................................................................................ 32 Statement of Revenues, Expenses, and Changes in Net Position ............................................................ 35 Statement of Cash Flows ......................................................................................................................... 36

Fiduciary Fund Financial Statements:

Statement of Fiduciary Assets and Liabilities ......................................................................................... 41

Notes to the Basic Financial Statements ........................................................................................................... 47

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City of Gilroy
Comprehensive Annual Financial Report
For the Year Ended June 30, 2020
Table of Contents (Continued)

Page
FINANCIAL SECTION (Continued)

Required Supplementary Information (Unaudited)

Schedule of Changes in the Net Pension Liability and Related Ratios– Last Ten Fiscal Years CalPERS Miscellaneous Plan ........................................................................................................................ 92 CalPERS Safety Plan ..................................................................................................................................... 93

Schedule of Plan Contributions - Pension – Last Ten Fiscal Years CalPERS Miscellaneous Plan ........................................................................................................................ 94 CalPERS Safety Plan ..................................................................................................................................... 95

Schedule of Changes in the Net OPEB Liability and Related Ratios – Last Ten Fiscal Years ........................ 97

Budgetary Comparison Schedules
General Fund .................................................................................................................................................. 98

Notes to the Budgetary Comparison Schedules ................................................................................................ 101

Supplementary Information:

Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual:

Public Facilities Impact Capital Projects Fund ............................................................................................ 104 Gilroy Community Library Debt Service Fund ........................................................................................... 105

Nonmajor Governmental Funds:

Description of Nonmajor Governmental Funds ........................................................................................... 106 Combining Balance Sheet ............................................................................................................................ 108 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .................................... 115 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual:

Gas Tax Special Revenue Fund ............................................................................................................. 122 Pavement Management Special Revenue Fund ..................................................................................... 123 Public Safety Grants Special Revenue Fund ......................................................................................... 124 Prop 172 Sales Tax Special Revenue Fund ........................................................................................... 125 Community Development Block Grant Special Revenue Fund ............................................................ 126 Rehabilitation Loans Special Revenue Fund ......................................................................................... 127 Housing Trust Fund Special Revenue Fund .......................................................................................... 128 Community Facilities District Special Revenue Fund ........................................................................... 129 Measure B Special Revenue Fund ......................................................................................................... 130 Vehicle License Fee Special Revenue Fund .......................................................................................... 131 Los Arroyos Fund Special Revenue Fund ............................................................................................. 132 CalHome Funds Special Revenue Fund .............................................................................................. 133

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City of Gilroy
Comprehensive Annual Financial Report
For the Year Ended June 30, 2020
Table of Contents (Continued)

Page

Supplementary Information (Continued):

Nonmajor Governmental Funds (Continued):

Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual (Continued):

Capital Projects Fund ............................................................................................................................ 134 BANS 2009 Financing Capital Projects Fund ....................................................................................... 135 Traffic Impact Capital Projects Fund .................................................................................................... 136 Storm Drains Capital Projects Fund ...................................................................................................... 137 Utility Undergrounding Capital Projects Fund ...................................................................................... 138 Street Trees Development Capital Projects Fund .................................................................................. 139 Sewer Development Capital Projects Fund ........................................................................................... 140 Water Development Capital Projects Fund ........................................................................................... 141 Bank Interest Capital Projects Fund ...................................................................................................... 142 Gilroy Community Library Capital Projects Fund ................................................................................ 143 Refunding Lease 2010 Debt Service Fund ............................................................................................ 144 2013 Refunding Bond Debt Service Fund ............................................................................................. 145 CA Energy Commission Loan Debt Service Fund ................................................................................ 146

Internal Service Funds:

Combining Statement of Net Position.......................................................................................................... 148 Combining Statement of Revenues, Expenses and Changes in Net Position .............................................. 150 Combining Statement of Cash Flows ........................................................................................................... 153

Agency Funds:

Combining Statement of Fiduciary Assets and Liabilities ........................................................................... 157 Combining Statement of Changes in Fiduciary Assets and Liabilities ........................................................ 160

Additional Schedules:

Analysis of Available Resources – Selected Funds ..................................................................................... 166 Composition of Available Resources – Selected Funds............................................................................... 168 Annual Report Fillings ................................................................................................................................. 171

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City of Gilroy
Comprehensive Annual Financial Report
For the Year Ended June 30, 2020
Table of Contents (Continued)

Page

STATISTICAL SECTION (Unaudited)

Description of Statistical Section Contents ............................................................................................................... 181

Financial Trends:

Net Position By Component - Last Ten Fiscal Years ............................................................................................ 182 Changes in Net Position - Last Ten Fiscal Years .................................................................................................. 184 Fund Balances of Governmental Funds - Last Ten Fiscal Years ........................................................................... 188 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years ........................................................ 190 Revenue Capacity:

Sales Tax by Category - Last Ten Fiscal Years ..................................................................................................... 192 Sales Tax Rates - Last Ten Fiscal Years ................................................................................................................ 194 Principal Sales Tax Producers – Last Fiscal Year and Nine Years Ago ................................................................ 195 Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years ................................. 196 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years .................................................................... 197 Principal Property Taxpayers - Current Year and Nine Years Ago ....................................................................... 198 Property Tax Levies, Tax Collections, and Delinquency - Last Ten Fiscal Years ................................................ 199 Debt Capacity:

Ratios of Outstanding Debt by Type - Last Ten Fiscal Years ............................................................................... 200 Ratio of General Bonded Debt Outstanding - Last Ten Fiscal Years .................................................................... 202 Schedule of Direct and Overlapping Bonded Debt ................................................................................................ 203 Legal Debt Margin Information - Last Ten Fiscal Years ....................................................................................... 204 Revenue Bond Coverage - Wastewater System - Last Ten Fiscal Years .............................................................. 206

Demographic and Economic Information:

Demographic and Economic Statistics – Last Ten Fiscal Years ........................................................................... 209 Principal Employers – Current Year and Five Years Ago ..................................................................................... 210

Operating Information:

Full-Time Equivalent City Government Employees By Function/Program – Last Ten Fiscal Years ................... 211 Operating Indicators by Function / Program – Last Ten Fiscal Years ................................................................... 212 Capital Assets By Function – Last Ten Fiscal Years ............................................................................................. 214

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i

CITY
ADMINISTRATOR’S
OFFICE
7351 Rosanna Street
Gilroy, CA 95020
Telephone (408) 846-0202
Facsimile (408) 846-0500
http://www.ci.gilroy.ca.us
February 1, 2021
To the Honorable Mayor, Members of the City Council and Citizens of Gilroy:

The City of Gilroy’s (City) Charter requires that the City publish a complete set of audited financial statements for each fiscal year. This report is published to fulfill that requirement for the fiscal year ended June 30, 2020. This Comprehensive Annual Financial Report (CAFR) is submitted for your information and review. The information contained herein has been provided to allow the reader to gain an understanding of Gilroy’s financial activities. Management assumes full responsibility for the completeness and reliability of the information contained in this report. The Management Discussion and Analysis (MD&A) is included to assist the reader in its review of the City’s financial statements. It provides a roadmap for the financial statements and related notes.

To provide a reasonable basis for making these representations, management of the City has established a comprehensive framework of internal controls that is designed to both protect the government’s assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP). Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable, rather than absolute assurance that the financial statements will be free from material misstatements. Management is committed to maintaining the City’s internal controls to adequately safeguard assets; and to provide reasonable assurances of proper recording of financial transactions.

The Pun Group LLP, Certified Public Accountants, have issued an unmodified (“clean”) opinion on Gilroy’s financial statements for the year ended June 30, 2020. The independent auditor’s report is located at the front of the financial section of this report. The MD&A immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction.

Profile of the government
The City is the southernmost city in Santa Clara County, and is located approximately 25 miles south of San Jose and approximately 75 miles south of San Francisco. Gilroy sits at the crossing of U.S. Highway 101 and State Highway 152. The City was first incorporated in 1870 and became a charter city on January 8, 1960. As of May 2020, the City had a population estimate of 57,084.

Situated between the Diablo and Santa Cruz mountains in the Santa Clara Valley, the City experiences mild temperatures, while missing most of the coastal fog. The agricultural growing season ranges from 300 to 350 days a year. Over the past few decades, the City has been transitioning from an agricultural economy into a light industrial- and services-based economy.

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The City operates under the Council-Administrator form of government. The seven City Council members, including the Mayor, are elected-at-large to four-year terms in alternate slates of three every two years, with the Mayor being elected every four years. The City Council appoints the City Administrator who heads the executive branch of the government, implements City Council directives and policies, and manages the administrative and operational functions through the department directors. The City Administrator appoints the department directors with the exception of the City Clerk and the City Attorney, who are appointed by the City Council.

The budget of the City is a detailed operating and capital improvement plan that identifies estimated costs and activities as related to estimated revenues. The City Administrator submits to the City Council a proposed biennial budget for all funds and the Council then proceeds to make any changes to the proposed budget it deems necessary. Before adopting the proposed budget, the Council holds a public hearing. After the conclusion of the public hearing the Council may further make revisions to the proposed budget. Thereafter the Council adopts the budget with revisions, if any.

The City provides municipal services including police and fire protection, community and economic development, recreation activities, parks and street maintenance, water and sewer utilities and general City administration. Natural gas and electricity are provided by Pacific Gas and Electric Company. Water service is provided by the City. Wastewater is collected and treated by the South County Regional Wastewater Authority. Recycling and solid waste disposal services are provided in the City by Recology South Valley.

Economic Setting
Gilroy’s economy has been dominated by agriculture and its related industries (food processing, etc.) since the 1800s. However, the growing influence of Silicon Valley and regional population growth have resulted in significant changes in the local economy during the past twenty years. The economic boom in Silicon Valley which began in the early 1990s had profound impacts on the local economy, resulting in significant increases in home prices and land values as well as significant decreases in local unemployment.

Today, Gilroy’s economy is diversified into non-agricultural commercial and industrial activities such as light manufacturing, wholesale operations, automobile sales, and large retail centers.

The Gilroy Outlets, Auto Mall area, and retail developments east of Highway 101 have put the City on the map as a regional retail destination, and helped strengthen the City’s tax revenues.

Manufacturing and wholesale/distribution operations take advantage of Gilroy’s proximity to Silicon Valley and easy access to Highway 152, leading to Interstate 5 and the Central Valley.

Development and Construction Activity
Prior to the 2008 economic recession, local real estate development and construction industries experienced a high demand for new residential, commercial, and industrial development. Although limited by the City’s Residential Development Ordinance (RDO), new housing construction saw a surge of activity, as RDO allocations approved in earlier years were built out. Housing developments in the northwest quad, north-central Gilroy, and Eagle Ridge area brought new households to the City, many residents of which commute to work in the north county area.

Construction activity was also high in the southeast industrial area.

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Fiscal Year 2020 (FY 20) Financial Results
The City ended FY 20 with an operating loss. Total Citywide expenditures were less than anticipated primarily due to savings in personnel and departmental expenditures, consistent with FY 19 savings. However, General Fund revenue for FY 20 was lower than budgeted, primarily due to less Sales Tax revenue, Plan Check and Inspection revenue, and Building Permit revenue than anticipated. The net impact was an operating loss in the General Fund.

Revitalization and Capital Improvements
Commercial development in certain corridors in Gilroy has added millions of square feet of retail and professional services space to the City. Downtown revitalization efforts have helped attract new businesses to the area, has retained existing businesses, and creating a core area of antique stores, specialty shops, and restaurants. Restored historic buildings also add to the downtown’s character, including the Old City Hall and Train Depot. However, some vacant storefronts persist and the City is focusing additional efforts at revitalizing these spaces. Within the past decade major projects including the Downtown Streetscape, the Camino Arroyo Bridge, the New Gilroy Library, and the Aquatics Center at Christopher High School have been added as significant assets to the community. The new Gilroy Library was completed in the spring of 2012 under budget and ahead of schedule.

The City’s capital improvement plan (CIP) provides a 5-year window of projects to be completed within the CIP horizon. The financial health of the capital improvement funds have improved over the last few years as a result of new development.

Long-term financial planning and major initiatives
The City’s general fund balance as of June 30, 2020 was $14.9 million. In June 2017, City Council adopted a general fund reserve policy of retaining a general fund reserve equal to 20% of annual general fund expenditures, or approximately $11.6 million at budget adoption for FY 20. The policy also adopted a separate economic stability reserve that is used only for limited purposes, at 10% of general fund expenditures, or approximately $5.8 million.

Near the end of FY 20, the City realized significant financial and operational impacts as a result of the Covid-19 pandemic. The City immediately implemented a Financial Recovery Plan which included the use of the Economic Uncertainty Fund and instituted workforce reductions that stabilized the City’s fiscal health. As part of the recovery plan, the City also implemented long- term expenditure adjustments to address a known structural imbalance. These measures were made to ensure that City maintained its’ long-standing fiscal health for years to come and to this point have achieved the desired results.

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Award and Acknowledgements
The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Gilroy for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2019. This was the sixth consecutive year that the government achieved this prestigious award. In order to be awarded a Certificate of Achievement, the government had to publish an easily readable and efficiently organized CAFR that satisfied both generally accepted accounting principles and applicable program requirements.

A Certificate of Achievement for Excellence in Financial Reporting is valid for a period of one year only. However, we believe that our current CAFR continues to meet the Certificate of Achievement for Excellence in Financial Reporting Program’s requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate.

The preparation of this report would not have been possible without the skill, diligence, and commitment of the entire staff of the Finance Department, and specifically Finance Manager Rosemary Guerrero. We wish to thank all government departments for their assistance in providing the data necessary to prepare this report. Credit also is due to the Mayor and the City Council for their continuing support for maintaining the highest standards of professionalism in the management of Gilroy’s finances and prioritizing the goal of financial sustainability.

Respectfully submitted,
Jimmy Forbis
City Administrator

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City of Gilroy
Elected Officials & City Staff
As of Fiscal Year End - June 30, 2020

ELECTED OFFICIALS
Roland Velasco Mayor
Marie Blankley Mayor Pro Tempore
Dion Bracco Council Member
Carol Marques Council Member
Peter Leroe-Muñoz Council Member
Cat Tucker Council Member
Fred Tovar Council Member

CITY STAFF
Jimmy Forbis (Interim) City Administrator
Shawna Freels City Clerk
Karen Garner Community Development Director
Jimmy Forbis Finance Director
Mark Bisbee (Interim) Fire Chief
LeeAnn McPhillips Human Resources Director/Risk Manager Scot Smithee Police Chief
Girum Awoke Public Works Director
Maria DeLeon Recreation Director

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CITY COUNCILADMINISTRATIVE ORGANIZATION CITY ATTORNEY Andy Faber CITY CLERK Shawna Freels COMMUNITY & ENGAGEMENT MANAGER Rachelle Bedell SR. MANAGEMENT ANALYST Trevin W. Barber MANAGEMENT ASSISTANT OFFICE ASSISTANT II COMMUNITY DEVELOPMENTKaren Garner PUBLIC WORKSGirum Awoke FINANCEJimmy Forbis HUMAN RESOURCESLeeAnn McPhillips RECREATIONMaria De Leon POLICEScot Smithee ENVIRONMENTAL SERVICESFIRE PREVENTION/HAZARDOUS MATERIALSPLANNINGOPERATIONSPARKS WATER STREETS, SEWERS, TREES FACILITIES FLEET ENGINEERINGTRANSPORTATION/TRAFFIC DEVELOPMENT CAPITAL PROJECTS SCRWAGENERAL ACCOUNTING ACCOUNTS PAYABLE PAYROLL INFORMATION TECHNOLOGY ADMINISTRATION CITY ADMINISTRATOR Jimmy Forbis (Interim) FIREMark Bisbee (Interim) OPERATIONS EMS/TRAINING ADMINISTRATIVE SUPPORTLABOR RELATIONS EMPLOYEE BENEFITS RECRUITMENT/SELECTION RISK MANAGEMENT/ WORKERS COMP CLASSIFICATION/ COMPENSATION EMPLOYEE TRAINING & DE-VELOPMENT ADAPTIVE AFTER SCHOOL AQUATICS ADULT & YOUTH SPORTS CONTRACT CLASSES CULTURAL ARTS EARLY CHILDHOOD RECREA-TION MUSEUM PARK & FACITIES RESERVA-TIONS SENIOR CENTER SPECIAL EVENITS SUMMER DAY CAMP VOLUNTEERS YOUTH CENTER YOUTH SCHOLARSHIP FIELD OPERATIONSBUILDINGHOUSING AND COMMUNITY DEVELOPMENTCODE ENFORCEMENTSPECIAL OPERATIONS TRAFFIC UNIT INVESTIGATIONS ANTI-CRIME TEAM YOUTH TASK FORCE ADMIN. SERVICES RECORDS COMMUNICATIONS ADMINISTRATIONBUDGET UTILITY BILLING PURCHASING vi

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City of Gilroy Map
vii

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viii

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FINANCIAL SECTION

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INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and the Members of the City Council of the City of Gilroy
Gilroy, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of City of Gilroy, California (the “City”) as of and for the year ended June 30, 2020, and the related notes to the basic financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes 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.

Auditors’ Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2020, 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.

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To the Honorable Mayor and the Members of the City Council of the City of Gilroy
Gilroy, California

2 Emphasis-of-Matter Regarding Prior Period Adjustments As described in Note 15 to the basic financial statements, certain amounts were restated due to improper reporting of $8,435,277 in net pension and OPEB liabilities and related items in the governmental activities which should have been allocated and reported in the business type activities and enterprise funds for the year ending June 30, 2020. In additions, accounts receivable for grants and capital assets in the governmental activities were understated by $1,416,417. Business-type activities and Sewer Enterprise Funds were overstated in the amount of $2,952,971 for the equity investment in its discretely presented component unit, the South County Regional Wastewater Authority.

Accordingly, beginning net position as of July 1, 2020, of the governmental activities, business type activities and the sewer and water funds were restated to reflect the correction of these errors. Our opinions are not modified with respect to these matters.

Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, the Budgetary Comparison Schedules, the Schedules of Changes in Net Pension Liability and Related Ratios, the Schedules of Contributions – Pensions, the Schedule of Changes in Net Other Postemployment Benefits Liability and Related Ratios, and the Schedule of Contributions – Other Postemployment Benefits on pages 5 to 14 and 92 to 101 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the Required supplementary Information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other 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 Introductory Section, the Combining and Individual Nonmajor Fund Financial Statements, Additional Schedules, and the Statistical Section 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 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 are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

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To the Honorable Mayor and the Members of the City Council of the City of Gilroy
Gilroy, California

3 The Introductory and the Statistical Sections, and Additional Schedules have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated February 1, 2021, except for the effect of the significant deficiencies subsequently reported in Finding 2020-001 which is as of July 25, 2022 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Santa Ana, California
February 1, 2021, except for the South County Regional Wastewater Authority, a Discretely Presented Component Unit (“DCU”) of the City and Notes 15 – Prior Period Adjustments and 16 - Subsequent Events, which is as of July 25, 2022.

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City of Gilroy
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2020

5 The following discussion and analysis of the financial performance of the City of Gilroy provides an overview of the City’s financial activities for the fiscal year ended June 30, 2020 (FY 20). Please read it in conjunction with the financial statements identified in the accompanying table of contents.

Using the Accompanying Financial Statements
This annual report consists of a series of financial statements. The Statement of Net Position and the Statement of Activities provide information about the activities of the City as a whole and present a longer-term view of the City’s finances. Also included in the accompanying report are fund financial statements. For governmental activities, the fund financial statements tell how these services were financed in the short term as well as what remains for future spending.

Fund financial statements also report the City’s operations in more detail than the government-wide statements by providing information about the City’s most significant funds. The remaining statements provide financial information about activities for which the City acts solely as a trustee or agent for the benefit of those outside of the government.

Notes to the Basic Financial Statements

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

FINANCIAL HIGHLIGHTS

The City’s overall net position decreased from FY 19 primarily due to revenue decline in sales tax, plan check and inspection revenue, and building permit revenue. As of June 30, 2020, the City’s governmental funds reported a combined ending fund balance of $72.0 million, a decrease of $11.5 million.

The FY 20 General Fund final budget revenue amount of $56.5 million was higher than the actual amount of $51.3 million. The difference of $5.2 million was due in part to lower than anticipated Sales Tax revenue, Plan Check and Inspection Fee revenue, and Building Permit revenue.

General Fund revenue overall was lower than budgeted for certain revenue types. While property tax revenue was approximately $0.9 million more, and utility tax was $0.7 million more than anticipated, sales tax revenue was $3.3 million less, and transient occupancy tax revenue was $0.7 million less than anticipated.

The FY 20 amended General Fund budget expenditure amount of $60.8 million was higher than the actual amount of $56.1 million due to departmental savings, including personnel savings resulting from vacant positions and one-time expenditures that were not completed in FY 20. In addition, the City maintained its conservative spending practices during the fiscal year.

The general fund reserve as of June 30, 2020 decreased by $12.9 million to $14.9 million which is 26% of actual FY 20 expenditures.

Total City’s long-term debt decreased by $3.8 million due to principal reduction payments and amortization of premium of $22.9 and new bond proceeds from Library GO Bond Series B of $19.1 million.

7.2.b
Packet Pg. 63 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2020

6 OVERVIEW OF THE FINANCIAL STATEMENTS

The annual report consists of four parts – management’s discussion and analysis (this section), the basic financial statements, required supplementary information, and a section that presents combining statements for nonmajor governmental funds, internal service funds and fiduciary funds. The basic financial statements include two kinds of statements that present different views of the City:

The first two statements are government-wide financial statements that provide both long-term and short-term information about the City’s overall financial status.

The remaining statements are fund financial statements that focus on individual parts of the City government, reporting the City’s operations in more detail than the government-wide statements.

The governmental funds statements tell how general government services like public safety were financed in the short term as well as what remains for future spending.

Proprietary funds statements offer short-term and long-term financial information about the activities the government operates like businesses, such as the water and sewer system.

Fiduciary funds statements provide information about the fiduciary relationships – like the agency funds of the City – in which the City acts solely as agent or trustee for the benefit of others, to whom the resources in question belong.

The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information that provides additional financial and budgetary information.

Figure A-1 summarizes the major features of the City’s financial statements, including the portion of the City government they cover and the types of information they contain. The remainder of this overview section of management’s discussion and analysis explains the structure and contents of each of the statements.

7.2.b
Packet Pg. 64 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2020

7 Figure A-1
Major Features of the City’s Government-wide and Fund Financial Statements Fund Statements
Government-wide Statements
Governmental Funds

Proprietary Funds

Fiduciary Funds

Scope Entire City government
(except fiduciary funds) and
the City’s component units
The activities of the
City that are not
proprietary or fiduciary
Activities the City
operates similar to
private businesses
Instances in which the
City is the trustee or
agent for someone
else’s resources

Required
financial
statements
Statement of net position
Statement of activities
Balance sheet
Reconciliation to
the balance sheet
to the statement of
net position
Statement of
revenues,
expenditures and
changes in fund
balances
Reconciliation of
the statement of
revenues,
expenditures and
changes to fund
balances to the
statement of
activities
Statement of net
position
Statement of
revenues,
expenses and
changes in net
position
Statement of cash
flows
Statement of
fiduciary net
position
Statement of
changes in
fiduciary net
position

Accounting
basis and
measurement
focus
Accrual accounting and
economic resources focus
Modified accrual
accounting and current
financial resources
focus
Accrual accounting
and economic
resources focus
Accrual accounting no
measurement focus

Type of asset/
liability
information
All assets, liabilities, and
deferred inflows/outflows of
resources, both financial and
capital, and short-term and
long-term
Only assets expected to
be used up and
liabilities that come
due during the year or
soon thereafter; no
capital assets or long-
term debt included
All assets and
liabilities, both
financial and capital,
and short-term and
long-term
All assets and
liabilities, both short-
term and long-term;
the City’s fiduciary
funds do not currently
contain capital assets,
although they can.

Type of inflow/
outflow
information
All revenues and expenses
during year, regardless of
when cash is received or paid
Revenues for which
cash is received during
or soon after the end of
the year; expenditures
when goods or services
have been received and
payment is due during
the year or soon
thereafter
All revenues and
expenses during the
year, regardless of
when cash is received
or paid
All revenues and
expenses during year,
regardless of when
cash is received or
paid.

7.2.b
Packet Pg. 65 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2020

8 Reporting the City as a Whole

The accompanying government-wide financial statements include two statements that present financial data for the City as a whole. One of the most important questions asked about the City’s finances is, “Is the City as a whole better off or worse off as a result of the year’s activities?” The Statement of Net Position and the Statement of Activities report information about the City as a whole and about its activities in a way that helps answer this question. These statements include all assets, deferred outflows of resources and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year’s revenues and expenses are considered regardless of when cash is received or paid.

These two statements report the City’s net position and changes in them. You can think of the City’s net position – the difference between assets and deferred outflow of resources, and liabilities and deferred inflow of resources– as one way to measure the City’s financial health, or financial position. Over time, increases and decreases in the City’s net position are one indicator of whether its financial health is improving or deteriorating. You will need to consider other nonfinancial factors, however, such as changes in the City’s property tax base and the condition of the City’s roads, to assess the overall health of the City.

In the Statement of Net Position and the Statement of Activities, we divide the City into two kinds of activities:

Governmental activities - Most of the City’s basic services are reported here. Sales taxes, property taxes, and other revenues finance most of these activities.

Business-type activities - The City charges a fee to customers to help it cover all or most of the cost of the services accounted for in these funds.

Reporting the City’s Major Funds

The fund financial statements provide detailed information about the City’s most significant funds – not the City as a whole. Some funds are required to be established by State law or by bond covenants. However, City Council establishes many other funds to help it control and manage money for particular purposes or to show that it is meeting administrative responsibilities for using certain taxes, grants, or other money (such as grants received). The City’s two kinds of funds – governmental and proprietary – use different accounting approaches.

Governmental funds - Most of the City’s basic services are reported in governmental funds, which focus 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 current 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 you determine whether there are more or fewer financial resources that can be spent in the near future to finance the City’s programs. We describe the relationship or differences between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds in reconciliations following the fund financial statements.

Proprietary funds - When the City charges customers for the services it provides - whether to outside customers or to other units of the City - these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Activities. In fact, the City’s enterprise funds (a component of proprietary funds) are the same as the business-type activities we report in the government-wide statements but provide more detail and additional information, such as cash flows for proprietary funds. We use internal service funds (the other component of proprietary funds) to report activities that provide supplies and services for the City’s other programs and activities.

7.2.b
Packet Pg. 66 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2020

9 Reporting the City’s Fiduciary Responsibilities

The City is an agent for certain assets held for, and under the control of, other organizations and individuals. All of the City’s fiduciary activities are reported in a separate Statement of Fiduciary Assets and Liabilities. We exclude these activities from the City’s other financial statements because the City cannot use these assets to finance its operations.

The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes.

GOVERNMENT-WIDE FINANCIAL STATEMENTS

A summary of the government-wide statement of net position (in millions) follows:
2020 2019 2020 2019 2020 2019
Cash and investments $ 95.3 $ 102.4 $ 44.5 $ 41.6 $ 139.8 $ 144.0 Other Assets 10.6 12.0 70.7 73.0 81.3 85.0 Capital Assets 216.7 219.8 91.4 91.1 308.1 310.9 Total Assets 322.6 334.2 206.6 205.7 529.2 539.9
Deferred Outflows 13.7 16.2 2.5 0.7 16.2 16.9
Other Liabilities 13.7 12.7 3.7 4.1 17.4 16.8
Long term liabilities outstanding 151.4 154.8 20.6 19.4 172.0 174.2 Total Liabilities 165.1 167.5 24.3 23.5 189.4 191.0
Deferred Inflows 4.8 4.7 0.8 0.1 5.6 4.8
Net Position
Net investment in capital assets 151.9 156.9 86.5 91.1 238.4 248.0 Restricted 57.1 50.7 0.0 0.0 57.1 50.7
Unrestricted (42.6) (29.4) 97.5 91.7 54.9 62.3 Total Net Position $ 166.4 $ 178.2 $ 184.0 $ 182.8 $ 350.4 $ 361.0 Governmental Activities Business-Type Activities Total

7.2.b
Packet Pg. 67 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2020

10 A summary of the government-wide statement of activities follows:

Changes in Net Position (In millions):

2020 2019 2020 2019 2020 2019
Revenues
Program revenues:

Charges for services 9.4$ 12.6$ 27.5$ 25.2$ 36.9$ 37.8$ Operating grants and contributions 14.2 14.1 - 14.2 14.1 Capital grants and contributions 1.9 6.5 2.4 4.2 4.3 10.7 General revenues:

Taxes 41.6 43.2 - - 41.6 43.2 Investment income 2.0 2.8 - - 2.0 2.8 Miscellaneous 0.2 - 1.2 1.3 1.4 1.3 Total revenues 69.3 79.2 31.1 30.7 100.4 109.9 Expenses:

General government 6.1 7.4 - - 6.1 7.4 Public safety 40.1 32.8 - - 40.1 32.8 Public Works 23.5 20.8 - - 23.5 20.8 Community development 8.6 7.7 - - 8.6 7.7 Interest expense 2.4 3.3 - - 2.4 3.3 Water and Sewer - - 27.3 31.9 27.3 31.9 Reclaimed water - - - - - - Total expenses 80.7 72.0 27.3 31.9 108.0 103.9 Change in net position before special item and
extraordinary loss and transfers (11.4) 7.2 3.8 (1.2) (7.6) 6.0 Transfers (0.4) (0.6) 0.4 0.6 - - Speical Items - - - (2.3) - (2.3) Change in net position (11.8) 6.6 4.2 (2.9) (7.6) 3.7 Net position, beginning of year (as restated) 178.2 171.6 179.8 185.7 358.0 357.3 Net position, end of year 166.4$ 178.2$ 184.0$ 182.8$ 350.4$ 361.0$ Business-Type Activities TotalGovernmental Activities
The increase or decrease in net position can provide an indication as to whether the overall financial position of the City improved or deteriorated during the year. The net position of the City’s governmental activities decreased between years primarily due to decreased revenue due to the financial and operational impacts as a result of the COVID-19 pandemic. See below for a discussion of the change in capital assets.

The net position of the City’s business activities also decreased slightly between years. See below for a discussion of the change in capital assets.

Charges for services for governmental activities decreased between years primarily due to decreased plan check and inspection fees, and building permit fees from FY 19. Additionally, sales tax revenue and interest income decreased from FY 19. Capital contributions for business-type activities decreased between years due to a reduction in the investment and completion of sewer improvement projects.

7.2.b
Packet Pg. 68 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2020

11 MAJOR FUNDS

As noted earlier, the City uses fund accounting to provide proper financial management of the City’s resources and to demonstrate compliance with finance-related legal requirements.

Major Governmental Funds. The General Fund is the chief operating fund of the City. In the financial statements for the year ended June 30, 2011, the City began combining its Sidewalk Repair, Library Reserve, Golf Course and Community Recreation special revenue funds with the City’s General Fund for financial statement presentation as required under GASB 54. At the end of FY 20, the total fund balance of the general fund (as presented in the aforementioned manner) was $14.9 million.

Revenues decreased between the years ended June 30, 2019 and June 30, 2020 primarily as a result of decreased sales tax revenue, and decreased charges for services in the areas of plan check and inspection fees, and building permits.

Near the end of FY 20, the City realized significant financial and operational impacts as a result of the COVID-19 pandemic.

The Public Facilities Impact Capital Projects Fund has a total fund deficit of $6.3 million. In the year ended June 30, 2006 several impact funds were consolidated into this fund. In February 2008, this fund borrowed $13.7 million from several funds for the purchase of Gilroy Gardens. See Note 4, in the Notes to the Basic Financial Statements for additional information.

Major Enterprise Funds. Unrestricted net position of the Sewer Fund at the end of the year amounted to $79.6 million and for the Water Fund amounted to $17.9 million.

GENERAL FUND

The final budgeted operating expenditures of the General Fund were $60.8 million. The actual operating expenditures of the General Fund were $56.1 million, approximately $4.7 million less than the final budget. The difference is primarily due to savings in personnel and departmental expenditures. In the last quarter of FY 20, the City enacted numerous expenditure adjustments to minimize the use of the City’s Unrestricted General Fund Reserve. At the time, the City expected to utilize the entire Economic Stability Reserve (ESR) and to a great extent did so. As the COVID- 19 pandemic has continued to impact both the City’s operational and financial performance, the City now expects to utilize the remaining ESR in FY 21 while the City awaits the return of a more normal economic environment. The ESR has been used for the purposes it was originally intended – to allow the City (as much as possible) to maintain service levels in the event of a severe economic downturn.

In June 2017, the City Council adopted a new general fund reserve policy that consisted of (i) an unrestricted General Fund Reserve of 20% of general fund expenditures and (ii) an Economic Stability Reserve of 10% of general fund expenditures that is intended to help the City weather a severe economic crisis. The following table summarizes the adopted general fund reserve policy:

General Fund Reserve Description of Use Amount
Unrestricted Unbudgeted costs or revenue shortfall
Economic Stability Specific triggers in severe economic downturn
Minimum of 20% of
expenditures
Minimum of 10% of
expenditures

7.2.b
Packet Pg. 69 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2020

12 The Economic Stability Reserve shall only be used in extraordinary circumstances, upon satisfaction of one of the following “economic triggers” and with the majority vote of the City Council:

State take-away of significant revenue

Large drop in property taxes (decrease in assessed valuations)

Major business closures (sales tax and/or utility users’ tax impact)

Dramatic drop in development from projections

Large unexpected drop in sales taxes (or other primary revenues - utility users’ tax, franchise fees or transient occupancy tax) due to severe recession

The economic triggers cause the General Fund Reserve to fall below a predetermined percentage of expenditures (e.g., 20%).

When the Economic Stability Reserve is used, the City is obligated to replenish the reserve by the end of the next biennial budget to 10% of the general fund expenditures for the given year.

CAPITAL ASSETS

Capital Assets (net of depreciation) (In millions):

2020 2019 2020 2019 2020 2019
Land $ 21.3 $ 21.3 $ - $ - $ 21.3 $ 21.3 Construction in progress 8.8 4.6 7.6 5.8 16.4 10.4 Buildings and structures 77.8 80.9 - - 77.8 80.9 Infrastructure/water mains
and lines/sewer mains 101.4 105.3 83.8 85.3 185.2 190.6 Furniture and equipment 7.4 7.7 - - 7.4 7.7 Total $ 216.7 $ 219.8 $ 91.4 $ 91.1 $ 308.1 $ 310.9 .

Governmental activities Business-Type activities Total

7.2.b
Packet Pg. 70 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2020

13 The major changes to capital assets during the year ended June 30, 2020 were as follows:

Buildings and improvements for governmental activities decreased primarily as a result of depreciation.

Furniture and equipment for governmental activities decreased as a result of depreciation.

Vehicles for governmental activities increased due to several major vehicle purchases, offset by depreciation expense.

IT equipment and software for governmental activities decreased as a result of depreciation.

Infrastructure for governmental activities decreased due to depreciation and assets reaching end of life, partially offset by additions in medians, storm drains, streetlights, pavement, sidewalk, and curb and gutter.

Construction in progress for governmental activities increased due to numerous projects that have started and will be completed in FY 21.

Utility system capital assets for business-type activities decreased as a result of depreciation and assets reaching end of life.

Construction in progress for business-type activities increased due to the transfer of completed assets to the utility system.

Additional information on the City’s capital assets can be found in the Notes 1I and 5 to the Basic Financial Statements.

LONG-TERM DEBT

As of June 30, 2020, the City’s governmental activities had bonded debt outstanding of $64.2 million. Of this amount, $26.6 million represents general obligation bonds secured solely by specified revenue sources. The remaining debt of $36.7 million represents refunding revenue bonds and a loan payable of $0.9.

2020 2019
Loan Payable 857,429$ 948,011$
General Obligation Bonds 26,630,459 27,983,538 Refunding Revenue Bonds 36,713,218 39,097,182
Total Long-Term Debt 64,201,106$ 68,028,731$

The City issued Certificates of Participation 2003 Series, in the amount of $45,900,000 to fund several capital projects.

These debt instruments were refinanced in August 2009 with bond anticipation notes (BANs). In 2010 the City refinanced its 2009 BANs with 50% fixed-rate, long- term lease revenue bonds (LRBs) (with a final maturity in 2033) and 50% three-year short-term BANs. These BANs were scheduled to mature on November 1, 2013 and were refinanced in August 2013 with LRBs. See Note 8 in the Notes to the Basic Financial Statements for a further discussion.

The City issued $10.5 million principal amount of General Obligation Bonds 2009 Series to finance the acquisition, construction and improvement of facilities to be used as a public library within the City. In FY 11, the City issued an additional $23.5 million principal amount of General Obligation Bonds 2010 Series for the library. The bonds were refunded on June 26, 2019 with proceeds from the 2019 General Obligation Refunding Bonds, Series A. See Note 8 in the Notes to the Basic Financial Statements for additional information.

The City’s long-term business-type debt includes Wastewater Revenue Bonds of $7,080,000. See Note 8 for additional information.

Additional information on the City’s long-term debt can be found in the Notes to the Basic Financial Statements.

7.2.b
Packet Pg. 71 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2020

14 Budgetary Highlights

See the Required Supplementary Information in the City’s financial statements for a comparison of the City’s budgeted revenues and expenditures to actual revenues and expenditures. When preparing its budget, the City projects its revenues using realistic, but conservative methods so as to budget its expenditure appropriations in a prudent manner.

As the City had adequate reserves, funds were utilized from the unrestricted fund balance to augment revenue shortfalls during the year. As previously noted, the City has two unr estricted reserve levels – the Unrestricted General Fund Reserves and the Economic Stability Reserve, the latter being partially utilized in FY 20. The City continues to monitor and make adjustments as necessary to ensure that there will be no need to utilize Unrestricted General Reserves.

In addition, the City continued economic incentive transfers from the general fund to the impact funds, to make these funds whole for the previously granted incentives.

Economic Factors and Fiscal Year 20 Budgets

For the first three-quarters of FY 20 the City continued to experience a healthy economy as evidenced by the increase in sales tax and property tax receipts during that period, however on March 13, 2020 the City ceased in-person operations as a results of the Santa Clara County (SCC) Public Health “Stay-At-Home” order which also closed most of the City’s businesses to in-person activity. The results of this event were immediate and significant and at the time, the City forecasted an annual loss of 20% of its’ sales tax revenue. To date, that assumption has proved to be accurate.

The City has continually shown the will to address its’ issues head-on and as a result the City not only weathered the initial financial impacts of the COVID-19 pandemic, but it is also primed and ready to respond to ongoing challenges the pandemic is most likely to present. The City has always taken a conservative approach in its spending in order to maintain a balanced budget – for and on behalf of the community – and will continue to be financially prudent during the current biennial budget.

The City regularly reviews its revenues and expenditures and reports to the City Council to keep both the Council and the residents apprised of its current fiscal health and to ensure the adequate protection of the City’s financial resources.

Contacting the City’s Financial Management
This financial report is designed to provide our citizens, taxpayers, customers, and creditors with a general overview of the City’s finances and to show the City’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Finance Director’s Office, at the City of Gilroy, 7351 Rosanna Street, Gilroy, California 95020.

