Gonzales City Council
March 21, 2022

Any writing or documents provided to a majority of the City Council regarding any item on this agenda will be made available for public inspection at City Hall located at 147 Fourth Street, Gonzales, California, during normal business hours.

A G E N D A

JOINT MEETING OF THE

GONZALES CITY COUNCIL AND

GONZALES SUCCESSOR AGENCY
CITY COUNCIL CHAMBERS – 117 FOURTH STREET
GONZALES, CA 93926
MONDAY, MARCH 21, 2022
6:00 P.M.

CALL TO ORDER

PLEDGE OF ALLEGIANCE

1. ROLL CALL- City Council/Successor Agency
Mayor Pro Tem/Vice Chair Scott Funk, Council/Agency Member Liz Silva, Council/Agency Member Lorraine Worthy, Council/Agency Member Paul Miller, Mayor/Chair Jose L. Rios
Youth Commissioners
Sherlyn Flores and Autumn Escobedo
Successor Agency Item

PUBLIC NOTICE
This meeting is being conducted consistent with State of California Executive Order N-29-20 dated March 17, 2020, regarding the COVID-19 pandemic. The public may participate in person or online via zoom at https://us06web.zoom.us/j/89145261252 or call 1 (669) 900-6833 and use Meeting ID: 891 4526 1252.

If you wish to make either a general public comment or to comment on a specific agenda item, please use the Raise Hand function. You will be allowed three minutes for your comments.

If you choose not to attend the City Council meeting but wish to make a comment on a specific agenda item, please submit your comment limited to 250 words or less by 12:00p.m. on Monday, March 21st to the City Clerk at [email protected].

PRESENTATIONS

2. Presentation of Resolution in Commemoration of the City’s 75th Year Anniversary

3. Quilt Presentation by Anna Mae Gazo

BUSINESS FROM THE PUBLIC

4. Business from the Public not on the Agenda; any member of the Public may address the Council/Agency for a period not to exceed three minutes on any subject not on the Agenda. The Council/Agency will listen to all communications but may take no action. *
Any writing or documents provided to a majority of the City Council regarding any item on this agenda will be made available for public inspection at City Hall located at 147 Fourth Street, Gonzales, California, during normal business hours.

CONSENT AGENDA
All matters listed under the Consent Agenda are considered routine by the City Council and will be adopted by one action of the Council unless any Council Member has a question or wishes to make a statement or discuss an item. In that event, the Mayor will remove the item from the Consent Calendar for separate consideration.

5. Approve the Joint City Council and Successor Agency - Regular Meeting - March 7, 2022 Minutes

6. Approve City Accounts Payable Warrants #46492-46564

7. Community Engagement & Strategic Partnerships Activity Report

8. Fire Department Activity Report

9. Police Department Activity Report

10. Public Works/City Engineer Department Activity Report

11. Recreation Department Activity Report

REGULAR AGENDA

12. Fiscal Year 2020-2021 Audited Financial Statements and Management Report a) Staff Report
b) Public Comment
c) Council/Agency Discussion
d) Council/Agency Action
Staff Recommended Action-Accept the City and Successor Agency’s Audited Financial Statements and Management Report for Fiscal Year Ending June 30, 2021

13. Fiscal Year 2021-2022 Mid-Year Financial Report
a) Staff Report
b) Public Comment
c) Council Discussion
d) Council Action
Staff Recommended Action-Accept the FY 2021-2022 Mid-Year Financial Report; Approve the Budget Adjustments as presented in Attachment 1 under the Projection Budget Column Heading; and Approve the Interfund Loan Agreement between the Water Enterprise Fund and the SB1 Gas Tax Fund to pay for the City’s portion of the Gloria/Iverson/Johnson Canyon Road Project

BUSINESS FROM CITY COUNCIL

14. City Council Board/Committee Reports
a. League of California Cities Monterey Bay Division
b. Association of Monterey Bay Area Governments
c. Monterey Salinas Transit
d. City & School Joint Steering Committee
e. Economic Development Committee

15. Oral Communications

BUSINESS FROM CITY MANAGER

16. Oral Communications

RECEPTION TO FOLLOW AT THE END OF THE MEETING IN HONOR OF THE CITY’S 75TH YEAR OF INCORPORATION

ADJOURNMENT
In compliance with the American with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk at (831) 675-5000. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting. (CFR 35.102-

35.104 ADA Title II). This is a public meeting and as such, can be seen live by people present or online and is being recorded; therefore; anything you say or do here is public information. The recordings are available online.
*
*

MINUTES

JOINT MEETING OF THE

GONZALES CITY COUNCIL AND

GONZALES SUCCESSOR AGENCY
MONDAY, MARCH 7, 2022
6:00 P.M.

CALL TO ORDER
The meeting was called to order at 6:00 PM by Mayor Jose L. Rios.

PLEDGE OF ALLEGIANCE
The flag salute was recited by all present.

ROLL CALL
Attendee Name Title Status
Jose L. Rios Mayor/Chair Present
Scott Funk Mayor Pro Tem/Vice Chair Excused
Liz Silva Council/Agency Member Present
Lorraine Worthy Council/Agency Member Present
Paul Miller Council/Agency Member Present

YOUTH COMMISSIONERS
Excused absence: Sherlyn Flores and Autumn Escobedo.

STAFF PRESENT
City Manager René L. Mendez, City Attorney Michael F. Rodriguez (via zoom), Director of Community Engagement and Strategic Partnerships Carmen Gil, Executive Assistant to the City Manager/Deputy City Clerk Mary Villegas, Administrative Assistant I Noemi Gregorio, Administrative Assistant II Anabel Almanza, Police Chief Keith Wise (via zoom), Assistant City Manager Mark Hartunian, and Fire Engineer Kyler Monares.
* Successor Agency Item
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Minutes Acceptance: Minutes of Mar 7, 2022 6:00 PM (CONSENT AGENDA) AGENDA
ITEM
5

*

PUBLIC NOTICE
This meeting is being conducted consistent with State of California Executive Order N-29-20 dated March 17, 2020, regarding the COVID-19 pandemic. The public may participate in person or online via zoom at https://us06web.zoom.us/j/8316407032 or call 1-669-900-6833 and use Meeting ID: 831 6407 0327. If you wish to make either a general public comment or to comment on a specific agenda item, please use the Raise Hand function. You will be allowed three minutes for your comments.

If you choose not to attend the City Council meeting but wish to make a comment on a specific agenda item, please submit your comment limited to 250 words or less by 12:00p.m. on Monday, March 7th to the City Clerk at [email protected].

PRESENTATIONS

2. Certificates of Recognition to the Fairview Middle School Students Maintaining a 4.0 GPA City Manager Mendez read all the students names into the record.

3. Annual Member Agency Update by Central Coast Community Energy Gabe Ruiz, Central Coast Community Energy Accounts Specialist, presented a powerpoint presentation updating the City on how the Community Choice Aggregation works, Central Coast Community Energy member agencies, governance, accomplishments, pathway to 100% clean and renewable by 2030, tracking new energy development, commitment to renewable procurement, rates and COVID-19 response, goals of service offerings, approach to rate design, energy programs, electrification and innovation grant program, meter distributed energy storage projects, vehicle electrification program, number of enrolled customers in Gonzales, field promotion, and customer resources and tools.

BUSINESS FROM THE PUBLIC

4. Business from the Public not on the Agenda; any member of the Public may address the Council for a period not to exceed three minutes on any subject not on the Agenda. The Council will listen to all communications, but may take no action.

Henry Martinez Sr. said felt sorry for the officer that was killed in Salinas, and told the Council they were enablers to allow the officers do whatever they want, and steal guns from a rancher. He elaborated on that story and a fight with his grandson. He also said he was here to tell Council Member Miller that he better watch his back.

Council Member Miller told Mr. Martinez Sr. to not threaten him.

Mr. Martinez Sr. said he wasn't threatening him, he was promising that he will have some stranger stand behind him with service papers and he better watch out for a stranger with service papers from the court and wherever he is at, here or home, they are going to sue him so he better watch out for a stranger. He said his grandson is turning 17 in a couple of months, and he can file papers in court and he will come back and sue him.

CONSENT AGENDA

5. Approve the Joint City Council and Successor Agency - Regular Meeting - February 22, 2022 Minutes
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Minutes Acceptance: Minutes of Mar 7, 2022 6:00 PM (CONSENT AGENDA)

6. Approve City Accounts Payable Warrants #46427-46491

7. Review and Accept the FY 2021-2022 First Two Quarters Interest Earnings Treasurer Report

8. Consider Approval of Resolution No. 2022-10, A Resolution of the City Council of the City of Gonzales Authorizing Execution of a Purchase Agreement with the City of Salinas to acquire a

0.3 acre parcel (APN 223-061-002-000) for the Wastewater Treatment Plant Expansion Project RESULT: APPROVED [UNANIMOUS]
MOVER: Liz Silva, Council Member
SECONDER: Lorraine Worthy, Council Member
AYES: Jose L. Rios, Liz Silva, Lorraine Worthy, Paul Miller EXCUSED: Scott Funk

BUSINESS FROM CITY COUNCIL

9. City Council Board/Committee Reports
a. Transportation Agency for Monterey County
Mayor Rios said there was no report since he left all his notes at home. He'll bring them back at the next meeting.
b. Mayor Selection Committee
Mayor Rios reported on the state budget for homelessness, mental health, and affordable housing.
c. Salinas Valley Recycles
Council Member Silva announced the next meeting March 17th at 6pm in the Council Chambers.
d. Measure K Oversight Committee
Director of Community Engagement & Strategic Partnerships Gil said there will be a meeting on March 15th but depending on the items, they may need to reschedule. e. Salinas Valley Basin Groundwater Sustainability
No report.
f. City's 75th Anniversary Committee
Director of Community Engagement & Strategic Partnerships Gil reported on the Car Show scheduled on April 2nd from 1:30pm - 5:30pm on Fourth Street, and registrations are online at www.teamsideline.com/gonzales. Council Member Silva announced the reception after the next Council meeting.

10. Oral Communications
Director of Community Engagement & Strategic Partnerships Gil reported the Youth Commissioners were not present today due to a meeting with the Soledad Youth Council.