7.2.b
Packet Pg. 72 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

BASIC FINANCIAL STATEMENTS
15 7.2.b
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16 7.2.b
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GOVERNMENT-WIDE FINANCIAL STATEMENTS
17 7.2.b
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Discretely Presented
Component Unit
South County
Governmental Business-Type Regional Wastewater
Activities Activities Total Authority
ASSETS
Current assets:

Cash and investments 90,642,564$ 41,858,353$ 132,500,917$ 9,935,264$ Cash and investments with fiscal agent 4,697,482 2,665,006 7,362,488 - Accounts receivable 90,823 3,639,635 3,730,458 150,566 Due from other governments 4,929,016 - 4,929,016 429,120 Inventory 147,311 470,571 617,882 - Prepaid items 110,821 - 110,821 - Interest receivable 1,172,875 - 1,172,875 - Loans receivable 3,392,599 - 3,392,599 - Due from primary government - - - 576,445 Due from component unit 1,044,367 1,044,367 - Total current assets 105,183,491 49,677,932 154,861,423 11,091,395 Noncurrent assets:

Land held for resale 706,754 - 706,754 - Equity investment in component unit (Note 6) - 65,549,814 65,549,814 - Capital assets - nondepreciable 30,092,317 7,603,111 37,695,428 25,107,421 Capital assets - depreciable, net 186,655,090 83,803,970 270,459,060 71,315,690 Total noncurrent assets 217,454,161 156,956,895 374,411,056 96,423,111 Total assets 322,637,652 206,634,827 529,272,479 107,514,506

DEFERRED OUTFLOWS OF RESOURCES
Deferred charges on refunding - 124,254 124,254 - Deferred outflows of resources related to pensions 12,871,991 2,172,815 15,044,806 - Deferred outflows of resources related to OPEB 800,597 168,531 969,128 - Total deferred outflows of resources 13,672,588 2,465,600 16,138,188 - Primary Government
City of Gilroy
Statement of Net Position
June 30, 2020
See accompanying Notes to the Basic Financial Statements 18 7.2.b
Packet Pg. 76 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Discretely Presented
Component Unit
South County
Governmental Business-Type Regional Wastewater
Activities Activities Total Authority

LIABILITIES
Current liabilities:

Accounts payable 3,067,774$ 1,091,382$ 4,159,156$ 1,174,151$ Accrued payroll and benefits 2,733,556 - 2,733,556 49,545 Deposits payable - 57,670 57,670 - Interest payable 641,509 147,500 789,009 - Unearned revenues 2,726,102 - 2,726,102 - Due to component unit 426,788 149,657 576,445 - Due to the primary government - - - 1,044,367 Compensated absences due within one year 230,000 27,000 257,000 - Claims payable due within one year 909,000 - 909,000 - Long-term debt due within one year 2,957,328 2,260,000 5,217,328 - Total current liabilities 13,692,057 3,733,209 17,425,266 2,268,063 Noncurrent liabilities:

Compensated absences due in more than one year 1,756,656 242,477 1,999,133 10,840 Claims payable due in more than one year 2,713,445 - 2,713,445 - Long-term debt due in more than one year 61,243,778 5,285,517 66,529,295 - Aggregate net pension liabilities 73,684,672 12,488,155 86,172,827 - Net OPEB liabilities 12,056,601 2,538,001 14,594,602 - Total noncurrent liabilities 151,455,152 20,554,150 172,009,302 10,840 Total liabilities 165,147,209 24,287,359 189,434,568 2,278,903

DEFERRED INFLOWS OF RESOURCES
Deferred pension-related items 2,495,300 282,048 2,777,348 - Deferred OPEB-related items 2,299,361 484,032 2,783,393 - Total deferred inflows of resources 4,794,661 766,080 5,560,741 -

NET POSITION
Net investment in capital assets 151,904,792 86,503,324 238,408,116 96,423,111 Restricted for:

Nonspendable:

Minority interest of component unit (Note 6) - - - 36,732,816 Spendable:

Public safety 560,033 - 560,033 - Community development 8,022,954 - 8,022,954 - Public works 44,465,113 - 44,465,113 - Debt service 4,089,661 - 4,089,661 - Total restricted 57,137,761 - 57,137,761 36,732,816 Unrestricted (deficit) (42,674,183) 97,543,664 54,869,481 (27,920,324) Total net position 166,368,370$ 184,046,988$ 350,415,358$ 105,235,603$ June 30, 2020
Statement of Net Position (Continued)
City of Gilroy
Primary Government
See accompanying Notes to the Basic Financial Statements 19 7.2.b
Packet Pg. 77 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Capital Grants
Charges for Operating Grants and
Expenses Services and Contributions Contributions
Functions/Programs
Governmental Activities:

General government 6,131,791$ 3,550,758$ 135,442$ -$ Public safety 40,088,865 1,188,951 1,093,696 - Community development 8,556,959 3,909,360 12,973,930 1,931,458 Public works 23,525,423 715,299 44,567 - Interest 2,431,588 - - - Total Governmental Activities 80,734,626 9,364,368 14,247,635 1,931,458 Business-Type Activities:

Sewer 14,668,434 12,872,189 - 1,655,291 Water 12,603,780 14,590,973 - 783,826 Total Business-Type Activities 27,272,214 27,463,162 - 2,439,117 Total Primary Government 108,006,840$ 36,827,530$ 14,247,635$ 4,370,575$ Discretely Presented Component Unit
South County Regional Wastewater
Authority 13,317,767$ 12,372,057$ -$ -$ City of Gilroy
Statement of Activities
For the Year Ended June 30, 2020
Program Revenues
See accompanying Notes to the Basic Financial Statements 20 7.2.b
Packet Pg. 78 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Discretely Presented
Component Unit
South County
Governmental Business-Type Regional Wastewater
Activities Activities Total Authority
Functions/Programs
Governmental Activities:

General government (2,445,591)$ -$ (2,445,591)$ -$ Public safety (37,806,218) - (37,806,218) - Community development 10,257,789 - 10,257,789 - Public works (22,765,557) - (22,765,557) - Interest (2,431,588) - (2,431,588) - Total Governmental Activities (55,191,165) - (55,191,165) - Business-Type Activities:

Sewer - (140,954) (140,954) - Water - 2,771,019 2,771,019 - Total Business-Type Activities - 2,630,065 2,630,065 - Total Primary Government (55,191,165) 2,630,065 (52,561,100) - Discrete Component Unit
South County Regional Wastewater
Authority - - - (945,710) General Revenues:

Taxes:

Property taxes 15,595,639 - 15,595,639 - Sales taxes 17,233,882 - 17,233,882 - Transient occupancy taxes 1,237,812 - 1,237,812 - Franchise taxes 1,855,622 - 1,855,622 - Utility users tax 5,177,426 - 5,177,426 - Real property transfer taxes 489,775 - 489,775 - Investment earnings 2,039,471 1,169,133 3,208,604 - Miscellaneous 127,479 - 127,479 - Transfers (447,847) 447,847 - - Total General Revenues 43,309,259 1,616,980 44,926,239 - Changes in Net Position (11,881,906) 4,247,045 (7,634,861) (945,710) Net Position - Beginning, as restated (Note 15)178,250,276 179,799,943 358,050,219 106,181,313 Net Position - Ending 166,368,370$ 184,046,988$ 350,415,358$ 105,235,603$ Net (Expense) Revenue and Changes in Net Position
City of Gilroy
Statement of Activities (Continued)
For the Year Ended June 30, 2020
See accompanying Notes to the Basic Financial Statements 21 7.2.b
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22 7.2.b
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FUND FINANCIAL STATEMENTS
23 7.2.b
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24 7.2.b
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GOVERNMENTAL FUND FINANCIAL STATEMENTS
25 7.2.b
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26 7.2.b
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Capital Debt
Projects Service
Fund Fund
Public Gilroy Other
General Facilities Community Governmental
Fund Impact Library Funds Total
ASSETS
Cash and investments 14,804,080$ 1,277,614$ 1,131,376$ 54,149,031$ 71,362,101$ Receivables:

Accounts 17,623 - - 40,000 57,623 Due from other governments 4,148,570 - 7,140 773,306 4,929,016 Interest - - - 1,172,875 1,172,875 Loans and notes - - - 3,392,599 3,392,599 Due from other funds 470,965 - - - 470,965 Advances from other funds - - - 2,758,836 2,758,836 Prepaid items 18,577 - - - 18,577 Inventories 108,338 - - - 108,338 Land held for resale - - - 706,754 706,754 Restricted assets:

Cash and investments with fiscal agents - - - 2,697,482 2,697,482 Total assets 19,568,153$ 1,277,614$ 1,138,516$ 65,690,883$ 87,675,166$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 804,751$ 131,318$ -$ 900,620$ 1,836,689$ Accrued liabilities 2,197,499 256,509 - 113,000 2,567,008 Unearned revenue 1,707,433 251,104 - 767,565 2,726,102 Due to other funds - - - 470,965 470,965 Advances to other funds - 6,997,367 - - 6,997,367 Due to the component unit - - - 426,788 426,788 Total liabilities 4,709,683 7,636,298 - 2,678,938 15,024,919 Deferred inflows of resources:

Unavailable revenues - - - 675,970 675,970 Total deferred inflows of resources - - - 675,970 675,970 Fund balances:

Nonspendable 126,915 - - 706,754 833,669 Restricted - - 1,138,516 56,283,167 57,421,683 Assigned - - - 5,368,008 5,368,008 Unassigned (deficit)14,731,555 (6,358,684) - (21,954) 8,350,917 Total fund balances 14,858,470 (6,358,684) 1,138,516 62,335,975 71,974,277 Total liabilities, deferred inflows
of resources, and fund balances 19,568,153$ 1,277,614$ 1,138,516$ 65,690,883$ 87,675,166$ City of Gilroy
Balance Sheet
June 30, 2020
Governmental Funds
See accompanying Notes to the Basic Financial Statements 27 7.2.b
Packet Pg. 85 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Total Fund Balances - Total Governmental Funds 71,974,277$ Nondepreciable, net of $969,219 reported in Internal Service Fund 29,123,098$ Depreciable, net of $5,004,841 reported in Internal Service Fund 181,650,249 210,773,347 Bonds payable (62,340,459)$
Premium on bonds payable (1,003,218)
Loans payable (857,429)
Interest payable (641,509)
Compensated absences, net of $119,999 reported in Internal Service Fund (1,866,657) (66,709,272) Pension related deferred outflows of resources 12,871,991$ Aggregate net pension liability (73,684,672)
Pension related deferred inflows of resources (2,495,300) (63,307,981) OPEB related deferred outflows of resources 800,597$
Aggregate net OPEB liability (12,056,601)
OPEB related deferred inflows of resources (2,299,361) (13,555,365) 675,970
26,517,394
Net Position of Governmental Activities 166,368,370$
City of Gilroy
Reconciliation of the Governmental Funds Balance Sheet to the June 30, 2020
Government-Wide Statement of Net Position
Amounts reported for governmental activities in the Statement of Net Position were reported differently because:

Long-term liabilities are not due and payable in the current period and accordingly are not reported as fund liabilities. All liabilities, both current and long-term, are reported in the Statement of Net Position:

Capital assets used in governmental activities were not current financial resources. Therefore, they were not reported in the Governmental Funds Balance Sheet.

Internal Service Funds were used by management to charge the costs of certain activities, such as insurance and equipment replacement to individual funds. The assets and liabilities of the Internal Service Funds were included in the governmental activities in the Government-Wide Statement of Net Position.

Revenue reported as unavailable revenue in the governmental funds when it is not received soon enough after year-end to be considered available. The availability criteria does not apply to the Government-Wide Financial Statements and, therefore, the revenue is recognized when eligibility requirements are met and earned.

Net pension liabilities and the related deferred outflows of resources and deferred inflows of resources are not due and payable in the current period or not available for current expenditures and are not reported in the governmental fund financial statements:

Net OPEB liabilities and the related deferred outflows of resources and deferred inflows of resources are not due and payable in the current period or not available for current expenditures and are not reported in the governmental fund financial statements:

See accompanying Notes to the Basic Financial Statements 28 7.2.b
Packet Pg. 86 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Capital Debt
Projects Service
Fund Fund
Public Gilroy Other
General Facilities Community Governmental
Fund Impact Library Funds Total
Revenues:

Taxes 41,634,421$ -$ 1,921,576$ 713,940$ 44,269,937$ Intergovernmental 196,685 - - 5,276,844 5,473,529 Charges for services 5,872,162 3,679,043 - 4,400,617 13,951,822 Licenses and permits 1,776,651 - - - 1,776,651 Fines and forfeitures 282,535 - - - 282,535 Investment income 489,509 78,375 97,797 1,218,468 1,884,149 Miscellaneous 1,011,718 - - 336,412 1,348,130 Total revenues 51,263,681 3,757,418 2,019,373 11,946,281 68,986,753 Expenditures:

Current:

General government 6,200,542 - 129,296 31,204 6,361,042 Public safety 35,693,586 - - 1,174,301 36,867,887 Community services 7,897,645 - - - 7,897,645 Community development 6,347,065 3,277,318 - 9,518,860 19,143,243 Debt service:

Principal retirement - - 1,090,630 1,895,582 2,986,212 Interest and fiscal charges - 102,559 1,123,892 1,785,256 3,011,707 Total expenditures 56,138,838 3,379,877 2,343,818 14,405,203 76,267,736 Revenues over (under)
expenditures (4,875,157) 377,541 (324,445) (2,458,922) (7,280,983) Other financing sources (uses):

Bond proceeds - - 19,087,551 - 19,087,551 Payment to refunded bond escrow - - (19,350,000) - (19,350,000) Transfers in 239,510 40,762 - 8,657,712 8,937,984 Transfers out (8,265,753) (3,594,976) - (1,045,268) (12,905,997) Total other financing sources (uses)(8,026,243) (3,554,214) (262,449) 7,612,444 (4,230,462) Net Change in Fund Balances (12,901,400) (3,176,673) (586,894) 5,153,522 (11,511,445) Fund balances:

Beginning of year 27,759,870 (3,182,011) 1,725,410 57,182,453 83,485,722 End of year 14,858,470$ (6,358,684)$ 1,138,516$ 62,335,975$ 71,974,277$ City of Gilroy
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
For the Year Ended June 30, 2020
See accompanying Notes to the Basic Financial Statements 29 7.2.b
Packet Pg. 87 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Net Change in Fund Balances - Total Governmental Funds (11,511,445)$ Capital outlay, net of $1,566,359 in Internal Service Fund 7,070,839$ Depreciation, net of $716,351 in Internal Service Funds (10,957,543) (3,886,704) (89,724)
(19,087,551)
Bonds payable 22,245,630$
Loans payable 90,582 22,336,212
1,155
578,964
(245,056)
(3,091,814)
(234,503)
3,348,560
Change in Net Position of Governmental Activities (11,881,906)$

Internal Service Funds are used by management to charge the costs of certain activities, such as insurance and equipment replacement, to individual funds. The net revenue of the Internal Service Funds is reported in governmental activities.

Certain pension expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds.

Certain OPEB expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds.

Compensated absences were reported in the Government-Wide Statement of Activities, but they did not require the use of current financial resources. Therefore, compensated absences were not reported as expenditures in the governmental funds.

Net change in revenues that was considered unavailable in the governmental funds. These items have been reported as revenue in the Statement of Activities.

Amortization of bond discount was recognized in interest expense on the Government-Wide Statement of Activities, but did not require the use of current financial resources. Therefore amortization of bond discount was not reported as an expenditure in the governmental funds.

Proceeds from the issuance of long-term debt is not a revenue in the Statement of Activities, but is reported as a liability on the Government-Wide Statement of Net Position.

Principal repayment on long-term debt is not an expense in the Statement of Activities, but is considered an expenditure in governmental funds.

Interest accrued on long-term debt is reported in the Statement of Activities, but does not require the use of current financial resources. Therefore, accrued interest is not reported as an expenditure in governmental funds. This amount represents the change in accrued interest from the prior year.

Capital assets used in governmental activities are not financial resources and therefore are not reported in governmental funds.

Governmental activities in the Statement of Activities were reported differently because:

City of Gilroy
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes For the Year Ended June 30, 2020
in Fund Balances to the Government-Wide Statement of Activities See accompanying Notes to the Basic Financial Statements 30 7.2.b
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PROPRIETARY FUND FINANCIAL STATEMENTS
31 7.2.b
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Governmental
Activities
Total Internal
Enterprise Service
Sewer Water Funds Funds
ASSETS
Current assets:

Cash and investments 18,610,720$ 23,247,633$ 41,858,353$ 19,280,463$ Cash and investments with fiscal agent 2,665,006 - 2,665,006 2,000,000 Accounts receivable 1,685,038 1,954,597 3,639,635 33,200 Inventory of materials - 470,571 470,571 38,973 Prepaid items - - - 92,244 Due from component unit 1,044,367 - 1,044,367 - Total current assets 24,005,131 25,672,801 49,677,932 21,444,880 Noncurrent assets:

Interfund loans receivable (Note 4B) - - - 4,238,531 Equity investment in component unit (Note 6) 65,549,814 - 65,549,814 - Capital assets:

Capital assets, not depreciated - 7,603,111 7,603,111 969,219 Capital assets, depreciated, net 33,116,971 50,686,999 83,803,970 5,004,841 Total noncurrent assets 98,666,785 58,290,110 156,956,895 10,212,591 Total assets 122,671,916 83,962,911 206,634,827 31,657,471

DEFERRED OUTFLOWS OF RESOURCES
Deferred amount on refunding 124,254 - 124,254 - Deferred outflows of resources related to pension 1,116,985 1,055,830 2,172,815 - Deferred outflows of resources related to OPEB 76,658 91,873 168,531 - Total deferred outflows of resources 1,317,897 1,147,703 2,465,600 - June 30, 2020
Proprietary Funds
Statement of Net Position
City of Gilroy
Business-Type Activities
See accompanying Notes to the Basic Financial Statements 32 7.2.b
Packet Pg. 90 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Governmental
Activities
Total Internal
Enterprise Service
Sewer Water Funds Funds

LIABILITIES
Current liabilities:

Accounts payable 223,872 867,510 1,091,382 1,231,085 Accrued liabilities - - - 166,548 Deposits payable - 57,670 57,670 - Interest payable 147,500 - 147,500 - Due to component unit 149,657 - 149,657 - Compensated absences, current portion 13,000 14,000 27,000 12,000 Claims payable, current portion - - - 909,000 Bond payable, current portion 2,260,000 - 2,260,000 - Total current liabilities 2,794,029 939,180 3,733,209 2,318,633 Noncurrent liabilities:

Compensated absences 114,056 128,421 242,477 107,999 Claims payable - - - 2,713,445 Bond payable 5,285,517 - 5,285,517 - Net pension liability 6,419,821 6,068,334 12,488,155 - Net OPEB liability 1,154,433 1,383,568 2,538,001 - Total noncurrent liabilities 12,973,827 7,580,323 20,554,150 2,821,444 Total liabilities 15,767,856 8,519,503 24,287,359 5,140,077

DEFERRED INFLOW OF RESOURCES
Deferred inflow of resources related to pension 144,993 137,055 282,048 - Deferred inflow of resources related to OPEB 220,166 263,866 484,032 - Total deferred inflows of resources 365,159 400,921 766,080 -

NET POSITION
Net investment in capital assets 28,213,214 58,290,110 86,503,324 5,974,060 Unrestricted 79,643,584 17,900,080 97,543,664 20,543,334 Total net position 107,856,798$ 76,190,190$ 184,046,988$ 26,517,394$ City of Gilroy
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2020
Business-Type Activities
See accompanying Notes to the Basic Financial Statements 33 7.2.b
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34 7.2.b
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Governmental
Activities
Total Internal
Enterprise Service
Sewer Water Funds Funds
OPERATING REVENUES:

Charges for services 12,872,189$ 14,572,310$ 27,444,499$ 25,874,719$ Miscellaneous - 18,663 18,663 602,100 TOTAL OPERATING REVENUES 12,872,189 14,590,973 27,463,162 26,476,819 OPERATING EXPENSES:

Operations 9,462,155 9,861,000 19,323,155 23,800,494 Depreciation 1,502,987 1,325,138 2,828,125 716,351 Billing 730,892 730,893 1,461,785 - Administration 667,733 686,749 1,354,482 323,349 Claims and judgments - - - 838,388 Insurance premiums - - - 1,373,381 TOTAL OPERATING EXPENSES 12,363,767 12,603,780 24,967,547 27,051,963 OPERATING INCOME (LOSS)508,422 1,987,193 2,495,615 (575,144) NONOPERATING REVENUES (EXPENSES):

Investment income 561,664 607,469 1,169,133 403,538 Interest expense (192,327) - (192,327) - Share of component unit net loss (2,112,340) - (2,112,340) - Total Nonoperating Income (Loss)(1,743,003) 607,469 (1,135,534) 403,538

NET INCOME (LOSS) BEFORE TRANSFERS
AND CAPITAL CONTRIBUTIONS (1,234,581) 2,594,662 1,360,081 (171,606) TRANSFERS:

Transfers in (Note 4C) 693,577 - 693,577 3,520,166 Transfers out (Note 4C) (100,000) (145,730) (245,730) - Capital contributions 1,655,291 783,826 2,439,117 -

TOTAL TRANSFERS AND
CAPITAL CONTRIBUTIONS 2,248,868 638,096 2,886,964 3,520,166 CHANGES IN NET POSITION 1,014,287 3,232,758 4,247,045 3,348,560 NET POSITION:

Beginning of the year, as restated (Note 15) 106,842,511 72,957,432 179,799,943 23,168,834 End of the year 107,856,798$ 76,190,190$ 184,046,988$ 26,517,394$ Proprietary Funds
Statement of Revenues, Expenses, and Changes in Net Position City of Gilroy
Business-Type Activities
For the Year Ended June 30, 2020
See accompanying Notes to the Basic Financial Statements 35 7.2.b
Packet Pg. 93 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Governmental
Activities
Total Internal
Enterprise Service
Sewer Water Funds Funds

CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers and users 12,463,663$ 13,910,570$ 26,374,233$ 26,474,709$ Cash paid to suppliers for goods and services (6,686,260) (7,474,140) (14,160,400) (21,664,293) Cash paid to employees for services (2,978,161) (3,113,950) (6,092,111) (1,965,240) Cash paid for insurance claims - - - (2,454,147) Net Cash Provided by (Used in) Operating Activities 2,799,242 3,322,480 6,121,722 391,029

CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:

Cash received from other funds 593,577 (145,730) 447,847 3,852,691 Net Cash Provided by (Used in) Noncapital Financing Activities 593,577 (145,730) 447,847 3,852,691

CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:

Acquisition of capital assets 1,146,655 (1,807,812) (661,157) (1,566,359) Principal paid (2,150,000) - (2,150,000) - Interest paid (407,750) - (407,750) - Net Cash (Used in) Capital and Related
Financing Activities (1,411,095) (1,807,812) (3,218,907) (1,566,359) CASH FLOWS FROM INVESTING ACTIVITIES:

Capital contributions to component unit (1,576,500) - (1,576,500) - Interest received 561,664 607,469 1,169,133 403,538 Net Cash Provided by Investing Activities (1,014,836) 607,469 (407,367) 403,538 Net Change In Cash and Cash Equivalents 966,888 1,976,407 2,943,295 3,080,899 CASH AND CASH EQUIVALENTS:

Beginning of year 20,308,838 21,271,226 41,580,064 18,199,564 End of year 21,275,726$ 23,247,633$ 44,523,359$ 21,280,463$ CASH AND CASH EQUIVALENTS:

Cash and investments 18,610,720$ 23,247,633$ 41,858,353$ 19,280,463$ Cash and investments with fiscal agent 2,665,006 - 2,665,006 2,000,000 Total cash and cash equivalents 21,275,726$ 23,247,633$ 44,523,359$ 21,280,463$ City of Gilroy
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2020
Business-Type Activities
See accompanying Notes to the Basic Financial Statements 36 7.2.b
Packet Pg. 94 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Governmental
Activities
Total Internal
Enterprise Service
Sewer Water Funds Funds
Reconciliation of Operating Income (Loss) to
Net Cash Provided by Operating Activities:

Operating income (loss) 508,422$ 1,987,193$ 2,495,615$ (575,144)$ Adjustments to reconcile to net cash provided by
Operating activities:

Depreciation 1,502,987 1,325,138 2,828,125 716,351 Noncapital financing activities:

Changes in assets and liabilities:
(Increase)/decrease in accounts receivables (408,476) (661,563) (1,070,039) (2,110) (Increase)/decrease in inventory of materials - (152,404) (152,404) 8,582 (Increase)/decrease in prepaid items 2,037 3,463 5,500 (67,242) (Increase)/decrease in due from component unit (59,843) - (59,843) - (Increase)/decrease in deferred outflows of resources
related to pension (188,773) (260,614) (449,387) - (Increase)/decrease in deferred outflows of resources
related to OPEB (35,210) (42,198) (77,408) - Increase/(decrease) in accounts payable 33,473 (590,029) (556,556) 513,868 Increase/(decrease) in accrued liabilities - - - 21,019 Increase/(decrease) in deposits payable (50) (18,840) (18,890) - Increase/(decrease) in due to component unit 127,009 - 127,009 - Increase/(decrease) in compensated absences 43,174 39,553 82,727 18,083 Increase/(decrease) in claims payable - - - (242,378) Increase/(decrease) in net pension liabilities 1,255,630 1,644,077 2,899,707 - Increase/(decrease) in net OPEB liabilities (26,846) (32,175) (59,021) - Increase/(decrease) in deferred inflows of resources (38,801) (20,405) (59,206) - Increase/(decrease) in deferred inflows of resources
related to OPEB 84,509 101,284 185,793 - Net Cash Provided by Operating Activities 2,799,242$ 3,322,480$ 6,121,722$ 391,029$ Noncash Financing, capital or Investing activities:

City share of component unit net loss (2,112,340)$ -$ -$ -$ Capital assets 1,655,291$ 783,826$ 2,439,117$ -$ City of Gilroy
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2020
Business-Type Activities
See accompanying Notes to the Basic Financial Statements 37 7.2.b
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38 7.2.b
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FIDUCIARY FUND FINANCIAL STATEMENTS
39 7.2.b
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Total
Agency
Funds
ASSETS
Cash and investments 4,418,961$
Cash and investments with fiscal agent 291,501
Accounts receivable 6,760
Due from County 1,253
Total assets 4,718,475$

LIABILITIES
Accounts payable 472,499$
Due to bond holders 1,083,959
Unearned revenues 197,173
Deposits payable 2,964,844
Total liabilities 4,718,475$
June 30, 2020
Statement of Fiduciary Assets and Liabilities
City of Gilroy
Fiduciary Funds
See accompanying Notes to the Basic Financial Statements 41 7.2.b
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43 NOTES TO THE BASIC FINANCIAL STATEMENTS

7.2.b
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7.2.b
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City of Gilroy
Index to the Notes to the Basic Financial Statements
For the Year Ended June 30, 2020
45 Page

Note 1 – Summary of Significant Accounting Policies ..................................................................................... 47 A. Description of the Reporting Entity ............................................................................................... 47 B. Basis of Accounting and Measurement Focus ............................................................................... 48 C. Cash and Investments ..................................................................................................................... 51 D. Interfund Loans Receivable and Payable ....................................................................................... 51 E. Accounts and Due from Other Governments ................................................................................. 52 F. Notes and Loans Receivable .......................................................................................................... 52 G. Inventories ...................................................................................................................................... 52 H. Land Held for Resale...................................................................................................................... 52 I. Capital Assets ................................................................................................................................. 52 J. Deferred Outflows/Inflows of Resources ....................................................................................... 53 K. Interest Payable .............................................................................................................................. 53 L. Unearned Revenue ......................................................................................................................... 53 M. Compensated Absences .................................................................................................................. 53 N. Net Pension Liability ...................................................................................................................... 54 O. Other Postemployment Benefits Liability ...................................................................................... 54 P. Claims Payable ............................................................................................................................... 54 Q. Net Position .................................................................................................................................... 55 R. Fund Balances ................................................................................................................................ 55 S. Spending Policy ............................................................................................................................. 56 T. Property Taxes ............................................................................................................................... 56 U. Use of Estimates ............................................................................................................................. 57 V. Implementation of New GASB Pronouncements .......................................................................... 57

Note 2 – Stewardship, Compliance and Accountability ................................................................................... 57 A. Encumbrances ................................................................................................................................ 57 B. Continuing Appropriations ............................................................................................................. 57 C. Deficit Fund Balances/Net Position ............................................................................................... 58 D. Excess of Expenditure Over Appropriations .................................................................................. 58

Note 3 – Cash and Investments .......................................................................................................................... 59

A. Demand Deposits ........................................................................................................................... 59 B. Investments Authorized by the California Government Code and the City's Investment Policy ................................................................................................................. 60 C. Fair Value Measurements ............................................................................................................... 60 D. Disclosures Relating to Interest Rate Risk ..................................................................................... 61 E. Disclosures Relating to Credit Risk ............................................................................................... 61 F. Concentration of Credit Risk .......................................................................................................... 61 G. Custodial Credit Risk ..................................................................................................................... 62 H. Investment in State Investment Pool .............................................................................................. 62

Note 4 – Interfund Transactions ........................................................................................................................ 63

A. Due to/from Other Funds ............................................................................................................... 63 B. Advances to/from Other Funds ...................................................................................................... 63 C. Transfers ......................................................................................................................................... 64 D. Due to/from Component Unit ........................................................................................................ 64

7.2.b
Packet Pg. 103 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Index to the Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2020
46 Page

Note 5 – Capital Assets ........................................................................................................................................ 65

Note 6 – Equity Investment in Component Unit ............................................................................................... 67

Note 7 – Deferred Compensation ........................................................................................................................ 68

Note 8 – Long-Term Liabilities ........................................................................................................................... 68

A. Governmental Activities ................................................................................................................. 68 B. Business-Type Activities ................................................................................................................. 72 C. Debt without Government Commitment ......................................................................................... 73

Note 9 – Defined Benefit Pension Plans (CalPERS) .......................................................................................... 74

A. Summary ......................................................................................................................................... 74 B. General Information about the Pension Plans ................................................................................. 75 C. Net Pension Liability ....................................................................................................................... 77 D. Changes in the Net Pension Liability .............................................................................................. 79 E. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions ................... 80

Note 10 – Other Postemployment Healthcare Plan ........................................................................................... 81

Note 11 – Claims Payable .................................................................................................................................... 85

Note 12 – Risk Management................................................................................................................................ 85

Note 13 – Commitments and Contingencies ...................................................................................................... 86

Note 14 – Classification of Fund Balances ......................................................................................................... 87

Note 15 – Prior Period Adjustments ................................................................................................................... 88

Note 16 – Subsequent Events .............................................................................................................................. 89

7.2.b
Packet Pg. 104 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

47 Note 1 – Summary of Significant Accounting Policies

The basic financial statements of the City of Gilroy, California, (the “City”) have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. 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 following is a summary of the City’s significant policies:

A. Description of the Reporting Entity

The City was incorporated in 1870 under the general laws of the State of California and became a charter city on January 8, 1960. The City operates under the Council-Administrator form of government. As required by accounting principles generally accepted in the United States of America, these financial statements present the City and its component units, entities for which the City is considered to be financially accountable. The City is considered to be financially accountable for an organization if the City appoints a voting majority of that organization’s governing body and the organization is able to provide specific financial benefits to or impose specific financial burdens on the City. The City is also considered to be financially accountable if an organization is fiscally dependent (i.e., it is unable to adopt its budget, levy taxes, set rates or charges or issue bonded debt without approval from the City). In certain cases, other organizations are included as component units if the nature and significance of their relationship with the City are such that their exclusion would cause the City’s financial statements to be misleading or incomplete.

The Gilroy Public Facilities Financing Authority is considered to be a blended component unit of the reporting entity of the City because its sole purpose is to finance and construct the City’s public facilities. Blended component units, although legally separate entities, are in substance, part of the City’s operations and so data from these units are reported with interfund data of the primary government. The Gilroy Public Facilities Financing Authority does not issue separate component unit financial statements.

Discretely Presented Component Unit

The South County Regional Wastewater Authority (Authority) was created on July 1, 1992 by the City of Gilroy and City of Morgan Hill (Member Agencies). The purpose of the Authority is to plan and implement regional solutions to the wastewater treatment and management problems resulting from the generation of wastewater within the service areas of the Member Agencies. To achieve this purpose, the Authority constructs, maintains and operates facilities for sewage treatment and wastewater reclamation. The City of Gilroy has a

58.1% ownership interest in the Authority. The City of Morgan Hill has a 41.9% ownership interest in the Authority.

The Authority is governed by a Board of Directors, which consists of three members from the Gilroy City Council and two members from the Morgan Hill City Council.

The Authority’s budget and member contribution requirements are approved by the Board of Directors of the Authority. The City’s management provides accounting services, engineering services and administrative support to the Authority, and day-to-day operations associated with the Authority have been contracted directly by the Authority to a private provider of services for wastewater management and operations. The Authority is presented in a separate column to emphasize that it is legally separate from the City and provides a financial benefit to the City. Debt issued by the Authority requires approval by the City, and the City approves the budget of the Authority.

Complete financial statements of the component unit can be obtained from the City’s administrative offices.

7.2.b
Packet Pg. 105 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

48 Note 1 – Summary of Significant Accounting Policies (Continued)

A. Description of the Reporting Entity (Continued)

The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information about the reporting government as a whole, except for its fiduciary activities. All fiduciary activities are reported only in the fund financial statements. Governmental activities, which normally are supported by taxes, intergovernmental revenues and other nonexchange transactions, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from discretely presented component units for which the primary government is financially accountable.

B. Basis of Accounting and Measurement Focus

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

Government-Wide Financial Statements
The City’s Government-Wide Financial Statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of governmental and business-type activities for the City accompanied by a total column. The component unit column in the government-wide statement of net position and statement of activities includes the financial data of the City’s component unit. The City’s ownership interest in the component unit is reported in the Sewer Fund as an Equity Investment in the Component Unit and is adjusted annually using the equity method of accounting.

Fiduciary activities of the City are not included in these statements.

These financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in Net Position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred.

Certain types of transactions are reported as program revenues for the City in three categories:

Charges for services
Operating grants and contributions
Capital grants and contributions

Certain eliminations have been made in regards to interfund activities, payables and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. The following interfund activities have been eliminated:

7.2.b
Packet Pg. 106 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

49 Note 1 – Summary of Significant Accounting Policies (Continued)

B. Basis of Accounting and Measurement Focus (Continued)

Due to/from other funds
Advances to/from other funds
Transfers in/out

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 nonmajor funds aggregated. An accompanying schedule is presented to reconcile and explain the differences between fund balance as presented in these statements to the net position presented in the Government-Wide Financial Statements. The City has presented all major funds that met the applicable criteria.

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

Revenues are recognized as soon as 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. For this purpose, 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, which have been treated as susceptible to accrual by the City, are property tax, sales tax, intergovernmental revenues and other taxes. Expenditures are recorded in the accounting period in which the related fund liability is incurred.

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

The City reports the following major governmental funds:

General Fund - The General Fund is used to account for resources traditionally associated with governments which are not required by law or sound financial management to be accounted for in another fund.

Public Facilities Impact Capital Projects Fund - This fund has been established to track expenditures related to the construction of facilities for public use.

Gilroy Community Library Debt Service Fund – This fund is used to account for payments of the indebtedness of the 2009 and 2010 General Obligation Bonds for the new Gilroy Community Library.

7.2.b
Packet Pg. 107 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

50 Note 1 – Summary of Significant Accounting Policies (Continued)

B. Basis of Accounting and Measurement Focus (Continued)

Proprietary Fund Financial Statements
Proprietary Fund Financial Statements include a Statement of Net Position, a Statement of Revenues, Expenses and Changes in Net Position, and a Statement of Cash Flows for each major Proprietary Fund.

A separate column representing internal service funds is also presented in these statements. However, internal service balances and activities have been combined with the governmental activities in the Government-Wide Financial Statements. The City’s internal service funds include three individual funds which provide services directly to other City funds. These areas of service include Garage, Information Technology, and Self-Insurance.

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 Net Position presents increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred.

In these funds, receivables have been recorded as revenue and provisions have been made for uncollectible amounts.

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 nonoperating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as nonoperating expenses.

The City reports the following major enterprise fund:

Sewer Fund - This fund is used to account for sewage stations and collection systems provided by the City to the public.

Water Fund - This fund is used to account for water services provided by the City to the public.

Fiduciary Fund Financial Statements
Fiduciary fund financial statements include a Statement of Fiduciary Net Position and a Statement of Changes in Assets and Liabilities of Agency Funds. These funds have been established to account for assets received and held by the City while acting in the capacity of an agent or custodian. Cash and deposits are maintained for activities associated with various associations and third-party projects.

Discretely Presented Component Unit Financial Statements The activities of the Authority closely resemble those of ongoing businesses in which the purpose is to conserve and add to basic resources while meeting operating expenses from current revenues. The Authority provides services on a continuous basis and its activities are substantially financed by revenues derived from user charges and contributions from the member agencies. The Authority utilizes the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized as they are incurred.

7.2.b
Packet Pg. 108 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

51 Note 1 – Summary of Significant Accounting Policies (Continued)

C. Cash and Investments

The City pools its available cash for investment purposes. 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.

U.S. GAAP defines fair value, establishes a framework for measuring fair value and establishes disclosures about fair value measurement. Investments, unless otherwise specified, recorded at fair value in the financial statements, are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

The three levels of the fair value measurement hierarchy are described below:

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

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

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

The statement of cash flows requires presentation of “cash and cash equivalents”. For this purpose, the City considers all proprietary fund pooled cash and investments as “cash and cash equivalents”, as such funds are available to the various funds as needed.

Certain disclosure requirements, if applicable, for Deposits and Investment Risks in the following areas:

Interest Rate Risk
Credit Risk
-Overall
- Custodial Credit Risk
- Concentration 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.

D. Interfund Loans Receivable and Payable

Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “due from/to other funds” (i.e., current portion of interfund loans) or advances to/from other fund (i.e., non-current interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “interfund balances”.

7.2.b
Packet Pg. 109 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

52 Note 1 – Summary of Significant Accounting Policies (Continued)

E. Accounts and Due from Other Governments

All accounts and due from other governments are shown net of any allowance for uncollectible accounts, if applicable, and estimated refunds due.

F. Notes and Loans Receivable

The accompanying financial statements reflect the recording of certain loans receivable that represent loans made to various parties for homebuyer and rehabilitation loan programs. Where reasonably estimable, an allowance for doubtful accounts has been recorded to reflect management’s best estimate of probable losses associated with nonrepayment. An estimate of any additional potential losses associated with nonrepayment cannot be reasonably estimated at this time.

G. Inventories

Inventories are stated at cost using the first-in, first-out (FIFO) method. Inventories recorded in governmental funds are recorded as an expenditure when used (consumption method). Inventory balances represent expendable supplies held for consumption. Reported expenditures reflecting the purchase of supplies have been restated to reflect the consumption method of recognizing inventory-related expenditures. Nonspendable fund balance has been reported in the governmental funds’ fund financial statements to show that inventories do not constitute “available spendable resources,” even though they are a component of fund balance.

H. Land Held for Resale

Land held for resale represents land, structures, and their related improvements acquired for resale in accordance with the objective of the Redevelopment Project. Land held for resale is valued at the lower of cost or the estimated realizable value determined at the date a disposition and development agreement is executed.

I. Capital Assets

Capital assets are recorded at cost where historical records are available and at an estimated historical cost where no historical records exist. Contributed capital assets are valued at acquisition value at the date of the contribution. Generally, capital asset purchases in excess of $10,000 are capitalized if they have an expected useful life of more than one year. Capital assets include all public domain (infrastructure) assets consisting of certain improvements including roads, streets, sidewalks, medians and storm drains.

The following schedule summarizes capital asset useful lives:

Buildings 40 years
Utility lines 50 years
Machinery and equipment 5 - 25 years
Furniture and fixtures 10 - 20 years
Vehicles 8 years
Infrastructure 5 - 50 years
Water wells and pumps 70 years

Depreciation has been provided using the straight-line method over the estimated useful life of the asset in the government-wide financial statements and in the fund financial statements of the proprietary funds.

7.2.b
Packet Pg. 110 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

53 Note 1 – Summary of Significant Accounting Policies (Continued)

J. Deferred Outflows/Inflows of Resources

The statement of financial position reports separate sections for deferred outflows of resources and deferred inflows of resources, when applicable.

Deferred Outflows of Resources represent outflows of resources (consumption of net position) that apply to future periods and that, therefore, will not be recognized as an expense until that time. The City reports pension contribution after measurement date and deferred loss related to pension, OPEB, debt refunding in this category.

Deferred Inflows of Resources represent inflows of resources (acquisition of net position) that apply to future periods and that, therefore, are not recognized as revenue until that time. The City reports unavailable revenues and deferred gain related to pension and OPEB in this category.

K. Interest Payable

In the government-wide financial statements, interest payable on long-term debt is recognized as the liability is incurred for governmental activities and business-type activities. In the fund financial statements, only proprietary fund and private-purpose trust fund types recognize the interest payable when the liability is incurred.

L. Unearned Revenue

Unearned revenue is reported for transactions for which revenue has not yet been earned. Typical transactions recorded as unearned revenues are prepaid charges for services.

M. Compensated Absences

All full-time employees accumulate vacation benefits in varying annual amounts. Sick leave benefits accrue at the rate of one day per month for all full-time employees (except fire shift employees who accrue 12 hours of sick leave per month) regardless of their length of service to the City. Upon termination or retirement, employees are paid for all unused vacation time and overtime. No cash payment is made for unused sick leave upon termination or retirement.

A liability is recorded for unused vacation and similar compensatory leave balances since the employees’ entitlement to these balances are attributable to services already rendered and it is probable that virtually all of these balances will be liquidated by either paid time off or payments upon termination or retirement.

If material, a proprietary fund liability is accrued for all leave benefits relating to the operations of the proprietary funds. A current liability is accrued in the governmental funds for material leave benefits due on demand to governmental fund employees that have terminated prior to year-end. All other amounts are recorded in the government-wide financial statements. These noncurrent amounts will be recorded as fund expenditures in the year in which they are paid or become due.

7.2.b
Packet Pg. 111 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

54 Note 1 – Summary of Significant Accounting Policies (Continued)

N. Net Pension Liability

For purposes of measuring the net pension liability, deferred outflows and inflows of resources related to pensions, and pension expense, information about the fiduciary net position and additions to/deductions from the fiduciary net position have been determined on the same basis as they are reported by the CalPERS Financial Office. For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

The following timeframes are used for pension reporting:

Valuation Date June 30, 2018
Measurement Date June 30, 2019
Measurement Period July 1, 2018 to June 30, 2019
Gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense. The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is amortized straight-line over 5 years. All other amounts are amortized straight-line over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period.

O. Other Postemployment Benefits Liability
For purposes of measuring the OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB and OPEB expense, information about the City's OPEB plan have been determined by an independent actuary. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms.

Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date June 30, 2019
Measurement Date June 30, 2019
Measurement Period July 1, 2018 to June 30, 2019
P. Claims Payable

The City records a liability for litigation, judgments and claims when it is probable that an asset has been impaired or a liability has been incurred prior to year-end and the probable amount of loss (net of any insurance coverage) can be reasonably estimated. This liability is recorded in the internal service fund that accounts for the City’s self-insurance activity.

7.2.b
Packet Pg. 112 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

55 Note 1 – Summary of Significant Accounting Policies (Continued)

Q. Net Position

In the government-wide financial statements and proprietary fund financial statements, net position is classified as follows:

Net Investment in Capital Assets – This component of net position consists of capital assets, net of accumulated depreciation and related deferred charges on refunding, reduced by the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of those items, net of unspent debt proceeds.

Restricted – This component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. Separate line items are used to distinguish among major categories of restrictions and are further displayed as expendable or nonexpendable based on the nature of the restriction.

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

R. Fund Balances
In the governmental fund financial statements, fund balances are classified as follows:

Nonspendable fund balance includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. The City’s nonspendable fund balance represents inventory, prepaid expenses, land held for resale, and loans receivable unless the proceeds from the collection of those loans receivable or from sale of the properties is restricted, committed, or assigned.

Restricted fund balance includes resources that are subject to externally enforceable legal restrictions. It includes amounts that can be spent only for the specific purposes stipulated by constitution, external resource providers, or through enabling legislation.

Committed fund balance includes amounts that can be used only for the specific purposes determined by a formal action of the City’s highest level of decision-making authority. The City Council, as the City’s highest level of decision-making authority, may commit, through a resolution, fund balance for specific purposes pursuant to constraints imposed by such formal actions taken. Committed amounts cannot be used for any other purpose unless the City Council removes or changes the specific use through the same type of formal action taken to establish the commitment.

Assigned fund balance consists of funds that are set aside for specific purposes by the City’s highest level of decision-making authority or a body or official that has been given the authority to assign funds. The City has not adopted a policy on the authority to assign amounts for specific purposes.

Unassigned fund balance is the residual classification for the City’s fund balance and includes all spendable amounts not contained in the other classifications. This category also provides the resources necessary to meet unexpected expenditures and revenue shortfalls. The General Fund is the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it is not appropriate to report a positive unassigned fund balance amount. However, in governmental funds other than General Fund, if expenditures incurred for specific purposes exceed the amounts that are restricted, committed or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund.

7.2.b
Packet Pg. 113 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

56 Note 1 – Summary of Significant Accounting Policies (Continued)

S. Spending Policy

Government-Wide Financial Statements and the Proprietary Fund Financial Statements When expenses are incurred for purposes for which both restricted and unrestricted components of net position are available, the City’s policy is to apply the restricted component of net position first, then the unrestricted component of net position as needed.

Governmental Fund Financial Statements
When expenditures are incurred for purposes for which both restricted and unrestricted fund balances are available, the City’s policy is to apply restricted fund balances first, then unrestricted fund balances as needed.

When expenditures are incurred for purposes where only unrestricted fund balances are available, the City uses the unrestricted resources in the following order, except for instances wherein an ordinance specifies the fund balance:

Committed
Assigned
Unassigned

T. Property Taxes

Property taxes in the State of California are administered for all local agencies at the County level, and consist of secured, unsecured and utility tax rolls. The following is a summary of major policies and practices relating to property taxes:

Property Valuations - are established by the Assessor of the County of Santa Clara for the secured and unsecured property tax rolls; the utility property tax roll is valued by the State Board of Equalization. Under the provisions of Article XIIIA of the State Constitution (Proposition 13 adopted by the voters on June 6, 1978), properties are assessed at 100% of full value. From this base of assessment, subsequent annual increases in valuation are limited to a maximum of 2%. However, increases to full value are allowed for property improvements or upon change in ownership. Personal property is excluded from these limitations and is subject to annual reappraisal.

Tax Levies - are limited to 1% of full market value which results in a tax rate of $1.00 per $100 assessed valuation, under the provisions of Proposition 13. Tax rates for voter-approved indebtedness are excluded from this limitation.

Tax Levy Dates - are attached annually on March 1 preceding the fiscal year for which the taxes are levied.

The fiscal year begins July 1 and ends June 30 of the following year. Taxes are levied on both real and unsecured personal property as it exists at that time. Liens against real estate, as well as the tax on personal property, are not relieved by subsequent renewal or change in ownership.

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

7.2.b
Packet Pg. 114 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

57 Note 1 – Summary of Significant Accounting Policies (Continued)

T. Property Taxes (Continued)

Tax Levy Apportionments - Due to the nature of the City-wide maximum levy, it is not possible to identify general purpose tax rates for specific entities. Under State legislation adopted subsequent to the passage of Proposition 13, apportionments to local agencies are made by the County Auditor-Controller based primarily on the ratio that each agency represented of the total City-wide levy for the three years prior to fiscal year 1979.

Property Tax Administration Fees - The State of California fiscal year 1990-91 Budget Act authorized counties to collect an administrative fee for collection and distribution of property taxes. Property taxes are recorded as net of administrative fees withheld during the fiscal year.

U. Use of Estimates

The preparation of financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period.

Actual results could differ from those estimates.

V. Implementation of New GASB Pronouncements

During fiscal year ended June 30, 2020, the City has implemented the following new GASB Pronouncement:

GASB Statement No. 95 - In May 2020, GASB issued Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance. The primary objective of this Statement is to provide temporary relief to governments and other stakeholders in light of the COVID-19 pandemic. That objective is accomplished by postponing the effective dates of certain provisions in Statements and Implementation Guides that first became effective or are scheduled to become effective for periods beginning after June 15, 2018, and later. Application of this statement is effective immediately and did not have a material effect on City's financial statements for the fiscal year ending June 30, 2020.

Note 2 – Stewardship, Compliance and Accountability

A. Encumbrances

Encumbrances are estimations of costs related to unperformed contracts for goods and services. These commitments are recorded for budgetary control purposes in the General, Special Revenue, and similar governmental funds. Encumbrances outstanding at fiscal year-end are reported as committed or assigned fund balance. They represent the estimated amount of the expenditure ultimately to result if unperformed contracts in- process at fiscal year-end are completed. They do not constitute expenditures or estimated liabilities. There were no significant amounts of encumbrances outstanding as of June 30, 2020.

B. Continuing Appropriations

The unexpended and unencumbered appropriations that are available and recommended for continuation are approved by the City Council for carryover to the following fiscal year. These commitments are reported as committed or assigned fund balance.

7.2.b
Packet Pg. 115 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

58 Note 2 – Stewardship, Compliance and Accountability (Continued)

C. Deficit Fund Balances/Net Position

The following funds contained a deficit fund balance/net position as of June 30, 2020:

Funds Amount
Major Capital Projects Fund:

Public Facilities Impact Fund (6,358,684)$
Nonmajor Governmental Funds:

Capital Projects Fund:

Bank Interest (54)
Debt Service Fund:

Lease Revenue Bond 2020A (21,900)
In the Government-Wide Financial Statements, the City had a deficit unrestricted net position at June 30, 2020 for its governmental activities of $ (42,674,183) of which, $(73,684,672) and $(12,056,601) were attributed to aggregate net pension liabilities and net other postemployment benefits liability, respectively.

D. Excess of Expenditure Over Appropriations
The following funds contained excess of expenditures over final appropriations for the year ended June 30, 2020:

Final
Funds Appropriations Expenditures Excess
General Fund:

General government 5,824,947$ 6,200,542$ (375,595)$ Public Facilities Impact Capital
Projects Fund:

Debt service:

Interest and fiscal charges 58,715 102,559 (43,844) Gilroy Community Library Debt
Service Fund:

General government 5,200 129,296 (124,096) Debt service:

Principal retirement 865,000 1,090,630 (225,630) Nonmajor Funds:

Special Revenue Funds:

Gas Tax Fund
Community development 1,535,471 2,757,438 (1,221,967) Prop 172 Sales Tax Fund
Public safety 292,693 293,128 (435) Capital Projects Funds:

Water Development Fund
Community development 447,806 507,085 (59,279)

7.2.b
Packet Pg. 116 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

59 Note 3 – Cash and Investments

The City maintains a cash and investment pool, which includes cash balances and authorized investments of all funds.

Statement of
Governmental Business-type Discretely Fiduciary
Activities Activities Presented Net Position Total
Cash and investments 90,642,564$ 41,858,353$ 9,935,264$ 4,418,961$ 146,855,142$ Cash and investment with fiscal agent 4,697,482 2,665,006 - 291,501 7,653,989 Total cash and investments 95,340,046$ 44,523,359$ 9,935,264$ 4,710,462$ 154,509,131$ Government-Wide Statement of Net Position

Cash and investment at June 30, 2020 consisted of the following:

Cash and cash equivalents:

Demand deposits 5,002,403$
Petty cash 4,955
Total cash and cash equivalents 5,007,358
Investments:

Local Agency Investment Fund 141,847,784
Investments with Fiscal Agent:

Investment Agreement 4,365,606
Money Market Mutual Fund 3,288,383
Total investments 149,501,773
Total cash and investments 154,509,131$

A. Demand Deposits

The carrying amount of the City’s demand deposits were $5,002,403 at June 30, 2020. Bank balances before reconciling items were $5,343,165 at that date, the total amount of which was insured or collateralized with securities held by the pledging financial institutions in the City’s name as discussed below.

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

Thus, collateral for cash deposits is considered to be held in the City's name.

The market value of pledged securities must equal at least 110% of the City's cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation (“FDIC”). The City, however, has not waived the collateralization requirements.

7.2.b
Packet Pg. 117 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

60 Note 3 – Cash and Investments (Continued)

B. Investments Authorized by the California Government Code and the City's Investment Policy

The table below identifies the investment types that are authorized by the City's investment policy and the California Government Code. The table also identifies certain provisions of the California Government Code (or the City's investment policy, if more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City's investment policy.

Maximum Maximum
Maximum Percentage of Investment in One
Authorized Investment Type Maturity Portfolio Issuer
Local Agency Investment Fund (LAIF) N/A None None
U.S. Government Sponsored Agency Securities N/A None None Insured Certificate of Deposit (CD's) N/A 15% $250,000
Banker's Acceptances N/A 15% None
Commercial Paper N/A 10% None
Passbook Savings or Money Market Demand Deposits N/A None None Money Market Mutual Funds N/A 5% None
Liquidity:
*Securities or bonds purchased under a prior investment policy may be held or sold but additional purchases shall not be made.

N/A- Not applicable
C. Fair Value Measurements

At June 30, 2020, investments are reported at fair value. The following table presents the fair value measurement of investments on a recurring basis and the levels within GASB 72 fair value hierarchy in which the fair value measurements fall at June 30, 2020:

Observable Unobservable
Input Input
Primary Government Total Level 2 Level 3 N/A
Local Agency Investment Fund 141,847,784$ -$ -$ 141,847,784$ Investment Agreement 4,365,606 - 4,365,606 - Money Market Mutual Funds 3,288,383 3,288,383 - - Total Leveled Investments 149,501,773$ 3,288,383$ 4,365,606$ 141,847,784$

7.2.b
Packet Pg. 118 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

61 Note 3 – Cash and Investments (Continued)

D. Disclosures Relating to Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer-term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. Information about the sensitivity of the fair values of the City's investments to market interest rate fluctuations is as follows:

12 Months More than
Investment Type Total or less 25-36 60 Months
Local Agency Investment Fund 141,847,784$ 141,847,784$ -$ -$ Investment Agreement 4,365,606 - 2,621,000 1,744,606 Money Market Mutual Funds 3,288,383 3,288,383 - - Total 149,501,773$ 145,136,167$ 2,621,000$ 1,744,606$ Remaining Maturity (in Months)

E. Disclosures Relating to Credit Risk

Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy or debt agreements, and the actual rating by Standard & Poor’s as of year-end for each investment type.

Minimum
Legal
Investment Type Total Rating
Local Agency Investment Fund 141,847,784$ N/A
Investment Agreement 4,365,606 A1
Money Market Mutual Funds 3,288,383 N/A
Total 149,501,773$

F. Concentration of Credit Risk

The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. There are no investments in any one issuer (other than U.S. Treasury securities, mutual funds and external investment pools) that represent 5% or more of total City investments.

7.2.b
Packet Pg. 119 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

62 Note 3 – Cash and Investments (Continued)

G. Custodial Credit Risk

Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party.

The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker- dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

For investments identified herein as held by fiscal agent, the trustee selects the investment under the terms of the applicable trust agreement, acquires the investment and holds the investment on behalf of the reporting government.

H. Investment in State Investment Pool

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 fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio).

The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. The City investments in LAIF at June 30, 2020 included a portion of pool funds invested in Structured Notes and Asset-Backed Securities.

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

Asset-Backed Securities: generally, mortgage-backed securities that 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 (for example, Collateralized Mortgage Obligations) or credit card receivables.

As of June 30, 2020, the City had $141,847,784 invested in LAIF, which had invested 3.37% of the pool investment funds in Structured Notes and Asset-Backed Securities.

7.2.b
Packet Pg. 120 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

63 Note 4 – Interfund Transactions

A. Due to/from Other Funds

The following is a summary of due to and due from other funds as of June 30, 2020:

Due From Other
Funds
Due To Other Funds General Fund Total
Nonmajor Governmental Funds 470,965$ 470,965$ Total 470,965$ 470,965$

These short-term borrowings were made to cover cash deficits at June 30, 2020.

B. Advances to/from Other funds

The following is a summary of advances to and from other funds as of June 30, 2020:

Advances to Other Funds
Nonmajor
Governmental
Funds
Internal Service
Fund Total
Public Facilities Impact Capital Projects Fund 2,758,836$ 4,238,531$ 6,997,367$ 2,758,836$ 4,238,531$ 6,997,367$
Advances from Other Funds
In February 2008, the City purchased the Gilroy Gardens Property (Property), which includes a horticultural education and theme park, for approximately $13.7 million. At the same time, the City entered into a single tenant lease of the Property with the seller, Gilroy Gardens Family Theme Park, Inc. To fund the acquisition, the Public Facilities Fund (Fund 440) borrowed from certain funds. The borrowings are accounted for as interfund loans for a period of twenty years and are reflected as balance sheet activity in accordance with GAAP. In addition, the annual budget reflects the loan activity through revenue and expenditure transactions. The interfund loans bear interest at the City’s annual average portfolio yield. The borrowing funds and their respective original loan amounts are as follows: Storm Drains Fund (Fund 420, $1.2 million), the Sewer Development Fund (Fund 435, $5.0 million), the Fleet Services Fund (Fund 600, $4.3 million), the Equipment Outlay Fund (Fund 605, $2.2 million) and the Water Fund (Fund 720, $1.0 million). As of June 30, 2017, the Water Fund loan has been paid off.

7.2.b
Packet Pg. 121 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

64 Note 4 – Interfund Transactions (Continued)

C. Transfers

During the year ended June 30, 2020, the City had the following transfers:

Public Facilities Nonmajor Sewer Water
Impact Capital Governmental Enterprise Enterprise
Transfers In General Fund1 Projects Fund2 Funds3 Fund4 Fund4 Total General Fund -$ -$ 193,780$ -$ 45,730$ 239,510$ Public Facilities Impact Capital Projects Fund 40,762 - - - - 40,762 Nonmajor Governmental Funds 4,905,991 3,594,976 156,745 - - 8,657,712 Sewer Enterprise Fund - - 693,577 - - 693,577 Internal Service Fund 3,319,000 - 1,166 100,000 100,000 3,520,166 Total 8,265,753$ 3,594,976$ 1,045,268$ 100,000$ 145,730$ 13,151,727$ Transfers Out
1General Fund support of certain capital projects, safety related grants, and fleet and facility services.

2Public Facilities Impact Capital Projects Fund supports various debt instruments.

3Other Governmental Funds support of grant personnel costs and sewer development project costs.

4Enterprise Fund transfers to the Internal Service Funds and the General Fund to support fringe benefit costs and subsidize environmental costs.

D. Due to/from Component Unit

The following is a summary of due to and from component unit as of June 30, 2020:

Due from
component unit
Due to component unit South Regional
Wastewater
Authority
Nonmajor Governmental Funds 426,788$
Sewer Enterprise Fund 149,657
576,445$
The due from primary government of $576,445 consists of $426,788 and $149,657 due from Sewer Development Special Revenue Fund and Sewer Enterprise, respectively, for capital costs.

7.2.b
Packet Pg. 122 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

65 Note 5 – Capital Assets

Governmental Activities

The following is a summary of changes in capital assets for the governmental activities for the year ended June 30, 2020:

Prior
Balance Period Balance
July 1, 2019 Adjustment Additions Deletions Reclassifications June 30, 2020 Capital assets not being depreciated:

Land 21,334,900$ -$ -$ -$ -$ 21,334,900$ Construction in progress 4,638,085 - 5,622,353 - (1,503,021) 8,757,417 Total capital assets not being depreciated 25,972,985 - 5,622,353 - (1,503,021) 30,092,317 Capital assets being depreciated:

Building and improvements 121,325,914 - - - - 121,325,914 Equipment and furniture 10,703,075 - 351,469 - - 11,054,544 IT equipment and software 2,871,105 - 25,646 - - 2,896,751 Vehicle 12,747,179 - 511,007 (18,690) - 13,239,496 Infrastructure 279,341,301 - 2,126,723 (281,464) 1,503,021 282,689,581 Total capital assets being depreciated 426,988,574 - 3,014,845 (300,154) 1,503,021 431,206,286 Less accumulated depreciation for:

Building and improvements (40,441,435) - (3,029,574) - - (43,471,009) Equipment and furniture (7,847,230) - (466,952) - - (8,314,182) IT equipment and software (2,443,731) - (137,216) - - (2,580,947) Vehicle (8,402,697) - (522,643) 18,690 - (8,906,650) Infrastructure (174,456,603) 414,240 (7,517,509) 281,464 - (181,278,408) Total accumulated depreciation (233,591,696) 414,240 (11,673,894) 300,154 - (244,551,196) Total capital assets being depreciated, net 193,396,878 414,240 (8,659,049) - 1,503,021 186,655,090 Total governmental activities 219,369,863$ 414,240$ (3,036,696)$ -$ -$ 216,747,407$ Depreciation expense was charged to functions/programs of governmental activities for the year ended June 30, 2020 as follows:

General government 860,545$
Public safety 1,246,873
Public works 1,168,162
Community services 7,681,963
Internal service fund 716,351
Total depreciation expense 11,673,894$

7.2.b
Packet Pg. 123 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

66 Note 5 – Capital Assets (Continued)

Business-Type Activities

The following is a summary of changes in capital assets for the business-type activities for the year ended June 30, 2020:

Balance Balance
July 1, 2019 Additions Deletions June 30, 2020
Capital assets not being depreciated:

Construction in progress 5,795,301$ 1,807,810$ -$ 7,603,111$ Total capital assets not being depreciated 5,795,301 1,807,810 - 7,603,111 Capital assets being depreciated:

Land improvements 427,852 - - 427,852 Equipment and furniture 212,630 - - 212,630 Vehicles - 213,353 - 213,353 Infrastructure 149,807,922 1,079,111 - 150,887,033 Total capital assets being depreciated 150,448,404 1,292,464 - 151,740,868 Less accumulated depreciation for:

Land improvements (427,853) - - (427,853) Equipment and furniture (191,421) (2,737) - (194,158) Vehicles - (4,741) - (4,741) Infrastructure (64,489,499) (2,820,647) - (67,310,146) Total accumulated depreciation (65,108,773) (2,828,125) - (67,936,898) Total capital assets being depreciated, net 85,339,631 (1,535,661) - 83,803,970 Total business-type activities 91,134,932$ 272,149$ -$ 91,407,081$ Depreciation expense was charged to the Sewer Maintenance Fund within business-type activities.

Sewer 1,502,987$
Water 1,325,138
Total depreciation expense 2,828,125$

7.2.b
Packet Pg. 124 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

67 Note 5 – Capital Assets (Continued)

Discretely Presented Component Unit

The following is a summary of changes in capital assets for the discretely presented component unit for the year ended June 30, 2020:

Balance Balance
July 1, 2019 Additions Deletions Reclassifications June 30, 2020 Capital assets not being depreciated:

Land 13,396,202$ -$ -$ -$ 13,396,202$ Construction in progress 13,791,603 2,647,982 - (4,728,366) 11,711,219 Total capital assets not being depreciated 27,187,805 2,647,982 - (4,728,366) 25,107,421 Capital assets being depreciated:

Building and improvements 67,494,863 4,728,366 72,223,229 Land improvements 10,681,371 - - - 10,681,371 Equipment and furnitures 19,964,163 - - - 19,964,163 Vehicles 1,295,492 - - - 1,295,492 Infrastructure 35,618,048 31,269 - - 35,649,317 Total capital assets being depreciated 135,053,937 31,269 - 4,728,366 139,813,572 Less accumulated depreciation for:

Building and improvements (37,924,692) (1,595,406) - - (39,520,098) Land improvements (5,527,237) (190,342) - - (5,717,579) Equipment and furniture (6,147,129) (998,978) - - (7,146,107) Vehicles (1,073,365) (34,760) - - (1,108,125) Infrastructure (13,366,673) (1,639,300) - - (15,005,973) Total accumulated depreciation (64,039,096) (4,458,786) - - (68,497,882) Total capital assets being depreciated, net 71,014,841 (4,427,517) - 4,728,366 71,315,690 Total governmental activities 98,202,646$ (1,779,535)$ -$ -$ 96,423,111$

Note 6 – Equity Investment in Discretely Presented Component Unit The City of Gilroy and the City of Morgan Hill are members of a joint venture, South County Regional Wastewater Authority, a discretely presented component unit (the “DCU”), of the City of Gilroy, that provides for the construction, ownership, maintenance and operation of a domestic sewer treatment plant. The agreement provides for the participants’ right to use the system. The participants are also obligated to share annual direct operating costs.

The City of Gilroy maintains the accounting records for the DCU. The City of Gilroy’s interest in equity investment in DCU assets is reflected on the statement of net position of the City’s sewer enterprise fund as an “equity investment in component unit” in the amount of $65,549,814 as required under the equity method of accounting for investments.

The financial statements of the joint venture can be obtained from the City of Gilroy’s finance department.

7.2.b
Packet Pg. 125 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

68 Note 7 – Deferred Compensation

The City maintains a deferred compensation plan under Section 457 of the Internal Revenue Code (IRC) for the benefit of its employees. The plan allows the employees to defer or postpone the taxation of a designated amount of earnings set aside for retirement.

The City has a fiduciary responsibility to safeguard the assets of the program and to ensure that the plan is properly maintained by the plan administrator. Generally speaking, assets are available to participants only upon termination of employment with the City, retirement, death or disability. The City has placed the plan assets into a trust for the exclusive benefit of plan participants and their beneficiaries. Accordingly, all plan assets have been excluded from the accompanying financial statements, except for those plan assets for which the City provides record keeping services.

Note 8 – Long-Term Liabilities

A. Governmental Activities

The following is a summary of changes in the City’s long-term liabilities for the fiscal year ended June 30, 2020:

Balance Balance Due within Due in more
July 1, 2019 Additions Deletions June 30, 2020 One Year than One Year Governmental Activities:

Other Debt:

General Obligation Bonds:

Library 2010 Series 19,350,000$ -$ (19,350,000)$ -$ -$ -$ Refunding Lease Revenue Bonds:
2010 Series 18,450,000 - (895,000) 17,555,000 930,000 16,625,000 2013 Series 19,065,000 (910,000) 18,155,000 945,000 17,210,000 Unamortized premium 1,582,182 - (578,964) 1,003,218 - 1,003,218 Loan payable 948,011 - (90,582) 857,429 91,515 765,914 Direct borrowings and placement
General Obligation Bonds:

Library 2019A Series 8,633,538 - (290,960) 8,342,578 326,786 8,015,792 Library 2019B Series - 19,087,551 (799,670) 18,287,881 664,027 17,623,854 Total long-term debt 68,028,731 19,087,551 (22,915,176) 64,201,106 2,957,328 61,243,778 Other long-term liabilities
Claims payable 3,864,823 596,010 (838,388) 3,622,445 909,000 2,713,445 Compensated absences 1,723,517 2,060,575 (1,797,436) 1,986,656 230,000 1,756,656 Total long-term liabilities 73,617,071$ 21,744,136$ (25,551,000)$ 69,810,207$ 4,096,328$ 65,713,879$ Classification

7.2.b
Packet Pg. 126 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

69 Note 8 – Long-Term Liabilities (Continued)

A. Governmental Activities (Continued)

General Obligation Bonds (Gilroy Community Library Project) 2010 Series

On July 21, 2010, the City of Gilroy issued General Obligation Bonds 2010 Series, in the amount of $23,500,000. The proceeds from the issue are being used to finance the acquisition, construction and improvement of facilities for the public library within the City.

Interest on the bonds is payable semiannually on February 1 and August 1 of each year commencing on February 1, 2011, and the Bonds mature on February 1, 2040. The bonds are payable solely from ad valorem property taxes levied by the City and collected by the County. The principal balance outstanding of $19,350,000 was paid off during the year.

Refunding Lease Revenue Bonds (LRBs) 2010 Series
On July 27, 2010, the City of Gilroy refinanced its 2009 BANs and issued Refunding Revenue Bonds, in the amount of $24,475,000. The proceeds from the issue were used to redeem the 2009 BANs.

Interest on the bonds is payable semiannually on May 1 and November 1 of each year commencing on May 1, 2011, and the Bonds mature on November 1, 2033. The principal balance of outstanding bonds at June 30, 2020 was $17,555,000. The reserve requirement on the bonds was $1,744,606, and the actual reserve was $1,775,338.

The annual debt service requirements to maturity for the Refunding Lease Revenue Bonds 2010 Series are as follows:

Year ending
June 30, Principal Interest Total
2021 930,000$ 810,706$ 1,740,706$
2022 965,000 775,219 1,740,219
2023 1,005,000 738,231 1,743,231
2024 1,045,000 697,231 1,742,231
2025 1,090,000 654,531 1,744,531
2026-2030 6,235,000 2,475,834 8,710,834
2031-2034 6,285,000 681,319 6,966,319
Total 17,555,000$ 6,833,071$ 24,388,071$

Refunding Lease Revenue Bonds (LRBs) 2013 Series
On July 25, 2013, the City of Gilroy refinanced its Bond Anticipation Notes (BANs) Gilroy 2010 and issued Refunding Revenue Bonds, in the amount of $23,120,000. The proceeds from the issue were used to redeem the 2010 BANs.

Interest on the bonds is payable semiannually on May 1 and November 1 of each year commencing on November 1, 2013, and the Bonds mature on November 1, 2033. The principal balance of outstanding bonds at June 30, 2020 was $18,155,000.

The reserve requirement was $920,222, and the actual reserve was $922,096.

7.2.b
Packet Pg. 127 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

70 Note 8 – Long-Term Liabilities (Continued)

A. Governmental Activities (Continued)

Refunding Lease Revenue Bonds (LRBs) 2013 Series (Continued)

The annual debt service requirements to maturity for the Refunding Lease Revenue Bonds 2013 Series are as follows:

Year ending
June 30, Principal Interest Total
2021 945,000$ 891,669$ 1,836,669$
2022 990,000 848,019 1,838,019
2023 1,035,000 805,156 1,840,156
2024 1,080,000 760,044 1,840,044
2025 1,130,000 710,444 1,840,444
2026-2030 6,440,000 2,751,278 9,191,278
2031-2034 6,535,000 813,750 7,348,750
Total 18,155,000$ 7,580,360$ 25,735,360$
Loan Payable

The City entered into a loan agreement with the California Energy Commission (CEC) to provide funds to install equipment for energy conservation. The original loan agreement was for the CEC to loan the City $1,812,722 with interest paid at 1% with semiannual payments to be paid commencing December following the year the project is complete. The City borrowed $1,201,155 with semiannual payments of interest and principal of $49,931 with the first payment occurring on December 27, 2016. The principal balance of outstanding at June 30, 2020 was $857,429.

The annual debt service requirements to maturity for the loans payable are as follows:

Year ending
June 30, Principal Interest Total
2021 91,515$ 8,347$ 99,862$
2022 92,433 7,429 99,862
2023 93,359 6,503 99,862
2024 94,281 5,581 99,862
2025 95,240 4,622 99,862
2026-2029 390,601 8,846 399,447 Total 857,429$ 41,328$ 898,757$

7.2.b
Packet Pg. 128 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

71 Note 8 – Long-Term Liabilities (Continued)

A. Governmental Activities (Continued)

General Obligation Bonds (Gilroy Community Library Project) 2019 Refunding Bonds, Series A

On June 26, 2019, the City of Gilroy issued General Obligation Refunding Bonds 2019 Series A through a private placement, in the amount of $8,633,538. The proceeds from the issue were used to currently refund the General Obligation Bonds Series 2019. The City’s refunding of the 2009 General Obligation Bonds resulted in an economic gain of (difference between the present value of the old and new debt) of $1,447,576 and an aggregate savings in debt services between the refunding debt and the refunded debt of $1,966,116.

Interest on the bonds is payable semiannually on February 1 and August 1 of each year commencing on February 1, 2011, and the Bonds mature on February 1, 2039. The bonds are payable solely from ad valorem property taxes levied by the City and collected by the County. The principal balance of outstanding bonds at June 30, 2020 was $8,342,578.

The annual debt service requirements to maturity for the General Obligation Refunding Bonds, 2019 Series A are as follows:

Year ending
June 30, Principal Interest Total
2021 326,786$ 260,288$ 587,074$
2022 337,143 250,093 587,236
2023 347,829 239,574 587,403
2024 358,853 228,722 587,575
2025 370,226 217,525 587,751
2026-2030 2,034,760 906,863 2,941,623
2031-2035 2,378,312 568,671 2,946,983
2036-2039 2,188,669 173,379 2,362,048
Total 8,342,578$ 2,845,115$ 11,187,693$

General Obligation Bonds (Gilroy Community Library Project) 2019 Refunding Bonds, Series B On November 1, 2019, the City of Gilroy issued General Obligation Refunding Bonds 2019 Series B through a private placement, in the amount of $19,087,551. The proceeds from the issue were used to currently refund the General Obligation Bonds Series 2019. The City’s refunding of the 2010 General Obligation Bonds resulted in an economic gain of (difference between the present value of the old and new debt) of $3,430,633 and an aggregate savings in debt services between the refunding debt and the refunded debt of $2,525,981.

Interest on the bonds is payable semiannually on February 1 and August 1 of each year commencing on February 1, 2020, and the Bonds mature on February 1, 2040. The bonds are payable solely from ad valorem property taxes levied by the City and collected by the County. The principal balance of outstanding bonds at June 30, 2020 was $18,287,881.

7.2.b
Packet Pg. 129 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

72 Note 8 – Long-Term Liabilities (Continued)

A. Governmental Activities (Continued)
General Obligation Bonds (Gilroy Community Library Project) 2019 Refunding Bonds, Series B (Continued)
The annual debt service requirements to maturity for the General Obligation Refunding Bonds, 2019 Series B are as follows:

Year ending
June 30, Principal Interest Total
2021 664,027$ 583,383$ 1,247,410$
2022 685,553 562,201 1,247,754
2023 707,776 540,332 1,248,108
2024 730,720 517,754 1,248,474
2025 754,408 494,444 1,248,852
2026-2030 4,155,121 2,095,248 6,250,369
2031-2035 4,873,709 1,388,122 6,261,831
2036-2039 5,716,567 558,706 6,275,273
Total 18,287,881$ 6,740,190$ 25,028,071$

B. Business-Type Activities

Balance Balance Due within Due in more
July 1, 2019 Additions Deletions June 30, 2020 One Year than One Year Other debt:
2010 Wastewater Revenue Bonds 9,230,000$ -$ (2,150,000)$ 7,080,000$ 2,260,000$ 4,820,000$ Unamortized premium 698,275 - (232,758) 465,517 - 465,517 9,928,275 - (2,382,758) 7,545,517 2,260,000 5,285,517 Other long-term liabilities
Compensated absences 186,750 279,504 (196,777) 269,477 27,000 242,477 10,115,025$ 279,504$ (2,579,535)$ 7,814,994$ 2,287,000$ 5,527,994$ Classification
2010 Wastewater Revenue Refunding Bonds
On March 1, 2010, the City issued revenue refunding bonds in the amount of $23,375,000. The bonds were issued to refinance an existing installment payment obligation of the City. The City had originally structured the sewer revenue bonds through its joint venture with Morgan Hill (South County Regional Wastewater Authority or SCRWA). The structure consisted of a pledge of an installment sale from the City to SCRWA as the collateral for the revenue bonds issued by SCRWA.

As part of the March 2010 refunding, the City issued the debt obligation, paid off the SCRWA bonds and now has the new obligation in the sewer fund. There is no longer any outstanding debt on SCRWA’s financial statements for Gilroy. The City’s sewer enterprise fund now maintains an obligation to generate net revenues to pay its outstanding obligation off over time without any responsibility or requirements from SCRWA.

The bonds are payable from the net revenues of the City’s Sewer Fund so pledged as security for the debt. Interest on the bonds is payable at rates ranging from 3.0% to 5.0%. Principal payments range from $1,465,000 to $2,440,000 payable on August 1 of each year beginning in 2011 and maturing in 2022. The principal balance of outstanding bonds at June 30, 2020 was $7,080,000.

7.2.b
Packet Pg. 130 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

73 Note 8 – Long-Term Liabilities (Continued)

B. Business-Type Activities (Continued)

2010 Wastewater Revenue Refunding Bonds (Continued)

Covenants within the bonds require the City of Gilroy to, among other things, maintain insurance on the facility, establish wastewater rates, exclusive of sewer development fees, which are sufficient to pay the operating costs and debt service on the bonds and to provide revenues equal to at least 1.2 times the annual payments due.

The reserve requirement was $2,621,000, and the actual reserve was $2,621,011.

The annual debt service requirements (principal and interest) to maturity for the 2010 Wastewater Revenue Refunding Bonds are as follows:

Year ending
June 30, Principal Interest Total
2021 2,260,000$ 297,500$ 2,557,500$
2022 2,380,000 181,500 2,561,500
2023 2,440,000 61,000 2,501,000
Total 7,080,000$ 540,000$ 7,620,000$

C. Debt without Government Commitment

Community Facilities District No. 2000-1, Highway 152, Special Tax Bonds

In December 2002, the City issued debt for and on behalf of Community Facilities District No. 2000-1 pursuant to Mello-Roos Community Facilities Act of 1982, $7,185,000 of Special Tax Bonds to finance the costs associated with the construction of public facilities for interchange improvements at State Highway 152 and U.S.

Highway 101 and for widening and improving of Highway 152. In September 2006, the City issued debt for and on behalf of the Community Facilities District No. 2000-1 pursuant to Mello-Roos Community Facilities Act of 1982, $8,670,000 of Special Tax Bonds to finance the costs associated with the construction of public facilities for interchange improvements at State Highway 152 and U.S. Highway 101 and for the widening and improving of Highway 152.