Council Member Silva, on behalf of the American Legion Auxiliary, thanked those who celebrated the life of Roger Baez who passed away a couple of weeks ago, and was the local commander of the Legion Post.

Council Member Miller congratulated Juan Mendoza on his promotion to Captain in the Police Department.

Mayor Rios thanked the local Rotary for always stepping forward to help with the annual basketball tournament and elaborated on the exciting 8th grade game. He asked staff about providing certificates to them for winning. On another note, he said he was dismayed on how the gas was shut off so easily. He felt we should send a letter to PG&E. *
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Minutes Acceptance: Minutes of Mar 7, 2022 6:00 PM (CONSENT AGENDA)

Council Member Silva commended all those PG&E employees from all over Northern California for coming and putting those extra hours connecting everyone back.

City Manager Mendez mentioned that staff has reached out to PG&E and have engaged with our Police and Fire Departments.

Council Member Worthy asked about doing something like robocalls.

City Manager Mendez said Carmen is already researching that such as mass messages on specific issues.

Mayor Rios elaborated on an elderly lady needing gas and contacting someone from PG&E who got there right away. He was impressed with their fast response to Gonzales.

BUSINESS FROM CITY MANAGER

11. Oral Communications
City Manager Mendez reported on a submittal of a list of projects for direct allocation to Senator Caballero's office; a proposal received for a storage facility; and staff working on an electric charging station. He also mentioned that staff will be submitting a letter to the Board of Supervisors regarding the VIDA program tomorrow, for the program that is funding our Community Health Workers, and will provide to the Mayor first for his review.

CLOSED SESSION
Any member of the public may address the Council on a closed session item appearing on the agenda.

Speakers shall have a limited time of three (3) minutes. Please be brief and to the point.

No comments came forward.

12. The City Council will recess to closed session to consider personnel matters pursuant to Government Code Section 54957(B)(1) - City Manager Evaluation.

The Council engaged in the City Manager evaluation process. No other reportable action taken.

ADJOURNMENT
The meeting was adjourned at 7:46 PM.

ATTEST:

Mary Villegas, Deputy City Clerk
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Minutes Acceptance: Minutes of Mar 7, 2022 6:00 PM (CONSENT AGENDA) City Of Gonzales
Check Register Report
Check
Date
Check
Number
Status Amount
BANK:

Vendor
Number Vendor Name Check Description
RABOBANK Page: 1
Time: 11:13 am
Date: 03/04/2022
Void/Stop
Date
Reconcile
Date
RABOBANK Checks
46492 03/04/22 Printed 108 AIRGAS Propane 167.54
46493 03/04/22 Printed 2 ALL - SAFE ALARMS Monthly Monitoring 400.00 46494 03/04/22 Printed 4225 YASER MOSA ALQADHI Water Deposits Refund 129.30 ALVAREZ TECHNOLOGY 5,925.99
GROUP INC.
46495 03/04/22 Printed 2180 Monthly Support
ALVAREZ TECHNOLOGY 5,963.90
GROUP, INC.
46496 03/04/22 Printed 3893 Dell CTO Mobile Precision 7760 Technical Engineer
46497 03/04/22 Printed 137 AMERICAN SUPPLY CO. Janitorial Supplies 463.98 ARMANASCO PUBLIC 14,000.00

RELATIONS,
46498 03/04/22 Printed 3284 Support on Capital Campaign 46499 03/04/22 Printed 341 PATRICK ASKEW Medical Insurance Benefit 361.00 46500 03/04/22 Printed 2830 AT&T Corp Yard Acct # 308309956 144.45 46501 03/04/22 Printed 4117 AT&T Monthly Charges - February 427.68 46502 03/04/22 Printed 86 AT&T Telephone Charges - Jan. 1/19/22 - 1,392.70 2/18/22
46503 03/04/22 Printed 3805 BADGER METER INC. Meter Reading Software 100.10 BANUELOS ENTERPRISES, 56.97
INC.
46504 03/04/22 Printed 1054 Fuel
46505 03/04/22 Printed 4220 RAY-ANTHONY BLANCO Youth Basketball Referee Svcs. 210.00 46506 03/04/22 Printed 3073 C4 CONSULTING Consulting Services - January 4,000.00 46507 03/04/22 Printed 3983 CAL COAST ELECTRIC, INC. Electrical Additions 2,483.87 CALIFORNIA STRATEGIES, 5,000.00
LLC
46508 03/04/22 Printed 3789 General & Strategic Consulting 46509 03/04/22 Printed 4232 CARDINALLI REALTY Gonzales Cares Program Maria de 4,011.61 Nazaret Talancon
46510 03/04/22 Printed 770 CARLOS ALBERTO ESQUIVEL Janitorial Services 1,600.00 46511 03/04/22 Printed 212 CITY OF GONZALES Utilities 2,621.69 46512 03/04/22 Printed 212 CITY OF GONZALES Water Deposits to be Applied 469.57 46513 03/04/22 Printed 3264 COASTAL TRACTOR Utility Vehicle Kawasaki SX Mule 6,008.75 46514 03/04/22 Printed 1482 CSC OF SALINAS Shop Compressor Maint. Parts 102.50 46515 03/04/22 Printed 3095 CSG CONSULTANTS INC. Building & Planning Svcs - Jan 2,909.88 46516 03/04/22 Printed 1821 CSK AUTO, INC. GZ#4 Vehicle Maint./Repair 505.93 46517 03/04/22 Printed 4231 CARMEN CUTLER Gonzales Cares Program Kenneth 15,400.00 Robicheaux
46518 03/04/22 Printed 3028 D & J TIRE SERVICE Flat Repair 289.08 46519 03/04/22 Printed 3678 DUDE SOLUTIONS INC. Annual Subscription & SmartGov Portal 11,882.23 FEHR ENGINEERING 480.00
COMPANY INC.
46520 03/04/22 Printed 3314 Design Services for Generator Replacement
46521 03/04/22 Printed 2599 YSAURO GONZALES Tableclothes 70.50 46522 03/04/22 Printed 4071 GREAT AMERICA FINANCIAL Copier Lease 951.58 46523 03/04/22 Printed 1744 GREEN'S ACCOUNTING Accounting Services - January 13,457.58 46524 03/04/22 Printed 4101 JIANG FAMILY LP Gonzales Cares Program Evelyn Amador 3,420.00 46525 03/04/22 Printed 4101 JIANG FAMILY LP Gonzales Cares Program Irene Padilla 870.00 46526 03/04/22 Printed 4101 JIANG FAMILY LP Gonzales Cares Program Jose 3,420.00 Hernandez/Alatorre
46527 03/04/22 Printed 4101 JIANG FAMILY LP Gonzales Cares Program Juan 3,420.00 Martin/Graciela Santos
46528 03/04/22 Printed 4101 JIANG FAMILY LP Gonzales Cares Program Salvador 3,420.00 Tejeda/Elvia Valdez
46529 03/04/22 Printed 4101 JIANG FAMILY LP Gonzales Cares Program Catalina Padilla 1,684.00 46530 03/04/22 Printed 223 LINCOLN AQUATICS Wave 120 Robotic Pool Cleaner 7,773.00 46531 03/04/22 Printed 3866 LINDA TAQUERIA S.V. Mayors & Managers Mtg. 150.00 MANUEL PEREA TRUCKING, 1,000.00
INC.
46532 03/04/22 Printed 3395 Repair Pump
46533 03/04/22 Printed 72 MISSION UNIFORM SERVICE Uniforms 840.68 46534 03/04/22 Printed 4226 MINERVA MONTES Park Res. Electricity Refund 25.00 46535 03/04/22 Printed 91 P. G. & E. Utilities Acct # 1024308210-3 28,049.73 46536 03/04/22 Printed 91 P. G. & E. Utilities 3,866.95 46537 03/04/22 Printed 91 P. G. & E. Gonzales Cares Program Evelyn Amador 256.43 46538 03/04/22 Printed 4221 ERIK PRADER Uniform Pants 284.99 PUBLIC AGENCY 477.62

RETIREMENT
46539 03/04/22 Printed 3194 Plan Admin Fees - Dec. 2021 AGENDA
ITEM
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Attachment: Warrants #46492-46564 (2374 : Approve City Accounts Payable Warrants #46492-46564) 6 City Of Gonzales
Check Register Report
Check
Date
Check
Number
Status Amount
BANK:

Vendor
Number Vendor Name Check Description
RABOBANK Page: 2
Time: 11:13 am
Date: 03/04/2022
Void/Stop
Date
Reconcile
Date
RABOBANK Checks
46540 03/04/22 Printed 1021 PURCHASE POWER Postage Machine Fees 2.42 46541 03/04/22 Printed 115 QUILL CORP Computer Mouse 766.21 46542 03/04/22 Printed 2893 QUINN COMPANY Fuel Transfer Pump - Returned 28.64 46543 03/04/22 Printed 4227 MARIA REYES Water Deposits Refund 1.13 46544 03/04/22 Printed 4228 ROBERTA D. RUIZ-CAMACHO Dia del Nino Community Grant 5,000.00 SAFEGUARD BUSINESS 186.25

SYSTEMS
46545 03/04/22 Printed 568 SA Laser Checks
46546 03/04/22 Printed 2685 SC FUELS Fuel for Fire Engines 426.17 SCHAAF & WHEELER, 4,320.00

CONSULTING
46547 03/04/22 Printed 3894 FEMA Flood Maps Review
46548 03/04/22 Printed 4229 DANIEL SEVERIANO-TORMES Youth Basketball Referee Svcs. 275.00 46549 03/04/22 Printed 2449 SMITH & ENRIGHT Landscape Maintenance 6,798.10 46550 03/04/22 Printed 3670 T-MOBILE Hot Spot # 2 Acct # 967822590 25,636.81 46551 03/04/22 Printed 27 TRI - CITIES DISPOSAL Trash Services - Feb. 55,005.89 TRI-COUNTY FIRE 344.64