These bonds (Series 2002 and 2001) were refunded in July 2018 with proceeds from the issuance in a private placement of Community Facilities District No. 2000-1 (Highway 152) Special Tax Refunded Bonds, Series 2018 in the aggregate principal amount of $7,815,860. These bonds do not constitute a debt or obligation of the City because they are payable solely from and secured by assets and revenues of other parties. The City is in no way liable for repayment but is only acting as an agent for the property owners in collecting the assessments, forwarding the collections to bondholders, and initiating foreclosure proceedings, if appropriate. The outstanding principal balance as of June 30, 2020 was $7,212,008.

7.2.b
Packet Pg. 131 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

74 Note 9 – Defined Benefit Pension Plans (CalPERS)

A. Summary
The following is the summary of net pension liabilities and the related deferred outflow of resources and deferred inflow of resources at June 30, 2020 and pension expenses for the year then ended:

Governmental Business-Type
Activities Sewer Water Activities Total
Deferred outflows of resources:

Pension contribution after measurement date:

Miscellaneous 2,323,645$ 678,946$ 641,772$ 1,320,718$ 3,644,363$ Safety 6,320,861 - - - 6,320,861 Total contribution after measurement date 8,644,506 678,946 641,772 1,320,718 9,965,224 Changes in assumptions:

Safety 2,728,320 - - - 2,728,320 Total changes in assumptions 2,728,320 - - - 2,728,320 Difference between expected and actual experience:

Miscellaneous 1,499,165$ 438,040$ 414,057$ 852,097$ 2,351,262 Total difference between expected and actual experience 1,499,165 438,040 414,057 852,097 2,351,262 Total deferred outflows of resources 12,871,991$ 1,116,986$ 1,055,829$ 2,172,815$ 15,044,806$ Aggregate net pension liabilities:

Miscellaneous 21,971,434$ 6,419,821$ 6,068,334$ 12,488,155$ 34,459,589$ Safety 51,713,238 - - - 51,713,238 Total aggregate net pension liabilities 73,684,672$ 6,419,821$ 6,068,334$ 12,488,155$ 86,172,827$ Deferred inflows of resources:

Changes in assumptions:

Miscellaneous 143,847$ 42,031$ 39,729$ 81,760$ 225,607$ Safety 316,799 - - - 316,799 Total changes in assumptions 460,646 42,031 39,729 81,760 542,406 Difference between expected and actual experience:

Safety 1,112,059 - - - 1,112,059 Total difference between expected and actual experience 1,112,059 - - - 1,112,059 Difference between projected and actual earnings on plan investments:

Miscellaneous 352,382$ 102,962$ 97,326$ 200,288$ 552,670 Safety 570,213 - - - 570,213 Total difference between projected and actual earnings on plan investments 922,595 102,962 97,326 200,288 1,122,883 Total deferred inflows of resources 2,495,300$ 144,993$ 137,055$ 282,048$ 2,777,348$ Pension expense:

Miscellaneous 4,214,347$ 1,231,388$ 1,163,969$ 2,395,357$ 6,609,704$ Safety 8,838,448 - - - 8,838,448 Total net pension expense 13,052,795$ 1,231,388$ 1,163,969$ 2,395,357$ 15,448,152$

7.2.b
Packet Pg. 132 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

75 Note 9 – Defined Benefit Pension Plans (CalPERS) (Continued)

B. General Information about the Pension Plans

Plan Descriptions

The City participates in the 2.5% at 55 (Miscellaneous Tier I), 2.0% at 62 (Miscellaneous Tier II PEPRA), 3.0% at 50 (Police Safety Tier I), 2.0% at 50 (Police Safety Tier II), 2.7% at 57 (Police Safety Tier III PEPRA), 3% at 55 (Fire Safety Tier I), 2% at 55 (Fire Safety Tier II) and 2% at 57 (Fire Safety Tier III PEPRA) agent multiple- employer defined benefit plans. The City’s defined benefit pension plans provide retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members and beneficiaries. The Plans are part of the Public Agency portion of the California Public Employees Retirement System (CalPERS), an agent multiple-employer plan administered by CalPERS, which acts as a common investment and administrative agent for participating public employers within the State of California. A menu of benefit provisions as well as other requirements are established by state statutes within the Public Employees’ Retirement Law.

The City selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through City ordinance. CalPERS issues a separate comprehensive annual financial report. Copies of CalPERS’s annual financial report may be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, CA 95814.

All full-time employees of the City are eligible to participate in the Plans. Part-time employees and temporary employees who work an average of 20 hours per week and over 1,000 hours per year are also eligible to participate. Upon 5 years of service, miscellaneous employees and public safety employees who retire at or after age 50 are entitled to receive an annual retirement benefit.

The benefit is payable monthly for life, in an amount that varies from each Tier, of the employees’ single highest year’s salary for each year of credited service. The Plans also provide death and disability benefits.

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 to 62 with statutorily reduced benefits. For employees hired into a plan with the 1.5% at 65 formula, eligibility for service retirement is age 55 with at least five years of services. PEPRA miscellaneous members become eligible for service retirement upon attainment of age 52 with at least five years of service. All members are eligible for nonduty disability benefits after five years of service. The death benefit is one of the following:
the Basic Death Benefit, the 1957 Survivor Benefit or the Optional Settlement 2W Death Benefit.

Safety members can receive a special death benefit if the member dies while actively employed and the death is job-related. Fire members may receive the alternate death benefit in lieu of the Basic Death Benefit or the 1957 Survivor Benefit if the member dies while actively employed and has at least 20 years of total CalPERS service.

The cost-of-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

7.2.b
Packet Pg. 133 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

76 Note 9 – Defined Benefit Pension Plans (CalPERS) (Continued)

B. General Information about the Pension Plans (Continued)

Benefits Provided (Continued)

The Plans’ provisions and benefits in effect at the measurement date of June 30, 2019 are summarized as follows:

Hire date
Prior to
January 1, 2013
On or after
January 1, 2013
Benefit formula 2.5% @ 60 2% @ 62
Benefit vesting schedule 5 years of service 5 years of service Benefit payments Monthly for life Monthly for life
Retirement age 50 52
Benefit per year of service, as a percentage of salary 2.0% to 3.0% 1.0% to 2.5% Required employee contribution rates 8.000% 7.000%
Required contribution during measurement period 10.531% 10.531% Miscellaneous
Hire Date
Prior to
January 5, 2011
Prior to
January 1, 2013
On or After
January 1, 2013
Benefit formula 3% @ 50 2% @ 57 2.7% @ 50
Benefit vesting schedule 3 years of service 3 years of service 3 years of service Benefit payments Monthly for life Monthly for life Monthly for life Retirement age 50-55 50-55 50-57
Benefit per year of service, as a percentage of salary 3.000% 2.00%-2.70% 2.00%-2.70% Required employee contribution rates 9.000% 9.000% 13.000% Required contribution during measurement period 19.471% 19.471% 8.250% Safety - Police

Hire Date
Prior to
January 5, 2011
Prior to
January 1, 2013
On or After
January 1, 2013
Benefit formula 2% @ 55 2% @ 55 2% @ 50
Benefit vesting schedule 3 years of service 3 years of service 3 years of service Benefit payments Monthly for life Monthly for life Monthly for life Retirement age 50-55 50-55 50-57
Benefit per year of service, as a percentage of salary 2.4%-3.0% 1.426%-2.0% 1.426%-2.0% Required employee contribution rates 9.000% 7.000% 8.250% Required contribution during measurement period 19.471% 19.471% 8.250% Safety - Fire

7.2.b
Packet Pg. 134 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

77 Note 9 – Defined Benefit Pension Plans (CalPERS) (Continued)

B. General Information about the Pension Plans (Continued)

Employees Covered

At the measurement date of June 30, 2019, the following employees were covered by the benefit terms for all Plans:

Inactives currently receiving benefits 116
Inactives entitled to but not yet receiving benefits 30 Active employees 124
Total 270

Contributions

Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’s annual actuarial valuation process. 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. City contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contributions requirements are classified as plan member contributions.

C. Net Pension Liability

Actuarial Methods and Assumptions Used to Determine Total Pension Liability

The June 30, 2018 valuation was rolled forward to determine the June 30, 2019 total pension liability, based on the following actuarial methods and assumptions:

Actuarial Cost Method
Actuarial Assumptions:

Discount Rate
Inflation
Salary Increases
Mortality Rate Table1
Post Retirement Benefit Increase
1The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website.

Derived using CalPERS’ membership data for all funds.

The lesser of contract COLA or 2.50% until Purchasing Power Protection Allowance floor on purchasing power applies, 2.50% thereafter
Entry Age Normal in accordance with the requirement of GASB Statement No. 68

7.15%

2.50%
Varies by Entry Age and Service

7.2.b
Packet Pg. 135 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

78 Note 9 – Defined Benefit Pension Plans (CalPERS) (Continued)

C. Net Pension Liability (Continued)

Long-Term Expected Rate of Return

The long-term expected rate of return on pension plan investments was determined using a building-block method in which 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 returns of 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 expected real rates of return by asset class are as follows:

Current Target Real Return Real Return
Asset Class1 Allocation Years 1 - 102 Years 11+3
Global equity 50.00% 4.80% 5.98%
Fixed income 28.00% 1.00% 2.62%
Inflation assets 0.00% 0.77% 1.81%
Private equity 8.00% 6.30% 7.23%
Real assets 13.00% 3.75% 4.93%
Liquidity 1.00% 0.00% -0.92%
2 An expected inflation of 2.0% used
3 An expected inflation of 2.92% used
1 In the CalPER's CAFR, 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.

Discount Rate

The discount rate used to measure the total pension liability 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.

Subsequent Events

There were no subsequent events that would materially affect the results in this disclosure.

7.2.b
Packet Pg. 136 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

79 Note 9 – Defined Benefit Pension Plans (CalPERS) (Continued)

D. Changes in the Net Pension Liability

The following table shows the changes in net pension liability for the City’s miscellaneous plan recognized over the measurement period.

Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability/(Asset)
(a) (b) (c) = (a) - (b)
Balance at June 30, 2018 (Valuation Date) 109,153,967$ 78,451,278$ 30,702,689$ Changes Recognized for the Measurement Period:

Service Cost 2,218,281 - 2,218,281 Interest on the total pension liability 7,888,537 - 7,888,537 Changes of benefit terms - - - Changes of assumptions - - - Difference between expected and actual experience 3,067,906 - 3,067,906 Plan to plan resource movement - - - Contributions from the employer - 3,254,181 (3,254,181) Contributions from employees - 992,926 (992,926) Net investment income - 5,226,520 (5,226,520) Benefit payments, including refunds of employee
contributions (6,003,668) (6,003,668) - Administrative expenses - (55,985) 55,985 Other Miscellaneous Income/(Expense) 182 (182) Net Changes during July 1, 2018 to June 30, 2019 7,171,056 3,414,156 3,756,900 Balance at June 30, 2019 (Measurement Date) 116,325,023$ 81,865,434$ 34,459,589$ Miscellaneous Plan
Increase (Decrease)

Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability/(Asset)
(a) (b) (c) = (a) - (b)
Balance at June 30, 2018 (Valuation Date) 164,393,053$ 113,500,016$ 50,893,037$ Changes Recognized for the Measurement Period:

Service Cost 4,001,654 - 4,001,654 Interest on the total pension liability 11,586,454 - 11,586,454 Changes of benefit terms - - - Changes of assumptions - - - Difference between expected and actual experience (560,783) - (560,783) Plan to plan resource movement - - - Contributions from the employer - 5,572,994 (5,572,994) Contributions from employees - 1,245,565 (1,245,565) Net investment income - 7,469,298 (7,469,298) Benefit payments, including refunds of employee
contributions (7,569,570) (7,569,570) - Administrative expenses - (80,996) 80,996 Other Miscellaneous Income/(Expense) 263 (263) Net Changes during July 1, 2018 to June 30, 2019 7,457,755 6,637,554 820,201 Balance at June 30, 2019 (Measurement Date) 171,850,808$ 120,137,570$ 51,713,238$ Safety
Increase (Decrease)

7.2.b
Packet Pg. 137 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

80 Note 9 – Defined Benefit Pension Plans (CalPERS) (Continued)

D. Changes in the Net Pension Liability (Continued)

Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the City for all Plans, calculated using the discount rate for each Plan, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:

Discount Rate Current Discount Discount Rate
- 1% (6.15%) Rate (7.15%) + 1% (8.15%)
Miscellaneous Plan 48,837,561$ 34,459,589$ 22,487,052$ Safety Plan 74,870,212$ 51,713,238$ 32,590,135$ Plan's Net Pension Liability/(Asset)
Pension Plans Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

E. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2020, the City recognized pension expense in the amounts of $6,609,704 and $8,838,448 for the miscellaneous plan and safety plan, respectively.

As of measurement date of June 30, 2019, the City has deferred outflows and deferred inflows of resources related to pensions as follows:

Deferred outflows Deferred inflows
of Resources of Resources
Contribution made after the measurement date 3,644,363$ -$ Changes of assumptions - (225,607) Difference between expected and actual experience 2,351,262 - Net difference between projected and actual earning on
pension plan investments - (552,670) Total 5,995,625$ (778,277)$
Miscellaneous Plan

Deferred outflows Deferred inflows
of Resources of Resources
Contribution made after the measurement date 6,320,861$ -$ Changes of assumptions 2,728,320 (316,799) Difference between expected and actual experience - (1,112,059) Net difference between projected and actual earnings
on pension plan investments - (570,213) Total 9,049,181$ (1,999,071)$
Safety Plan

7.2.b
Packet Pg. 138 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

81 Note 9 – Defined Benefit Pension Plans (CalPERS) (Continued)

E. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)

$3,644,363 reported in the Miscellaneous Plans and $6,320,861 reported in the Safety Plans 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, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Measurement
Period Miscellaneous Safety
Ending June 30 Plan Plan
2020 1,584,654$ 1,756,242$
2021 79,838 (852,401)
2022 (151,232) (297,194)
2023 59,725 122,602
2024 - -
Thereafter - -
1,572,985$ 729,249$
of Resources
Deferred Outflows/(Inflows)

Note 10 – Other Postemployment Healthcare Plan
Governmental Business-Type
Activities Sewer Water Activities Total Total
Deferred outflows of resources:

Employer contributions made
subsequent to the measurement date 413,652$ 39,608$ 47,469$ 87,077$ 500,729$ Changes of assumption 386,945 37,050 44,404 81,454 468,399 Total deferred outflows of resources 800,597$ 76,658$ 91,873$ 168,531$ 969,128$ Total OPEB liability 12,056,601$ 1,154,433$ 1,383,568$ 2,538,001$ 14,594,602$ Total OPEB liability 12,056,601$ 1,154,433$ 1,383,568$ 2,538,001$ 14,594,602$ Deferred inflows of Resources:

Change in assumption 1,130,105$ 108,209$ 129,686$ 237,895$ 1,368,000$ Difference between expected and actual experience 1,169,256 111,958 134,179 246,137 1,415,393 Total deferred inflows of resources 2,299,361$ 220,167$ 263,865$ 484,032$ 2,783,393$ OPEB Expense 648,154$ 62,062$ 74,380$ 136,442$ 784,596$ Business-Type Activities
Plan Description

The City of Gilroy Retiree Healthcare Plan (Plan) is a single-employer defined benefit healthcare plan administered by the City. The plan provides healthcare benefits to eligible retirees and their dependents through the California Public Employee’s Retirement System healthcare program (PEMHCA) and a post-employment retention/recognition incentive benefit program (RRIB) which requires proof of medical coverage. Benefit provisions are established and may be amended through agreements and memorandums of understanding between the City, its management employees and unions representing City employees.

7.2.b
Packet Pg. 139 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

82 Note 10 – Other Postemployment Healthcare Plan (Continued)

Plan Description (Continued)

For all retirees under the plan, the City contributes the PEMHCA minimum on the unequal method for eligible retirees and surviving spouses. The PEMHCA minimum amount is $136 in 2019 and $139 in 2020. No dental, vision or life insurance benefits are provided.

The RRIB incentive benefit is for certain bargaining units’ retirees that retired prior to July 1, 2014 (police and fire employees), July 1, 2015 (management employees) or November 1, 2015 (AFSCME, miscellaneous employees).

Prior employees that retired and were fifty (50) or more years of age (police and fire employees) or fifty-five (55) or more years of age (AFSCME and management employees) and previously retired from City service with a minimum of fifteen (15) years of service with the City are eligible to receive this postretirement benefit until reaching the age of sixty-five (65). Additional tiers of years of service were added to the plan to qualify for benefits. This supplemental pension plan has been discontinued for new participants after the dates noted above. The City offers a Health Reimbursement Plan (PEMHCA) for new retirees after the dates noted above.

The employer contribution under RRIB provides a temporary monthly annuity (to age 65) up to $300 per month based on service at retirement to eligible retirees. All classes of employees are covered, if eligible.

No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement 75. The plan does not issue a separate report.

Employees Covered

At the measurement date of June 30, 2019, the following current and former employees were covered by the benefit terms under the plan:

Active plan members 261
Retirees 215
Total 476

Total OPEB Liability
The City’s OPEB liability of $14,594,602 was measured as of June 30, 2019 and was determined by an actuarial valuation as of June 30, 2019 rolled forward to 2020 using standard update procedures. The OPEB liability from the governmental activities is primarily liquidated from the general fund.

7.2.b
Packet Pg. 140 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

83 Note 10 – Other Postemployment Healthcare Plan (Continued)

Actuarial Assumptions and Other Inputs

The total OPEB liability as of June 30, 2019 actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified:

Actuarial Valuation Date June 30, 2019
Contribution Policy No pre-funding
Discount Rate 3.50% at June 30, 2019 (Bond Buyer 20-Bond Inflation 2.75% annually
Salary Increase Aggregate - 3% annually, Merit - CalPERS 1997- 2015 Experience Study
Mortality, Retirement,
Termination, and
i bili
CalPERS 1997-2015 Experience Study
Mortality Improvement
Scale
Modified projected fully generational with Scale
MP-2019
Healthcare Trend Rate -
Non-Medicare
An annual healthcare cost trend rate of 7.25% for
2021, decreasing to an ultimate rate of 4.0% in
Healthcare Trend Rate -
Medicare
An annual healthcare cost trend rate of 6.3% for
2021, decreasing to an ultimate rate of 4.0% in
Changes in total OPEB Liability

The change in total OPEB liability are as follows:

Total OPEB
Liability
Balance at June 30, 2019 (Measurement Date) 14,934,000$ Changes Recognized for the Measurement Period:

Service Cost 697,310
Interest on the total OPEB liability 594,793
Difference between expected and actual experience (1,655,290) Changes of assumptions 547,789
Benefit payments (524,000)
Net Changes during July 1, 2018 to June 30, 2019 (339,398) Balance at June 30, 2019 (Measurement Date) 14,594,602$

Sensitivity of the Total OPEB Liability to Changes in the Discount Rate

The following presents the total OPEB liability of the City, calculated using the discount rate for the Plan, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:

Discount Rate - 1% Current Discount Discount Rate + 1%
Rate (2.50%) Rate (3.50%) Rate (4.50%)
16,858,633$ 14,594,602$ 12,772,720$
Plan's Total OPEB Liability

7.2.b
Packet Pg. 141 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

84 Note 10 – Other Postemployment Healthcare Plan (Continued)

Sensitivity of the Total OPEB Liability to Changes in the Discount Rate (Continued) The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are one percentage point lower or one percentage point higher) than the current healthcare cost trend rates:

Healthcare Cost
-1% Trend Rates 1%
12,524,048$ 14,594,602$ 17,224,950$
Plan's Total OPEB Liability

OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB

For the year ended June 30, 2020, the City recognized OPEB expense of $784,596. At June 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred outflows Deferred inflows
of Resources of Resources
Difference between expected and actual experience -$ (1,415,393)$ Changes of assumptions 468,399 (1,368,000) Employer contributions made
subsequent to the measurement date 500,729 - Total 969,128$ (2,783,393)$
$500,729 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the OPEB liability in the year ending June 30, 2021. The change in assumptions was due to the change in discount rate of 3.50% from 3.87% for the June 30, 2019 measurement date and is amortized over the average expected remaining service lives.

Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows:

Measurement Period Deferred Outflows/
Ended June 30 (Inflows) of Resources
2021 (507,507)$
2022 (507,507)
2023 (507,507)
2024 (420,507)
2025 (227,507)
Thereafter (144,459)
(2,314,994)$

7.2.b
Packet Pg. 142 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

85 Note 11 – Claims Payable

The workers’ compensation and general liability claims administrators have estimated liabilities for probable future payments relating to claims outstanding as of June 30, 2020 in the following amounts which are recorded in separate internal service funds:

Worker' compensation claims 2,932,396$
General liability claims 690,049
Total claims payable 3,622,445$

Although the eventual outcome of these claims is uncertain, in the opinion of management, the resolution of these matters is not expected to have a material adverse effect on the financial condition of the City, beyond the provision for losses reflected in the recorded claims payable liabilities.

Changes in claims payable for workers’ compensation for the past three fiscal years are as follows:

Current Year Amounts
Beginning Claims and End Amounts Due in
of Year Changes in Claim of Year Due within more than
Workers' Compensation Liability Estimates Payments Liability One Year One Year 2017-2018 2,991,505$ 485,364$ (588,389)$ 2,888,480$ 780,000$ 2,108,480$ 2018-2019 2,888,480 1,433,203 (1,066,813) 3,254,870 879,000 2,375,870 2019-2020 3,254,870 70,329 (392,803) 2,932,396 792,000 2,140,396

Changes in claims payable for general liability for the past three fiscal years are as follows:

Beginning Claims and End Amounts Due in
of Year Changes in Claim of Year Due within more than
General Liability Liability Estimates Payments Liability One Year One Year 2017-2018 226,974$ 77,496$ (166,232)$ 138,238$ 24,000$ 114,238$ 2018-2019 138,238 114,526 (642,811) (390,047) (66,000) (324,047) 2019-2020 609,953 525,681 (445,585) 690,049 117,000 573,049 Note 12 – Risk Management

Bodily injury, property damage and public officials’ errors and omissions insurance is provided via participation in a joint power’s authority. Effective July 1, 2015, the City is a member of the Municipal Pooling Authority (MPA), a joint powers authority established pursuant to California Government Code Sections 990.4-990.8 and 6500, et seq.

The pool has 20 member cities. The City is insured by the MPA for up to $29,000,000 per claim for liability coverage, including $28,000,000 provided by an excess policy with the California Affiliated Risk Management Authority, after a deductible of $50,000 which is paid by the City. Premiums paid by the participating members may be retrospectively increased or decreased to reflect the actual operating costs of MPA and the City’s share of incurred losses. The City is contingently liable for assessments which may be made by MPA in the event that MPA has insufficient resources to pay unexpectedly large claims. Prior to July 1, 2015, the City was a member of the ABAG Plan Corp. (ABAG Plan) insurance pool, a nonprofit public benefit corporation organized under Section 5110, et seq. of the Corporations Code of California. ABAG Plan, now called PLAN JPA, coverage applies to occurrences/claims prior to July 1, 2015. The City was operating under a five-year withdrawal agreement with PLAN JPA due to unresolved claims that had not yet closed. During the fiscal year ended June 30, 2020, a final actuarial valuation was completed as required by the Withdrawal Agreement and necessary equity has been returned to the City.

7.2.b
Packet Pg. 143 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

86 Note 12 – Risk Management (Continued)

The City is self-insured for the first $500,000 of each workers’ compensation claim. The City belongs to the Local Agency Workers’ Compensation Excess (LAWCX) joint powers authority, established pursuant to California Government Code Sections 990.4-990.8 and 6500 et seq., for the purpose of workers’ compensation excess coverage.

LAWCX coverage is for individual workers’ compensation claims in excess of $500,000 up to $5,000,000. In addition, additional excess coverage beyond $5,000,000 is purchased via California State Association of Counties Excess Insurance Authority (CSAC EIA) bringing statutory coverage to $50,000,000.

Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years.

Note 13 – Commitments and Contingencies

Under the terms of federal, county, and state grants, periodic audits are required and certain costs may be questioned as not appropriate expenditures under the terms of the grants. Such audits could lead to reimbursements to the grantor agencies. If expenditures were disallowed, the City believes such disallowances, if any, would be immaterial.

The City is a defendant in certain legal claims and actions arising from the normal course of operations. In the opinion of management and legal counsel, such claims and actions will not have a material adverse effect on the City’s financial position.

Gilroy Garlic Festival

On July 28, 2019, the Gilroy Garlic Festival, held at Christmas Hill Park, was the site of a mass shooting. The gunman killed himself and three others and wounded 17 people. The City’s response costs have been submitted to the California Governor’s Office of Emergency Services (Cal OES) for reimbursement consideration. The City may incur additional financial impacts as a result of this tragedy. However, at this time, the extent of those impact is unknown.

COVID-19

In December 2019, a novel strain of coronavirus has spread around the world resulting in business and social disruption. The coronavirus was declared a Public Health Emergency of International Concern by the World Health Organization on January 30, 2020. The operations and business results of the City could potentially be adversely affected by this global pandemic. The extent to which the coronavirus may impact business activity or investment results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and the actions required to contain the coronavirus. The ultimate financial impact and duration cannot be estimated at this time.

7.2.b
Packet Pg. 144 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

87 Note 13 – Commitments and Contingencies (Continued)

The City had the following commitments outstanding as of June 30, 2020:

Name of Project Spent-to-date
Remaining
Commitment
Citywide Sign Replacement -$ 289,060$ FY21 Citywide Pavement Maintenance 2,900,058
-$ 3,189,118$

Note 14 – Classification of Fund Balances

Public Facilities Gilroy Community Nonmajor
Impact Capital Library Debt Governmental
General Projects Fund Service Fund Funds Total
Nonspendable:

Inventory of materials 108,338$ -$ -$ -$ 108,338$ Prepaid items 18,577 - - - 18,577 Land held for resale - - - 706,754 706,754 126,915 - - 706,754 833,669 Restricted:

Public safety - - - 560,033 560,033 Community library - - 1,138,516 5,229,657 6,368,173 Street maintenance - - - 6,499,937 6,499,937 Grant programs - - - 2,133,862 2,133,862 Housing - - - 2,807,898 2,807,898 Traffic impact - - - 13,414,069 13,414,069 Sewer development - - - 13,376,865 13,376,865 Water development - - - 4,656,240 4,656,240 Storm drains - - - 2,046,518 2,046,518 Community
development - - - 2,606,943 2,606,943 Debt service - - - 2,951,145 2,951,145 Subtotal - - 1,138,516 56,283,167 57,421,683 Assigned:

Capital projects - - - 5,368,008 5,368,008 Subtotal - - - 5,368,008 5,368,008 Unassigned (deficit) 14,731,555 (6,358,684) - (21,954) 8,350,917 Total 14,858,470$ (6,358,684)$ 1,138,516$ 62,335,975$ 71,974,277$

7.2.b
Packet Pg. 145 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

88 Note 14 – Classification of Fund Balances (Continued)

General Fund Balance Policy

The City’s general fund reserve policy consists of an unrestricted General Fund Reserve of 25% of general fund expenditures and an Economic Stability Reserve of 15% of general fund expenditures. The Economic Stability Reserve would only be used in extraordinary circumstances, upon satisfaction of one of the following “economic triggers” and with the majority vote of the City Council: (i) state take-away of significant revenue; (ii) large drop in property taxes (decrease in assessed valuations), (iii) major business closures (sales tax and/or utility users’ tax impact); (iv) dramatic drop in development from projections; (v) large unexpected drop in sales taxes (or other primary revenues - utility users’ tax, franchise fees or transient occupancy tax) due to severe recession or (vi) the economic triggers cause the General Fund Reserve to fall below a predetermined percentage of expenditures (e.g. 20%). In the event the Economic Stability Reserve is used, the City is obligated to replenish the reserve by the end of the next biennial budget to 15% of the general fund expenditures for the given year.

Note 15 – Prior Period Adjustments

The City made following prior period adjustments as of July 1, 2019:

Governmental Business-Type
Activities Activities Total
Net position at July 1, 2019, as previously reported 168,398,582$ 191,188,191$ 359,586,773$ Understatement of accounts receivable grants 1,002,177 - 1,002,177 Adjustment for equity investment in discretely presented component unit - (2,952,971) (2,952,971) Understatement of capital assets, net 414,240 - 414,240 (Under)over-statement of net pension liabilities and related items* 5,631,139 (5,631,139) - (Under)over-statement of net OPEB liabilities and related items* 2,804,138 (2,804,138) - Net position at July 1, 2019, as restated 178,250,276$ 179,799,943$ 358,050,219$

Sewer Water Total
Net position at July 1, 2019, as previously reported 114,098,068$ 77,090,123$ 191,188,191$ Adjustment for equity investment in discretely presented component unit (2,952,971) - (2,952,971) Understatement of net pension liabilities and related items (3,027,098) (2,604,041) (5,631,139) Understatement of net OPEB liabilities and related items (1,275,488) (1,528,650) (2,804,138) Net position at July 1, 2019, as restated 106,842,511$ 72,957,432$ 179,799,943$ Enterprise Funds

*Prior period adjustments in pension and OPEB liabilities and related items were due to correcting the allocation between Governmental Activities and Business-Type Activities.

7.2.b
Packet Pg. 146 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2020

89 Note 16 – Subsequent Events

COVID-19 Funding

On June 29, 2020, the State approved the budget and authorized the Department of Finance to allocate $1,289,065,000 to address the public health and public safety impacts of COVID-19 including homelessness.

Pursuant to the provisions of Control Section 11.90, cities with populations between 300,000 and 500,000 were allocated $225 million and cities with populations of less than 300,000 were allocated $275 million. Based on the City’s population, the City was allocated $704,824 and be received starting July 2020.

American Rescue Recovery Act Funding

On March 11, 2021, President Biden signed into law the American Rescue Plan Act (ARPA), delivering $65.1 billion of direct and flexible aid to America’s cities, towns, and villages. Finalized committed amount of funding allocation for the City is $10,964,521 and the City received first half of the payment on May 19, 2021 of $5,482,261.

Bond Issuance

On July 29, 2020, the City issued Gilroy Public Facilities financing Authority Lease Revenue Refunding Bonds, Series 2020A for $13,740,000 to refund the Authority’s outstanding Refunding Lease Revenue Bonds, Series 2010 and to pay for the cost associated with the issuance of the Series 2020A.

On June 1, 2021, the City issued Gilroy Facilities Financing Authority Wastewater Revenue Bonds, Series 2021A to finance the City’s portion of certain improvements to the South County Regional Wastewater Authority wastewater treatment facility, to fund capitalized interest on the Bonds through February 1, 2023, and to pay the costs of issuance of the Bonds.

Contract Award

On May 5, 2021, the South County Regional Wastewater Authority (SCRWA), a component unit of the City, awarded the bid for the SCRWA Plant Expansion Project for $62.2 million.

General Fund Amendment

At the June 1, 2020, City Council Meeting, a recovery plan was introduced to Council to address the decrease of revenue sources due to COVID19 emergency incident. As part of the recovery plan, staff recommended reductions in staffing and operating expenses to address the shortfall in FY21 and the estimated $8 million shortfall in subsequent years. Approval of the General Fund amendments to FY21 were adopted in FY21 (November 16, 2020 City Council Meeting).

7.2.b
Packet Pg. 147 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

90 This page intentionally left blank.

7.2.b
Packet Pg. 148 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

REQUIRED SUPPLEMENTARY INFORMATION
(UNAUDITED)
91 7.2.b
Packet Pg. 149 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Measurement period 2018-19 2017-18 2016-17 2015-16 2014-15 2013-141
Total pension liability
Service cost 2,218,281$ 2,107,888$ 2,119,709$ 1,974,107$ 1,914,477$ 1,886,470$ Interest 7,888,537 7,397,421 7,057,333 6,992,371 6,720,915 6,378,166 Changes of benefit terms - - - - - - Changes of assumptions - (870,201) 5,558,063 - (1,563,145) - Differences between expected and actual experience 3,067,906 1,618,519 (2,724,046) (878,722) 67,994 - Benefit payments, including refunds of employee
contributions (6,003,668) (5,515,662) (4,810,256) (4,335,513) (4,140,599) (3,800,609) Net change in total pension liability 7,171,056 4,737,965 7,200,803 3,752,243 2,999,642 4,464,027 Total pension liability - beginning 109,153,967 104,416,002 97,215,199 93,462,956 90,463,314 85,999,287 Total pension liability - ending (a)116,325,023$ 109,153,967$ 104,416,002$ 97,215,199$ 93,462,956$ 90,463,314$ Pension fiduciary net position
Contributions - employer 3,254,181$ 2,796,490$ 2,535,645$ 2,448,744$ 2,236,836$ 2,105,469$ Contributions - employee 992,926 1,003,145 888,342 895,816 894,531 978,326 Net investment income 5,226,520 6,275,073 7,621,577 355,337 1,523,463 10,200,504 Benefit payments, including refunds of employee
contributions (6,003,668) (5,515,662) (4,810,256) (4,335,513) (4,140,599) (3,800,609) Plan to plan resource movement - (182) - - - - Administrative expense2 (55,985) (115,667) (100,535) (41,912) (77,393) - Other Miscellaneous income/(expense)1 182 (219,654) - - - - Net change in plan fiduciary net position 3,414,156 4,223,543 6,134,773 (677,528) 436,838 9,483,690 Plan fiduciary net position - beginning 3 78,451,278 74,227,735 68,092,962 68,770,490 68,333,652 58,849,962 Plan fiduciary net position - ending (b)81,865,434$ 78,451,278$ 74,227,735$ 68,092,962$ 68,770,490$ 68,333,652$ Plan net pension liability - ending (a) - (b)34,459,589$ 30,702,689$ 30,188,267$ 29,122,237$ 24,692,466$ 22,129,662$ Plan fiduciary net position as a percentage 70.38% 71.87% 71.09% 70.04% 73.58% 75.54% of the total pension liability
Covered payroll3 12,003,033$ 11,457,160$ 10,902,171$ 11,189,178$ 10,920,524$ 10,072,452$ Plan net pension liability as a percentage of covered
payroll 287.09% 267.98% 276.90% 260.27% 226.11% 219.70% Notes to Schedule:

Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after the June 30, 2017 valuation date. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes).

Changes of Assumptions: None in 2019. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumption December 2017. There were no changes in the discount rate. In 2017, the accounting discount rate reduced from 7.65 percent to

7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to

7.65 percent (without a reduction for pension plan administrative expense.) In 2014, amounts reported were based on the 7.5 percent discount rate.

City of Gilroy
Required Supplementary Information (Unaudited)
Schedule of Changes in the Net Pension Liability and Related Ratios For the Year Ended June 30, 2020
Last Ten Fiscal Years
California Public Employees' Retirement System Defined Pension Plan - Miscellaneous Plan 1 Historical information is presented only for measurement periods for which GASB 68 is applicable. 2 Includes any beginning of year adjustment.
3 Includes one year’s payroll growth using 2.75 percent payroll growth assumption for fiscal years ended June 30, 2018-19; 3.00 percent payroll growth assumption for fiscal years ended June 30, 2014-17.
92 7.2.b
Packet Pg. 150 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Measurement period 2018-19 2017-18 2016-17 2015-16 2014-15 2013-141
Total pension liability
Service cost 4,001,654$ 3,782,506$ 3,795,030$ 3,436,724$ 3,251,786$ 3,441,840$ Interest 11,586,454 11,090,179 10,658,420 10,258,316 9,778,748 9,235,218 Changes of benefit terms - - - - - - Changes of assumptions - (633,599) 9,024,447 - (2,444,546) - Differences between expected and actual experience (560,783) (600,354) (1,138,485) (557,694) 437,762 - Benefit payments, including refunds of employee
contributions (7,569,570) (7,391,540) (6,957,768) (6,616,198) (5,976,690) (5,792,746) Net change in total pension liability 7,457,755 6,247,192 15,381,644 6,521,148 5,047,060 6,884,312 Total pension liability - beginning 164,393,053 158,145,861 142,764,217 136,243,069 131,196,009 124,311,697 Total pension liability - ending (a)171,850,808$ 164,393,053$ 158,145,861$ 142,764,217$ 136,243,069$ 131,196,009$ Pension fiduciary net position
Contributions - employer 5,572,994$ 4,906,333$ 4,528,260$ 4,131,687$ 3,911,991$ 3,844,918$ Contributions - employee 1,245,565 1,196,981 1,157,337 1,130,369 1,106,970 1,082,775 Net investment income 7,469,298 8,983,812 10,785,793 541,083 2,139,791 14,460,928 Benefit payments, including refunds of employee
contributions (7,569,570) (7,391,540) (6,957,768) (6,616,198) (5,976,690) (5,792,746) Plan to plan resource movement - (263) - - - - Administrative expense2 (80,996) (165,621) (143,087) (59,596) (110,062) - Other Miscellaneous income/(expense)1 263 (314,517) - - - - Net change in plan fiduciary net position 6,637,554 7,215,185 9,370,535 (872,655) 1,072,000 13,595,875 Plan fiduciary net position - beginning 3 113,500,016 106,284,831 96,914,296 97,786,951 96,714,951 83,119,076 Plan fiduciary net position - ending (b)120,137,570$ 113,500,016$ 106,284,831$ 96,914,296$ 97,786,951$ 96,714,951$ Plan net pension liability - ending (a) - (b)51,713,238$ 50,893,037$ 51,861,030$ 45,849,921$ 38,456,118$ 34,481,058$ Plan fiduciary net position as a percentage 69.91% 69.04% 67.21% 67.88% 71.77% 73.72% of the total pension liability
Covered payroll3 13,479,938$ 12,879,248$ 12,700,905$ 12,637,804$ 12,055,260$ 12,092,757$ Plan net pension liability as a percentage of covered
payroll 383.63% 395.16% 408.33% 362.80% 319.00% 285.14% Notes to Schedule:
2 Includes any beginning of year adjustment.
3 Includes one year’s payroll growth using 2.75 percent payroll growth assumption for fiscal years ended June 30, 2018-19; 3.00 percent payroll growth assumption for fiscal years ended June 30, 2014-17.

Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after the June 30, 2017 valuation date. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes).

Changes of Assumptions: None in 2019. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumption December 2017. There were no changes in the discount rate. In 2017, the accounting discount rate reduced from 7.65 percent to

7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to

7.65 percent (without a reduction for pension plan administrative expense.) In 2014, amounts reported were based on the 7.5 percent discount rate.

City of Gilroy
Required Supplementary Information (Unaudited)
Schedule of Changes in the Net Pension Liability and Related Ratios (Continued) For the Year Ended June 30, 2020
Last Ten Fiscal Years
California Public Employees' Retirement System Defined Pension Plan - Safety Plan 1 Historical information is presented only for measurement periods for which GASB 68 is applicable. 93 7.2.b
Packet Pg. 151 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Fiscal Year End 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 1
Actuarially determined contribution 3,644,363$ 3,254,181$ 2,796,490$ 2,535,645$ 2,448,744$ 2,236,836$ 2,105,469$ Contributions in relation to the actuarially
determined contribution2 (3,644,363) (3,254,181) (2,796,490) (2,535,645) (2,448,744) (2,236,836) (2,105,469) Contribution deficiency (excess) -$ -$ -$ -$ -$ -$ -$ Covered payroll3 12,363,124$ 12,003,033$ 11,457,160$ 10,902,171$ 11,189,178$ 10,920,524$ 10,072,452$ Contributions as a percentage of covered
payroll3 29.48% 27.11% 24.41% 23.26% 21.88% 20.48% 20.90% Notes to Schedule:

Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry Age Normal Cost Method
Amortization method Level percentage of payroll
Asset valuation method Market value
Inflation 2.75%
Salary increases Varies by entry age and service
Payroll Growth 3.00%
Investment rate of return
Retirement age
Mortality
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2018-19 were derived from the June 30, 2016 funding valuation report.

7.375% net of pension plan investment expenses; includes Inflation.

The probabilities of retirement are based on the 2014 CalPERS Experience study for the period from 1997 to 2011.

The probabilities of mortality are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011. Pre-retirement and Post-retirement mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of Actuaries.
3 Includes one year’s payroll growth using 2.75 percent payroll growth assumption for fiscal years ended June 30, 2018-19; 3.00 percent payroll growth assumption for fiscal years ended June 30, 2014-17.
2 Employers are assumed to make contributions equal to the actuarially determined contributions. However, some employers may choose to make additional contributions towards their unfunded liability. Employer contributions for such plans exceed the actuarially determined contributions. 1 Historical information is presented only for measurement periods for which GASB 68 is applicable.

City of Gilroy
Required Supplementary Information (Unaudited)
Schedule of Plan Contributions - Pension
For the Year Ended June 30, 2020
Last Ten Fiscal Years
California Public Employees' Retirement System Defined Pension Plan - Miscellaneous 94 7.2.b
Packet Pg. 152 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

2019-20 2018-19 2017-18 2016-17 2015-16 2014-15
2013-14 1
Actuarially determined contribution 6,320,861$ 5,572,994$ 4,906,333$ 4,528,260$ 4,131,687$ 3,911,991$ 3,844,918$ Contributions in relation to the actuarially
determined contribution2 (6,320,861) (5,572,994) (4,906,333) (4,528,260) (4,131,687) (3,911,991) (3,844,918) Contribution deficiency (excess) -$ -$ -$ -$ -$ -$ -$ Covered payroll3 13,884,336$ 13,479,938$ 12,879,248$ 12,700,905$ 12,637,804$ 12,055,260$ 12,092,757$ Contributions as a percentage of covered
payroll3 45.53% 41.34% 38.09% 35.65% 32.69% 32.45% 31.80% Notes to Schedule:

Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry Age Normal Cost Method
Amortization method Level percentage of payroll
Asset valuation method Market value
Inflation 2.75%
Salary increases Varies by entry age and service
Payroll Growth 3.00%
Investment rate of return
Retirement age
Mortality
2 Employers are assumed to make contributions equal to the actuarially determined contributions. However, some employers may choose to make additional contributions towards their unfunded liability. Employer contributions for such plans exceed the actuarially determined contributions.

City of Gilroy
Required Supplementary Information (Unaudited)
Schedule of Plan Contributions - Pension (Continued)
For the Year Ended June 30, 2020
Last Ten Fiscal Years
California Public Employees' Retirement System Defined Pension Plan - Safety Plan 1 Historical information is presented only for measurement periods for which GASB 68 is applicable. 3 Includes one year’s payroll growth using 2.75 percent payroll growth assumption for fiscal years ended June 30, 2018-19; 3.00 percent payroll growth assumption for fiscal years ended June 30, 2014-17.

The probabilities of retirement are based on the 2014 CalPERS Experience study for the period from 1997 to 2011.

The probabilities of mortality are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011. Pre-retirement and Post-retirement mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of Actuaries.

The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2018-19 were derived from the June 30, 2016 funding valuation report.

7.375% net of pension plan investment expenses; includes Inflation. 95 7.2.b
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Measurement period 2018-19 2017-18 2016-17
Total OPEB liability
Service cost 697,310$ 723,000$ 832,000$ Interest 594,793 546,000 463,000 Actual vs. expected experience (1,655,290) - - Changes of assumptions 547,789 (625,000) (1,691,000) Benefit payments, including refunds of employee contributions (524,000) (491,000) (479,000) Net change in total OPEB liability (339,398) 153,000 (875,000) Total OPEB liability - beginning 14,934,000 14,781,000 15,656,000 Total OPEB liability - ending (a)14,594,602$ 14,934,000$ 14,781,000$ Covered payroll 3 29,906,910$ 27,610,000$ 26,626,000$ Plan net OPEB liability as a percentage of covered payroll 48.80% 54.09% 55.51% Notes to Schedule:

Benefit Changes:

There were no changes in benefits.

Changes in Assumptions:

The discount rate for the June 30, 2017 measurement date was increased to 3.58% from 2.85%.

The discount rate for the June 30, 2018 measurement date was increased to 3.87% from 3.58%.

The discount rate for the June 30, 2019 measurement date was increased to 3.50% from 3.87%.

Other Post Employment Benefit Plan
City of Gilroy
Required Supplementary Information (Unaudited)
Schedule of Changes in the Net OPEB Liability and Related Ratios For the Year Ended June 30, 2020
Last Ten Fiscal Years
97 7.2.b
Packet Pg. 155 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Taxes:

Property taxes 14,663,707$ 14,663,707$ 15,595,639$ 931,932$ Sales tax 20,558,684 20,558,684 17,233,882 (3,324,802)
Transient occupancy tax 1,898,986 1,898,986 1,237,812 (661,174) Utility taxes 4,643,909 4,514,371 5,177,426 663,055
Franchise taxes 1,724,598 1,724,598 1,855,622 131,024
Document transfer tax 313,982 313,982 489,775 175,793
Motor vehicle in lieu tax 32,462 32,462 44,265 11,803
Total taxes 43,836,328 43,706,790 41,634,421 (2,072,369) Intergovernmental:

Grants 141,500 106,500 196,685 90,185
Total intergovernmental
Charges for Services:

Administrative charges 2,231,512 2,231,512 2,800,293 568,781 Overhead to enterprise 434,756 434,756 445,491 10,735
Plan checks and inspections 2,703,851 2,703,851 1,047,625 (1,656,226) Special planning services 500,000 500,000 546,308 46,308 Special police services 54,122 54,122 21,075 (33,047)
Special fire services 150,000 150,000 222,617 72,617
Community recreation 1,183,565 1,170,565 788,753 (381,812) Total charges for services 7,257,806 7,244,806 5,872,162 (1,372,644) Licenses and Permits:

Business licenses 710,435 710,435 708,554 (1,881)
Hazardous material permits 200,000 200,000 250,925 50,925 Building permits 2,689,783 2,689,783 771,244 (1,918,539) Other licenses and permits 54,000 54,000 45,928 (8,072) Total licenses and permits 3,654,218 3,654,218 1,776,651 (1,877,567) Fines:

Vehicle fines 166,580 166,580 90,839 (75,741)
Parking fines 21,150 21,150 30,010 8,860
Abandoned vehicle 75,000 75,000 161,686 86,686
Total Fines 262,730 262,730 282,535 19,805 Investment incomes 500,637 500,637 489,509 (11,128)
Miscellaneous:

Police and fire 488,536 488,036 627,520 139,484
Community services 116,300 116,300 128,293 11,993
Buildings 2,000 2,000 2,694 694
Other 428,557 428,557 253,211 (175,346)
Total Miscellaneous 1,035,393 1,034,893 1,011,718 (23,175) Total Revenues 56,688,612$ 56,510,574$ 51,263,681$ (5,246,893)$ (Conitnued)
City of Gilroy
Required Supplementary Information
Budgetary Comparison Schedule - General Fund
For the Year Ended June 30, 2020
98 7.2.b
Packet Pg. 156 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Original Final Variance with
Budget Budget Actual Final Budget
EXPENDITURES:

General Government:

City council 209,099 209,099 211,181 (2,082)
City administration 1,384,323 1,384,322 1,397,751 (13,429) Emergency services 4,020 1,000 442,928 (441,928)
Finance 804,293 794,294 730,637 63,657
General administration 1,489,572 1,483,202 1,630,898 (147,696) City attorney 435,000 425,000 575,993 (150,993)
Personnel 1,534,031 1,528,030 1,211,154 316,876
Total general government 5,860,338 5,824,947 6,200,542 (375,595) Public Safety:

Police administration 3,735,485 3,735,484 4,003,359 (267,875) Police patrol operations 16,206,794 16,204,094 15,194,094 1,010,000 Police investigation 1,626,649 1,607,150 1,458,790 148,360 Communications 2,344,324 2,344,324 1,988,891 355,433
Police records 1,320,961 1,320,960 1,128,481 192,479
Fire administration 1,770,778 1,769,928 1,359,547 410,381 Fire operations 10,857,429 10,856,228 10,560,424 295,804 Total public safety 37,862,420 37,838,168 35,693,586 2,144,582 Community Services:

Public information 680,525 680,525 616,654 63,871
Environmental programs 129,083 124,683 201,837 (77,154) Street maintenance/forestry 1,271,666 1,254,969 1,219,837 35,132 Landscape maintenance 2,993,191 2,993,190 2,718,569 274,621 Community recreation 3,834,832 3,792,446 3,140,748 651,698 Total community services 8,909,297 8,845,813 7,897,645 948,168 Community development:

Public works and administration: 261,065 261,065 269,462 (8,397) Engineering 1,417,147 1,420,741 1,165,373 255,368
Planning 2,310,718 3,766,154 2,462,528 1,303,626
B.L.E.S.1,956,937 1,956,938 1,624,692 332,246
Chemical containment hazardous materials 641,214 641,214 633,191 8,023 Economic development 160,669 257,317 191,819 65,498
Total community development 6,747,750 8,303,429 6,347,065 1,956,364 TOTAL EXPENDITURES 59,379,805 60,812,357 56,138,838 4,673,519

EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES (2,691,193) (4,301,783) (4,875,157) (573,374) OTHER FINANCING SOURCES:

Transfers in 144,000 144,000 239,510 95,510 Transfers out (1,784,633) (6,409,633) (8,265,753) (1,856,120) Total other financing sources (1,640,633) (6,265,633) (8,026,243) (1,760,610) NET CHANGE IN FUND BALANCE (4,331,826)$ (10,567,416)$ (12,901,400) (2,333,984)$ FUND BALANCE:

Beginning of Year 27,759,870
End of Year 14,858,470$
(Concluded)
For the Year Ended June 30, 2020
City of Gilroy
Required Supplementary Information
Budgetary Comparison Schedule - General Fund (Continued) 99 7.2.b
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The City Administrator submits to the City Council a proposed budget for all funds. Council then proceeds to make any changes to the proposed budget it deems necessary. Before adopting the proposed budget, Council holds a public hearing for any interested party desiring to be heard. Notice must be given 10 days prior to the hearing and must be published in the City’s official newspaper. After the conclusion of the public hearing, Council may further make revisions to the proposed budget.

Thereafter, Council adopts the budget with revisions, if any.

Legally adopted budgets for all governmental funds are established on a basis consistent with accounting principles generally accepted in the United States of America. City Council approval is required for all revisions to the adopted budget that require additional appropriations or new funding. City Administrator approval is required for all transfers within the adopted budget.

Operational appropriations lapse at fiscal year-end unless City Council takes formal action to carry forward appropriations into the following fiscal year.

The level on which expenditures may not legally exceed appropriations is the fund level. The budgetary comparison schedules are not presented for the Lease Revenue Bond Series 2020A Debt Service Fund.

City of Gilroy
Required Supplementary Information
Notes to the Budgetary Comparison Schedules
For the Year Ended June 30, 2020
Budget and Budgetary Accounting
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SUPPLEMENTARY INFORMATION
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Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Charges for services 8,993,125$ 8,993,125$ 3,679,043$ (5,314,082)$ Investment income 153,606 153,606 78,375 (75,231) Total revenues 9,146,731 9,146,731 3,757,418 (5,389,313) EXPENDITURES:

Current:

Community development 10,000 4,110,675 3,277,318 833,357 Debt service:

Interest and fiscal charges 58,715 58,715 102,559 (43,844) Total expenditures 68,715 4,169,390 3,379,877 789,513

EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES 9,078,016 4,977,341 377,541 (4,599,800) OTHER FINANCIN SOURCES (USES):

Transfers in 40,763 40,763 40,762 (1) Transfers out (3,594,976) (3,594,976) (3,594,976) - Total other financing sources (uses)(3,554,213) (3,554,213) (3,554,214) (1) NET CHANGE IN FUND BALANCE 5,523,803$ 1,423,128$ (3,176,673) (4,599,801)$ FUND BALANCE:

Beginning of Year (3,182,011)
End of Year (6,358,684)$
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Public Facilities Impact Capital Projects Fund
For the Year Ended June 30, 2020
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Packet Pg. 162 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Taxes 2,114,233$ 2,114,233$ 1,921,576$ (192,657)$ Investment income 27,179 27,179 97,797 70,618 Total revenues 2,141,412 2,141,412 2,019,373 (122,039) EXPENDITURES:

Current:

General government 5,200 5,200 129,296 (124,096) Debt service:

Principal retirement 865,000 865,000 1,090,630 (225,630) Interest and fiscal charges 1,244,033 1,244,033 1,123,892 120,141 Total expenditures 2,114,233 2,114,233 2,343,818 (229,585)

EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES 27,179 27,179 (324,445) (351,624) OTHER FINANCIN SOURCES (USES):

Bond proceeds - - 19,087,551 19,087,551 Payment to refunded bond escrow - - (19,350,000) (19,350,000) Total other financing sources (uses)- - (262,449) (262,449) NET CHANGE IN FUND BALANCE 27,179$ 27,179$ (586,894) (614,073)$ FUND BALANCE:

Beginning of Year 1,725,410
End of Year 1,138,516$
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Gilroy Community Library Debt Service Fund
For the Year Ended June 30, 2020
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Community Development Block Grant - This fund is used to account for Housing and Urban Development grants used to operate the Community Development Grant Program.

Rehabilitation Loans - This fund is used to account for loan proceeds used from the state for housing projects.

Housing Trust Fund - This fund is used to account for local funds used to address affordable housing and homelessness, for both capital projects and services provided to homebuyers regarding down payment assistance and administrative oversight.

Community Facilities District - This fund is used to account for funds from special landscape assessment districts used to maintain improvements of a public nature that provide benefits to the property owner.

Vehicle License Fee - This fund is used to account for vehicle license fees received from Santa Clara County to be used for pavement maintenance, operations, signals, signs and markings.

Measure B - This fund is used to account for street and road maintenance and repair projects.

Prop 172 Sales Tax - This fund is used to account for funds received from state sales tax used for public safety activities.

NONMAJOR GOVERNMENTAL FUNDS
These funds account for revenue sources that are restricted for specific purposes (other than those resources to be expended solely for the construction of major capital facilities).

Gas Tax - This fund is used to account for the City’s share of state gasoline tax required to be used for construction and maintenance of the City’s road network system.

Pavement Management - This fund is used to account for County Measure A and other transportation grants used to repair and rebuild various roads.

Public Safety Grants - This fund is used to account for state and federal grants used for public safety activities.

SPECIAL REVENUE FUNDS
Traffic Impact - This fund is used to finance the construction of streets, bridges, interchanges and traffic signals within the City as described in the City of Gilroy’s Circulation Element. Improvements and expansions of the City’s traffic circulation system are needed to accommodate development of new residential, commercial and industrial uses with the City. The traffic impact fee is used to expand system capacity to accommodate new development.

Storm Drains - This fund is used finance the construction of drainage collection and distribution systems within the City as described in the City of Gilroy’s Storm Drain Master Plan. Improvements and expansions of the City’s storm drain system are needed to accommodate development of new residential, commercial and industrial uses within the City. The storm drain development fee is used to expand system capacity to accommodate new development.

Utility Undergrounding - This fund is used to allocate resources to underground existing overhead utilities (electricity, telephone and cable) along fully constructed streets. The City collects the fee from developers as development occurs along these streets.

Street Trees Development - This fund is used to account for the collection of a front footage fee to plant trees in new developments.

BANS 2009 Financing -This fund is used to account for the 2009 short-term refinancing of the City’s public facilities debt. The City included its cost for the Christopher High School joint use public facilities with GUSD in the refinancing.

Los Arroyos Fund - This fund is used to account for funds received from South County Housing to support future homebuyers in the Los Arroyos neighborhood.

CAPITAL PROJECTS FUNDS
These funds account for resources intended to be used primarily for major capital facilities (other than those financed by revenues of proprietary funds).

Capital Projects -This fund is used to account for major capital projects other than those financed by revenues of proprietary funds, including projects that are partially funded from other sources such as grants or fuel tax.

CalHome Funds - This fund is used to account funds received from South County Housing to support future homebuyers. 106

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Packet Pg. 164 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Lease Revenue Bonds Series 2020A - This fund is used to account for the payments of debt service of principal and interest for the PFFA Lease Revenue 2020A Bonds.

Sewer Development - This fund is used to account for the construction of sewer collection and conveyance systems within the City as described in the City of Gilroy’s Sewer Master Plan. Improvements and expansions of the City’s sewer system are needed to accommodate development of new residential, commercial and industrial uses within the City. The sewer development fee is used to expand system capacity to accommodate new development.

CA Energy Commission Loan -This fund is used to account for the payments of debt service of principal and interest for the loan agreement between the CA Energy Commission (CEC) and the City for the Wide LED streetlight replacement project.

NONMAJOR GOVERNMENTAL FUNDS (Continued )
CAPITAL PROJECTS FUNDS (Continued)

DEBT SERVICE FUNDS
These funds account for resources accumulated for the payment of principal and interest (other than that for proprietary fund debt).

Water Development - This fund is used to account for the construction of water transmission, distribution and storage systems within Pressure Zone 1 of the City’s water system as described in the City of Gilroy’s Water Master Plan. Improvements and expansions of the City’s water system are needed to accommodate development of new residential, commercial and industrial uses within the City.

The water development fee is used to expand capacity to accommodate new development.

Refunding Lease 2010 -This fund is used to account for the payments of debt service of principal and interest for the PFFA Refunding Lease 2010 Bonds.
2013 Refunding Bond -This fund is used to account for the payments of debt service of principal and interest for the 2013 Lease Revenue Refunding Bonds.

Bank Interest - This fund is used to account for the interest earned on the citywide treasurer’s investment pool. Quarterly, the earnings are allocated to the appropriate funds. At the end of the fiscal year, the earnings of those funds not subject to interest are transferred to the Capital Projects Fund.

Gilroy Community Library - This fund is used to account for the acquisition, construction and improvement of facilities to be used as a public library within the City. Funding was provided by issuance of general obligation bonds. Interest earned on specific LAIF account will be recorded directly to the Library fund.
107

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Public
Pavement Safety Prop 172
Gas Tax Management Grants Sales Tax
ASSETS
Cash and investments 6,499,984$ 152,213$ 441,288$ 44,160$ Receivables:

Accounts - - 40,000 - Due from other governments 420,891 - 99,552 40,048 Interest - - - - Loans and notes - - - - Advances from other funds - - - - Land held for resale - - - - Restricted assets:

Cash and investments with fiscal agents - - - - Total assets 6,920,875$ 152,213$ 580,840$ 84,208$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 420,938$ 98,585$ 46,263$ 12,927$ Accrued liabilities - - 45,825 - Unearned revenue - - - - Due to other funds - - - - Due to component unit - - - - Total liabilities 420,938 98,585 92,088 12,927 Deferred inflows of resources:

Unavailable revenues - - - - Total deferred inflows of resources - - - - Fund balances:

Nonspendable - - - - Restricted 6,499,937 53,628 488,752 71,281 Assigned - - - - Unassigned (deficit)- - - - Total fund balances 6,499,937 53,628 488,752 71,281 Total liabilities, deferred inflows of
resources, and fund balances 6,920,875$ 152,213$ 580,840$ 84,208$ (Continued)
City of Gilroy
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2020
Special Revenue Funds
108

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Community Housing Community
Development Rehabilitation Trust Facilities
Block Grant Loans Fund District
ASSETS
Cash and investments 332,168$ 230$ 906,106$ 1,255,483$ Receivables:

Accounts - - - - Due from other governments 190,429 - - 3,447 Interest 378,998 - 290,619 - Loans and notes 1,826,475 - 1,385,524 - Advances from other funds - - - - Land held for resale - - 706,754 - Restricted assets:

Cash and investments with fiscal agents - - - - Total assets 2,728,070$ 230$ 3,289,003$ 1,258,930$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 166,786$ -$ 34,396$ 23,762$ Accrued liabilities 42,301 - 24,874 - Unearned revenue - - - - Due to other funds - - - - Due to component unit - - - - Total liabilities 209,087 - 59,270 23,762 Deferred inflows of resources:

Unavailable revenues 385,351 - 290,619 - Total deferred inflows of resources 385,351 - 290,619 - Fund balances:

Nonspendable - - 706,754 - Restricted 2,133,632 230 2,232,360 1,235,168 Assigned - - - - Unassigned (deficit)- - - - Total fund balances 2,133,632 230 2,939,114 1,235,168 Total liabilities, deferred inflows of
resources, and fund balances 2,728,070$ 230$ 3,289,003$ 1,258,930$ (Continued)
City of Gilroy
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2020
Special Revenue Funds
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Vehicle
License Los Arroyos CalHome
Measure B Fee Fund Funds
ASSETS
Cash and investments 244,298$ 1,180,136$ 405,525$ 210,013$ Receivables:

Accounts - - - - Due from other governments - - - - Interest - - - 52,347 Loans and notes - - - 180,600 Advances from other funds - - - - Land held for resale - - - - Restricted assets:

Cash and investments with fiscal agents - - - - Total assets 244,298$ 1,180,136$ 405,525$ 442,960$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable -$ 44,700$ -$ -$ Accrued liabilities - - - - Unearned revenue 240,462 - - 272,947 Due to other funds - - - - Due to component unit - - - - Total liabilities 240,462 44,700 - 272,947 Deferred inflows of resources:

Unavailable revenues - - - - Total deferred inflows of resources - - - - Fund balances:

Nonspendable - - - - Restricted 3,836 1,135,436 405,525 170,013 Assigned - - - - Unassigned (deficit)- - - - Total fund balances 3,836 1,135,436 405,525 170,013 Total liabilities, deferred inflows of
resources, and fund balances 244,298$ 1,180,136$ 405,525$ 442,960$ (Continued)
City of Gilroy
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2020
Special Revenue Funds
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BANS
Capital 2009 Traffic Storm
Projects Financing Impact Drains
ASSETS
Cash and investments 5,413,114$ 34,795$ 13,554,468$ 1,039,566$ Receivables:

Accounts - - - - Due from other governments - - - - Interest - - - - Loans and notes - - - - Advances from other funds - - - 1,006,952 Land held for resale - - - - Restricted assets:

Cash and investments with fiscal agents - - - - Total assets 5,413,114$ 34,795$ 13,554,468$ 2,046,518$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 45,106$ -$ 5,257$ -$ Accrued liabilities - - - - Unearned revenue - - 135,142 - Due to other funds - - - - Due to component unit - - - - Total liabilities 45,106 - 140,399 - Deferred inflows of resources:

Unavailable revenues - - - - Total deferred inflows of resources - - - - Fund balances:

Nonspendable - - - - Restricted - 34,795 13,414,069 2,046,518 Assigned 5,368,008 - - - Unassigned (deficit)- - - - Total fund balances 5,368,008 34,795 13,414,069 2,046,518 Total liabilities, deferred inflows of
resources, and fund balances 5,413,114$ 34,795$ 13,554,468$ 2,046,518$ (Continued)
City of Gilroy
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2020
Capital Projects Funds
111

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Packet Pg. 169 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Street
Utility Trees Sewer Water
Undergrounding Development Development Development
ASSETS
Cash and investments 8,092$ 135,988$ 12,146,465$ 4,680,558$ Receivables:

Accounts - - - - Due from other governments - - - - Interest - - - - Loans and notes - - - - Advances from other funds - - 1,751,884 - Land held for resale - - - - Restricted assets:

Cash and investments with fiscal agents - - - - Total assets 8,092$ 135,988$ 13,898,349$ 4,680,558$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable -$ -$ -$ -$ Accrued liabilities - - - - Unearned revenue - - 94,696 24,318 Due to other funds - - - - Due to component unit - - 426,788 - Total liabilities - - 521,484 24,318 Deferred inflows of resources:

Unavailable revenues - - - - Total deferred inflows of resources - - - - Fund balances:

Nonspendable - - - - Restricted 8,092 135,988 13,376,865 4,656,240 Assigned - - - - Unassigned (deficit)- - - - Total fund balances 8,092 135,988 13,376,865 4,656,240 Total liabilities, deferred inflows of
resources, and fund balances 8,092$ 135,988$ 13,898,349$ 4,680,558$ (Continued)
City of Gilroy
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2020
Capital Projects Funds
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Gilroy Refunding 2013
Bank Community Lease Refunding
Interest Library 2010 Bond
ASSETS
Cash and investments -$ 5,210,718$ 152,361$ 81,429$ Receivables:

Accounts - - - - Due from other governments - 18,939 - - Interest 450,911 - - - Loans and notes - - - - Advances from other funds - - - - Land held for resale - - - - Restricted assets:

Cash and investments with fiscal agents - - 1,775,370 922,112 Total assets 450,911$ 5,229,657$ 1,927,731$ 1,003,541$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 1,900$ -$ -$ -$ Accrued liabilities - - - - Unearned revenue - - - - Due to other funds 449,065 - - - Due to component unit - - - - Total liabilities 450,965 - - - Deferred inflows of resources:

Unavailable revenues - - - - Total deferred inflows of resources - - - - Fund balances:

Nonspendable - - - - Restricted - 5,229,657 1,927,731 1,003,541 Assigned - - - - Unassigned (deficit)(54) - - - Total fund balances (54) 5,229,657 1,927,731 1,003,541 Total liabilities, deferred inflows of
resources, and fund balances 450,911$ 5,229,657$ 1,927,731$ 1,003,541$ (Continued)
June 30, 2020
City of Gilroy
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
Capital Projects Funds Debt Service Funds
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CA Energy Lease Revenue Total Other
Commission Bond Series Governmental
Loan 2020A Funds
ASSETS
Cash and investments 19,873$ -$ 54,149,031$ Receivables:

Accounts - - 40,000 Due from other governments - - 773,306 Interest - - 1,172,875 Loans and notes - - 3,392,599 Advances from other funds - - 2,758,836 Land held for resale - - 706,754 Restricted assets:

Cash and investments with fiscal agents - - 2,697,482 Total assets 19,873$ -$ 65,690,883$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable -$ -$ 900,620$ Accrued liabilities - - 113,000 Unearned revenue - - 767,565 Due to other funds - 21,900 470,965 Due to component unit - - 426,788 Total liabilities - 21,900 2,678,938 Deferred inflows of resources:

Unavailable revenues - - 675,970 Total deferred inflows of resources - - 675,970 Fund balances:

Nonspendable - - 706,754 Restricted 19,873 - 56,283,167 Assigned - - 5,368,008 Unassigned (deficit)- (21,900) (21,954) Total fund balances 19,873 (21,900) 62,335,975 Total liabilities, deferred inflows of
resources, and fund balances 19,873$ -$ 65,690,883$ (Concluded)
Debt Service Funds
City of Gilroy
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2020
114

7.2.b
Packet Pg. 172 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Public
Pavement Safety Prop 172
Gas Tax Management Grants Sales Tax
Revenues:

Taxes -$ -$ -$ 260,773$ Intergovernmental 3,476,089 133,234 805,278 - Charges for services - - - - Investment income 112,525 513 10,236 552 Miscellaneous 31,600 - 90,678 - Total revenues 3,620,214 133,747 906,192 261,325 Expenditures:

Current:

General government - - - - Public safety - - 881,173 293,128 Community development 2,757,438 57,996 - - Debt service:

Principal retirement - - - - Interest and fiscal charges - - - - Total expenditures 2,757,438 57,996 881,173 293,128 Revenues over (under)
expenditures 862,776 75,751 25,019 (31,803) Other financing sources (uses):

Transfers in - - 140,265 34,970 Transfers out (107,363) - (185,449) (3,167) Total other financing sources (uses)(107,363) - (45,184) 31,803 Net Change in Fund Balances 755,413 75,751 (20,165) - Fund balances:

Beginning of year 5,744,524 (22,123) 508,917 71,281 End of year 6,499,937$ 53,628$ 488,752$ 71,281$ (Continued)
Special Revenue Funds
City of Gilroy
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds
For the Year Ended June 30, 2020
115

7.2.b
Packet Pg. 173 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Community Housing Community
Development Rehabilitation Trust Facilities
Block Grant Loans Fund District
Revenues:

Taxes -$ -$ -$ 453,167$ Intergovernmental 445,291 - - - Charges for services - - - - Investment income 11,369 4 46,405 20,682 Miscellaneous 26,438 - 187,696 - Total revenues 483,098 4 234,101 473,849 Expenditures:

Current:

General government - - - - Public safety - - - - Community development 519,013 - 113,110 291,297 Debt service:

Principal retirement - - - - Interest and fiscal charges - - - - Total expenditures 519,013 - 113,110 291,297 Revenues over (under)
expenditures (35,915) 4 120,991 182,552 Other financing sources (uses):

Transfers in - - 12,886 - Transfers out (55,712) - - - Total other financing sources (uses)(55,712) - 12,886 - Net Change in Fund Balances (91,627) 4 133,877 182,552 Fund balances:

Beginning of year 2,225,259 226 2,805,237 1,052,616 End of year 2,133,632$ 230$ 2,939,114$ 1,235,168$ (Continued)
Special Revenue Funds
City of Gilroy
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Governmental Funds
For the Year Ended June 30, 2020
116

7.2.b
Packet Pg. 174 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Vehicle
License Los Arroyos CalHome
Measure B Fee Fund Funds
Revenues:

Taxes -$ -$ -$ -$ Intergovernmental - 374,773 42,179 - Charges for services - - - - Investment income 3,836 25,058 7,356 9,679 Miscellaneous - - - - Total revenues 3,836 399,831 49,535 9,679 Expenditures:

Current:

General government - - - - Public safety - - - - Community development - 897,092 - - Debt service:

Principal retirement - - - - Interest and fiscal charges - - - - Total expenditures - 897,092 - - Revenues over (under)
expenditures 3,836 (497,261) 49,535 9,679 Other financing sources (uses):

Transfers in - - - - Transfers out - - - - Total other financing sources (uses)- - - - Net Change in Fund Balances 3,836 (497,261) 49,535 9,679 Fund balances:

Beginning of year - 1,632,697 355,990 160,334 End of year 3,836$ 1,135,436$ 405,525$ 170,013$ (Continued)
City of Gilroy
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Governmental Funds
For the Year Ended June 30, 2020
Special Revenue Funds
117

7.2.b
Packet Pg. 175 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

BANS
Capital 2009 Traffic Storm
Projects Financing Impact Drains
Revenues:

Taxes -$ -$ -$ -$ Intergovernmental - - - - Charges for services - - 2,319,258 9,538 Investment income 43,699 684 268,940 33,201 Miscellaneous - - - - Total revenues 43,699 684 2,588,198 42,739 Expenditures:

Current:

General government - - - - Public safety - - - - Community development 850,025 -2,075,285 7,292 Debt service:

Principal retirement - - - - Interest and fiscal charges - - - - Total expenditures 850,025 - 2,075,285 7,292 Revenues over (under)
expenditures (806,326) 684 512,913 35,447 Other financing sources (uses):

Transfers in 4,690,516 - 48,769 1,196 Transfers out - - - - Total other financing sources (uses)4,690,516 - 48,769 1,196 Net Change in Fund Balances 3,884,190 684 561,682 36,643 Fund balances:

Beginning of year 1,483,818 34,111 12,852,387 2,009,875 End of year 5,368,008$ 34,795$ 13,414,069$ 2,046,518$ (Continued)
Capital Projects Funds
City of Gilroy
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Governmental Funds
For the Year Ended June 30, 2020
118

7.2.b
Packet Pg. 176 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Street
Utility Trees Sewer Water
Undergrounding Development Development Development
Revenues:

Taxes -$ -$ -$ -$ Intergovernmental - - - - Charges for services - 344 1,608,755 462,722 Investment income 159 2,673 266,951 92,917 Miscellaneous - - - - Total revenues 159 3,017 1,875,706 555,639 Expenditures:

Current:

General government - - - - Public safety - - - - Community development - - 1,367,560 507,085 Debt service:

Principal retirement - - - - Interest and fiscal charges - - - - Total expenditures - - 1,367,560 507,085 Revenues over (under)
expenditures 159 3,017 508,146 48,554 Other financing sources (uses):

Transfers in - 27 28,351 5,893 Transfers out - - (693,577) - Total other financing sources (uses)- 27 (665,226) 5,893 Net Change in Fund Balances 159 3,044 (157,080) 54,447 Fund balances:

Beginning of year 7,933 132,944 13,533,945 4,601,793 End of year 8,092$ 135,988$ 13,376,865$ 4,656,240$ (Continued)
City of Gilroy
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Governmental Funds
For the Year Ended June 30, 2020
Capital Projects Funds
119

7.2.b
Packet Pg. 177 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Gilroy Refunding 2013
Bank Community Lease Refunding
Interest Library 2010 Bond
Revenues:

Taxes -$ -$ -$ -$ Intergovernmental - - - - Charges for services - - - - Investment income 75,664 105,867 63,731 15,144 Miscellaneous - - - - Total revenues 75,664 105,867 63,731 15,144 Expenditures:

Current:

General government - - 5,152 4,152 Public safety - - - - Community development 75,667 - - - Debt service:

Principal retirement - - 895,000 910,000 Interest and fiscal charges - - 847,207 928,770 Total expenditures 75,667 - 1,747,359 1,842,922 Revenues over (under)
expenditures (3) 105,867 (1,683,628) (1,827,778) Other financing sources (uses):

Transfers in - - 1,747,706 1,847,270 Transfers out - - - - Total other financing sources (uses)- - 1,747,706 1,847,270 Net Change in Fund Balances (3) 105,867 64,078 19,492 Fund balances:

Beginning of year (51) 5,123,790 1,863,653 984,049 End of year (54)$ 5,229,657$ 1,927,731$ 1,003,541$ (Continued)
Capital Projects Funds
City of Gilroy
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Governmental Funds
For the Year Ended June 30, 2020
Debt Service Funds
120

7.2.b
Packet Pg. 178 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

CA Energy Lease Revenue Total Other
Commission Bond Series Governmental
Loan 2020A Funds
Revenues:

Taxes -$ -$ 713,940$ Intergovernmental - - 5,276,844 Charges for services - - 4,400,617 Investment income 623 - 1,218,468 Miscellaneous - - 336,412 Total revenues 623 - 11,946,281 Expenditures:

Current:

General government - 21,900 31,204 Public safety - - 1,174,301 Community development - - 9,518,860 Debt service:

Principal retirement 90,582 - 1,895,582 Interest and fiscal charges 9,279 -1,785,256 Total expenditures 99,861 21,900 14,405,203 Revenues over (under)
expenditures (99,238) (21,900) (2,458,922) Other financing sources (uses):

Transfers in 99,863 - 8,657,712 Transfers out - - (1,045,268) Total other financing sources (uses)99,863 - 7,612,444 Net Change in Fund Balances 625 (21,900) 5,153,522 Fund balances:

Beginning of year 19,248 - 57,182,453 End of year 19,873$ (21,900)$ 62,335,975$ (Concluded)
Debt Service Funds
City of Gilroy
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Governmental Funds
For the Year Ended June 30, 2020
121

7.2.b
Packet Pg. 179 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Intergovernmental 2,007,500$ 2,007,500$ 3,476,089$ 1,468,589$ Investment income 114,873 114,872 112,525 (2,347) Miscellaneous - - 31,600 31,600 Total Revenues 2,122,373 2,122,372 3,620,214 1,497,842 Expenditures:

Current:

Community development 1,221,169 1,535,471 2,757,438 (1,221,967) Total Expenditures 1,221,169 1,535,471 2,757,438 (1,221,967)

REVENUE OVER
(UNDER) EXPENDITURES 901,204 586,901 862,776 275,875 Other Financing Sources (Uses):

Transfers out (107,363) (107,363) (107,363) - Total Other Financing Sources (Uses)(107,363) (107,363) (107,363) - NET CHANGE IN FUND BALANCE 793,841$ 479,538$ 755,413 275,875$ FUND BALANCE:

Beginning of Year 5,744,524
End of Year 6,499,937$
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the Year Ended June 30, 2020
Budgeted Amounts
Gas Tax Special Revenue Fund
122

7.2.b
Packet Pg. 180 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Intergovernmental 700,000$ 700,000$ 133,234$ (566,766)$ Investment income - - 513 513 Total Revenues 700,000 700,000 133,747 (566,253) Expenditures:

Current:

Community development 1,028,000 1,533,297 57,996 1,475,301 Total Expenditures 1,028,000 1,533,297 57,996 1,475,301

REVENUE OVER
(UNDER) EXPENDITURES (328,000) (833,297) 75,751 909,048 NET CHANGE IN FUND BALANCE (328,000)$ (833,297)$ 75,751 909,048$ FUND BALANCE:

Beginning of Year (22,123)
End of Year 53,628$
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Pavement Management Special Revenue Fund
For the Year Ended June 30, 2020
Budgeted Amounts
123

7.2.b
Packet Pg. 181 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Intergovernmental 526,000$ 526,000$ 805,278$ 279,278$ Investment income 11,043 11,043 10,236 (807) Miscellaneous - - 90,678 90,678 Total Revenues 537,043 537,043 906,192 369,149 Expenditures:

Current:

Public safety 574,664 998,646 881,173 117,473 Total Expenditures 574,664 998,646 881,173 117,473

REVENUE OVER
(UNDER) EXPENDITURES (37,621) (461,603) 25,019 486,622 Other Financing Sources (Uses):

Transfers in 143,664 143,664 140,265 (3,399) Transfers out (100,000) (100,000) (185,449) (85,449) Total Other Financing Sources (Uses)43,664 43,664 (45,184) (88,848) NET CHANGE IN FUND BALANCE 6,043$ (417,939)$ (20,165) 397,774$ FUND BALANCE:

Beginning of Year 508,917
End of Year 488,752$
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Public Safety Grants Special Revenue Fund
Budgeted Amounts
For the Year Ended June 30, 2020
124

7.2.b
Packet Pg. 182 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Taxes 257,000$ 257,000$ 260,773$ 3,773$ Investment income 723 723 552 (171) Total Revenues 257,723 257,723 261,325 3,602 Expenditures:

Current:

Public safety 292,693 292,693 293,128 (435) Total Expenditures 292,693 292,693 293,128 (435)

REVENUE OVER
(UNDER) EXPENDITURES (34,970) (34,970) (31,803) 3,167 Other Financing Sources (Uses):

Transfers in 34,970 34,970 34,970 -
Transfers out - - (3,167) (3,167) Total Other Financing Sources (Uses)34,970 34,970 31,803 (3,167) NET CHANGE IN FUND BALANCE -$ -$ - -$ FUND BALANCE:

Beginning of Year 71,281
End of Year 71,281$
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Prop 172 Sales Tax Special Revenue Fund
Budgeted Amounts
For the Year Ended June 30, 2020
125