PROTECTION, IN
46552 03/04/22 Printed 142 Maintenance
46553 03/04/22 Printed 3577 U.S. BANK 2/7/22 Carmen Gil Acct # 4866 9145 716.94 5550 8537
46554 03/04/22 Printed 3577 U.S. BANK 2/7/22 Rene Mendez Acct # 4866 9145 1,001.18 5550 8537
46555 03/04/22 Printed 3577 U.S. BANK 2/7/22 City of Gonzales Acct # 4866 9145 1,263.49 5550 8537
46556 03/04/22 Printed 3410 ULINE, INC. Kid Power Supplies Disinfect. Wipes & 161.65 Face Masks
VALLEY ELECTRIC MOTOR 230.35

SERVICE
46557 03/04/22 Printed 132 Grinder Repair
46558 03/04/22 Printed 3471 VERIZON WIRELESS Police Mobile Broadband - Jan 304.08 46559 03/04/22 Printed 4230 JESSE VILLARRUEL Youth Basketball Referee Svcs. 370.00 46560 03/04/22 Printed 4116 VINTAGE APARTMENTS Gonzales Cares Program Vanesa 2,280.00 Polanco
46561 03/04/22 Printed 4116 VINTAGE APARTMENTS Gonzales Cares Program Alfredo Rico 2,650.00 Gonzales
46562 03/04/22 Printed 4116 VINTAGE APARTMENTS Gonzales Cares Program Moises Solis 2,280.00 46563 03/04/22 Printed 99 VOSTI'S, INC. Vehicle Maint. 171.19 WORKWELL MEDICAL 700.00
GROUP
46564 03/04/22 Printed 2683 Employee Physical
Total Checks: 73 Checks Total (excluding void checks): 271,866.92 Total Payments: 73 Bank Total (excluding void checks): 271,866.92 Total Payments: 73 Grand Total (excluding void checks): 271,866.92 Packet Pg. 8
Attachment: Warrants #46492-46564 (2374 : Approve City Accounts Payable Warrants #46492-46564) City of Gonzales

COMMUNITY ENGAGEMENT & STRATEGIC

PARTNERSHIPS

STAFF REPORT
TO: Honorable Mayor Rios and City Council
DATE: March 21, 2022
FROM: Carmen Gil, Community Engagement & Strat. Partnership Dir.

THROUGH: René L. Mendez, City Manager
SUBJECT: Community Engagement and Strategic Partnerships Actitivity Report Gonzales Youth Council

1. The Youth Council continues to meet on a biweekly basis and more recently started meeting in person once again. During their meetings they are breaking up into workgroups to begin taking on the work for the two projects they want to focus on this year which they have determined to be pedestrian safety and mental health.

2. The Youth Council also continues to engage with the folks from Blue Zones and the commissioners plan to attend the Blue Zones school submit being held March 15th.

3. The Gonzales Youth Council are also planning a series of meetings with the Soledad Youth Council to see if they can build synergy between their projects and work on something collectively.

4. The Youth Council has also been meeting Dr. Lovell from CSUMB and her team of research students to begin planning for the follow up around the next phase of the mental health survey.

Gonzales Cares Program

1. Staff continues to stay busy with the rental and utility assistance program. However, we are nearing the end of our funding and expect our rental assistance to be fully expended in the next few months. We will however support the program by referring individuals needing support to another partner organization.

AGENDA
ITEM
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COVID-19 and Community Health Workers (CHWs)

1. The Community Health Care Workers (CHWs) continue to provide testing services at St.

Theodore’s Church on Mondays, Wednesdays, and Fridays starting at 2:00pm. They are also testing at the school Technology portable on Tuesday’s starting at 2:00pm. They are seeing less and less people coming into test, but we will be monitoring the situation once the schools go mask-free.

Community Engagement

1. Staff is working hard on planning for the first round of activities in celebration of the City’s 75th Year Anniversary. Staff is working with an individual to document the local history of the town.

On March 21st we will also be having a small ceremony as part of the City Council meeting and on April 2
nd we will be hosting a car show. The car show will include food vendors, live performers, and a children's zone. The community is excited to participate and there seems to be a lot of anticipation.

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City of Gonzales

FIRE DEPARTMENT

ACTIVITY REPORT
TO: Honorable Mayor Rios and City Council
DATE: March 21, 2022
FROM: Jason Muscio, Fire Chief
THROUGH: René L. Mendez, City Manager
SUBJECT: Fire Department Activity Report

RESPONSES
There were 41 calls for service during the month of February 2022, compared to 46 calls for service during the month of February 2021. Most calls for service are EMS calls, followed by vehicle accidents.

EMS calls related to COVID-19 dropped significantly during the month, and we had no documented exposures to personnel. The Fire Department provided mutual aid to outside agencies twice during the month, both times for structure fires.

STAFFING
Staffing remains at 7 career and 3 active Volunteer Firefighters. We currently do not have any applications from qualified volunteer firefighter candidates.

TRAINING
For the month of February, our Firefighters training was in incident management and water supply operations for commercial fires. We also conducted training in fire prevention and inspection procedures.

EQUIPMENT
Engine 8112 was out of service for 12 days for a broken oil pan and cab locks. Water tender 8141 was out of service for 4 days for repairs to the turbo intake system.

PREVENTION
Annual business and residential rental inspections were conducted as time allowed. Less complex AGENDA
ITEM
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business inspections have been assigned to the on-duty crews so our new staff can become more familiar with the businesses and the business owners in our community. Our local farm labor housing facilities were inspected in February prior to the growing season.

GRANTS
Grant opportunities continue to be investigated and pursed as they become available.

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City of Gonzales

POLICE DEPARTMENT

ACTIVITY REPORT
TO: Honorable Mayor Rios and City Council
DATE: March 21, 2022
FROM: Keith Wise, Chief of Police
THROUGH: René L. Mendez, City Manager
SUBJECT: February Activity Report 2022
Crime and Arrests
The Gonzales Police Department investigated 11 Part I Crimes (Homicide, Robbery, Theft, Burglary, Rape, Assault and Motor Vehicle Theft) during the month of February 2022. During the same time last year, there were 10 Part I Crimes investigated.

During the month of February 2022, Officers made 11 arrests. During the same time last year, there were a total of 7 arrests.

Calls for Service
The Department responded to 412 calls for service in February 2022. There were 47 crime, accident, and information reports taken during the month.

Animal Control
During the month of February 2022, the Department provided the following services:

Animal
Control
Trapped/Stray Dead Injured Bite Cases Returned to
Owner
Transported
to the SPCA
Cats 0 0 0 0 0 0
Dogs 2 0 0 0 2 0
Total 2 0 0 0 2 0
AGENDA
ITEM
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Significant Cases
Although the Police Department responded to 412 calls for service during the month of February 2022, the most significant cases involved 11 Part I crimes. 0-Homicide, 0-Rape, 0-Robbery,5-Assault, 0- Burglary, 6-Larcenies, and 0-Stolen Motor Vehicle Thefts.

Training
Officers worked on ongoing web-based training offered by the Police Officer Standards and Training (P.O.S.T.) online training Portal. The Department continues to conduct in-house training during briefings.

Other
During the month of February, our Department welcomed two new members, Officer Eric Serrano, and Officer Miguel Perez. Both Officers were sworn in by me at the Police Department.

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City of Gonzales

PUBLIC WORKS / CITY ENGINEER DEPARTMENT

ACTIVITY REPORT
TO: Honorable Mayor Rios and City Council
DATE: March 21, 2022
FROM: Patrick Dobbins, Public Works Director/City Engineer THROUGH: René L. Mendez, City Manager
SUBJECT: Public Works Activity Report

BUILDING PROJECTS

1. Community Center Complex Project – Based on the presentation at the 2/22/2022 City Council meeting, Group 4 Architects is finalizing the “Design Criteria” documents for use in the Request for Proposals to the top three shortlisted Design/Build teams. City staff and Swinerton Consulting submitted a grant application for EV vehicle charging stations on 3/11/2022 and will submit a grant application for funding related to the library on 3/18/2022.

2. Emergency Generator Replacements – At the 2/07/2022 City Council meeting, a $175,000 contract with Alltech Services was approved to replace the emergency generators at City Hall, Police Station, and the California Breeze Sewer Lift station. The contract has been executed, a kick-off meeting was held on 3/02/2022 and the three generators have been ordered.

WASTEWATER PROJECTS

1. Industrial Wastewater (IW) System/Reclamation Plant – The Project EIR was approved at the 9/20/2021 City Council Meeting. Dudek is completing the design for the IW Conveyance and Treatment Facility contracts. Staff and the City surveyor are finalizing the temporary and permanent easements needed for the project. Staff is completing the SWRCB State Revolving Fund loan for project financing

WATER PROJECTS

1. Equip Well 7 Project – Water quality samples were taken by County staff on 1/11/2022. Preliminary lab results were received on 1/28/2022 and the final test results were received on 2/18/2022. Final AGENDA
ITEM
10 Packet Pg. 15
steps to operate the well include completing the SCADA controls and a site visit and inspection by the State Drinking Water Division staff.

2. Alpine Court Water/Sewer Service – Grant agreements with the State Water Resource Control Board (SWRCB) to fund the preliminary and final design of extending water and sewer service from Gonzales River Road to Alpine Camp were approved at the 7/06/20 City Council meeting. On 7/22/2021 Schaaf & Wheeler submitted a draft preliminary design report. On 12/14/2021 Schaaf & Wheeler submitted the 60% plans, specifications, and cost estimate for our review. Staff is holding bi-weekly progress meeting with SWRCB staff.

ROADWAY PROJECTS

1. Slurry Seal Contract – MNS Engineers provided draft construction documents for this contract for review by city staff. Staff will bid the contract in March 2022 with the work to occur in June 2022.

2. Gonzales River Road Bridge Rehabilitation (Monterey County) – On 12/03/2021 Staff issued a letter of comments to County staff on the draft Initial Study/Mitigated Neg Dec for County consideration.

Staff requested a meeting with County staff and the Consultant Design Manager to discuss our concerns with the 18-month closure of the bridge while construction takes place

3. Tenth Street –As authorized at the 11/01/2021 City Council meeting, STOP signs were placed on the Tenth Street legs at the intersections of Belden Street and Day Street in mid-December.