7.2.b
Packet Pg. 183 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Intergovernmental 509,869$ 509,869$ 445,291$ (64,578)$ Investment income 3,798 3,798 11,369 7,571 Miscellaneous - - 26,438 26,438 Total Revenues 513,667 513,667 483,098 (30,569) Expenditures:

Current:

Community development 229,520 529,518 519,013 10,505 Total expenditures 229,520 529,518 519,013 10,505

REVENUE OVER
(UNDER) EXPENDITURES 284,147 (15,851) (35,915) (20,064) Other Financing Sources (Uses):

Transfers out (53,500) (53,500) (55,712) (2,212) Total Other Financing Sources (Uses)(53,500) (53,500) (55,712) (2,212) NET CHANGE IN FUND BALANCE 230,647$ (69,351)$ (91,627) (22,276)$ FUND BALANCE:

Beginning of Year 2,225,259
End of Year 2,133,632$
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Community Development Block Grant Special Revenue Fun d Budgeted Amounts
For the Year Ended June 30, 2020
126

7.2.b
Packet Pg. 184 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Investment income 5$ 5$ 4$ (1)$ Total revenues 5 5 4 (1) Net Change in Fund Balances 5$ 5$ 4 (1)$ Fund balances:

Beginning of year 226
End of year 230$
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Rehabilitation Loans Special Revenue Fund
Budgeted Amounts
For the Year Ended June 30, 2020
127

7.2.b
Packet Pg. 185 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Investment income 31,441$ 31,441$ 46,405$ 14,964$ Miscellaneous 55,000 55,000 187,696 132,696 Total revenues 86,441 86,441 234,101 147,660 Expenditures:

Current:

Community development 146,913 149,713 113,110 36,603 Total expenditures 146,913 149,713 113,110 36,603 Revenues over (under)
expenditures (60,472) (63,272) 120,991 184,263 Other financing sources (uses):

Transfers in - - 12,886 12,886 Total other financing sources (uses)- - 12,886 12,886 Net Change in Fund Balances (60,472)$ (63,272)$ 133,877 197,149$ Fund balances:

Beginning of year 2,805,237
End of year 2,939,114$
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Housing Trust Fund Special Revenue Fund
Budgeted Amounts
For the Year Ended June 30, 2020
128

7.2.b
Packet Pg. 186 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Taxes 380,000$ 380,000$ 453,167$ 73,167$ Investment income 16,856 16,855 20,682 3,827 Total revenues 396,856 396,855 473,849 76,994 Expenditures:

Current:

Community development 329,477 329,477 291,297 38,180 Total expenditures 329,477 329,477 291,297 38,180 Net Change in Fund Balances 67,379$ 67,378$ 182,552 115,174$ Fund balances:

Beginning of year 1,052,616
End of year 1,235,168$
Budgeted Amounts
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Community Facilities District Special Revenue Fund
For the Year Ended June 30, 2020
129

7.2.b
Packet Pg. 187 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Intergovernmental 1,000,804$ 1,000,804$ -$ (1,000,804)$ Investment income - - 3,836 3,836 Total revenues 1,000,804 1,000,804 3,836 (996,968) Net Change in Fund Balances 1,000,804$ 1,000,804$ 3,836 (996,968)$ Fund balances:

Beginning of year -
End of year 3,836$
Budgeted Amounts
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Measure B Special Revenue Fund
For the Year Ended June 30, 2020
130

7.2.b
Packet Pg. 188 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Intergovernmental 320,000$ 320,000$ 374,773$ 54,773$ Investment income 37,126 37,126 25,058 (12,068) Total revenues 357,126 357,126 399,831 42,705 Expenditures:

Current:

Community development 133,600 977,903 897,092 80,811 Total expenditures 133,600 977,903 897,092 80,811 Net Change in Fund Balances 223,526$ (620,777)$ (497,261) 123,516$ Fund balances:

Beginning of year 1,632,697
End of year 1,135,436$
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Vehicle License Fee Special Revenue Fund
Budgeted Amounts
For the Year Ended June 30, 2020
131

7.2.b
Packet Pg. 189 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Intergovernmental -$ -$ 42,179$ 42,179$ Investment income 7,634 7,634 7,356 (278) Total revenues 7,634 7,634 49,535 41,901 Net Change in Fund Balances 7,634$ 7,634$ 49,535 41,901$ Fund balances:

Beginning of year 355,990
End of year 405,525$
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Los Arroyos Fund Special Revenue Fund
Budgeted Amounts
For the Year Ended June 30, 2020
132

7.2.b
Packet Pg. 190 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Investment income 2,220$ 2,220$ 9,679$ 7,459$ Total revenues 2,220 2,220 9,679 7,459 Net Change in Fund Balances 2,220$ 2,220$ 9,679 7,459$ Fund balances:

Beginning of year 160,334
End of year 170,013$

City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual CalHome Funds Special Revenue Fund
Budgeted Amounts
For the Year Ended June 30, 2020
133

7.2.b
Packet Pg. 191 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Investment income 34,815$ 34,815$ 43,699$ 8,884$ Total revenues 34,815 34,815 43,699 8,884 Expenditures:

Current:

Community development 23,082 1,214,994 850,025 364,969 Total expenditures 23,082 1,214,994 850,025 364,969 Revenues over (under)
expenditures 11,733 (1,180,179) (806,326) 373,853 Other financing sources (uses):

Transfers in - - 4,690,516 4,690,516 Total other financing sources (uses)- - 4,690,516 4,690,516 Net Change in Fund Balances 11,733$ (1,180,179)$ 3,884,190 5,064,369$ Fund balances:

Beginning of year 1,483,818
End of year 5,368,008$
Budgeted Amounts
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Capital Projects Fund
For the Year Ended June 30, 2020
134

7.2.b
Packet Pg. 192 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Investment income 276$ 276$ 684$ 408$ Total revenues 276 276 684 408 Net Change in Fund Balances 276$ 276$ 684 408$ Fund balances:

Beginning of year 34,111
End of year 34,795$
Budgeted Amounts
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual BANS 2009 Financing Capital Projects Fund
For the Year Ended June 30, 2020
135

7.2.b
Packet Pg. 193 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Charges for services 5,129,491$ 5,129,491$ 2,319,258$ (2,810,233)$ Investment income 302,924 302,924 268,940 (33,984) Total revenues 5,432,415 5,432,415 2,588,198 (2,844,217) Expenditures:

Current:

Community development 3,416,697 3,863,439 2,075,285 1,788,154 Total expenditures 3,416,697 3,863,439 2,075,285 1,788,154 Revenues over (under)
expenditures 2,015,718 1,568,976 512,913 (1,056,063) Other financing sources (uses):

Transfers in 48,769 48,769 48,769 - Total other financing sources (uses)48,769 48,769 48,769 - Net Change in Fund Balances 2,064,487$ 1,617,745$ 561,682 (1,056,063)$ Fund balances:

Beginning of year 12,852,387
End of year 13,414,069$
Budgeted Amounts
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Traffic Impact Capital Projects Fund
For the Year Ended June 30, 2020
136

7.2.b
Packet Pg. 194 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Charges for services 74,367$ 74,367$ 9,538$ (64,829)$ Investment income 27,594 27,594 33,201 5,607 Total revenues 101,961 101,961 42,739 (59,222) Expenditures:

Current:

Community development 155,155 197,522 7,292 190,230 Total expenditures 155,155 197,522 7,292 190,230 Revenues over (under)
expenditures (53,194) (95,561) 35,447 131,008 Other financing sources (uses):

Transfers in 1,196 1,196 1,196 - Total other financing sources (uses)1,196 1,196 1,196 - Net Change in Fund Balances (51,998)$ (94,365)$ 36,643 131,008$ Fund balances:

Beginning of year 2,009,875
End of year 2,046,518$
Budgeted Amounts
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Storm Drains Capital Projects Fund
For the Year Ended June 30, 2020
137

7.2.b
Packet Pg. 195 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Investment income 181$ 181$ 159$ (22)$ Total revenues 181 181 159 (22) Net Change in Fund Balances 181$ 181$ 159 (22)$ Fund balances:

Beginning of year 7,933
End of year 8,092$
Budgeted Amounts
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Utility Undergrounding Capital Projects Fund
For the Year Ended June 30, 2020
138

7.2.b
Packet Pg. 196 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Charges for services 5,257$ 5,257$ 344$ (4,913)$ Investment income 3,032 3,032 2,673 (359) Total revenues 8,289 8,289 3,017 (5,272) Other financing sources (uses):

Transfers in 27 27 27 - Total other financing sources (uses)27 27 27 - Net Change in Fund Balances 8,316$ 8,316$ 3,044 (5,272)$ Fund balances:

Beginning of year 132,944
End of year 135,988$
Budgeted Amounts
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Street Trees Development Capital Projects Fun d
For the Year Ended June 30, 2020
139

7.2.b
Packet Pg. 197 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Charges for services 3,546,705$ 3,546,705$ 1,608,755$ (1,937,950)$ Investment income 323,585 323,585 266,951 (56,634) Total revenues 3,870,290 3,870,290 1,875,706 (1,994,584) Expenditures:

Current:

Community development 3,256,562 3,256,362 1,367,560 1,888,802 Total expenditures 3,256,562 3,256,362 1,367,560 1,888,802 Revenues over (under)
expenditures 613,728 613,928 508,146 (105,782) Other financing sources (uses):

Transfers in 28,351 28,351 28,351 - Transfers out (694,146) (694,146) (693,577) 569 Total other financing sources (uses)(665,795) (665,795) (665,226) 569 Net Change in Fund Balances (52,067)$ (51,867)$ (157,080) (105,213)$ Fund balances:

Beginning of year 13,533,945
End of year 13,376,865$
Budgeted Amounts
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Sewer Development Capital Projects Fund
For the Year Ended June 30, 2020
140

7.2.b
Packet Pg. 198 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Charges for services 870,563$ 870,563$ 462,722$ (407,841)$ Investment income 102,996 102,996 92,917 (10,079) Total revenues 973,559 973,559 555,639 (417,920) Expenditures:

Current:

Community development 447,806 447,806 507,085 (59,279) Total expenditures 447,806 447,806 507,085 (59,279) Revenues over (under)
expenditures 525,753 525,753 48,554 (477,199) Other financing sources (uses):

Transfers in 5,893 5,893 5,893 - Total other financing sources (uses)5,893 5,893 5,893 - Net Change in Fund Balances 531,646$ 531,646$ 54,447 (477,199)$ Fund balances:

Beginning of year 4,601,793
End of year 4,656,240$
Budgeted Amounts
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Water Development Capital Projects Fund
For the Year Ended June 30, 2020
141

7.2.b
Packet Pg. 199 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Investment income -$ 3$ 75,664$ 75,661$ Total revenues - 3 75,664 75,661 Expenditures:

Current:

Community development 96,900 96,900 75,667 21,233 Total expenditures 96,900 96,900 75,667 21,233 Net Change in Fund Balances (96,900)$ (96,897)$ (3) 96,894$ Fund balances:

Beginning of year (51)
End of year (54)$
Budgeted Amounts
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Bank Interest Capital Projects Fund
For the Year Ended June 30, 2020
142

7.2.b
Packet Pg. 200 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Investment income 87,730$ 87,730$ 105,867$ 18,137$ Total revenues 87,730 87,730 105,867 18,137 Net Change in Fund Balances 87,730$ 87,730$ 105,867 18,137$ Fund balances:

Beginning of year 5,123,790
End of year 5,229,657$

Budgeted Amounts
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Gilroy Community Library Capital Projects Fun d
For the Year Ended June 30, 2020
143

7.2.b
Packet Pg. 201 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Investment income 62,500$ 62,500$ 63,731$ 1,231$ Total revenues 62,500 62,500 63,731 1,231 Expenditures:

Current:

General government 5,500 5,500 5,152 348 Debt service:

Principal retirement 895,000 895,000 895,000 - Interest and fiscal charges 847,206 847,207 847,207 - Total expenditures 1,747,706 1,747,707 1,747,359 348 Revenues over (under)
expenditures (1,685,206) (1,685,207) (1,683,628) 1,579 Other financing sources (uses):

Transfers in 1,747,706 1,747,706 1,747,706 - Total other financing sources (uses)1,747,706 1,747,706 1,747,706 - Net Change in Fund Balances 62,500$ 62,499$ 64,078 1,579$ Fund balances:

Beginning of year 1,863,653
End of year 1,927,731$
Budgeted Amounts
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Refunding Lease 2010 Debt Service Fund
For the Year Ended June 30, 2020
144

7.2.b
Packet Pg. 202 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Investment income -$ -$ 15,144$ 15,144$ Total revenues - - 15,144 15,144 Expenditures:

Current:

General government 8,500 8,500 4,152 4,348 Debt service:

Principal retirement 910,000 910,000 910,000 - Interest and fiscal charges 928,770 928,770 928,770 - Total expenditures 1,847,270 1,847,270 1,842,922 4,348 Revenues over (under)
expenditures (1,847,270) (1,847,270) (1,827,778) 19,492 Other financing sources (uses):

Transfers in 1,847,270 1,847,270 1,847,270 - Total other financing sources (uses)1,847,270 1,847,270 1,847,270 - Net Change in Fund Balances -$ -$ 19,492 19,492$ Fund balances:

Beginning of year 984,049
End of year 1,003,541$
Budgeted Amounts
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 2013 Refunding Bond Debt Service Fund
For the Year Ended June 30, 2020
145

7.2.b
Packet Pg. 203 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:

Investment income 822$ 822$ 623$ (199)$ Total revenues 822 822 623 (199) Expenditures:

Debt service:

Principal retirement 90,583 90,582 90,582 - Interest and fiscal charges 9,280 9,279 9,279 - Total expenditures 99,863 99,861 99,861 - Revenues over (under)
expenditures (99,041) (99,039) (99,238) (199) Other financing sources (uses):

Transfers in 99,863 99,863 99,863 - Total other financing sources (uses)99,863 99,863 99,863 - Net Change in Fund Balances 822$ 824$ 625 (199)$ Fund balances:

Beginning of year 19,248
End of year 19,873$
Budgeted Amounts
City of Gilroy
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual CA Energy Commission Loan Debt Service Fund
For the Year Ended June 30, 2020
146

7.2.b
Packet Pg. 204 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

General Liability -This fund is used to account for all expenses relating to the City’s general liability insurance. The costs are recovered through an annual “user fee” which is charged to various funds.

INTERNAL SERVICE FUNDS
These funds account for goods or services provided to other departments of the City where the intent of the City is that the costs of these goods or services are to be recovered through interdepartmental charges at the time that the goods are delivered or the services rendered to those departments.

Fleet Services -This fund is used to account for the operations required to maintain the City’s vehicles. The costs are recovered through an annual “user fee” which is charged to all departments/funds that have vehicle use. This fund also provides funding for replacement of all the City’s vehicles on an “as needed” basis.

Equipment Outlay -This fund is used to allocate resources intended for the purchase of General Fund equipment costing more than $1,000.

Workers’ Compensation - This fund is used to account for all expenses relating to workers’ compensation (i.e., injury claims, insurance premiums, etc.). The costs are recovered through an annual “user fee” which is charged to all departments/funds that have employees.

Facility Services -This fund is used to account for all expenses relating to the operation and maintenance of City facilities. The costs are recovered through an annual “user fee” which is charged to all departments/funds that have facilities.

Information Technologies -This fund is used to account for all expenses relating to computer hardware, software, maintenance, capital purchasing and other service charges. The costs are recovered through an annual “user fee” which is charged to all departments/funds that have computer equipment.

Fringe Benefits -This fund is used for City paid benefits which are charged. Examples include medical, dental, disability, unemployment, life insurance and retirement including PERS and PARS. These benefit costs are allocated to the funds based on budget for three quarters and then reconciled to actual in the fourth quarter. 147

7.2.b
Packet Pg. 205 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Fleet Equipment Workers' General
Services Outlay Compensation Liability
ASSETS
Current assets:

Cash and investments 3,358,394$ 2,502,891$ 3,643,623$ 2,186,207$ Cash and investments with fiscal agent - - - - Accounts receivable - - - - Inventory of materials 38,973 - - - Prepaid items - - - - Total current assets 3,397,367 2,502,891 3,643,623 2,186,207 Noncurrent assets:

Interfund loans receivable 3,220,764 1,017,767 - - Capital assets:

Nondepreciable - 4,404 - - Depreciable, net 4,170,770 527,519 - - Total capital assets 4,170,770 531,923 - - Total noncurrent assets 7,391,534 1,549,690 - - Total assets 10,788,901 4,052,581 3,643,623 2,186,207 Current Liabilities:

Accounts payable 163,860 39,163 33 44,423 Accrued liabilities 31,331 - 736 - Compensated absences, current portion 6,200 - - - Claims payable, current portion - - 792,000 117,000 Total current liabilities 201,391 39,163 792,769 161,423 Noncurrent liabilities:

Compensated absences 55,313 - - - Claims payable - - 2,140,396 573,049 Total noncurrent liabilities 55,313 - 2,140,396 573,049 Total liabilities 256,704 39,163 2,933,165 734,472 NET POSITION:

Investment in capital assets 4,170,770 531,923 - - Unrestricted 6,361,427 3,481,495 710,458 1,451,735 Total net position 10,532,197$ 4,013,418$ 710,458$ 1,451,735$ (Continued)
Internal Service Funds
June 30, 2020
City of Gilroy
Combining Statement of Net Position

LIABILITIES
148

7.2.b
Packet Pg. 206 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Facility Information Fringe
Services Technologies Benefits Total
ASSETS
Current assets:

Cash and investments 1,797,086$ 5,257,205 535,057$ 19,280,463$ Cash and investments with fiscal agent - - 2,000,000 2,000,000 Accounts receivable 33,200 - - 33,200 Inventory of materials - - - 38,973 Prepaid items - 92,244 - 92,244 Total current assets 1,830,286 5,349,449 2,535,057 21,444,880 Noncurrent assets:

Interfund loans receivable - - - 4,238,531 Capital assets:

Nondepreciable - 964,815 - 969,219 Depreciable, net - 306,552 - 5,004,841 Total capital assets - 1,271,367 - 5,974,060 Total noncurrent assets - 1,271,367 - 10,212,591 Total assets 1,830,286 6,620,816 2,535,057 31,657,471 Current Liabilities:

Accounts payable 239,126 264,604 479,876 1,231,085 Accrued liabilities 41,928 37,582 54,971 166,548 Compensated absences, current portion 3,100 2,700 - 12,000 Claims payable, current portion - - - 909,000 Total current liabilities 284,154 304,886 534,847 2,318,633 Noncurrent liabilities:

Compensated absences 28,082 24,604 - 107,999 Claims payable - - - 2,713,445 Total noncurrent liabilities 28,082 24,604 - 2,821,444 Total liabilities 312,236 329,490 534,847 5,140,077 NET POSITION:

Investment in capital assets - 1,271,367 - 5,974,060 Unrestricted 1,518,050 5,019,959 2,000,210 20,543,334 TOTAL NET POSITION 1,518,050$ 6,291,326$ 2,000,210$ 26,517,394$ (Concluded)
Internal Service Funds
June 30, 2020
City of Gilroy
Combining Statement of Net Position (Continued)

LIABILITIES
149

7.2.b
Packet Pg. 207 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Fleet Equipment Workers' General
Services Outlay Compensation Liability
OPERATING REVENUES:

Charges for services 1,626,839$ 125,923$ 1,294,102$ 1,317,106$ Miscellaneous - - - 410,494 Total operating revenues 1,626,839 125,923 1,294,102 1,727,600 OPERATING EXPENSES:

Current:

Operations 1,610,201 326,580 - - Depreciation 497,251 98,279 - - Administration - - 220,113 103,236 Claims and judgments - - 392,803 445,585 Insurance premiums - - 224,979 1,148,402 Total operating expenses 2,107,452 424,859 837,895 1,697,223 OPERATING INCOME (LOSS)(480,613) (298,936) 456,207 30,377 NONOPERATING REVENUES:

Investment income 104,548 67,331 66,267 29,623 Total nonoperating revenues 104,548 67,331 66,267 29,623 INCOME (LOSS) BEFORE TRANSFERS (376,065) (231,605) 522,474 60,000 TRANSFERS:

Transfers in 365,000 - - - Total transfers 365,000 - - - CHANGES IN NET POSITION (11,065) (231,605) 522,474 60,000 NET POSITION:

Beginning of year 10,543,262 4,245,023 187,984 1,391,735 End of year 10,532,197$ 4,013,418$ 710,458$ 1,451,735$ (Continued)
Internal Service Funds
For the Year Ended June 30, 2020
City of Gilroy
Combining Statement of Revenues, Expenses, and Changes in Net Position 150

7.2.b
Packet Pg. 208 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Facility Information Fringe
Services Technologies Benefits Total
OPERATING REVENUES:

Charges for services 2,513,352$ 2,482,746$ 16,514,651$ 25,874,719$ Miscellaneous 188,006 3,600 - 602,100 Total operating revenues 2,701,358 2,486,346 16,514,651 26,476,819 OPERATING EXPENSES:

Current:

Operations 2,732,798 2,622,381 16,508,534 23,800,494 Depreciation - 120,821 - 716,351 Administration - - - 323,349 Claims and judgments - - - 838,388 Insurance premiums - - - 1,373,381 Total operating expenses 2,732,798 2,743,202 16,508,534 27,051,963 OPERATING INCOME (LOSS)(31,440) (256,856) 6,117 (575,144) NONOPERATING REVENUES:

Investment income 31,440 104,329 - 403,538 Total nonoperating revenues 31,440 104,329 - 403,538 INCOME (LOSS) BEFORE TRANSFERS - (152,527) 6,117 (171,606) TRANSFERS:

Transfers in - 1,155,166 2,000,000 3,520,166 Total transfers - 1,155,166 2,000,000 3,520,166 CHANGES IN NET POSITION - 1,002,639 2,006,117 3,348,560 NET POSITION:

Beginning of year 1,518,050 5,288,687 (5,907) 23,168,834 End of year 1,518,050$ 6,291,326$ 2,000,210$ 26,517,394$ (Concluded)
City of Gilroy
Combining Statement of Revenues, Expenses, and Changes in Net Position (Continued) For the Year Ended June 30, 2020
Internal Service Funds
151

7.2.b
Packet Pg. 209 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

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152

7.2.b
Packet Pg. 210 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Fleet Equipment Workers' General
Services Outlay Compensation Liability

CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers and users 1,626,839$ 125,923$ 1,294,102$ 1,727,600$ Cash paid to suppliers for goods and services (892,131) (322,220) (219,194) (79,320) Cash paid to employees for services (563,213) - - - Cash paid for insurance claims - - (940,256) (1,513,891) Net cash provided by (used in) operating activities 171,495 (196,297) 134,652 134,389

CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:

Cash received from other funds 585,930 111,595 - - Net cash provided by noncapital financing activities 585,930 111,595 - -

CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:

Acquisition of capital assets (394,674) (206,870) - - Net Cash (Used in) Capital and Related
Financing Activities (394,674)(206,870) - - CASH FLOWS FROM INVESTING ACTIVITIES:

Interest received 104,548 67,331 66,267 29,623 Net Cash Provided by Investing Activities 104,548 67,331 66,267 29,623 Net change in cash and cash equivalents 467,299 (224,241) 200,919 164,012

RECONCILIATION OF CASH AND CASH EQUIVALENTS
TO STATEMENTOF NET POSITION:

Beginning of year 2,891,095 2,727,132 3,442,704 2,022,195 End of year 3,358,394$ 2,502,891$ 3,643,623$ 2,186,207$ CASH AND CASH EQUIVALENTS:

Cash and investments 3,358,394$ 2,502,891$ 3,643,623$ 2,186,207$ Cash and investments with fiscal agent - - - - Total cash and cash equivalents 3,358,394$ 2,502,891$ 3,643,623$ 2,186,207$ Reconciliation of Operating Income (Loss) to
to Net Cash Provided by (used in) Operating Activities:

Operating income (loss) (480,613)$ (298,936)$ 456,207$ 30,377$ Adjustments to reconcile operating income (loss)
to net cash provided by (used in) operating activities:

Depreciation 497,251 98,279 - - Changes in assets and liabilities:
(Increase)/decrease in accounts receivables - - - - (Increase)/decrease in inventory of materials 8,582 - - - (Increase)/decrease in prepaid items - 24,608 150 - Increase/(decrease) in accounts payable 138,319 (20,248) 33 23,916 Increase/(decrease) in accrued liabilities 553 - 736 - Increase/(decrease) in compensated absences 7,403 - - - Increase/(decrease) in claims payable - - (322,474) 80,096 Net cash provided by (used in) operating activities 171,495$ (196,297)$ 134,652$ 134,389$ City of Gilroy
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended June 30, 2020
153

7.2.b
Packet Pg. 211 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Facility Information Fringe
Services Technologies Benefits Total

CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers and users 2,692,048$ 2,493,546$ 16,514,651$ 26,474,709$ Cash paid to suppliers for goods and services (1,789,789) (1,947,423) (16,414,216) (21,664,293) Cash paid to employees for services (791,055) (610,972) - (1,965,240) Cash paid for insurance claims - - - (2,454,147) Net cash provided by (used in) operating activities 111,204 (64,849) 100,435 391,029

CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:

Cash received from other funds - 1,155,166 2,000,000 3,852,691 Net cash provided by noncapital financing activities - 1,155,166 2,000,000 3,852,691

CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:

Acquisition of capital assets - (964,815) - (1,566,359) Net Cash (Used in) Capital and Related
Financing Activities - (964,815) - (1,566,359) CASH FLOWS FROM INVESTING ACTIVITIES:

Interest received 31,440 104,329 - 403,538 Net Cash Provided by Investing Activities 31,440 104,329 - 403,538 Net change in cash and cash equivalents 142,644 229,831 2,100,435 3,080,899

RECONCILIATION OF CASH AND CASH EQUIVALENTS
TO STATEMENTOF NET POSITION:

Beginning of year 1,654,442 5,027,374 434,622 18,199,564 End of year 1,797,086$ 5,257,205$ 2,535,057$ 21,280,463$ CASH AND CASH EQUIVALENTS:

Cash and investments 1,797,086$ 5,257,205$ 535,057$ 19,280,463$ Cash and investments with fiscal agent - - 2,000,000 2,000,000 Total cash and cash equivalents 1,797,086$ 5,257,205$ 2,535,057$ 21,280,463$ Reconciliation of Operating Income (Loss) to
to Net Cash Provided by (used in) Operating Activities:

Operating income (loss) (31,440)$ (256,856)$ 6,117$ (575,144)$ Adjustments to reconcile operating income (loss)
to net cash provided by (used in) operating activities:

Depreciation - 120,821 - 716,351 Changes in assets and liabilities:
(Increase)/decrease in accounts receivables (9,310) 7,200 - (2,110) (Increase)/decrease in inventory of materials - - - 8,582 (Increase)/decrease in prepaid items 244 (92,244) - (67,242) Increase/(decrease) in accounts payable 148,648 146,273 76,927 513,868 Increase/(decrease) in accrued liabilities 888 1,451 17,391 21,019 Increase/(decrease) in compensated absences 2,174 8,506 - 18,083 Increase/(decrease) in claims payable - - - (242,378) Net cash provided by (used in) operating activities 111,204$ (64,849)$ 100,435$ 391,029$ Combining Statement of Cash Flows (Continued)
Internal Service Funds
For the Year Ended June 30, 2020
City of Gilroy
154

7.2.b
Packet Pg. 212 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

These funds account for assets held by the City on behalf of other organizations.

Henry Miller - This fund is used to account for a donation from Henry Miller. The annual interest earned on the original donation of $15,000 is the amount donated to the poor of Gilroy each Christmas season.

Deposit Revolving - This fund is used to account for miscellaneous deposits, revolving deposits from developers and refundable deposits received in advance for rental of City facilities.

Gilroy Junior Golf - This fund is used to account for entry fees received from participants in junior golf tournaments and is used to pay associated costs such as trophies, supplies and officials.

Softball Advisory Board - This fund is used to pay for program expense such as trophies, T-shirts, supplies, umpires, scorekeepers and donations to other recreation programs.

AGENCY FUNDS
Payroll Withholdings - This fund is used to establish the liabilities for payroll withholdings and their subsequent payment to outside agencies.

Museum Trust -This fund was established by the sale of a vase by the Gilroy Museum. The purpose in selling the vase was to create an endowment for the museum. This would generate interest income for the museum.

Senior Advisory Board - This fund is used to account for revenues that come from fund raising and donations. The funds are used to buy equipment for the Senior Center.

Employee Wellness - This fund is used to account for the employee organization designed to provide recreational and educational programs to foster the City employees’ mental and physical health.

Barney J. Garcia EMS Training - This fund is used to account for a donation from the family of Barney J. Garcia. The family has restricted the use of donations and interest earnings to the purchase of Fire EMS training equipment only.

Highway 152 Series 2002 - This fund is used to account for special assessments collected and pay the bonded indebtedness for the Highway 152 Series 2002 improvements.

Highway 152 Series 2006 - This fund is used to account for special assessments collected and pay the bonded indebtedness for the Highway 152 Series 2006 improvements.

Highway 152 Series 2018 - This fund is used to account for special assessments collected and pay the bonded indebtedness for the Highway 152 Series 2018 Bonds.
155

7.2.b
Packet Pg. 213 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

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156

7.2.b
Packet Pg. 214 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Gilroy Softball Senior
Henry Deposit Junior Advisory Advisory
Miller Revolving Golf Board Board
Assets:

Cash and investments 17,238$ 3,528,963$ 3,867$ 3,167$ 8,345$ Cash and investments with fiscal agent - - - - - Accounts receivable - 6,751 - - - Due from County - - - - - Total Assets 17,238$ 3,535,714$ 3,867$ 3,167$ 8,345$ Liabilities:

Accounts payable -$ 472,499$ -$ -$ -$ Due to bondholders - - - - - Unearned revenue - 197,173 - - - Deposits payable 17,238 2,866,042 3,867 3,167 8,345 Total Liabilities 17,238$ 3,535,714$ 3,867$ 3,167$ 8,345$ (Continued)
City of Gilroy
Combining Statement of Fiduciary Assets and Liabilities Agency Funds
June 30, 2020
157

7.2.b
Packet Pg. 215 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Employee Barney J Garcia Highway 152 Highway 152
Wellness EMS Training Series 2002 Series 2006
Assets:

Cash and investments 4,154$ 2,390$ -$ -$ Cash and investments with fiscal agent - - - - Accounts receivable - - - - Due from County - - 544 709 Total Assets 4,154$ 2,390$ 544$ 709$ Liabilities:

Accounts payable -$ -$ -$ -$ Due to bondholders - - 544 709 Unearned revenue - - - - Deposits payable 4,154 2,390 - - Total Liabilities 4,154$ 2,390$ 544$ 709$ (Continued)
City of Gilroy
Combining Statement of Fiduciary Assets and Liabilities (Continued) Agency Funds
June 30, 2020
158

7.2.b
Packet Pg. 216 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Highway 152 Payroll Museum
Series 2018 Withholdings Trust Total
Assets:

Cash and investments 791,205$ 15,000$ 44,632$ 4,418,961$ Cash and investments with fiscal agent 291,501 - - 291,501 Accounts receivable - 9 - 6,760 Due from County - - - 1,253 Total Assets 1,082,706$ 15,009$ 44,632$ 4,718,475$ Liabilities:

Accounts payable -$ -$ -$ 472,499$ Due to bondholders 1,082,706 - - 1,083,959 Unearned revenue - - - 197,173 Deposits payable - 15,009 44,632 2,964,844 Total Liabilities 1,082,706$ 15,009$ 44,632$ 4,718,475$ (Concluded)
City of Gilroy
Combining Statement of Fiduciary Assets and Liabilities (Continued) Agency Funds
June 30, 2020
159

7.2.b
Packet Pg. 217 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Balance Balance
July 01, 2019 Additions Deletions June 30, 2020

HENRY MILLER
Assets:

Cash and investments 17,308$ 343$ (413)$ 17,238$ Total Assets 17,308$ 343$ (413)$ 17,238$ Liabilities:

Deposits payable 17,308$ 343$ (413)$ 17,238$ Total Liabilities 17,308$ 343$ (413)$ 17,238$

DEPOSIT REVOLVING
Assets:

Cash and investments 3,440,462$ 4,027,711$ (3,939,210)$ 3,528,963$ Accounts receivable 7,027 25,374 (25,650) 6,751 Total Assets 3,447,489$ 4,053,085$ (3,964,860)$ 3,535,714$ Liabilities:

Accounts payable 89,958$ 1,647,307$ (1,264,766)$ 472,499$ Unearned revenue 54,089 - 143,084 197,173 Deposits payable 3,303,442 2,405,778 (2,843,178) 2,866,042 Total Liabilities 3,447,489$ 4,053,085$ (3,964,860)$ 3,535,714$

GILROY JUNIOR GOLF
Assets:

Cash and investments 3,791$ 76$ -$ 3,867$ Total Assets 3,791$ 76$ -$ 3,867$ Liabilities:

Deposits payable 3,791$ 76$ -$ 3,867$ Total Liabilities 3,791$ 76$ -$ 3,867$ (Continued)
City of Gilroy
Combining Statement of Changes in Fiduciary Assets and Liabilities Agency Funds
For the Year Ended June 30, 2020
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Balance Balance
July 01, 2019 Additions Deletions June 30, 2020

SOFTBALL ADVISORY BOARD
Assets:

Cash and investments 3,105$ 62$ -$ 3,167$ Total Assets 3,105$ 62$ -$ 3,167$ Liabilities:

Deposits payable 3,105$ 62$ -$ 3,167$ Total Liabilities 3,105$ 62$ -$ 3,167$

SENIOR ADVISORY BOARD
Assets:

Cash and investments 8,535$ 832$ (1,022)$ 8,345$ Total Assets 8,535$ 832$ (1,022)$ 8,345$ Liabilities:

Accounts payable 18$ -$ (18)$ -$ Deposits payable 8,517 832 (1,004) 8,345 Total Liabilities 8,535$ 832$ (1,022)$ 8,345$

EMPLOYEE WELLNESS
Assets:

Cash and investments 1,742$ 5,953$ (3,541)$ 4,154$ Total Assets 1,742$ 5,953$ (3,541)$ 4,154$ Liabilities:

Accounts payable 20$ -$ (20)$ -$ Deposits payable 1,722 5,953 (3,521) 4,154 Total Liabilities 1,742$ 5,953$ (3,541)$ 4,154$ BARNEY J. GARCIA EMS TRAINING
Assets:

Cash and investments 2,343$ 47$ -$ 2,390$ Total Assets 2,343$ 47$ -$ 2,390$ Liabilities:

Deposits payable 2,343$ 47$ -$ 2,390$ Total Liabilities 2,343$ 47$ -$ 2,390$ (Continued)
Combining Statement of Changes in Fiduciary Assets and Liabilities (Continued) Agency Funds
For the Year Ended June 30, 2020
City of Gilroy
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Balance Balance
July 01, 2019 Additions Deletions June 30, 2020
HIGHWAY 152 SERIES 2002
Assets:

Due from County 237$ 544$ (237)$ 544$ Total Assets 237$ 544$ (237)$ 544$ Liabilities:

Due to bondholders 237$ 544$ (237)$ 544$ Total Liabilities 237$ 544$ (237)$ 544$ HIGHWAY 152 SERIES 2006
Assets:

Cash and investments 1,008$ -$ (1,008)$ -$ Due from County 308 401 - 709 Total Assets 1,316$ 401$ (1,008)$ 709$ Liabilities:

Due to bondholders 1,316$ 401$ (1,008)$ 709$ Total Liabilities 1,316$ 401$ (1,008)$ 709$ HIGHWAY 152 SERIES 2018
Assets:

Cash and investments 743,211$ 910,696$ (862,702)$ 791,205$ Cash and investments with fiscal agent 295,479 3,805 (7,783) 291,501 Total Assets 1,038,690$ 914,501$ (870,485)$ 1,082,706$ Liabilities:

Due to bondholders 1,038,690$ 914,501$ (870,485)$ 1,082,706$ Total Liabilities 1,038,690$ 914,501$ (870,485)$ 1,082,706$

PAYROLL WITHHOLDINGS
Assets:

Cash and investments 2,816$ 19,223,699$ (19,211,515)$ 15,000$ Accounts receivable - 9 - 9 Total Assets 2,816$ 19,223,708$ (19,211,515)$ 15,009$ Liabilities:

Deposits payable 2,816$ 19,223,708$ (19,211,515)$ 15,009$ Total Liabilities 2,816$ 19,223,708$ (19,211,515)$ 15,009$ (Continued)
Agency Funds
City of Gilroy
Combining Statement of Changes in Fiduciary Assets and Liabilities (Continued) For the Year Ended June 30, 2020
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Balance Balance
July 01, 2019 Additions Deletions June 30, 2020

MUSEUM TRUST
Assets:

Cash and investments 43,754$ 2,182$ (1,304)$ 44,632$ Total Assets 43,754$ 2,182$ (1,304)$ 44,632$ Liabilities:

Deposits payable 43,754$ 2,182$ (1,304)$ 44,632$ Total Liabilities 43,754$ 2,182$ (1,304)$ 44,632$

TOTAL ALL AGENCY FUNDS
Assets:

Cash and investments 4,268,075$ 24,171,601$ (24,020,715)$ 4,418,961$ Cash and investments with fiscal agent 295,479 3,805 (7,783) 291,501 Accounts receivable 7,027 25,383 (25,650) 6,760 Due from County 545 945 (237) 1,253 Total Assets 4,571,126$ 24,201,734$ (24,054,385)$ 4,718,475$ Liabilities:

Accounts payable 89,996$ 1,647,307$ (1,264,804)$ 472,499$ Due to bondholders 1,040,243 915,446 (871,730) 1,083,959 Unearned revenue 54,089 - 143,084 197,173 Deposits payable 3,386,798 21,638,981 (22,060,935) 2,964,844 Total Liabilities 4,571,126$ 24,201,734$ (24,054,385)$ 4,718,475$ (Concluded)
City of Gilroy
Combining Statement of Changes in Fiduciary Assets and Liabilities (Continued) Agency Funds
For the Year Ended June 30, 2020
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ADDITIONAL SCHEDULES
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Fleet Equipment Workers'
Sewer Water Services Outlay Compensation
BEGINNING RESOURCES AVAILABLE:

Depreciation reserve 9,274,721$ 16,133,247$ 9,046,441$ 3,545,699$ -$ Operating reserve 13,104,754 4,896,964 (2,769,971) 251,384 3,442,704 Total beginning resources 22,379,475$ 21,030,211$ 6,276,470$ 3,797,083$ 3,442,704$ Source of Funds:

Revenues 12,872,189$ 14,572,310$ 1,626,839$ 125,923$ 1,294,102$ Investment income 561,664 607,469 104,548 67,331 66,267 Miscellaneous revenue - 18,663 - - - Capital contributions 1,655,291 783,826 - - - Interfund transfers in 693,577 - 365,000 - - Total sources 15,782,721 15,982,268 2,096,387 193,254 1,360,369 Use of Funds:

Expenditures (excluding depreciation) 10,860,780 11,278,642 1,610,201 326,580 837,895 Interest paid 192,327 - - - - Principal paid 2,150,000 - - - - Capital assets constructed/acquired (1,146,655) 1,807,812 394,674 206,870 - Interfund transfers out 100,000 145,730 - - - Total uses 12,156,452 13,232,184 2,004,875 533,450 837,895 Adjustments:

Adjustments for other assets and liabilities (3,268,852) 554,425 15,985 24,608 (322,324) Total adjustments (3,268,852) 554,425 15,985 24,608 (322,324) Total changes in resources 357,417 3,304,509 107,497 (315,588) 200,150 Ending resources available 22,736,892$ 24,334,720$ 6,383,967$ 3,481,495$ 3,642,854$ RECAP RESOURCES AVAILABLE:

Depreciation reserve 10,777,708$ 17,458,385$ 9,543,692$ 3,643,978$ -$ Operating reserve 11,959,184 6,876,335 (3,159,725) (162,483) 3,642,854 Total ending resources 22,736,892$ 24,334,720$ 6,383,967$ 3,481,495$ 3,642,854$ ANALYSIS OF DEPRECIATION RESERVE:

Beginning Balance 9,274,721$ 16,133,247$ 9,046,441$ 3,545,699$ -$ 2019-20 depreciation 1,502,987 1,325,138 497,251 98,279 - Total depreciation reserve 10,777,708$ 17,458,385$ 9,543,692$ 3,643,978$ -$ (Continued)
City of Gilroy
Analysis of Available Resources - Selected Funds
For the Year Ended June 30, 2020
166

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General Facility Information Fringe
Liability Services Technologies Benefits Total
BEGINNING RESOURCES AVAILABLE:

Depreciation reserve -$ 4,057$ 6,822,333$ -$ 44,826,498$ Operating reserve 2,001,688 1,542,757 (1,942,221) (5,907) 20,522,152 Total beginning resources 2,001,688$ 1,546,814$ 4,880,112$ (5,907)$ 65,348,650$ Source of Funds:

Revenues 1,317,106$ 2,513,352$ 2,482,746$ 16,514,651$ 53,319,218$ Investment income 29,623 31,440 104,329 - 1,572,671 Miscellaneous revenue 410,494 188,006 3,600 - 620,763 Capital contributions - - - - 2,439,117 Interfund transfers in - - 1,155,166 2,000,000 4,213,743 Total sources 1,757,223 2,732,798 3,745,841 18,514,651 62,165,512 Use of Funds:

Expenditures (excluding depreciation) 1,697,223 2,732,798 2,622,381 16,508,534 48,475,034 Interest paid - - - - 192,327 Principal paid - - - - 2,150,000 Capital assets constructed/acquired - - 964,815 - 2,227,516 Interfund transfers out - - - - 245,730 Total uses 1,697,223 2,732,798 3,587,196 16,508,534 53,290,607 Adjustments:

Adjustments for other assets and liabilities 80,096 2,418 (83,738) - (2,997,382) Total adjustments 80,096 2,418 (83,738) - (2,997,382) Total changes in resources 140,096 2,418 74,907 2,006,117 5,877,523 Ending resources available 2,141,784$ 1,549,232$ 4,955,019$ 2,000,210$ 71,226,173$ RECAP RESOURCES AVAILABLE:

Depreciation reserve -$ 4,057$ 6,943,154$ -$ 48,370,974$ Operating reserve 2,141,784 1,545,175 (1,988,135) 2,000,210 22,855,199 Total ending resources 2,141,784$ 1,549,232$ 4,955,019$ 2,000,210$ 71,226,173$ ANALYSIS OF DEPRECIATION RESERVE:

Beginning Balance -$ 4,057$ 6,822,333$ -$ 44,826,498$ 2019-20 depreciation - - 120,821 - 3,544,476 Total depreciation reserve -$ 4,057$ 6,943,154$ -$ 48,370,974$ (Concluded)
City of Gilroy
Analysis of Available Resources - Selected Funds (Continued) For the Year Ended June 30, 2020
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Fleet Equipment Workers'
Sewer Water Services Outlay Compensation
BEGINNING RESOURCES AVAILABLE:

Cash 20,308,838$ 21,271,226$ 2,891,095$ 2,727,132$ 3,442,704$ Receivables 2,261,086 1,293,034 3,441,694 1,129,362 - Payables (190,449) (1,534,049) (56,319) (59,411) - Total beginning working capital 22,379,475$ 21,030,211$ 6,276,470$ 3,797,083$ 3,442,704$ ENDING RESOURCES AVAILABLE:

Cash 21,275,726$ 23,247,633$ 3,358,394$ 2,502,891$ 3,643,623$ Receivables 1,685,038 1,954,597 3,220,764 1,017,767 - Payables (223,872) (867,510) (195,191) (39,163) (769) Total ending working capital 22,736,892$ 24,334,720$ 6,383,967$ 3,481,495$ 3,642,854$ (Continued)
City of Gilroy
Composition of Available Resources - Selected Funds
June 30, 2020
168

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General Facility Information Fringe
Liability Services Technologies Benefits Total
BEGINNING RESOURCES AVAILABLE:

Cash 2,022,195$ 1,654,442$ 5,027,374$ 434,622$ 59,779,628$ Receivables - 23,890 7,200 - 8,156,266 Payables (20,507) (131,518) (154,462) (440,529) (2,587,244) Total beginning working capital 2,001,688$ 1,546,814$ 4,880,112$ (5,907)$ 65,348,650$ ENDING RESOURCES AVAILABLE:

Cash 2,186,207$ 1,797,086$ 5,257,205$ 2,535,057$ 65,803,822$ Receivables - 33,200 - - 7,911,366 Payables (44,423) (281,054) (302,186) (534,847) (2,489,015) Total ending working capital 2,141,784$ 1,549,232$ 4,955,019$ 2,000,210$ 71,226,173$ (Concluded)
City of Gilroy
Composition of Available Resources - Selected Funds (Continued) June 30, 2020
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City of Gilroy
Annual Report Filings
For Fiscal Year 2019-20

171
(1) Gilroy Community Library Project:

$8,633,538

CITY OF GILROY
2019 General Obligation Refunding Bonds Series A
(Gilroy Community Library Project)

$19,087,551

CITY OF GILROY
2019 General Obligation Bonds Series B
(Gilroy Community Library Project)

(a) Audited financial statements for the City for Fiscal Year 2019-2020.

This exhibit is attached to the City’s audited financial statements.

(b) Financial information and operating data.
(i) Assessed value of taxable property within the jurisdiction of the City.

CITY OF GILROY
Assessed Valuations of All Taxable Property
Fiscal Years 2015-16 to 2020-21

Fiscal Year
Gross Local
Secured(1)

Net Local
Secured(2)Net Utility(3) Net Unsecured(4) Total(2)
2015-16 $ 6,798,621,370 $ 6,752,750,370 $ 47,030,836 $ 268,445,327 $ 7,068,226,533 2016-17 7,385,130,561 7,338,552,561 42,130,836 273,713,487 7,654,396,884 2017-18 7,872,947,886 7,825,703,486 39,330,836 263,667,226 8,128,701,548 2018-19 8,445,397,378 8,397,307,378 38,939,704 256,724,279 8,692,971,361 2019-20 9,001,686,593 8,953,812,193 32,539,704 257,410,089 9,243,761,986 2020-21 9,557,360,668 9,510,019,668 29,739,704 267,854,749 9,807,614,121 ________________
(1) Before deduction of homeowner’s exemptions.
(2) Net of homeowner’s exemptions.
(3) Beginning in Fiscal Year 1988-89, Chapter 921 of the Statutes of 1987 requires the establishment of a single Countywide tax area for the assignment of the assessed value of certain types of State-assessed utility property and sets forth formulas for the determination of Countywide tax rates for this particular type of property. This statute also spells out how to distribute the taxes which have been collected from the bills derived from this value and specified tax rate. (4) Does not include aircraft.

Source: Santa Clara County Auditor-Controller’s Office

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City of Gilroy
Annual Report Filings (Continued)
For Fiscal Year 2019-20

172
(1) Gilroy Community Library Project: (Continued)

(iii) If and to the extent such information is available from the County, property tax collection delinquencies for the City if the City is no longer a participant in Santa Clara County’s Teeter Plan.

The County is not able to provide tax levy and delinquency information to the City because the County has adopted the Teeter Plan, which means it pays to the City the amount of taxes levied rather than the amount collected. The City will make this information available if and when it becomes available from the County.

(iv) Amount of all general obligation debt of the City outstanding, and total scheduled debt service on such general obligation debt.

Please see information in the audited financial statements.

(v) Any changes in the operation of Santa Clara County’s Teeter Plan since the previous Annual Report affecting the City’s receipt of property tax revenues used to pay debt service on the Bonds.

The City is not aware of any changes in the operation of Santa Clara County’s Teeter Plan since the previous Annual Report affecting the City’s receipt of property tax revenues used to pay debt service.

7.2.b
Packet Pg. 230 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Annual Report Filings (Continued)
For Fiscal Year 2019-20

173
(2) Gilroy Public Facilities Financing Authority:

$24,475,000

GILROY PUBLIC FACILITIES FINANCING AUTHORITY
Refunding Lease Revenue Bonds, Series 2010

$23,120,000

GILROY PUBLIC FACILITIES FINANCING AUTHORITY
Refunding Lease Revenue Bonds, Series 2013

(a) Audited financial statements for the City for Fiscal Year 2019-2020.

This exhibit is attached to the City’s audited financial statements. (b) Financial information and operating data.
(i) Principal amount of Notes/Bonds outstanding.

Please see information in the audited financial statements. (ii) Balance in each fund under the Trust Agreement as of June 30, preceding the filing of the Annual Report.

CITY OF GILROY
Balance under the Trust Agreement as of June 30, 2020

Financing Authority Type

Year
Account
Name Shares/Units

Cost Basis

Market Value
Gilroy Public Facilities
Financing Authority
Lease Revenue
Bonds
Series
2010

Reserve

$1,744,606

$1,744,606

$1,744,606
Gilroy Public Facilities
Financing Authority
Lease Revenue
Bonds
Series
2013

Reserve

922,096

922,096

922,096
(iii) General fund summary of revenues and expenditures.

Please see information in the audited financial statements. (iv) General fund balance sheet.

Please see information in the audited financial statements.

7.2.b
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City of Gilroy
Annual Report Filings (Continued)
For Fiscal Year 2019-20

174
(2) Gilroy Public Facilities Financing Authority: (Continued)

(v) General fund budget for the then-current fiscal year.

REVENUES
Taxes 45,168,333$
Licenses & Permits 3,662,546
Intergovernmental 142,000
Charges for Services 5,628,041
Fines 262,730
Investment Income 475,334
Miscellaneous 1,659,975
Total Revenues 56,998,959$

EXPENDITURES
Personnel Expense 39,166,463$
Maintenance and Services 5,211,904
Interfund, charges, allocations & other 7,982,305
Total Expenditures 52,360,672$
Budget 2020 - 21

Also, please see information in the audited financial statements.

(vi) General fund tax revenues by source.

Source Audited Audited Audited Audited Audited
Revenues 2015 - 16 2016 - 17 2017 - 18 2018 - 19 2019 - 20 Sales Tax 17,884,735$ 18,827,189$ 20,186,105$ 20,186,105$ 17,233,882$ Property Taxes (1) 11,468,510 12,278,552 18,827,189 14,476,481 15,595,639 Utility Users Tax 4,610,631 4,748,382 4,666,131 4,721,529 5,177,426 Motor Vehicle in lieu of Taxes 21,385 24,715 29,444 26,695 44,265 Franchise Taxes 1,569,059 1,623,952 1,713,690 1,669,817 1,855,622 Transient Occupancy Taxes 1,676,691 1,709,332 1,722,355 1,771,882 1,237,812 Document Transfer Taxes 505,957 516,105 526,583 372,284 489,775 Total 37,736,968$ 39,728,227$ 47,671,497$ 43,224,793$ 41,634,421$ (1) Property tax revenue includes secured, unsecured and supplemental property tax revenue along with penalties and interest.

Source: City of Gilroy Finance Department
City of Gilroy
General Fund Tax Revenues by Source
For Fiscal Years 2015 - 16 through 2019 - 20

7.2.b
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City of Gilroy
Annual Report Filings (Continued)
For Fiscal Year 2019-20

175
(2) Gilroy Public Facilities Financing Authority: (Continued)

(vii) Sales tax rates.

CITY OF GILROY
Sales Tax Rates
Effective January 1, 2020

State 6.0%
Santa Clara County Transportation Funds 0.25
City 1.00
Santa Clara County Transit District 0.50
Santa Clara County Valley Transportation Authority (VTA) 0.50 Santa Clara County Retail Transactions and Use Tax 0.125 Santa Clara VTA Bay Area Rapid Transit (BART) 0.125
Silicon Valley Transportation Solutions Tax 0.50_
Total 9.00%
Source: California State Board of Equalization.
(viii) Assessed valuation of property in the City.

Please see (1)(b)(i) above.
(ix) Updated descriptions of outstanding general fund debt and lease obligations.

Please see information in the audited financial statements.

7.2.b
Packet Pg. 233 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

City of Gilroy
Annual Report Filings (Continued)
For Fiscal Year 2019-20

176
(3) Wastewater Revenue Refunding Bonds:

$23,375,000

CITY OF GILROY
2010 Wastewater Revenue Refunding Bonds

(a) Audited financial statements for the City for Fiscal Year 2019-20.

This exhibit is attached to the City’s audited financial statements.

(b) Financial information and operating data.
(i) Principal amount of Bonds outstanding.
$7,080,000
(ii) Balance in the Reserve Fund and a statement of the Reserve Requirement.

Reserve Fund Balance as of June 30, 2020: $2,621,011.

Reserve Requirement: $2,621,000. Reserve Requirement is defined in the Indenture to mean an amount equal to the maximum amount of principal of and interest on the Bonds coming due and payable in the current or any future Bond Year including the principal of any Term Bonds required to be redeemed in such Bond Year under the Indenture.
(iii) Updated wastewater system information:

CITY OF GILROY WASTEWATER SYSTEM
Wastewater Flow
Fiscal Years 2014-15 through 2019-20

Fiscal Year
SCRWA
Treatment Facility
Total Flow
(MG/Year)
SCRWA
Treatment Facility
Million Gallons
p er Day (MGD)
City of Gilroy
Flow (MG/Year)
City % Share of
SCRWA
Treatment Facility
Flow
2014 - 15 2,186.40 5.99 1,278.96 58 2015 - 16 2,185.58 5.97 1,311.35 60 2016 - 17 2,763.99 7.60 1,761.18 63 2017 - 18 2,250.28 6.16 1,413.14 61 2018 - 19 2,427.24 6.66 1,539.50 63 2019 - 20 2,255.70 6.18 1,398.54 62 Source: City of Gilroy
Historical Revenues and Expenses: Please see information in the audited financial statements.

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City of Gilroy
Annual Report Filings (Continued)
For Fiscal Year 2019-20

177
(3) Wastewater Revenue Refunding Bonds (Continued)

CITY OF GILROY WASTEWATER SYSTEM
Historical Debt Service Coverage

2015 - 16 2016 - 17 2017 - 18 2018 - 19 2019 - 20
Gross Revenue
Charges for services 11,773,938$ 18,827,189$ 20,186,105$ 20,186,105$ 17,233,882$ Investment income 210,826 12,278,552 18,827,189 14,476,481 15,595,639 Available rate stabilization fund balance - 4,748,382 4,666,131 4,721,529 5,177,426 Transfers from sewer impact fund 700,111 24,715 29,444 26,695 44,265 Total Gross Revenue 12,684,875 13,529,576 13,658,483 14,192,732 14,127,430 Operating Expenses:

Operations (7,296,107) (7,454,895) (746,650) (8,339,489) (9,462,155) Billing (612,551) (594,654) (618,400) (668,982) (730,892) Administration (500,398) (472,465) (558,846) (706,101) (667,733) Total Operating Expenses (8,409,056) (8,522,014) (1,923,896) (9,714,572) (10,860,780) Net Wastewater System Revenues 4,275,819 5,007,562 5,014,587 4,478,160 3,266,650 Series 1999 Installment Payments 2,566,550 2,558,687 2,562,738 2,557,625 2,557,750 Refunding Series 2010 Payments
Gross Revenue Debt Service Coverage 494.24% 528.77% 532.96% 554.92% 552.34% Net Revenue Debt Service Coverage 166.60% 195.71% 195.67% 175.09% 127.72% Funds Available
Sewer Development Capital Project Fund 11,481,078 12,964,741 14,534,002 15,040,842 13,376,865 Sewer Fund Cash and Cash Equivalent 18,537,029 16,777,330 17,391,216 17,687,792 18,610,720 Rate Stabilization Fund 750,000 750,000 750,000 750,000 750,000 Total Funds Available 30,768,107$ 30,492,071$ 32,675,218$ 33,478,634$ 32,737,585$ Days Cash on Hand (Sewer Fund
Cash/Cash Equivalent) 805 719 734 665 625
Source: City of Gilroy

(iv) A summary of any changes in the City’s wastewater service charges since the date of the previous Annual Report.

Effective July 1, 2019, the City of Gilroy implemented a wastewater rate increase in accordance with the rate analysis study approved in August 2015. This represents a 3% increase in the fixed monthly charge for non-residential wastewater rates.

The increases noted in the rate structure will help to ensure that sufficient funding is collected to operate and maintain the capital infrastructure of the wastewater system.

(v) A description of any Parity Debt issued during the most recently completed fiscal year.

None

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STATISTICAL SECTION
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Contents Page
Financial Trends 182-191
Revenue Capacity 192-199
Debt Capacity 200-207
Demographic and Economic Information 209-210
Operating Information 211-215

STATISTICAL SECTION
(Unaudited)
This part of the City of Gilroy's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health.

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

Sources: Unless otherwise noted, the information in these tables is derived from the comprehensive annual financial reports for the relevant year.

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

These tables 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 tables offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place.

These tables 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.
181

7.2.b
Packet Pg. 239 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

2011 2012 2013 2014 2015
Governmental Activities:

Net investment in capital assets 186,497,667$ 180,031,582$ 170,944,637$ 162,950,296$ 167,625,947$ Restricted 16,148,971 19,257,961 19,616,322 24,277,233 22,320,085 Unrestricted 21,373,299 25,031,844 26,414,676 28,892,199 (26,524,001) Total governmental activities net position 224,019,937 224,321,387 216,975,635 216,119,728 163,422,031 Business-type Activities:

Net investment in capital assets 96,128,432 93,390,622 91,165,074 88,728,174 90,335,349 Restricted - - - - - Unrestricted 75,964,187 79,652,868 82,012,944 85,736,094 84,832,390 Total business-type activities net position 172,092,619 173,043,490 173,178,018 174,464,268 175,167,739 Primary Government:

Net investment in capital assets 282,626,099 273,422,204 262,109,711 251,678,470 257,961,296 Restricted 16,148,971 19,257,961 19,616,322 24,277,233 22,320,085 Unrestricted 97,337,486 104,684,712 108,427,620 114,628,293 58,308,389 Total primary government net position 396,112,556$ 397,364,877$ 390,153,653$ 390,583,996$ 338,589,770$ Fiscal Year
City of Gilroy
Net Position By Component
Last Ten Fiscal Years
(accrual basis of accounting)
182

7.2.b
Packet Pg. 240 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

2016 2017 2018 2019* 2020
Governmental Activities:

Net investment in capital assets 159,684,128$ 154,863,285$ 159,069,886$ 156,883,868$ 151,904,792$ Restricted 35,564,991 41,636,040 48,731,281 50,690,981 57,137,761 Unrestricted (25,032,197) (25,229,815) (36,193,491) (29,324,573) (42,674,183) Total governmental activities net position 170,216,922 171,269,510 171,607,676 178,250,276 166,368,370 Business-type Activities:

Net investment in capital assets 90,917,108 88,183,287 87,336,604 91,134,932 86,503,324 Restricted - - - (2,952,971) - Unrestricted 88,668,400 93,612,020 98,375,675 91,617,982 97,543,664 Total business-type activities net position 179,585,508 181,795,307 185,712,279 179,799,943 184,046,988 Primary Government:

Net investment in capital assets 250,601,236 243,046,572 246,406,490 248,018,800 238,408,116 Restricted 35,564,991 41,636,040 48,731,281 47,738,010 57,137,761 Unrestricted 63,636,203 68,382,205 62,182,184 62,293,409 54,869,481 Total primary government net position 349,802,430$ 353,064,817$ 357,319,955$ 358,050,219$ 350,415,358$ *Balances have been restated. See Note 15 -Prior Period Adjustment to the basic financial statements.

Fiscal Year
City of Gilroy
Net Position By Component (Continued)
Last Ten Fiscal Years
(accrual basis of accounting)
183

7.2.b
Packet Pg. 241 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

2011 2012 2013 2014 2015
Expenses:

Governmental activities:

General government 3,385,407$ 11,895,682$ 3,732,098$ 3,795,033$ 3,619,582$ Public safety 24,069,357 5,995,050 28,747,964 29,696,344 30,273,444 Community development 14,423,744 14,271,031 15,485,705 14,824,460 15,901,215 Community services 6,355,948 180,845 7,686,862 7,726,938 7,807,765 Interest and other charges 3,666,139 16,654,681 3,226,789 3,744,396 3,406,855 Total governmental activities expenses 51,900,595 48,997,289 58,879,418 59,787,171 61,008,861 Business-type activities
Sewer 9,599,950 11,575,152 10,206,770 9,929,622 9,806,990 Water 6,508,446 11,428,662 8,081,041 8,642,660 8,329,710 Total business-type activities expenses 16,108,396 23,003,814 18,287,811 18,572,282 18,136,700 Total primary government expenses 68,008,991$ 72,001,103$ 77,167,229$ 78,359,453$ 79,145,561$ Program revenues:

Governmental activities:

Charges for services:

General government 1,008,468$ 7,623$ 1,119,217$ 1,415,106$ 2,096,137$ Public safety 926,399 1,055,373 1,004,530 897,059 1,030,410 Community development 2,959,139 767,444 3,866,305 5,434,764 7,385,391 Community services 603,419 66,788 757,445 810,503 886,988 Operating grants and contributions 4,633,908 8,711,464 14,091,083 15,057,119 13,109,933 Capital grants and contributions 7,083,530 - 3,207,487 3,157,642 8,999,636 Total governmental activities program revenues 17,214,863 10,608,692 24,046,067 26,772,193 33,508,495 Business-type activities:

Charges for services:

Sewer 8,012,406 7,828,759 8,441,024 10,359,334 - Water 7,219,424 4,556,861 8,179,888 8,640,784 - Capital grants and contributions - 95,360 1,410,773 179,707 - Total business-type activities program revenues 15,231,830 12,480,980 18,031,685 19,179,825 - Total primary government program revenues 32,446,693$ 23,089,672$ 42,077,752$ 45,952,018$ 33,508,495$ Net revenue (expense):

Governmental activities (34,685,732)$ (38,388,597)$ (34,833,351)$ (33,014,978)$ (27,500,366)$ Business-type activities (876,566) (10,522,834) (256,126) 607,543 (18,136,700) Total primary government net expense (35,562,298)$ (48,911,431)$ (35,089,477)$ (32,407,435)$ (45,637,066)$ City of Gilroy
Fiscal Year
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
184

7.2.b
Packet Pg. 242 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

2016 2017 2018 2019 2020
Expenses:

Governmental activities:

General government 3,900,226$ 6,437,408$ 7,315,065$ 7,696,445$ 6,131,791$ Public safety 31,020,245 33,393,829 35,591,790 37,837,438 40,088,865 Community development 21,413,283 19,167,193 19,211,323 18,348,409 8,556,959 Public works 8,217,318 8,978,597 9,654,957 9,526,627 23,525,423 Interest and other charges 3,327,992 3,256,733 3,147,606 3,226,849 2,431,588 Total governmental activities expenses 67,879,064 71,233,760 74,920,741 76,635,768 80,734,626 Business-type activities
Sewer 12,298,662 12,060,236 11,538,388 14,044,716 14,668,434 Water 8,370,320 9,197,426 9,937,768 11,777,220 12,603,780 Total business-type activities expenses 20,668,982 21,257,662 21,476,156 25,821,936 27,272,214 Total primary government expenses 88,548,046$ 92,491,422$ 96,396,897$ 102,457,704$ 108,006,840$ Program revenues:

Governmental activities:

Charges for services:

General government 1,651,713$ 3,087,335$ 3,280,977$ 3,726,486$ 3,550,758$ Public safety 1,146,593 1,439,418 959,277 1,234,017 1,188,951 Community development 6,145,791 5,207,571 6,430,321 6,624,477 3,909,360 Public works 978,780 986,582 977,834 1,009,235 715,299 Operating grants and contributions 22,838,535 15,860,767 19,389,757 13,146,274 14,247,635 Capital grants and contributions 3,820,892 5,438,560 10,319,300 2,649,021 1,931,458 Total governmental activities program revenues 36,582,304 32,020,233 41,357,466 28,389,510 25,543,461 Business-type activities:

Charges for services:

Sewer 11,984,798 12,833,030 12,961,285 12,904,657 12,872,189 Water 7,330,300 9,156,082 11,343,036 12,294,119 14,590,973 Capital grants and contributions 5,086,464 1,172,844 2,330,335 4,160,510 2,439,117 Total business-type activities program revenues 24,401,562 23,161,956 26,634,656 29,359,286 29,902,279 Total primary government program revenues 60,983,866$ 55,182,189$ 67,992,122$ 57,748,796$ 55,445,740$ Net revenue (expense):

Governmental activities (31,296,760)$ (39,213,527)$ (33,563,275)$ (48,246,258)$ (55,191,165)$ Business-type activities 3,732,580 1,904,294 5,158,500 3,537,350 2,630,065 Total primary government net expense (27,564,180)$ (37,309,233)$ (28,404,775)$ (44,708,908)$ (52,561,100)$ City of Gilroy
Changes in Net Position (Continued)
Last Ten Fiscal Years
Fiscal Year
(accrual basis of accounting)
185

7.2.b
Packet Pg. 243 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

2011 2012 2013 2014 2015
General revenues and other changes in net position:

Governmental Activities:

Taxes:

Property taxes 8,861,163$ 8,907,492$ 9,462,337$ 9,728,458$ 10,862,568$ Sales tax 12,820,172 13,833,561 14,114,277 14,423,130 15,858,910 Transient occupancy taxes 889,124 998,743 1,092,486 1,234,798 1,501,837 Franchise tax 1,293,850 1,355,340 1,326,364 1,408,045 1,463,770 Other taxes 5,048,813 4,781,148 4,694,440 4,759,067 4,905,868 Investment income 1,060,450 922,309 350,105 630,095 619,139 State motor vehicle in lieu 236,142 25,739 26,670 22,072 21,479 Other - 109,798 390,812 632,113 164,321 Transfers (307,165) (647,847) (669,940) (678,707) (689,011) Total governmental activities 29,902,549 30,286,283 30,787,551 32,159,071 34,708,881 Business-type activities:

Investment and rental income 1,013,724 777,528 - - - Other 350 600 - - - Share of joint revenue net income (loss) 3,372,137 (1,059,357) - - - Transfers 307,165 647,847 669,940 678,707 689,011 Total business-type activities 4,693,376 366,618 669,940 678,707 689,011 Total primary government 34,595,925$ 30,652,901$ 31,457,491$ 32,837,778$ 35,397,892$ Changes in net position:

Governmental activities (4,783,183)$ 301,450$ (4,045,800)$ (855,907)$ 7,208,515$ Business-type activities 3,816,810 950,871 413,814 1,286,250 3,800,429 Total primary government (966,373)$ 1,252,321$ (3,631,986)$ 430,343$ 11,008,944$ Net Position (Net Assets), Beginning 397,078,929$ 396,112,556$ 397,364,877$ 390,153,653$ 390,583,996$ Beginning Fund Balance Restatement (1)- - (3,579,238) - (63,003,170) Changes in Net Position (Net Assets) (966,373) 1,252,321 (3,631,986) 430,343 11,008,944 Net Position (Net Assets), Ending 396,112,556$ 397,364,877$ 390,153,653$ 390,583,996$ 338,589,770$ (1)Net Position (Net Assets) of the governmental and business type activities were restated based on an infrastructure study performed by an independent consulting firm. The study was conducted to obtain the values necessary for the City to implement GASB Statement No. 34. Additional restatement of net position (FY15) to record pension liability necessary for the implementation of GASB No. 68 and No. 71.

Fiscal Year
City of Gilroy
Changes in Net Position (Continued)
Last Ten Fiscal Years
(accrual basis of accounting)
186

7.2.b
Packet Pg. 244 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

2016 2017 2018 2019 2020
General revenues and other changes in net position:

Governmental Activities:

Taxes:

Property taxes 11,468,510$ 12,278,553$ 13,161,002$ 14,476,481$ 15,595,639$ Sales tax 17,884,735 17,768,469 18,827,189 20,186,105 17,233,882 Transient occupancy taxes 1,676,691 1,709,332 1,722,355 1,771,882 1,237,812 Franchise tax 1,569,059 1,623,951 1,713,690 1,669,817 1,855,622 Other taxes 5,116,588 5,264,486 5,192,899 5,093,813 5,667,201 Investment income 647,057 900,622 1,190,732 2,567,147 2,039,471 State motor vehicle in lieu 21,385 24,715 29,444 26,695 - Other 392,815 15,188 571,340 166,316 127,479 Transfers (685,189) (305,505) 1,241,528 (640,347) (447,847) Total governmental activities 38,091,651 39,279,811 43,650,179 45,317,909 43,309,259 Business-type activities:

Investment and rental income - - - 1,298,215 1,169,133 Other - - - - - Share of joint revenue net income (loss) - - - - - Transfers 685,189 305,505 (1,241,528) 640,347 447,847 Total business-type activities 685,189 305,505 (1,241,528) 1,938,562 1,616,980 Total primary government 38,776,840$ 39,585,316$ 42,408,651$ 47,256,471$ 44,926,239$ Changes in net position:

Governmental activities 6,794,891$ 66,284$ 10,086,904$ (2,928,349)$ (11,881,906)$ Business-type activities 4,417,769 2,209,799 3,916,972 5,475,912 4,247,045 Total primary government 11,212,660$ 2,276,083$ 14,003,876$ 2,547,563$ (7,634,861)$ Net Position (Net Assets), Beginning 338,589,770$ 348,802,430$ 352,078,513$ 357,319,955$ 358,050,219$ Beginning Fund Balance Restatement (1)(2)- - (8,762,454) (1,536,554) - Changes in Net Position (Net Assets) 11,212,660 2,276,083 14,003,896 2,266,818 (7,634,861) Net Position (Net Assets), Ending 349,802,430$ 351,078,513$ 357,319,955$ 358,050,219$ 350,415,358$ (1)
(2)
Fiscal Year
City of Gilroy
Changes in Net Position (Continued)
Last Ten Fiscal Years
(accrual basis of accounting)
Net Position (Net Assets) of the governmental and business type activities were restated based on an infrastructure study performed by an independent consulting firm. The study was conducted to obtain the values necessary for the City to implement GASB Statement No. 34. Additional restatement of net position (FY15) to record pension liability necessary for the implementation of GASB No. 68 and No. 71.

Nert position (Net Assets) of the governmental and business-type activities have been restated as of June 30, 2019. See Note 15 -Prior Period Adjustment to the basic financial statements.
187

7.2.b
Packet Pg. 245 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

2011 2012 2013 2014 2015
General fund:

Nonspendable 54,011$ 59,670$ 45,003$ 52,592$ 74,622$ Restricted - - - - - Assigned - - - - - Unassigned 25,166,657 25,423,199 23,038,183 22,291,553 21,316,940 Total general fund 25,220,668$ 25,482,869$ 23,083,186$ 22,344,145$ 21,391,562$ All other governmental funds:

Nonspendable 10,848$ 9,766$ 5,454,973$ 9,265$ 9,265$ Restricted 50,980,559 37,880,519 31,995,403 41,474,238 40,117,010 Assigned 743,166 525,601 226,654 576,889 544,284 Unassigned (deficit) (14,551,024) (12,379,723) (12,423,935) (11,866,882) (12,884,818) Total all other governmental funds 37,183,549$ 26,036,163$ 25,253,095$ 30,193,510$ 27,785,741$ (a) (b)
(a) Fiscal year 2010 included the Sewer Fund as part of the Nonmajor Governmental Funds. Beginning with 2010-2011, it was reclassified as an Enterprise Fund.
(b) The City implemented GASB Statement 54 in Fiscal Year 2010-2011 which changed the Fund Balance categories to Restricted, Committed, Assigned or Unassigned.

Fiscal Year
City of Gilroy
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
188

7.2.b
Packet Pg. 246 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

2016 2017 2018 2019 2020
General fund:

Nonspendable 84,923$ 74,217$ 126,965$ 76,000$ 126,915$ Restricted - - - - - Assigned - - - - - Unassigned 22,202,316 24,354,609 25,475,105 27,683,870 14,731,555 Total general fund 22,287,239$ 24,428,826$ 25,602,070$ 27,759,870$ 14,858,470$ All other governmental funds:

Nonspendable 8,670$ 9,470$ 25,570$ 1,000$ 706,754$ Restricted 44,922,496 50,775,875 55,248,281 57,445,219 56,283,167 Assigned 2,827,521 1,588,907 1,448,954 1,483,818 5,368,008 Unassigned (deficit) (7,883,587) (5,761,804) (2,841,776) (4,206,362) (21,954) Total all other governmental funds 39,875,100$ 46,612,448$ 53,881,029$ 54,723,675$ 62,335,975$ Fiscal Year
City of Gilroy
Fund Balances of Governmental Funds (Continued)
Last Ten Fiscal Years
(modified accrual basis of accounting)
189

7.2.b
Packet Pg. 247 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

2011 2012 2013 2014 2015
Revenues:

Taxes 28,913,122$ 30,122,948$ 33,041,266$ 33,902,225$ 37,190,336$ Licenses and permits 1,552,585 2,000,283 2,071,569 2,088,024 2,847,912 Intergovernmental 5,669,019 6,413,621 5,258,266 5,235,608 3,260,688 Charges for services 8,225,000 14,688,796 13,944,828 17,081,714 17,396,590 Fines 339,063 425,265 251,313 226,220 281,580 Special assessments 2,359,399 2,133,413 - - - Investment income (loss) 1,034,140 898,495 385,744 697,612 600,960 Contribution from property owners - - - - - Miscellaneous 728,057 826,591 1,035,480 1,464,470 2,128,737 Total revenues 48,820,385 57,509,412 55,988,466 60,695,873 63,706,803 Expenditures:

General government 2,714,636 3,287,262 3,793,066 4,073,708 4,025,604 Public safety 23,098,221 25,448,868 26,416,606 27,448,432 28,845,371 Community services 4,856,669 5,650,806 6,029,323 6,072,624 6,322,864 Community development 19,816,994 26,470,128 14,393,211 10,031,035 16,393,573 Debt service:

Principal retirement 430,000 2,170,000 1,350,000 25,745,000 2,215,000 Interest 2,804,239 3,287,244 3,319,071 3,525,898 3,557,829 Bond issuance costs - - - 275,515 2,582 Total expenditures 53,720,759 66,314,308 55,301,277 77,172,212 61,362,823 Excess of revenues over
(under) expenditures (4,900,374) (8,804,896) 687,189 (16,476,339) 2,343,980 Other Financing Sources (Uses):

Transfers in 4,522,359 5,496,446 3,746,485 3,574,115 4,318,330 Transfers out (5,037,174) (7,576,735) (7,616,425) (7,154,454) (11,012,940) Issuance of loan/notes - - - - 959,229 Issuance of bonds 70,815,000 - - 23,120,000 - Payment to refunded bond escrow
Payment to bond escrow agent (46,370,000) - - - - Premium on bonds 1,737,198 - - 1,138,052 - Total other financing sources (uses) 25,667,383 (2,080,289) (3,869,940) 20,677,713 (5,735,381) Net Change in fund balances 20,767,009$ (10,885,185)$ (3,182,751)$ 4,201,374$ (3,391,401)$ Debt service as a percentage
of noncapital expenditures 7.11% 11.66% 9.57% 39.37% 10.81% 8,252,168$ 19,502,689$ 6,503,584$ 2,831,468$ 7,967,777$ (a) Long-term debt was transferred to the Successor Agency on February 1, 2012. The Successor Agency is not considered a component unit for the City, thus the debt payments are disclosed in the Fiduciary Funds section of this report.