DEVELOPMENT PROJECTS

1. Vista Lucia Development (City’s Sphere of Influence - East of US 101) a. City staff reviewed the Admin Draft #1 and Admin Draft #2 of the SEIR and provided comments to the Community Development Director.
b. City staff is holding monthly Zoom meetings with Pembrook Development and their consultants regarding their development project.
c. Psomas developed a capital program of improvements to convey sewage from the SOI to the City WWTP for treatment and provided the draft technical memo in Mid-November for staff’s review. d. Staff and our on-call traffic engineer meet with Caltrans District 5 staff on 6/10/2021 to discuss the process of a Project Study Report/Project Development Support (PSR-PDS). Staff will issue a Request for Proposals to engage a transportation engineer to prepare the PSR-PDS documents. e. On 3/28/2022 Staff will meet with Monterey County PW staff to discuss the applicant’s preliminary offsite roadway design.

2. Puente Del Monte Development (City’s Sphere of Influence - East of US 101) - On 10/30/20 City staff held a coordination meeting with Jackson Family Investments regarding wastewater conveyance and treatment for their proposed development project. City staff has followed up with more information on the wastewater system expansion and coordination with Caltrans on future improvements to the freeway interchanges.

OTHER PROJECTS

1. Skate Park Improvements – Phase two of improvements to the skate park will be funded by the 2018 Parks Bond Act. On 3/03/2022 staff received the executed grant agreement with the State Packet Pg. 16
Department of Parks and Recreation. American Ramp Company will provide a revised scope for the improvements due to an increase in costs over the last year.

2. GIS – City staff continues to work on a GIS mapping system by inputting field data for water, sewer and storm drainage systems. Our water and wastewater consultants are using the GIS to develop capital improvement projects to serve the proposed development projects in the SOI. We hold monthly coordination meetings with a GIS Consultant.

3. FEMA Flood Map Updates – Over the last year, FEMA and their consultants have been remapping seven watersheds in the Gabilan Mountains in the vicinity of South Salinas, Chualar, Gonzales and Soledad to update their Flood Maps. In July 2020 City staff engaged Schaaf & Wheeler to review the mapping and drainage data collected. Preliminary flood insurance maps were released for public review on 10/21/2021. At the 12/06/2021 City Council Meeting, City staff made a follow-up presentation on this project along with a letter to be sent to FEMA with our comments and questions on their mapping effort.

4. City Construction Standards – As approved at the 8/16/2021 City Council meeting, MNS Engineers is preparing new construction standards. MNS submitted draft standards for city staff review on 1/31/2022.

5. Microgrid Project – Staff has been coordinating with Concentric Power staff on various elements of the project design including participating in biweekly coordination meetings. At the 7/19/2021 City Council meeting, a contract for Program Management services was approved with Sage Energy. A kick-off meeting was held on 8/11/2021 and we hold bi-weekly progress meetings with Sage Energy staff.

6. PW Intern – Since mid-August 2021, Briana Medvecki, a second year student at Hartnell College has worked as a part-time intern. She updates the city’s GIS system and helps Public Works staff with some of their efforts.

PUBLIC WORKS OPERATIONS AND MAINTENANCE

WASTEWATER
Staff continues to monitor the WWTP, daily tests and inspections. Staff is continuing to work with Industrial dischargers to ensure pretreatment systems a working correctly.

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One of the grinders in channel B ceased to work. Crews pulled the grinder, had the motor checked for operability and greased the gears and returned to operation. Staff performed monthly maintenance on the headworks.

Staff continues to perform weed control at the wastewater treatment plant.

WATER
Staff continues to change out bad meter registers. Staff has worked on the meter reading programs and streamlined some of the information needed to perform meter reads. Staff repairs leaks and replaces meters as needed. Staff has ben inspecting ADU’s when needed for Public Works items.

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Staff is getting ready for swim season. The pool needs some minor repairs. A few of the lights in the pool need replacing, the fill level transducer needs replacing, and the heater needs to be restarted after the gas shutdown. We are on track to have the pool filled, heated, and balanced by May 1.

STORM WATER
Staff is maintaining stormwater records and inspections needed for the annual stormwater report.

PARKS → CANYON CREEK & MEYER PARKS
Crew is preparing fields for little league and softball season.

The gate at canyon creek slough has been repaired.

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GOVERNMENT BUILDING
Now that we have had time to catch up on work orders, crew has had time to give city buildings much needed cleaning. Council Chambers will, again, be cleaned on a weekly and timely basis.

STREETS
Thanks to youth group from Gonzales High School, we have been getting help picking up trash around city.

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Staff continues to fill potholes on a regular basis.

PLANNING
Public Works Director and City Engineer continue to work on the Capital Improvement Project Plan, the Pavement Management Plan, and the needed upgrades to the Wastewater Treatment Plant, and the Community Center.

TRAINING
Staff has been participating in water webinars to increase their knowledge. Staff will participate in south County Public Works training in April. Briana and Noemi attended the APWA awards ceremony with Tiffany in March. A few staff will participate in Pool School in March.

INTERNSHIP
Briana Medvecki continues to work on GIS and has made several videos for Facebook. Check out a day in the life of Public Works.

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City of Gonzales

PARKS & RECREATIONDEPARTMENT

ACTIVITY REPORT
TO: Honorable Mayor Rios and City Council
DATE: March 21, 2022
FROM: Carmen Gil, Community Engagement & Strat. Partnership Dir.

THROUGH: René L. Mendez, City Manager
SUBJECT: Recreation Department Activity Report
Current Activities

1. Our Kid Power Program continues to run smoothly. In February we had 47 kids registered. For Valentines Day the kids got to enjoy a small celebration.

2. Kid Power staff continues to practice all COVID-19 safety protocols and continues to deep clean the tables and chairs as well as all the materials that the children use to play and learn with.

3. Our youth recreation basketball league continues to be strong. Everyone involved continues to practice all the safety protocols and has been working hard to make the season a success. This season we have a total of 143 participants and 16 teams. 27 volunteers that helped to make our program successful, which consisted of head coaches, assistant coaches, and team parents and 3 referees. The season’s last games are scheduled for the week of Feb. 28th through March 2nd. Certificate and medals will be handed out to the participants during the last games. A select group of players from each team starting from 2nd grade through 8th will be recognized and awards for Best Offensive Player, Best Defensive Player, Most Improved and Sportsmanship Award will be given out.

4. Mini T-Ball registration for ages 2 ½ to 4 is still open. However, we are almost at our max, we are currently at 32 participants out of 40. Four Teams will be established. We have 7 volunteers so far which consist of head coaches, assistant coaches, and team parents.

5. Our South County Girls Softball League registration opened in January. We will be competing against Soledad and King City teams. Unfortunately, not enough interested participants from ages 5- 10 registered before the deadline. We were able to get enough girls for one 14U team. Sports Rec will run a clinic for ages 5-10 for any interested participants to continue to gain interest and build sport knowledge.

AGENDA
ITEM
11 Packet Pg. 22

6. With Measure K funding, the Recreation Department obtained a utility vehicle that will be unitized in assisting with the preparation of the softball fields and will use for any other recreational events.

7. Girls’ softball and Mini T-ball will be officially starting in March. Opening Ceremonies to kick off the season will be held with the Gonzales Girls’ Softball and Gonzales Little League. Open Ceremonies will be on Saturday March 12th at the Brusa Field.

Activities in Planning Phase

1. Staff is also helping to plan the 75th Year Anniversary festivities that are fast approaching. First up will be the car show and food event along Fourth St. on April 2nd starting at 1:30pm, which promises to be fun for the entire family as there will be live performances and a kid’s zone.

2. The team at Kid Power is beginning to plan for spring camp which will be the week of April 18th- 22nd. On one of the days the Fire Department will come out and conduct a show and tell day for the kids. Firemen will showcase their firetruck and talk to the kids about fire safety.

3. Recreation staff is also beginning to prepare for our summer activities which includes the opening of the pool and our aquatic activities.

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City of Gonzales

FINANCE DEPARTMENT

STAFF REPORT
TO: Honorable Mayor Rios and City Council
DATE: March 21, 2022
FROM: Mike Howard, Finance Director
THROUGH: René L. Mendez, City Manager
SUBJECT: Fiscal Year 2020-2021 Audited Financial Statements and Management Report

RECOMMENDATION
It is recommended that the City Council and Agency Board accept the City and Successor Agency’s Audited Financial Statements and Management Report for Fiscal Year Ending June 30, 2021.

BACKGROUND
The State of California Government code (sections 25250 & 25253) require all general-purpose local government to issue an annual report on the financial position and activities of that government. The report must be presented in conformance with generally accepted accounting principles (GAAP) and must be audited by an independent firm of certified public accountants (CPA) in conformance with generally accepted auditing standards (GAGAS). The goal of the audit by an independent firm is to provide reasonable assurance that the accounting transactions, practices, and procedures result in fair presentation of the financial position of the organization. In addition, the audit provides the same type of assurance about management’s assertions about the adequacy of internal accounting controls to safeguard the assets of the entities.

REVIEW AND ANALYSIS
The independent auditor has rendered an unqualified audit opinion indicating that the City and Successor Agency are materially in compliance and has accounting records that properly reflect the financial position of those entities.

Like in prior years, Mike Howard, Finance Director, will attend the meeting to present, and explain the audit, and answer any questions.

AGENDA
ITEM
12 Packet Pg. 24
Explain Recommendation and How it Supports the Vision
Gonzales will continue to be a safe, clean, family-friendly community, diverse in its heritage, and committed to working collaboratively to preserve and retain its small town charm.

Explain: The annual audit is important to make sure that the financial structure of the City is sound, and to identify any issues that might need correction. This is important because it is necessary to keep a close watch on the resources needed to carry out the Mission.

Explain how the Recommendation Directly Implements the Mission The City Council and Staff of the City of Gonzales will realize our Vision by providing the leadership, commitment, and resources necessary to provide excellent services that enhance the quality of life of our diverse community.

Explain: Please see explanation above for the Vision.

City services will be delivered in a cost-effective, respectful, and friendly manner to insure the safety and well being of the residents and the promotion of business, recreational, housing and employment opportunities in an environmentally sustainable manner.

Explain: Please see explanation above for the Vision.

Strong fiscal policies allow us to provide appropriate infrastructure for:
• Public Safety X Yes No N/A
• Housing X Yes No N/A
• Recreation X Yes No N/A
• Environment X Yes No N/A
• Education X Yes No N/A
Explain: Please see explanation above.

ALTERNATIVES
There are no alternatives to the annual audit; they are required per State law.

BUDGET IMPACT
Please see attached audit.

CONCLUSION
It is recommended that the City Council and Agency Board accept the City and Successor Agency’s Audited Financial Statements and Management Report for Fiscal Year Ending June 30, 2021.

Attachments:

1. 2021 Gonzales Financial Statements

2. 2021 Gonzales Management Letter
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CITY OF GONZALES
INDEPENDENT AUDITOR’S REPORT
AND

FINANCIAL

STATEMENTS
JUNE 30, 2021
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report)

TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR’S REPORT 1 – 2
BASIC FINANCIAL STATEMENTS:

Government-Wide Financial Statements
Statement of Net Position 3
Statement of Activities 4
Fund Financial Statements
Balance Sheet – Governmental Funds 5
Reconciliation of Total Governmental Fund Balance to
Net Position of Governmental Activities 6
Statement of Revenue, Expenditures and Changes in
Fund Balance – Governmental Funds 7
Reconciliation of Statement of Revenue, Expenditures
and Changes in Fund Balance of Governmental Funds
to the Statement of Activities 8
Statement of Net Position – Proprietary Funds 9
Statement of Revenue, Expenses and Changes in Fund Net
Position - Proprietary Funds 10
Statement of Cash Flows – Proprietary Funds 11 – 12
Statement of Fiduciary Net Position – Private Purpose Trust Fund 13 Statement of Changes in Fiduciary Net Position – Private Purpose Trust Fund 14 Notes to Basic Financial Statements 15 – 45
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) TABLE OF CONTENTS (Continued)
Page
Required Supplementary Information
Budgetary Comparison Schedule – General Fund 46
Budgetary Comparison Schedule – Community Development Block Grant 47 Budgetary Comparison Schedule – Measure X 48
Schedule of the City’s Proportionate Share of Net Pension Liability 49 Schedule of Contributions 50
Supplemental Only Information
Combining Balance Sheet – Nonmajor Governmental Funds 51 – 53 Combining Statement of Revenue, Expenditures and
Changes in Fund Balance – Nonmajor Governmental Funds 54 – 56 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL

OVER FINANCIAL REPORTING AND ON COMPLIANCE AND

OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 57 – 58 Packet Pg. 28
Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) BRYANT L. JOLLEY
CERTIFIED PUBLIC ACCOUNTANTS Bryant L. Jolley C.P.A.

Ryan P. Jolley C.P.A.

Darryl L. Smith C.P.A.

Luis A. Perez C.P.A.

Lan T. Kimoto
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and City Council
City of Gonzales, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Gonzales, California, (the City) as of and for the year ended June 30, 2021, and the related notes to the 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.

Auditor’s 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, each major fund, and the aggregate remaining fund information of the City of Gonzales, California, as of June 30, 2021, 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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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the budgetary comparison information on pages 46 through 48 and the Schedule of the City’s Proportionate Share of Net Pension Liability and the Schedule of Contributions pages 49 and 50 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.

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

Other Information
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.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 1, 2022 on our consideration of the City of Gonzales’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 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 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 City of Gonzales’s internal control over financial reporting and compliance.

March 1, 2022
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) See accompanying notes. 3

CITY OF GONZALES

STATEMENT OF NET POSITION
JUNE 30, 2021
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments 5,528,272 $ 9,444,820 $ 14,973,092 $ Accounts receivable, net - 519,483 519,483
Due from other governments 1,142,411 - 1,142,411
Interest receivable 1,272 9,398 10,670
Notes and loans receivable 1,971,796 - 1,971,796
Other assets - deposits 15,746 - 15,746
Internal balances (594,000) 594,000 -
Capital assets, net of allowance
for depreciation 20,015,390 27,556,496 47,571,886
Total assets 30,583,091 35,621,993 66,205,084
DEFERRED OUTFLOWS OF RESOURCES 286,219 1,118,831 1,405,050

LIABILITIES
Accounts payable and accrued expense 237,315 634,860 872,175 Unearned revenues 58,179 - 58,179
Deposits payable 214,223 78,845 293,068
Long-term liabilities
Due within one year 289,248 525,974 815,222
Due in more than one year 2,621,565 2,962,117 5,583,682 Net pension liability 2,765,770 632,216 3,397,986
Compensated absences - 394,364 394,364
Total liabilities 4,834,012 6,580,664 11,414,676
DEFERRED INFLOWS OF RESOURCES 83,697 235,490 319,187

NET POSITION
Net investment in capital assets 24,645,683 16,072,195 40,717,878 Restricted for specific projects and programs 4,574,825 - 4,574,825 Restricted for capital improvements - 4,601,752 4,601,752 Unrestricted 5,277,654 704,162 5,981,816
Total net position $ 25,951,601 29,924,670 $ 55,876,271 $ Packet Pg. 31
Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) See accompanying notes. 4
CITY OF GONZALESSTATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2021 Operating Capital
Charges for Grants and Grants and Governmental Business-Type Expense Services Contributions Contributions Activities Activities Total Primary Government
Governmental activities
General government $ - 1,557,808 $ 532,214 $ - $ (1,025,594) $ - $ (1,025,594) $ Public safety 4,514,033 50,522 983,249 - (3,480,262) - (3,480,262)Public works 1,649,137 37,088 387,178 224,715 (1,000,156) - (1,000,156)Parks and recreation 1,278,999 54,912 126,447 - (1,097,640) - (1,097,640)Community development 1,179,831 204,471 143,034 - (832,326) - (832,326) Debt Service
Interest and fiscal charges - 80,939 - - (80,939) - (80,939) Total governmental activities 346,993 10,260,747 2,172,122 224,715 (7,516,917) - (7,516,917) Business-type activities
Water 2,047,206 2,245,787 - - - 198,581 198,581Sewer 1,254,072 1661061 - 3,084,995 - 3,491,984 3,491,984Garbage 1,246,747 1,537,926 - - - 291,179 291,179Solar Energy 160,175 4,312 - - - (155,863) (155,863)Electric Power Authority - 116,630 - - - (116,630) (116,630) Total business-type activities 5,449,086 4,824,830 - 3,084,995 - 3,709,251 3,709,251 Total primary government 5,796,079 15,085,577 2,172,122 3,309,710 (7,516,917) 3,709,251 (3,807,666) General Revenue
Property taxes - 2,822,675 2,822,675
Sales taxes - 2,399,408 2,399,408
Franchise and other taxes - 106,921 106,921Utility users tax - 233,913 233,913Business licenses - 61,119 61,119 Investment income 32,971 128,503 161,474Other - 253,103 253,103Loss on disposal of property - 4,672 4,672Transfers (280,244) 280,244 - Total general revenue and transfers (247,273) 6,290,558 6,043,285 Change in Net Position 3,461,978 (1,226,359) 2,235,619
Net Position
Beginning of year 22,489,623 31,151,029 53,640,652
End of year $ 25,951,601 29,924,670 $ 55,876,271 $
Functions/Programs
Net Revenue/(Expense) and
Program Revenue Changes in Net Position
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial See accompanying notes. 5

CITY OF GONZALES
BALANCE SHEET – GOVERNMENTAL FUNDS
JUNE 30, 2021
Community Other Total
Development Measure Governmental Governmental
General Block Grant X Funds Funds
ASSETS
Cash and investments 988,556 $ 332,127 $ - $ 4,207,589 $ 5,528,272 $ Due from other governments 771,881 - 22,897 347,633 1,142,411 Interest receivable - 177 - 1,095 1,272
Due from other funds 785,619 - - - 785,619
Notes and loans receivable - 1,605,382 - 366,414 1,971,796 Other assets - deposits - 15,746 - - 15,746
Total assets $ 1,937,686 2,561,802 $ 22,897 $ 4,922,731 $ 9,445,116 $

LIABILITIES
Accounts payable and accrued expense 192,319 $ 133 $ - $ 44,863 $ 237,315 $ Due to other funds - - - 785,619 785,619
Deposits and other liabilities 214,223 - - - 214,223
Unearned revenues 58,179 - - - 58,179
Advances from other funds - 594,000 - - 594,000
Total liabilities 133 1,058,721 - 830,482 1,889,336

DEFERRED INFLOWS OF RESOURCES
Deferred loans 1,605,382 - - 366,414 1,971,796
Total deferred inflows of resources 1,605,382 - - 366,414 1,971,796

FUND BALANCE
Restricted
Lighting, landscape & park maintenance - - - 2,536,902 2,536,902 Low-income housing activities - - - 483,063 483,063
Community development - 332,171 - 877,782 1,209,953
Street improvements - - 22,897 248,440 271,337
Public safety - - - 73,570 73,570
Committed for contingency reserve 1,000,000 - - - 1,000,000 Unassigned - 503,081 - (493,922) 9,159
Total fund balance 1,503,081 332,171 22,897 3,725,835 5,583,984 Total liabilities, deferred inflows of resources,
and fund balance 2,561,802 $ 1,937,686 $ 22,897 $ 4,922,731 $ 9,445,116 $ Packet Pg. 33
Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) See accompanying notes. 6

CITY OF GONZALES

RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCE TO NET POSITION

OF GOVERNMENTAL ACTIVITIES
JUNE 30, 2021
Total governmental fund balance 5,583,984 $
Amounts reported for governmental activities in the Statement of Net Position are different because:

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds 27,556,496 Governmental long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds (2,910,813) Compensated absences are not due and payable in the current period and therefore are not reported in the governmental funds (394,364) Deferred outflows of resources related to net pension liability, represent an consumptiom of net position or fund balance that applies to future period(s) and so will not be recognized as an outflow of resources (expense) until that time 1,118,831 Net pension liability applicable to governmental activities is not due and payable in the current period and accordingly is not reported in the governmental funds (2,765,770) Deferred inflows of resources related to net pension liability, represent an acquisition of net position or fund balance that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until that time (235,490) In governmental funds, receivables which are not considered available are deferred. Such items are not deferred in the Statement of Net Position 1,971,796 Net position of governmental activities $ 29,924,670
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) See accompanying notes. 7