Fiscal Year
City of Gilroy
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
190

7.2.b
Packet Pg. 248 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

2016 2017 2018 2019 2020
Revenues:

Taxes 40,177,903$ 41,350,739$ 43,512,402$ 51,483,855$ 44,269,937$ Licenses and permits 3,720,755 2,713,733 2,751,137 3,487,338 1,776,651 Intergovernmental 4,291,272 3,748,000 4,047,728 3,913,484 5,473,529 Charges for services 24,960,535 18,973,863 22,820,605 11,501,828 13,951,822 Fines 266,163 293,899 208,305 239,873 282,535 Special assessments - - - - - Investment income (loss) 608,641 762,671 1,084,408 1,247,543 1,884,149 Contribution from property owners - - - - Miscellaneous 2,059,106 1,604,397 1,635,888 1,990,459 1,348,130 Total revenues 76,084,375 69,447,302 76,060,473 73,864,380 68,986,753 Expenditures:

General government 4,532,241 4,906,824 5,103,946 5,760,831 6,361,042 Public safety 29,867,361 30,830,873 31,781,515 34,062,421 36,867,887 Public Works 6,764,060 7,231,274 7,723,166 7,831,193 7,897,645 Community development 14,675,204 11,052,313 14,993,509 15,421,483 19,143,243 Debt service:

Principal retirement 2,305,000 2,459,619 2,558,818 2,654,708 2,986,212 Interest 3,479,710 3,410,441 3,302,252 3,448,556 3,011,707 Bond issuance costs - - - 112,903 - Total expenditures 61,623,576 59,891,344 65,463,206 69,292,095 76,267,736 Excess of revenues over
(under) expenditures 14,460,799 9,555,958 10,597,267 4,572,285 (7,280,983) Other Financing Sources (Uses):

Transfers in 6,803,782 4,233,745 4,503,781 4,236,075 8,937,984 Transfers out (8,521,471) (4,910,768) (6,659,253) (5,876,422) (12,905,997) Issuance of loan/notes 241,926 - - - - Issuance of bonds - - - - 19,087,551 Payment to refunded bond escrow (19,350,000)
Payment to bond escrow agent - - - (8,565,000) - Premium on bonds - - - 8,633,538 - Total other financing sources (uses) (1,475,763) (677,023) (2,155,472) (1,571,809) (4,230,462) Net Change in fund balances 12,985,036$ 8,878,935$ 8,441,795$ 3,000,476$ (11,511,445)$ Debt service as a percentage
of noncapital expenditures 9.52% 9.97% 9.58% 9.53% 8.67% 870,322$ 1,003,386$ 4,284,158$ 5,261,085$ 7,070,839$ (modified accrual basis of accounting)
Fiscal Year
City of Gilroy
Changes in Fund Balances of Governmental Funds (Continued) Last Ten Fiscal Years
191

7.2.b
Packet Pg. 249 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

CATEGORY 2011 2012 2013 2014 2015
Outkes Center 2,552,694$ 2,833,256$ 2,845,863$ 2,867,431$ 2,899,778$ Newman Development 2,070,313 2,131,034 2,201,623 2,230,855 2,332,215 Regency Center 923,509 940,836 949,436 946,073 965,112 Downtown Core 191,131 224,977 271,227 296,354 316,595 General Retail 5,737,647 6,130,103 6,268,149 6,340,713 6,513,700 Auto Dealers 871,311 1,045,717 1,131,680 1,649,758 2,136,541 Service Stations 1,355,605 1,543,421 1,457,239 1,442,888 1,292,736 Transportation 2,226,916 2,589,138 2,588,919 3,092,646 3,429,277 Others 3,234,205 3,284,517 3,344,680 3,697,010 3,695,108 Allocation from State and County 1,621,404 1,829,803 1,912,529 1,292,761 2,220,825 TOTALS:12,820,172$ 13,833,561$ 14,114,277$ 14,423,130$ 15,858,910$ Population 49,316 50,081 51,505 52,413 53,000
Sales Tax Per Capita 240 276 274 275 299
City of Gilroy
Sales Tax by Category
Last Ten Fiscal Years
Fiscal Year
Source: MBIA MuniServices Company
State of California, Department of Finance, Population Estimates for California Cities 0 50
100
150
200
250
300
350
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
0 5,000
10,000
15,000
20,000
25,000
30,000
Others State/County Gen. Retail Transportation Per Capita 192

7.2.b
Packet Pg. 250 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

CATEGORY 2016 2017 2018 2019 2020
Outlet Center 2,747,030$ 2,669,216$ 2,571,713$ 2,464,617$ 1,739,806$ Newman Development 2,426,698 2,500,961 2,529,804 2,743,665 2,643,207 Regency Center 999,738 968,005 987,417 1,004,376 896,599 Downtown Core 356,687 398,344 385,497 505,600 472,427 General Retail 6,530,153 6,536,526 6,474,431 6,718,258 5,752,039 Auto Dealers 2,633,013 3,224,719 3,691,038 3,855,166 3,056,022 Service Stations 1,094,398 1,064,232 1,290,582 1,298,298 1,129,189 Transportation 3,727,411 4,288,951 4,981,620 5,153,464 4,185,211 Others 4,018,337 4,263,541 4,632,323 4,418,367 4,294,454 Allocation from State and County 3,608,834 2,679,451 2,152,877 3,896,016 3,002,179 TOTALS:17,884,735$ 17,768,469$ 18,241,251$ 20,186,105$ 17,233,883$ Population 55,170 55,936 55,615 55,928 57,084
Sales Tax Per Capita 324 318 328 361 302
City of Gilroy
Sales Tax by Category (Continued)
Last Ten Fiscal Years
Fiscal Year
Source: MBIA MuniServices Company
State of California, Department of Finance, Population Estimates for California Cities 193

7.2.b
Packet Pg. 251 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Agency 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

7.250% 6.250% 6.500% 6.500% 6.500% 6.250% 6.000% 6.000% 6.000% 6.000%

0.250% 0.250% 0.250% 0.250% 0.250% 0.250% 0.250% 0.250% 0.250% 0.250%

0.750% 0.750% 0.750% 0.750% 0.750% 1.000% 1.000% 1.000% 1.000% 1.000% - -0.125% 0.125% 0.125% 0.125% 0.125% 0.125% 0.125% 0.125% - - - - - - - - - -

0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500%

0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% - -0.125% 0.125% 0.125% 0.125% 0.125% 0.125% 0.125% 0.125% - - - - - -0.500% 0.500% 0.500% 0.500%
Total 9.250% 8.250% 8.750% 8.750% 8.750% 8.750% 9.000% 9.000% 9.000% 9.000% Source: California Department of Tax and Fee Administration

FISCAL YEAR
City of Gilroy
Sales Tax Rates
Last Ten Fiscal Years
SCC Transit District
SCC Valley Transportation
Authority
SCC VTA Bay Area Rapid
Transit
Silicon Valley
Transportation Solutions
State of California
Santa Clara County (SCC)
Transportation Funds
City of Gilroy
SCC Retail Transactions
and Use Tax
SCC Transactions and Use
Tax

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Total
Gilroy
194

7.2.b
Packet Pg. 252 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Taxpayer Business Type Taxpayer Business Type
Action Gypsum Supply West Bldg.Matls-Whsle Arco AM/PM Mini Marts Service Stations Arco AM/PM Mini Marts Service Stations Banana Republic Apparel Stores Best Buy Stores Furniture/Appliance Best Buy Stores Furniture/Appliance Chevron Service Stations Service Stations Chevron Service Stations Service Stations Coach Stores Miscellaneous Retail Coach Stores Miscellaneous Retail Costco Wholesale Department Stores Costco Wholesale Department Stores Garlic Travel Center Service Stations Garlic Travel Center Service Stations Gilroy Buick GMC Auto Sales - New Gilroy Chevrolet/Cadillac Auto Sales - New Gilroy Chevrolet/Cadillac Auto Sales - New Gilroy Gas & Mini-Mart Service Stations Gilroy Toyota Auto Sales - New Gilroy Honda Auto Sales - New Happy Daze RV's Misc. Vehicle Sales Gilroy Toyota Auto Sales - New Home Depot Bldg.Matls-Retail Home Depot Bldg.Matls-Retail Lowe's Home Centers Bldg.Matls-Retail JN Abbott Distributor Energy Sales McDonald's Restaurants Restaurants Kohl's Department Stores Department Stores Nike Factory Store Apparel Stores Lowe's Home Centers Bldg.Matls-Retail Ross Stores Apparel Stores McDonald's Restaurants Restaurants Rotten Robbie Service Stations Service Stations Nike Factory Store Apparel Stores See Grin's RV Misc. Vehicle Sales Polo Ralph Lauren Apparel Stores Shell Service Stations Service Stations Rotten Robbie Service Stations Service Stations South County Chrysler Jeep Dodge Ram Fiat Auto Sales - New South County Chrysler Jeep Dodge Ram Fiat Auto Sales - New South County Hyundai of Gilroy Auto Sales - New South County Nissan Auto Sales - New Target Stores Department Stores Target Stores Department Stores Union 76 Service Stations Service Stations TV's Gas & Foodmart Service Stations Vans Shoes Apparel Stores Union 76 Service Stations Service Stations Wal Mart Stores Department Stores Wal Mart Stores Department Stores Source: MuniServices, LLC / Avenu Insights & Analytics City of Gilroy
Principal Sales Tax Producers
Last Fiscal Year and Nine Years Ago
2019-20 2010-11
195

7.2.b
Packet Pg. 253 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Fiscal Year
End
Gross Local
Secured Exempt Valuation Net Local Secured Net Utility Net Unsecured Net Taxable
Assessed Value
Gross Taxable
Assessed
Valuation
2011 5,515,703,007$ 47,031,600$ 5,468,671,407$ 80,918,014$ 232,541,079$ 5,782,130,500$ 5,829,162,100$ 2012 5,477,242,040 46,387,600 5,430,854,440 78,686,470 281,804,033 5,791,344,943 5,837,732,543 2013 5,467,139,776 46,209,800 5,420,929,976 72,086,470 266,918,393 5,759,934,839 5,806,144,639 2014 5,913,805,270 46,463,200 5,867,342,070 64,186,470 260,981,844 6,192,510,384 6,238,973,584 2015 6,395,754,046 46,050,200 6,349,703,846 52,530,836 265,879,967 6,668,114,649 6,714,164,849 2016 6,798,621,370 45,871,000 6,752,750,370 47,030,836 268,445,327 7,068,226,533 7,114,097,533 2017 7,385,130,561 46,578,000 7,338,552,561 42,130,836 273,713,487 7,654,396,884 7,700,974,884 2018 7,872,947,886 47,244,400 7,825,703,486 39,330,836 263,667,226 8,128,701,548 8,175,945,948 2019 8,445,397,378 48,090,000 8,397,307,378 38,939,704 256,724,279 8,692,971,361 8,741,061,361 2020 9,001,686,593 47,874,400 8,953,812,193 32,539,704 257,410,089 9,243,761,986 9,291,636,386 Source: County of Santa Clara, Department of Finance
Note: In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With few exceptions, property is only reassessed at the time that it is sold to a new owner. At that point, the new assessed value is reassessed at the purchase price of property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of the taxable property and is subject to the limitations described above.

City of Gilroy
Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years
(modified accrual basis of accounting)
196

7.2.b
Packet Pg. 254 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Special
Fiscal Basic County County Total County City of Other Special Total Tax Year Wide Levy Levy District
Gilroy (1)Districts Rate
2010 1.00000 0.05340 1.05340 0.01160 0.17630 1.24130
2011 1.00000 0.05070 1.05070 0.03750 0.18710 1.27530
2012 1.00000 0.04590 1.04590 0.03650 0.13040 1.21280
2013 1.00000 0.04630 1.04630 0.03650 0.13690 1.21970
2014 1.00000 0.04470 1.04470 0.03400 0.14620 1.22490
2015 1.00000 0.05030 1.05030 0.03400 0.14690 1.23120
2016 1.00000 0.05000 1.05000 0.02900 0.13540 1.21440
2017 1.00000 0.04980 1.04980 0.02720 0.19160 1.26860
2018 1.00000 0.06206 1.06206 0.02600 0.17900 1.26706
2019 1.00000 0.05890 1.05890 0.02500 0.13180 1.21570
2020 1.0000 0.05810 1.05810 0.02000 0.19940 1.27750 Notes:
(1)In 2005 and 2006 the tax rate was only applicable to a certain tax district within Gilroy (2-007) (2) The above tax rates are applied per $100 of assessed valuation In 1978 the voters of the State of California passed Proposition 13 which sets the property tax rate at a 1.00% fixed amount.

This 1.00% is shared by all taxing agencies for which the subject property resides within. The City of Gilroy's share is approximately 10%.

In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of voter approved bonds.

Source: County of Santa Clara, Department of Finance
City of Gilroy
Direct and Overlapping Property Tax Rates
(Per $100 of Taxable Value)
Last Ten Fiscal Years

0.00000 0.20000 0.40000 0.60000 0.80000 1.00000 1.20000 1.40000 2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Series3
Series2
Series1
197

7.2.b
Packet Pg. 255 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Owner Assessed Valuation
% of Total
Assessed
Valuation Assessed Valuation
% of Total
Assessed
Valuation
Simon Property Group 216,750,517$ 2.34% 187,313,681$ 3.29% Olam West Coast Inc 67,575,848 0.73%
Excel Gilroy Llc 63,672,477 0.69%
United Natural Foods West Inc 59,227,472 0.64% Mabury Vineyards Llc Et Al 55,665,651 0.60% Pacheco Pass Retail Xii Llc 43,660,386 0.47% Wal Mart Real Est Bus Trt 33,720,630 0.36% 30,064,245 0.53% Performance Food Group Inc 31,681,994 0.34% 7610 Isabella Way Llc 30,930,799 0.33%
E P & G South Valley Plaza Llc 27,540,000 0.30% Calatlantic Group Inc 26,977,077 0.29%
Calpine Gilroy Cogen L P 26,392,634 0.29%
Central Valley Coalition 25,173,640 0.27%
Monterey Gourmet Foods 24,127,423 0.26%
Costco Wholesale Corp A Ws Cor 23,013,776 0.25% 20,425,360 0.36% Tri Pointe Homes Inc 21,978,500 0.24%
Redwoods Wheeler L P 19,952,347 0.22%
Sterigenics U S Llc 17,713,699 0.19%
Target Corporation 17,660,892 0.19% 15,262,381 0.27% First Street Gilroy I Llc 17,646,000 0.19% Mission Park Gilroy Llc 16,678,530 0.18%
Hd Development Of Maryland,Inc 16,569,289 0.18% 14,319,026 0.25% Lee James Trustee 16,320,000 0.18%
Gilroy Village Shopping Center 15,887,249 0.17% 12,211,766 0.21% Trimark-Gilroy Hospitality Llc 15,850,593 0.17% Lakha Properties Gilroy Llc 79,933,495 1.40% Conagra Inc 67,175,415 1.18%
Inland Western Gilroy I Llc 64,889,748 1.14% Shapell Industries Inc 47,709,322 0.84%
Health Care Reit Inc 34,855,601 0.61%
Mccarthy Gilroy Llc 26,614,465 0.47%
South Valley Apts Llc 23,428,128 0.41%
Land Department 20,878,710 0.37%
Cp6Sv Llc 20,698,134 0.36%
Chinatown Llc 19,603,754 0.34%
Gilroy Country Oaks Ests Llc 18,141,704 0.32% Kelly-Kehriotis Partners Llc 15,658,065 0.27% Lowes Hiw Inc A Ws Corp 15,343,101 0.27%
Adelaide Pines Llc 14,765,324 0.26%
Tin Inc. 14,076,051 0.25%
Avery Cypress Pointe Lp 12,561,601 0.22%
Town Place Llc 12,414,777 0.22%
Garlic Farm Annex Llc 12,243,323 0.21%
Country Estates Venture 11,416,793 0.20%
Total Top 25 Taxpayers 932,367,423$ 10.09% 812,003,970$ 14.24% Gross Local Secured Valuation 9,243,761,986$ 100.00% 5,701,212,486$ 100.00% Note:

Source: Santa Clara County Assessor data, MuniServices, LLC / an Avenu Insights & Analytics Company GASB Statement 44 requires the presentation of information about the principal revenue payers for the current year 2020 2011
City of Gilroy
Principal Property Taxpayers
Current Year and Nine Years Ago
198

7.2.b
Packet Pg. 256 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

COLLECTED WITHIN THE

FISCAL YEAR OF LEVY TOTAL COLLECTIONS TO DATE
Fiscal Taxes Levied for Percent of Percent of
Year the Fiscal Year Amount Levy Amount Levy
2011 5,656,421$ 5,591,508$ 98.85% 5,591,508$ 98.85% 2012 5,664,737 5,609,406 99.02% 5,609,406 99.02% 2013 5,634,085 5,622,101 99.79% 5,622,101 99.79% 2014 6,054,088 6,029,696 99.60% 6,029,696 99.60% 2015 6,515,197 6,547,657 100.50% 6,547,657 100.50% 2016 6,903,278 6,963,327 100.87% 6,963,327 100.87% 2017 7,472,764 7,487,528 100.20% 7,487,528 100.20% 2018 7,941,242 7,941,242 100.00% 7,941,242 100.00% 2019 8,521,868 8,521,868 100.00% 8,521,868 100.00% 2020 9,060,136 9,060,136 100.00% 9,060,136 100.00% Note: The amounts presented include City secured and supplemented property taxes.

The City of Gilroy is on Santa Clara County's teeter program. Therefore, secured revenue is based on net levy, rather than collection.

Source: Finance Department, County of Santa Clara
City of Gilroy
Property Tax Levies, Tax Collections, and Delinquency
Last Ten Fiscal Years
199

7.2.b
Packet Pg. 257 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

General Tax Lease Special
Fiscal Revenue Allocation Notes & Revenue Assessment Revenue Year Bonds (4)Bonds Loans Bonds (4)Bonds Bonds
2010 10,724,640$ -$ 1,500,000$ 46,370,000$ 1,130,000$ -$ 2011 34,529,124 - 24,340,000 25,410,269 870,000 - 2012 33,860,997 - 24,340,000 24,438,409 - - 2013 33,162,870 - 24,340,000 23,710,455 - - 2014 32,434,743 - - 47,182,360 - - 2015 31,681,616 - 959,229 45,587,503 - - 2016 30,893,489 - 1,201,155 43,937,647 - - 2017 30,080,362 - 1,126,536 42,232,790 - - 2018 29,247,235 - 1,082,253 40,462,933 - - 2019 28,305,209 - 948,011 38,623,072 - - 2020 26,630,459 - 857,428 36,713,219 - - Note: Details regarding the outstanding debt can be found in the notes to the basic financial statements.

Source:
(1)Finance Department, City of Gilroy
(2)Finance Department, County of Santa Clara
(3)In 2010, the City issued revenue refunding bonds to refinance an existing installment payment obligation. (4)Presented net of related premiums, discounts, and adjustments. (5)GO Bonds Series 2009 refinanced on June 1, 2019 to Series 2019 A. (6)GO Bonds Series 2010 refinanced on November 5, 2019 to Series 2019 B.

City of Gilroy
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Governmental Activities
200

7.2.b
Packet Pg. 258 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Wastewater Total % of
Fiscal Revenue Primary Property Net Debt
Year Bonds (3) (4)Government (1)Assessed Value (2)per Capita 2010 26,168,102$ 85,892,742$ 1.39% 1,758 2011 25,935,334 111,084,727 1.92% 2,253 2012 24,237,585 106,876,991 1.85% 2,134 2013 22,384,827 103,598,152 1.80% 2,011 2014 20,477,068 100,094,171 1.62% 1,910 2015 18,519,310 96,747,658 1.45% 1,825 2016 16,491,551 92,523,842 1.31% 1,677 2017 14,393,793 87,833,481 1.15% 1,570 2018 12,206,034 82,998,455 1.02% 1,484 2019 9,928,276 77,804,568 0.90% 1,391 2020 7,545,517 71,746,623 0.78% 1,257 Note: Details regarding the outstanding debt can be found in the notes to the basic financial statements.

Source:
(1)Finance Department, City of Gilroy
(2)Finance Department, County of Santa Clara
(3) In 2010, the City issued revenue refunding bonds to refinance an existing installment payment obligation. (4) Presented net of related premiums, discounts, and adjustments. (5) GO Bonds Series 2009 refinanced on June 1, 2019 to Series 2019 A. (6) GO Bonds Series 2010 refinanced on November 5, 2019 to Series 2019 B.

City of Gilroy
Ratios of Outstanding Debt by Type (Continued)
Last Ten Fiscal Years
Business-Type
Activities
201

7.2.b
Packet Pg. 259 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Ratio of
General Tax Net General Bonded General
Fiscal Obligation Allocation Assessed Debt to Net Bonded Debt Year Bonds (4)Bonds Total (1)Value (2)Population (3)Assessed Value Per Capita 2010 10,724,640$ -$ 10,724,640$ 6,160,626,025$ 48,853 0.174% 220 2011 34,529,124 - 34,529,124 5,782,130,500 49,316 0.597% 700 2012 33,860,997 - 33,860,997 5,791,344,943 50,081 0.585% 676 2013 33,162,870 - 33,162,870 5,759,934,839 51,505 0.576% 644 2014 32,434,743 - 32,434,743 6,192,510,384 52,413 0.524% 619 2015 31,681,616 - 31,681,616 6,668,114,649 53,000 0.475% 598 2016 30,893,489 - 30,893,489 7,068,226,533 55,170 0.437% 560 2017 30,080,362 - 30,080,362 7,654,396,884 55,936 0.393% 538 2018 29,247,235 - 29,247,235 8,128,701,548 55,615 0.360% 526 2019 28,305,209 - 28,305,209 8,692,971,361 55,928 0.326% 506 2020 26,630,459 - 26,630,459 9,243,761,986 57,084 0.288% 467 Source: (1) State of California, Finance Department.
(2) This is the amount restricted for the COP debt service principal payments.

City of Gilroy
Ratio of General Bonded Debt Outstanding
Last Ten Fiscal Years

OUTSTANDING GENERAL BONDED DEBT
48 49
50 51
52 53
55 56 56 56
57 0.000%

0.100%

0.200%

0.300%

0.400%

0.500%

0.600%

0.700%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
42 44
46 48
50 52
54 56
58 202

7.2.b
Packet Pg. 260 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

2019-20 City Gross Taxable Assessed Valuation: 9,291,636,386$ Total Debt City’s Share of
OVERLAPPING TAX AND ASSESSMENT DEBT:6/30/2020 Debt 6/30/20 Santa Clara County 881,455,000$ 1.802% 15,883,819$ Gavilan Joint Community College District 124,070,000 26.109% 32,393,436 Gilroy Unified School District 284,057,495 81.923% 232,708,422 City of Gilroy 27,487,888 100.000%27,487,888 City of Gilroy Community Facilities District No. 2000-1 7,212,008 100.000% 7,212,008 Santa Clara Valley Water District Benefit Assessment District 65,495,000 1.802% 1,180,220 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 316,865,793$
DIRECT AND OVERLAPPING GENERAL FUND DEBT:

Santa Clara County General Fund Obligations 966,725,100$ 1.802% 17,420,386$ Santa Clara County Pension Obligation Bonds 346,996,639 1.802% 6,252,879 Santa Clara County Board of Education Certificates of Participation 3,480,000 1.802% 62,710 Gavilan Joint Community College District Certificates of Participation 6,925,000 26.109% 1,808,048 Gilroy Unified School District Certificates of Participation 24,245,000 81.923% 19,862,231 City of Gilroy General Fund Obligations 36,713,218 100.000%36,713,218 Santa Clara County Vector Control Certificates of Participation 2,010,000 1.802% 36,220 Total Gross Direct And Overlapping General Fund Debt 82,155,692$ Less: Santa Clara County Support Obligations 579,007
TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT 81,576,685$ TOTAL DIRECT DEBT 64,201,106
TOTAL GROSS OVERLAPPING DEBT 334,820,379
TOTAL OVERLAPPING DEBT 334,241,372
COMBINED TOTAL DEBT 398,442,478$ (2)
(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, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Ratios to 2019-20 Assessed Valuation :

Direct Debt ($27,087,578)0.29%
Total Direct and Overlapping Tax and Assessment Debt 3.41% Total Direct Debt ($62,797,578) 0.68%
Gross Combined Total Debt 4.28%
Net Combined Total Debt 4.27%
AB: ($500)
Source: County of Santa Clara, Department of FinanceCalifornia Municipal Statistics % Applicable
(1)
City of Gilroy
Schedule of Direct and Overlapping Bonded Debt
June 30, 2020
203

7.2.b
Packet Pg. 261 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

2011 2012 2013 2014 2015
Assessed valuation 5,829,162,100$ 5,837,732,543$ 5,806,144,639$ 6,238,973,584$ 6,714,164,849$ Debt Limit Rate (1)15% 15% 15% 15% 15%
Debt limit 874,374,315 875,659,881 870,921,696 935,846,038 1,007,124,727 Total net debt applicable to limit:

General obligation bonds 33,830,000 33,190,000 32,520,000 31,820,000 31,095,000 Legal debt margin 840,544,315$ 842,469,881$ 838,401,696$ 904,026,038$ 976,029,727$ Total debt applicable to the limit
as a percentage of debt limit 4.0% 3.9% 3.9% 3.5% 3.2%
Continued
(1) Section 1108 of the City of Gilroy Charter limits the general obligation bonds of the City to 15% of total assessed value of real and personal property within the City.

Source: County of Santa Clara, Department of Finance
City of Gilroy
Legal Debt Margin Information
Last Ten Fiscal Years
Fiscal Year
204

7.2.b
Packet Pg. 262 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

2016 2017 2018 2019 2020
Assessed valuation 7,114,097,533$ 7,700,974,884$ 8,175,945,948$ 8,741,061,361$ 9,291,636,386$ Debt Limit Rate (1)15% 15% 15% 15% 15%
Debt limit 1,067,114,630 1,155,146,233 1,226,391,892 1,311,159,204 1,393,745,458 Total net debt applicable to limit:

General obligation bonds 30,335,000 29,550,000 28,745,000 27,983,538 26,630,459 Legal debt margin 1,036,779,630$ 1,125,596,233$ 1,197,646,892$ 1,283,175,666$ 1,367,114,999$ Total debt applicable to the limit
as a percentage of debt limit 2.9% 2.6% 2.4% 2.2% 1.9%
End
(1) Section 1108 of the City of Gilroy Charter limits the general obligation bonds of the City to 15% of total assessed value of real and personal property within the City.

Source: County of Santa Clara, Department of Finance
City of Gilroy
Legal Debt Margin Information (Continued)
Last Ten Fiscal Years
Fiscal Year
205

7.2.b
Packet Pg. 263 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

2011 2012 2013 2014 2015
Gross revenues:

Charges for services 8,012,406$ 8,170,711$ 8,441,024$ 9,168,356$ 10,336,111$ Investment income (loss) 646,240 451,737 283,816 370,199 257,938 Rate Stabilization Fund Balance - - 750,000 - - Transfer from Sewer Impact Fund 287,600 674,534 704,007 705,356 700,544 Total gross revenues 8,946,246 9,296,982 10,178,847 10,243,911 11,294,593 Operating expenses:

Operations 4,618,320 5,259,612 5,893,404 5,612,274 6,281,516 Billing 467,355 551,109 533,611 559,262 588,131 Administration 182,670 237,750 279,787 375,945 377,770 Claims and judgements - - - - - Total operating expenses 5,268,345 6,048,471 6,706,802 6,547,481 7,247,417 Net Revenues 3,677,901 3,248,511 3,472,045 3,696,430 4,047,176 Series 1999 installment
payments / Refunding Series 2010 payments 886,181$ 2,462,276$ 2,571,000$ 2,576,576$ 256,950$ Gross revenue debt service coverage 1009.53% 377.58% 395.91% 397.58% 440.00% Net revenue debt service coverage 415.03% 131.93% 135.05% 143.46% 157.66% Fund available
Sewer Development Capital Project Fund 8,519,976$ 10,391,910$ 11,416,503$ 12,304,205$ 10,362,866$ Sewer Fund cash and cash equivalent 30,519,114 29,427,892 29,267,803 27,625,188 26,336,933 Rate stabilization fund - - 750,000 750,000 750,000 Total funds available 39,039,090$ 39,819,802$ 41,434,306$ 40,679,393$ 37,449,799$ Days funds on hand 2,114 1,776 1,593 1,540 1,326 Fiscal Year
City of Gilroy
Revenue Bond Coverage - Wastewater System
Last Ten Fiscal Years
206

7.2.b
Packet Pg. 264 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

2016 2017 2018 2019 2020
Gross revenues:

Charges for services 11,773,938$ 12,644,730$ 12,720,141$ 12,904,657$ 12,872,189$ Investment income (loss) 210,826 188,300 241,144 593,929 561,664 Rate Stabilization Fund Balance - - - - - Transfer from Sewer Impact Fund 700,111 696,546 697,198 694,146 693,577 Total gross revenues 12,684,875 13,529,576 13,658,483 14,192,732 14,127,430 Operating expenses:

Operations 7,296,107 7,454,895 7,466,650 8,339,489 9,462,155 Billing 612,551 594,654 618,400 668,982 730,892 Administration 500,398 472,465 558,846 706,101 667,733 Claims and judgements - - - - - Total operating expenses 8,409,056 8,522,014 8,643,896 9,714,572 10,860,780 Net Revenues 4,275,819 5,007,562 5,014,587 4,478,160 3,266,650 Series 1999 installment
payments / Refunding Series 2010 payments 2,566,550$ 2,558,687$ 2,562,738$ 2,557,625$ 2,557,750$ Gross revenue debt service coverage 494.24% 528.77% 532.96% 554.92% 552.34% Net revenue debt service coverage 166.60% 195.71% 195.67% 175.09% 127.72% Fund available
Sewer Development Capital Project Fund 11,481,078$ 12,964,741$ 14,534,002$ 13,533,945$ 13,376,865$ Sewer Fund cash and cash equivalent 18,537,029 16,777,330 17,391,216 17,687,792 18,610,720 Rate stabilization fund 750,000 750,000 750,000 750,000 750,000 Total funds available 30,768,107$ 30,492,071$ 32,675,218$ 31,971,737$ 32,737,585$ Days funds on hand 805 719 734 665 625 Fiscal Year
City of Gilroy
Revenue Bond Coverage - Wastewater System (Continued)
Last Ten Fiscal Years
207

7.2.b
Packet Pg. 265 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

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208

7.2.b
Packet Pg. 266 Attachment: FY20 ACFR Final (3699 : Acceptance of FY21 Federal Single Audit)

Net Taxable Per Capita Average
Fiscal Assessed Taxable Property Unemployment
Year Population (1)Values (2)Values Rate (3)
2011 49,316 5,782,130,500$ 117,247$ 14.6% 2012 50,081 5,791,344,943 115,640 12.7% 2013 51,505 5,759,934,839 111,833 10.4% 2014 52,413 6,192,510,384 118,148 8.6%

2015 53,000 6,668,114,649 125,813 6.9% 2016 55,170 7,068,226,533 128,117 5.7%

2017 55,936 7,654,396,884 136,842 4.9%

2018 55,615 8,128,701,548 146,160 4.9%

2019 55,928 8,692,971,361 155,431 2.5% 2020 57,084 9,243,761,986 161,933 13.90% Note: Data for personal income is not readily available; the City used taxable assessed values to calculate per capita taxable property values.

Sources:
(1) State of California, Department of Finance, Population Estimates for California Cities (2) County of Santa Clara, Finance Agency (3) State of California, Employment and Development Department, Labor Market Information Division City of Gilroy
Demographic and Economic Statistics
Last Ten Fiscal Years
209

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2020 2015
Percent of Percent of
Number of Total Number of Total
Company or Organization Employees Rank Employment Employees Rank Employment Gilroy Unified School District* 1,045 1 3.47%
Christopher Ranch LLC 780 2 2.59% 600 1 3.27%
Olam International (Formerly ConAgra-Gilroy Foods) 500 3 1.66% 440 4 2.09% Saint Louise Regional Hospital 478 4 1.59% 500 2 2.56%
Costco Wholesale 316 5 1.05% 253 7 0.87%
Gavilan College 293 6 0.97% 213 10 0.72%
Wal-Mart 286 7 0.95% 395 5 1.64%
City of Gilroy 284 8 0.94%
Community Solutions 270 9 0.90% 219 9 0.78%
Rebekah Children's Services 243 10 0.81% 233 8 0.80%
Gilroy Gardens Theme Park (formerly Bonfante) 464 3 2.50% Monterey Gourmet Foods 270 6 0.88%
Total Top 10 Employers 4,495 14.93% 3,587 16.11%
Total City Employment(1)30,100 N/A
Source: MuniServices, LLC / Avenu Insights & Analytics Source: 2014-15 previously published CAFR. Nine years prior data is unavailable.

Results based on direct correspondence with city’s local businesses. (1) Total City Labor Force provided by EDD Labor Force Data. * Includes FTE & PTE.

City of Gilroy
Principal Employers
Current Year and Five Years Ago
210

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Department 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Administration 5 5 6 5 4 5 5 6 6 7 City Council and Mayor 7 7 7 7 7 7 7 7 7 7 Community Development 17 18 18 20 21 21 18 18 21 23 Finance 13 14 13 13 13 13 11 13 14 14 Fire 43 39 41 39 40 39 35 36 37 37 Fleet and Facilities 9 10 10 10 10 10 10 10 10 10 Human Resources 3 3 3 4 4 4 4 4 4 5 Information Technology 3 2 4 4 2 2 3 3 4 3 Police 87 87 87 88 93 94 87 92 94 96 Public Works 34 34 34 36 38 43 40 42 54 57 Recreation 9 11 11 11 11 12 10 11 11 11 Total 230 230 234 237 243 250 230 242 262 270 (a) Beginning in fiscal year 2013-2014, the amount represents the number of filled positions by departments. Prior to fiscal year 2013-14, the amounts noted represent budgeted positions.

Fiscal Year
City of Gilroy
Full-Time Equivalent City Government Employees
By Function / Program
Last Ten Fiscal Years
211

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Function 2011 2012 2013 2014 2015
General Government
Number of Business Licenses Issued 2,967 2,958 2,855 2,615 3,034 Total Volunteer Service Hours 29,668 31,905 29,566 35,439 32,598 Total City-Wide Training Hours Provided 1,538 3,513 1,300 1,245 1,957 Total Vehicle Work Orders Generated 1,631 3,118 2,919 2,739 3,146 Total Facilities Work Orders Generated 1,576 1,660 1,658 1,613 1,542 Public Safety
Police
Number of 911 Calls Received 21,206 22,328 24,074 27,753 28,498 ** Number of Police Calls for Service 59,177 59,361 58,124 58,112 62,200 Number of Investigations Assigned to Detectives 816 781 769 727 821 Number of Case Reports Processed 10,780 10,708 11,956 11,926 13,566 Fire
Total Calls for Service 3,746 4,014 4,322 4,557 5,131 Total Fire Calls 179 172 178 182 179 Total Emergency Medical Aid Calls 2,340 2,410 2,566 2,802 3,341 Community Development
Number of Building Inspections Completed 9,378 14,055 13,938 14,101 21,592 Number of Building Permits Processed 1,212 1,160 1,158 1,706 2,042 Number of Fire Code Permits Issued 525 587 577 567 819 Public Works
10,000 430,000 660,000 930,000 90,000 Linear Feet of Preventive Cleaning 600,000 540,000 640,000 600,000 716,900 Million Gallons of Wastewater Treated per Day 6.76 6.39 6.27 6.05 5.99 Million Gallons of Municipal Water Produced per Day 7.31 7.71 8.32 7.87 6.79 Million Gallons of Wastewater Flow per Day (COG) 3.91 0.37 3.58 3.45 3.50 Number of Utility Billing Customers 12,958 13,210 13,540 13,716 13,865 Recreation
Number of Registrations Processed 4,166 5,075 7,405 5,500 6,378 Number of Meals Provided to Seniors Annually 18,392 17,744 19,459 19,549 20,031 Source: City of Gilroy, Various City Departments
** Available Data Reflects
Square Feet of Chip Seal/Slurry Seal/Crack Seal Completed City of Gilroy
Operating Indicators By Function / Program
Last Ten Fiscal Years
Fiscal Year
212

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Function 2016 2017 2018 2019 2020
General Government
Number of Business Licenses Issued 2,685 3,166 3,800 3,965 3,160 Total Volunteer Service Hours 34,723 33,855 31,505 28,460 18,465 Total City-Wide Training Hours Provided 2,356 3,112 3,200 2,688 2,892 Total Vehicle Work Orders Generated 2,629 2,478 1,428 1,327 1,514 Total Facilities Work Orders Generated 1,445 1,317 1,428 1,411 1,488 Public Safety
Police
Number of 911 Calls Received 21,044 **23,744 23,484 22,235 23,578 Number of Police Calls for Service 62,071 63,887 63,073 64,134 58,354 Number of Investigations Assigned to Detectives 913 845 815 986 1,023 Number of Case Reports Processed 12,621 12,320 12,478 11,075 11,020 Fire
Total Calls for Service 5,007 5,441 5,374 5,555 6,243 Total Fire Calls 223 223 265 282 336 Total Emergency Medical Aid Calls 3,323 3,735 3,707 3,739 4,065 Community Development
Number of Building Inspections Completed 24,500 23,623 17,991 17,450 14,618 Number of Building Permits Processed 2,197 1,903 1,970 2,050 1,300 Number of Fire Code Permits Issued 839 476 1,060 1,230 885 Public Works
Square Feet of Chip Seal/Slurry Seal/Crack Seal Completed 274,479 712,504 533,397 1,430,477 698,249 Linear Feet of Preventive Cleaning 785,288 707,379 854,304 897,479 849,228 Million Gallons of Wastewater Treated per Day 5.97 7.60 6.16 6.66 6.18 Million Gallons of Municipal Water Produced per Day 5.94 6.46 7.07 6.80 7.20 Million Gallons of Wastewater Flow per Day (COG) 3.59 4.84 3.87 4.13 3.73 Number of Utility Billing Customers 14,300 14,549 14,870 15,133 15,218 Recreation
Number of Registrations Processed 5,856 5,807 4,952 4,737 4,232 Number of Meals Provided to Seniors Annually 21,351 22,566 23,815 25,103 21,979 Source: City of Gilroy, Various City Departments
** Available Data Reflects
Fiscal Year
City of Gilroy
Operating Indicators By Function / Program (Continued)
Last Ten Fiscal Years
213

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2011 2012 2013 2014 2015
General Government
City Buildings 55 55 55 55 55 Public Safety
Police
Police Stations 1 1 1 1 1 Police Vehicles 73 71 72 76 79 Fire
Fire Stations 3 3 3 3 3 Fire Vehicles 20 20 20 20 20 Public Works
Park sites 16 16 16 16 16 Centerline Miles of Streets 151 156 159 118 120 Number of Streetlights 3,784 3,894 3,969 4,150 4,150 Miles of Storm Trunk Mains 30 30 31 31 31 Miles of Sewer Mains 102 108 110 110 111 Treatment Plant Dry Weather Flow Capacity (MGD) 9 9 9 9 9 Water Meters in Municipal Service Area 13,063 13,319 13,651 13,831 14,127 Miles of Water Mains 109 116 120 121 152 Number of Fire Hydrants 1,815 1,948 1,960 2,048 2,150 Source: City of Gilroy, Various City Departments
Function
City of Gilroy
Capital Assets By Function
Last Ten Fiscal Years
Fiscal Year
214

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2016 2017 2018 2019 2020
General Government
City Buildings 55 55 57 57 57 Public Safety
Police
Police Stations 1 1 1 1 1 Police Vehicles 86 87 83 103 109 Fire
Fire Stations 3 3 3 3 3 Fire Vehicles 20 21 20 19 19 Public Works
Park sites 16 16 19 19 20 Centerline Miles of Streets 119 126 151 166 166 Number of Streetlights 4,773 4,794 4,841 4,861 4,885 Miles of Storm Trunk Mains 31 37 39 40 40 Miles of Sewer Mains 111 151 160 161 163 Treatment Plant Dry Weather Flow Capacity (MGD) 9 9 9 9 9 Water Meters in Municipal Service Area 14,669 14,783 14,450 15,133 15,220 Miles of Water Mains 152 204 205 210 205 Number of Fire Hydrants 2,265 2,290 1,948 2,229 2,187 Source: City of Gilroy, Various City Departments
Fiscal Year
Function
City of Gilroy
Capital Assets By Function (Continued)
Last Ten Fiscal Years
215

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216

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City of Gilroy
Gilroy, California
Single Audit
and Independent Auditors’ Reports
For the Year Ended June 30, 2020

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City of Gilroy
Single Audit Report
For the Year Ended June 30, 2020
Table of Contents

Page
Independent Auditors’ Reports:

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards .............................................................. 1

Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance, and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance .............................................................................. 3

Schedule of Expenditures of Federal Awards ............................................................................................................ 7

Notes to the Schedule of Expenditures of Federal Awards ........................................................................................ 8

Schedule of Findings and Questioned Costs .............................................................................................................. 9

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REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND

OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Independent Auditors’ Report
To the Honorable Mayor and Members of City Council
of the City of Gilroy
Gilroy, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Gilroy, California (the “City”), as of and for the year ended June 30, 2020, and the related notes to the basic financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated February 1, 2021, except for the South County Regional Wastewater Authority, a Discretely Presented Component Unit (“DCU”) of the City and Notes 15 – Prior Period Adjustments and 16 - Subsequent Events, which is as of July 25, 2022.

Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (“internal control”) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the basic financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified.

Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify certain deficiencies in internal control, described in the accompanying schedule of findings and questioned costs as item 2020-001 that we consider to be significant deficiencies.

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To the Honorable Mayor and Members of City Council
of the City of Gilroy
Gilroy, California