CITY OF GONZALES
STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE –

GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2021
Community Other Total
Development Measure Governmental Governmental
General Block Grant X Funds Funds
Revenue
Taxes and assessments 4,610,804 $ - $ - $ 733,712 $ 5,344,516 $ Licenses, permits and impact fees 162,984 - - 302,329 465,313 Intergovernmental 991,759 - 279,520 1,018,728 2,290,007 Charges for services 69,306 - - - 69,306
Fines and forfeitures 72,274 - - - 72,274
Loan repayments - 133,994 - 72,826 206,820
Use of money and property 53,634 64,685 - 10,183 128,502 Other - 339,567 - 40,000 379,567
Total revenue 198,679 6,300,328 279,520 2,177,778 8,956,305 Expenditures
Current
General government 1,152,041 - - 270,452 1,422,493
Public safety 3,841,344 - - 304,240 4,145,584
Public works 382,327 24,762 - 687,525 1,094,614
Parks and recreation 785,255 - - 200,151 985,406
Community development 444,644 61,245 - 445,878 951,767
Capital outlay 8,491 - - 30,000 38,491
Debt Service
Principal 95,342 - 209,978 - 305,320
Interest and fiscal charges - 34,294 46,645 - 80,939
Total expenditures 86,007 6,743,738 256,623 1,938,246 9,024,614 Revenue over/(under) expenditures (443,410) 112,672 22,897 239,532 (68,309) Other Financing Sources/(Uses)
Sale of assets 4,672 - - - 4,672
Transfers in/(out) - net (25,000) 315,726 - (10,482) 280,244 (25,000) 320,398 - (10,482) 284,916
Change in Fund Balance 87,672 (123,012) 22,897 229,050 216,607 Fund Balance
Beginning of year 244,499 1,626,093 - 3,496,784 5,367,376 End of year $ 332,171 1,503,081 $ 22,897 $ 3,725,835 $ 5,583,983 $ Packet Pg. 35
Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) See accompanying notes. 8

CITY OF GONZALES

RECONCILIATION OF STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN

FUND BALANCE OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITES YEAR ENDED JUNE 30, 2021
Net change in fund balance - total governmental funds 216,607 $ Amounts reported for governmental activities in the Statement of Activities are different because:

Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is capitalized and allocated over their estimated lives and reported as depreciation expense Capital outlay expenditures are therefore added back to fund balances 38,491 Depreciation expense not reported in governmental funds (1,264,208) (1,225,717)
Repayment of long-term debt is an expenditure in governmental funds, but the repayment reduces long-term liabilities in the statement of net position 305,320
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 the Governmental Funds (291,411)
Repayment of long-term loans receivable is revenue in governmental funds, but the repayment reduces long-term assets in the statement of net position. Issuance of long-term loans receivable produces the opposite effect (166,803)
Compensated absence costs in the Statement of Activities does not require the use of current financial resources and, therefore, is not reported as expenditures in Governmental Funds (64,356) Change in net position of governmental activities (1,226,360) $ Packet Pg. 36
Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) See accompanying notes. 9
CITY OF GONZALES STATEMENT OF NET POSITION – PROPRIETARY FUNDS JUNE 30, 2021 Nomajor
Electric Total
Solar Power Proprietary
Water Sewer Garbage Energy Authority Funds
ASSETSCurrent assets
Cash and investments 4,931,090 $ 4,269,080 $ - $ 47,915 $ 196,735 $ 9,444,820 $ Accounts receivable, net 175,925 126,924 212,322 4,312 - 519,483 Interest receivable 4,733 1,877 2,706 - 82 9,398
Due from other funds - 60,357 - - - 60,357
Total current assets 4,397,881 5,172,105 215,028 52,227 196,817 10,034,058 Non-current assets
Advances to other funds 594,000 - - - - 594,000
Property, plant and equipment,
net of allowance for depreciation 8,913,533 8,109,599 - 2,992,258 - 20,015,390 Total non-current assets 8,913,533 8,703,599 - 2,992,258 - 20,609,390 Total assets 13,311,414 13,875,704 215,028 3,044,485 196,817 30,643,448 DEFERRED OUTFLOWS OF RESOURCES 123,271 124,974 37,974 - - 286,219 LIABILITIESCurrent liabilities
Accounts payable and accrued expenses 383,380 141,499 92,135 - 17,846 634,860 Due to other funds - - 60,357 - - 60,357
Deposits 78,845 - - - - 78,845
Current portion of long-term debt - 199,207 - 326,767 - 525,974 Total current liabilities 383,380 419,551 152,492 326,767 17,846 1,300,036 Non-current liabilities
Long-term debt 751,730 - - 2,210,387 - 2,962,117
Net pension liability 272,286 276,049 83,881 - - 632,216 Total noncurrent liabilities 272,286 1,027,779 83,881 2,210,387 - 3,594,333 Total liabilities 655,666 1,447,330 236,373 2,537,154 17,846 4,894,369 DEFERRED INFLOWS OF RESOURCES 36,048 36,545 11,104 - - 83,697

NET POSITION
Net investment in capital assets 7,158,662 8,913,533 - - - 16,072,195 Restricted for capital improvements 1,186,412 3,415,340 - - - 4,601,752 Unrestricted/(deficit) 414,098 4,171,729 5,525 507,331 178,971 5,277,654 Total net position $ 12,742,971 12,516,803 $ 5,525 $ 507,331 $ 178,971 $ 25,951,601 $ Business-Type Activities - Enterprise Funds
Packet Pg. 37
Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial See accompanying notes. 10
CITY OF GONZALES STATEMENT OF REVENUE, EXPENSE, AND CHANGES IN FUND NET POSITION – PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2021 Nonmajor
Electric Total
Solar Power Proprietary
Water Sewer Garbage Energy Authority Funds
Operating Revenue
Charges for services $ 1,661,061 2,245,787 $ 1,537,926 $ 4,312 $ - $ 5,449,086 $ Total operating income 1,661,061 2,245,787 1,537,926 4,312 - 5,449,086 Operating Expense
Contractual services and utilities 1, 605,672 324,531 1,115,952 14,929 116,629 3,177,713Personnel 322,773 322,938 115,818 - - 761,529Supplies and materials 120,945 166,228 14,977 18,478 - 320,628Depreciation 159,234 242,246 - 47,381 - 448,861 Total operating expense 1,254,072 2,010,495 1,246,747 80,788 116,629 4,708,731 Operating income/(loss) 406,989 235,292 291,179 (76,476) (116,629) 740,355 Nonoperating Revenue/(Expense)
Development impact fees - 3,084,995 - - - 3,084,995Interest income 15,801 16,579 - 28 563 32,971Interest expense - (36,711) - (79,388) - (116,099) Total nonoperating revenue/(expense) 3,101,574 (20,910) - (79,360) 563 3,001,867 Net income/(loss) before transfers 214,382 3,508,563 291,179 (155,836) (116,066) 3,742,222 Operating Transfers In/(Out) (285,860) (387,590) (298,647) 461,853 230,000 (280,244) Change in Net Position 3,222,703 (173,208) (7,468) 306,017 113,934 3,461,978 Net Position
Beginning of year 9,520,268 12,690,011 12,993 201,314 65,037 22,489,623 End of year $ 12,742,971 12,516,803 $ 5,525 $ 507,331 $ 178,971 $ 25,951,601 $ Business-Type Activities - Enterprise Funds
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial See accompanying notes. 11
CITY OF GONZALES STATEMENT OF CASH FLOW - PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2021 Nonmajor
Electric Total
Solar Power Business-Type
Water Sewer Garbage Energy Authority Funds
Operating Activities
Receipts from customers and users 2,329,682 $ 1,733,913 $ 1,488,866 $ - $ - $ 5,552,461 $ Payments for contractual services and utilities (1,226,931) (376,683) (1,124,543) (14,929) (133,797) (2,876,883) Payments to employees (298,195) (298,695) (108,350) - - (705,240) Payment to suppliers (166,228) (120,945) (14,977) (18,478) - (320,628) Net cash provided by (used in) operating activities 892,307 683,611 240,996 (33,407) (133,797) 1,649,710 Non-capital Financial Activities
Payments (to)/from developers - 3,084,995 - - - 3,084,995 Transfers (to)/from other funds (285,860) (447,947) (238,290) 461,853 230,000 (280,244) Net cash provided by (used in)
noncapital financing activities 2,799,135 (447,947) (238,290) 461,853 230,000 2,804,751 Capital and Related Financing Activities
Purchase of property, plant and equipment - (1,508,493) - - - (1,508,493) Principal paid on long-term debt (192,698) - - (302,888) - (495,586)Interest paid on long-term debt - (36,711) - (79,388) - (116,099) Net cash provided by (used in) capital
and related financing activities (1,508,493) (229,409) - (382,276) - (2,120,178) Investing Activities
Interest received 16,645 - (2,706) 40 481 14,460
Payments received on notes 17,895 - - - - 17,895
Net cash provided by (used in)
investing activities 17,895 16,645 (2,706) 40 481 32,355 Net Increase (Decrease) in Cash 2,200,844 22,900 - 46,210 96,684 2,366,638 Cash
Beginning of year 2,068,236 4,908,190 - 1,705 100,051 7,078,182 End of year $ 4,269,080 4,931,090 $ - $ 47,915 $ 196,735 $ 9,444,820 $ Business-Type Activities - Enterprise Funds
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial See accompanying notes. 12
CITY OF GONZALES STATEMENT OF CASH FLOW - PROPRIETARY FUNDS (CONTINUED) YEAR ENDED JUNE 30, 2021 Nonmajor
Electric Total
Solar Power Business-Type
Water Sewer Garbage Energy Authority Funds
Cash Flows from Operating Activities
Operating income (loss) 235,292 $ 406,989 $ 291,179 $ (76,476) $ (116,629) $ 740,355 $ Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:

Depreciation 242,246 159,234 - 47,381 - 448,861
(Increase) Decrease in Accounts Receivable 80,438 72,852 (49,060) (4,312) - 99,918 (Increase) Decrease in Deferred Outflows of Resources 20,642 20,360 6,272 - - 47,274 Increase (Decrease) in Accounts Payable
and Accrued Liabilities 97,600 228,989 (8,591) - (17,168) 300,830 Increase (Decrease) in Deposits 3,457 - - - - 3,457
Increase (Decrease) in Net Pension Liability 30,188 29,777 9,173 - - 69,138 Increase (Decrease) in Deferred Inflows of Resources (25,894) (26,252) (7,977) - - (60,123) Net Cash Provided by (Used in) Operating Activities $ 683,611 892,307 $ 240,996 $ (33,407) $ (133,797) $ 1,649,710 $ Business-Type Activities - Enterprise Funds
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial See accompanying notes. 13

CITY OF GONZALES

STATEMENT OF FIDUCIARY NET POSITION

PRIVATE-PURPOSE TRUST FUNDS
JUNE 30, 2021
Successor
Agency
Assets
Current assets
Cash and investments 142,000 $
Restricted cash and investments 1,597,668
Total current assets 1,739,668
Noncurrent assets
Notes receivable 354,777
Property, plant and equipment,
net of allowance for depreciation 461,051
Total noncurrent assets 815,828
Total assets 2,555,496
Liabilities
Current liabilities
Accounts payable and accrued liabilities 276
Interest payable 113,287
Bonds - current portion 919,879
Total current liabilities 1,033,442
Noncurrent liabilities
Bonds - long term portion 10,889,565
Total noncurrent liabilities 10,889,565
Total liabilities 11,923,007
Net Position
Held in trust for other governments (9,367,511) $
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) See accompanying notes. 14

CITY OF GONZALES

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

PRIVATE-PURPOSE TRUST FUND
JUNE 30, 2021
Successor
Agency
Additions
Property taxes 1,274,983 $
Interest and unrealized loss 22,385
Total additions 1,297,368
Deductions
Administrative expenses 195,191
Interest and fiscal expenses 726,696
Total deductions 921,887
Change In Net Position 375,481
Net Position
Beginning of year (9,742,992)
End of year $ (9,367,511)
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 15 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 1 – Summary of Significant Accounting Policies
Reporting Entity
The City of Gonzales (the City) is a municipal corporation, operating as a general law city, and governed by a city council of five members. As required by accounting principles generally accepted in the United States of America, as prescribed by the Governmental Accounting Standards Board (GASB), these financial statements present the City of Gonzales (the primary government) and its component units. The component units discussed below are included in the City's reporting entity because of the significance of their operational or financial relationship with the City.

The Gonzales Public Financing Authority (the Authority) is governed by the City Council of the City of Gonzales.

Although, it is legally separate from the City, the Authority is reported as if it were part of the primary government because the City Council is the governing board and is able to impose its will on the Authority and management has the same operational responsibility for the Authority as it does for the rest of the City. The activity of the Authority is included as separate funds in the special revenue fund and debt service fund types. Separate financial statements are not issued by the Authority.

Basis of Presentation
The City has conformed to the pronouncements of the GASB, which are the primary authoritative statements of accounting principles generally accepted in the United States of America applicable to state and local governments.

Government-Wide Financial Statements
The Government-Wide Financial Statements (the Statement of Net Position and the Statement of Activities) report information of all of the nonfiduciary activities of the primary government and its component units. Eliminations have been made to minimize the double counting of internal activities. These statements distinguish between the governmental and business-type activities of the City. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely significantly on fees charged to external parties.

The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and are clearly identifiable to a particular function. Program revenues include 1) charges paid by the recipients of goods or services offered by the programs and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.

Fund Financial Statements
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 with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Government resources are allocated to, and accounted for, in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 16 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 1 – Summary of Significant Accounting Policies (Continued) The fund financial statements provide information about the City's funds, including fiduciary funds and blended component units. Separate statements for each fund category - governmental, proprietary, and fiduciary – are presented. The emphasis of fund financial statements is on major individual funds, each of which is displayed in a separate column. All remaining funds are aggregated and reported as non-major funds.

Governmental Fund Financial Statements Funds
Major funds are defined as funds that have assets, liabilities, revenues, or expenditures/expenses equal to ten percent of their fund-type (governmental and enterprise funds, respectively) total and five percent of the grand total. The General Fund is always a major fund. The City may also select other funds it believes should be presented as major funds.

The following types of governmental funds are used:

General Fund
The General fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund.

Special Revenue Funds
Special revenue funds are used to account for and report the proceeds of specific revenue sources (other than debt service and capital projects) that are restricted or committed to expenditures for specified purposes.

Debt Service Funds
Debt service funds are used to account for and report the financial resources that are restricted, committed or assigned for the payment of long-term debt principal, interest, and related costs.

The City reported the following major governmental funds in the accompanying financial statements:
 General Fund – This fund accounts for all financial resources except those to be accounted for in another fund. It is the general operating fund of the City.
 Community Development Block Grant Fund – This fund accounts for Federal Grant monies restricted for specific community programs, which includes the activity related to loans provided to homeowners and businesses and the repayment of these loans.
 Measure X Fund – The fund is used to account for the City’s Transportation Safety and Investment Plan activities.

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 17 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 1 – Summary of Significant Accounting Policies (Continued) Fund Balance Classifications
The City’s fund balance policy establishes the procedures for reporting unrestricted fund balance (comprised of Committed, Assigned, and Unassigned categories) within the City’s governmental funds: General Fund, Special Revenue Funds, Debt Service Fund, and Capital Projects Funds.

Definitions
Fund balance is the difference between the assets and liabilities reported in the City’s governmental funds. There are generally limitations on the purpose for which all or a portion of the resources of a governmental fund may be used.

The force behind these limitations can vary significantly, depending upon their source. Consequently, the fund balance reported in the annual financial statements is categorized into five components whereby each component identifies the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the fund can be spent. The five components of fund balance are as follows:
 Nonspendable: Resources that are 1) not in spendable form, such as inventories, prepaids, long-term receivables, or non-financial assets held for resale, or 2) required to be maintained intact such as an endowment.
 Restricted: Resources that are subject to externally enforceable legal restrictions; these restrictions would be either 1) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or 2) imposed by law through constitutional provisions or enabling legislation.
 Committed: Resources that are constrained to specific purposes by a formal action of the City Council such as an ordinance or resolution. The constraint remains binding unless removed in the same formal manner by the City Council. Council action to commit fund balance must occur within the fiscal reporting period while the amount committed may be determined subsequently.
 Assigned: Resources that are constrained by the City’s intent to be used for specific purposes, but that are neither restricted nor committed. Intent is expressed by the City Council or to an official which the City Council has delegated this authority.
 Unassigned: Within the General Fund, the residual resources, either positive or negative, in excess of what can be properly classified in one of the other four fund balance categories. Within all other governmental funds, the negative residual resources in excess of what can be properly classified as nonspendable, restricted, or committed.

Policy

1. Unless necessary by other requirements and circumstances, when expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) fund balances are available, the City’s policy is to first apply restricted fund balance. When expenditures are incurred for purposes for which committed, assigned, or unassigned fund balances are available, the City’s policy is to first apply committed fund balance, then assigned fund balance, and finally unassigned fund balance.

2. The City’s Fund Balance policy delegates to the Finance Director the authority to assign unrestricted fund balance amounts where the City’s intent is for those amounts to be used for specific purposes. This delegation of authority is for the sole purpose of reporting these amounts in the annual financial statements.

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 18 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 1 – Summary of Significant Accounting Policies (Continued) Proprietary Fund Financial Statements
Proprietary fund financial statements include a Statement of Net Position, a Statement of Revenues, Expenses, and Change in Net Position, and a Statement of Cash Flows.

Proprietary fund types are accounted for using the “economic resources” measurement focus and accrual basis of accounting. This means that all assets and liabilities (whether current or non-current) associated with the activity are included on the Statement of Net Position. Their reported fund equity presents total net position. The operating statement of the proprietary funds presents increases (revenues) and decreases (expenses) in total net position.

Revenues are recognized when they are earned and expenses are recognized when the liability is incurred.

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise funds are charges to customers for sales and services. Operating expenses for the enterprise funds include the costs of sales and services, the costs of employee benefits, maintenance of capital assets, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

The City reported the following major proprietary (enterprise) funds:
 Water Fund - This fund accounts for the activities for providing water service to the residents of the City.  Sewer Fund - This fund accounts for the activities of providing sewer service to the residents of the City.  Garbage Fund - This fund accounts for the activities of providing garbage service to the residents of the City.  Solar Energy Fund – This fund accounts for the activities, the debt and the resources generated from the installation of solar energy panels.

Fiduciary Fund Financial Statements
Fiduciary funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, and other governmental units. The City maintains the Private Purpose Trust Fund for the Successor Agency of the former Redevelopment Agency.

Basis of Accounting
The government-wide, proprietary funds and fiduciary fund financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.

Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The City considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after fiscal year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent that they have matured. Capital asset acquisitions are reported as expenditures in governmental funds.

Proceeds of long-term debt and acquisitions under capital leases are reported as other financing sources.

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 19 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 1 – Summary of Significant Accounting Policies (Continued) Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

Other revenues susceptible to accrual include other taxes, intergovernmental revenues, interest, and charges for services.

Grant revenues are recognized in the fiscal year in which all eligibility requirements are met. Under the terms of grant agreements, the City may fund certain programs with a combination of cost-reimbursement grants, categorical block grants, and general revenues. Thus, both restricted and unrestricted net position may be available to finance program expenditures/expenses. The City's policy is to first apply restricted net position to such programs, followed by unrestricted net position.

Financial Statement Amounts
Cash and Cash Equivalents – The City maintains a pooled cash and investment program. Therefore, for purposes of the statement of cash flows, the City considers the entire pooled cash and investment balance to be cash and cash equivalents.

Investments of the pool include only those investments authorized by the California Government Code such as, United States Treasury securities, agencies guaranteed by the United States Government, registered state warrants, and other investments. Investments primarily consist of deposits in the State of California Local Agency Investment Fund and certificates of deposit. Investments are recorded at amortized cost or fair value.

Fair value is based upon quoted market prices.

Changes in fair value that occur during a fiscal year are recognized as investment income reported for that fiscal year.

Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation, maturity, or sale of investments.

The City pools its cash and investments of all funds with the City’s pool, except for assets held by fiscal agents.

Investment income earned by the pooled investments is allocated to the various funds based on each fund’s average cash and investment balance.

Accounts Receivable – Billed, but unpaid, services provided to individuals or non-governmental entities are recorded as accounts receivable. The Proprietary Funds include a year end accrual for services through the end of the fiscal year which have not yet been billed. Accounts receivable are reported net of an allowance for uncollectibles.

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:

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 20 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 1 – Summary of Significant Accounting Policies (Continued) Property Valuations - are established by the Assessor of the County of Monterey 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 percent of full value. From this base of assessment, subsequent annual increases in valuation are limited to a maximum of 2 percent. 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 percent of assessed value which results in a tax rate of $1 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 January 1st, proceeding the fiscal year for which the taxes are levied. The fiscal year begins July 1st and ends June 30th 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 installment is due on November 1st of the fiscal year and is delinquent, if not paid, by December 10th; and the second installment is due on March 1st of the fiscal year and is delinquent, if not paid, by April 10th. 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 31st of the fiscal year. Significant penalties are imposed by the County for late payments.

Advances To/From Other Funds – This classification represents non-current portions of any long-term lending/borrowing transactions between funds. This amount will be equally offset by a reserve of fund balance which indicates that it does not represent available financial resources and therefore, is not available for appropriation. The current portion of any interfund long-term loan (advance) is included as an interfund receivable/payable.

Capital Assets – Capital outlays are recorded as expenditures of the General, Special Revenue, and Capital Projects Funds and as assets in the Government-Wide Financial Statements to the extent the City’s capitalization threshold are met.

Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities column in the GovernmentWide Financial Statements. Capital assets are defined by the government as assets with an initial individual cost of more than $5,000 and with an estimated useful life of at least two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Betterments and major improvements which significantly increase values, change capacities or extend useful lives are capitalized. Upon sale or retirement of fixed assets, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the results of operations.

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 21 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 1 – Summary of Significant Accounting Policies (Continued) Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed.

Property, plant, and equipment of the primary government, as well as the component units, are depreciated using the straight line method over the following estimated useful lives:

Years
Buildings 40
Improvements 20 - 40
Equipment 5 - 15
Infrastructure 20 - 70
Compensated Absences – The City has adopted policies on sick leave and vacation leave. Sick leave is accrued at the rate of eight hours per month by all employees. A portion of the accumulated sick leave will be paid to retiring or resigning employees with a minimum of fifteen years of service. All other employees who terminate employment will receive no compensation for accumulated sick leave.

Employees are only allowed to carry forward one year worth of vacation hours as of January 1 of each year. Vacation is accrued for employees as follows:

Years of Service Monthly Accrual Annually
0 to 2 6-2/3 hours Two weeks
3 to 9 10 hours Three weeks
10 to 15 11-2/3 hours Three weeks and 2-1/2 days
15+ 13-1/3 hours Four weeks
Upon termination of employment and, after completion of at least six months of service with the City, the accrued vacation leave shall be paid to the terminated employee.

Unearned Revenue – Unearned revenue is that for which asset recognition criteria have been met, but for which revenue recognition criteria have not been met. The City typically records unearned revenue related to uncollected outstanding performing loans and intergovernmental revenues received but not earned (qualifying expenditures not yet incurred).

Deferred Compensation Plan – City employees may defer a portion of their compensation under a City sponsored deferred compensation plan created in accordance with Internal Revenue Code Section 457. Under this Plan, participants are not taxed on the deferred portion of their compensation until distributed to them; distributions may be made only upon termination, retirement, death, or in an emergency as defined by the Plan. The assets of the Plan are not included within the City's financial statements.

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 22 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 1 – Summary of Significant Accounting Policies (Continued) Pension Plan – All full-time City employees are members of the State of California Public Employees’ Retirement System. The City’s policy is to fund all pension costs accrued; such costs to be funded are determined annually as of July 1 by the System’s actuary.

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

Long-Term Obligations – In the Government-Wide Financial Statements and in the Proprietary Fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or Proprietary Fund Type Statement of Net Position. Debt principal payments of both government and business-type activities are reported as decreases in the balance of the liability on the Statement of Net Position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount.

In the fund financial statements, however, debt principal payments of Governmental Funds are recognized as expenditures when paid. Governmental Fund types recognize bond premiums and discounts during the current period.

The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

Net Position – The government-wide and business-type activities financial statements utilize a net position presentation. Net position are categorized as net investment in capital assets, restricted and unrestricted.  Net Investment in Capital Assets – This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce the balance in this category.  Restricted Net Position – This category presents external restrictions on net position imposed by creditors, grantors, contributors, laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation.
 Unrestricted Net Position – This category represents net position of the City not restricted for any project or other purpose.

Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make 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 and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates.

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 23 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 2 – Stewardship, Compliance and Accountability
California law authorizes the City to invest in obligations of the United States Treasury, agencies and instrumentalities, certificates of deposit or time deposits in banks and savings and loan associations which are insured by the Federal Deposit Insurance Corporation.

In accordance with applicable sections of the California Government Code and the Gonzales Municipal Code, the City prepares and legally adopts an annual balanced budget on a basis consistent with accounting principles generally accepted in the United States of America. Annual appropriated budgets are adopted for the General Fund, specific Special Revenue Funds, and specific Capital Projects Funds. Budget plans are adopted for Proprietary Funds. A proposed budget is presented to the City Council during June of each year for review. The Council holds public hearings and may add to, subtract from, or change appropriations within the revenues and reserves estimated as available. Expenditures may not legally exceed budgeted appropriations at the fund level. Supplementary appropriations which alter the total expenditures of any fund, or expenditures in excess of total budgeted fund appropriations, must be approved by the City Council.

All annual appropriations lapse at fiscal year end to the extent they have not been expended or encumbered.

Note 3 – Cash and Investments
The City pools all of its cash and investments except those funds required to be held by outside fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash is allocated to the various funds on average cash balances. Interest income from cash investments held with fiscal agents is credited directly to the related funds.

Cash and investments as of June 30, 2021 are classified in the accompanying financial statements as follows:

Statement of Net Position:

Cash and Investments 14,973,092 $
Private Purpose Trust:

Cash and Investments 142,000
Restricted cash and investments 1,597,668
Total Cash and Investments $ 16,712,760
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 24 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 3 – Cash and Investments (Continued)
Cash and investments as of June 30, 2021 consist of the following:

Cash on hand 364 $
Deposits with Financial Institutions 1,163,069
Local Agency Investment Fund 4,362,911
Certificates of Deposit 10,954
Money Market Accounts 9,577,794
Cash Held by Fiscal Agent 1,597,668
Total Cash and Investments $ 16,712,760
Fair Value Measurements
The framework for measuring fair value provides a fair value hierarchy that categorizes the inputs to valuation techniques used to measure fair value into three levels. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described as follows:

Level 1: Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets that a government can access at the measurement date.

Level 2: Inputs to valuation methodology include inputs – other than quoted prices included within Level 1 – that are observable for an asset or liability, either directly or indirectly.

Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset’s or liability’s fair value measurement level within a fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Following is a description of the valuation methodologies used for assets measured at fair value.

LAIF is valued based on the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (Level 2 input).

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 25 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 3 – Cash and Investments (Continued)
The City had the following recurring fair value meausrements as of June 30, 2021:

Level 1 Level 2 Level 3
June 30, 2021
Balance
Investments by fair value level:

Equity Securities:

CDS 10,954 $ - $ - $ 10,954 $
LAIF - 4,362,911 - 4,362,911
Total Equity Securities 10,954 4,362,911 - 4,373,865
Cash equivalents carried at amortized cost:

Deposits 1,163,433
Money Market Mutual Funds 9,577,794
Cash Held by Fiscal Agent 1,597,668
Total cash and equivalents amortized at cost 12,338,895 Total Investments $ 16,712,760
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 26 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 3 – Cash and Investments (Continued)
Investments Authorized by the California Government Code and the City’s Investment Policy The table below identifies the investment types that are authorized for the City by the California Government Code (or the City’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City’s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.

Maximum Maximum
Maximum Percentage Investment
Maturity of Portfolio In One Issuer
U.S. Treasury Obligations 5 years None None
U.S. Agency Securities 5 years None None
Banker's Acceptances 270 days 40% 30%
Commercial Paper 180 days 15% 10%
Time Certificates of Deposit 3 years 25% None
Negotiable Certificates of Deposit 3 years 30% None
Repurchase Agreements 1 year 20% None
Medium-Term Notes 5 years 30% 15%
Mutual Funds 5 years 20% 10%
Money Market Mutual Funds 5 years 15% 10%
Local Agency Investment Fund (LAIF) N/A None None
County Investment Pool N/A None None
Authorized Investment Type
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 27 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 3 – Cash and Investments (Continued)
Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City’s investment policy. The table below identifies the investment types that are authorized for investments held by the bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.

Maximum Maximum
Maximum Percentage Investment
Maturity of Portfolio In One Issuer
U.S. Treasury Obligations None None None
U.S. Agency Securities None None None
Banker's Acceptances 180 days None None
Commercial Paper 270 days None None
Money Market Mutual Funds N/A None None
Investment Contracts None None None
Certificates of Deposits 1 year None None
Repurchase Agreements 30 days None None
Local Agency Investment Fund (LAIF) N/A None None
Municipal Bonds None None None
Authorized Investment Type
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 28 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 3 – Cash and Investments (Continued)
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.

Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity:
12 Months 13 to 24 25 to 60 More than
Fair Value or Less Months Months 60 Months
Local Agency Investment Fund 4,362,911 $ 4,362,911 $ - $ - $ - $ Certificates of deposit 10,954 10,954 - - -
Money Market Accounts 9,577,794 9,577,794 - - -
Cash Held by Bond Trustee 1,597,668 1,597,668 - - -
Total $ 15,549,327 15,549,327 $ - $ - $ - $
Investment Type
Remaining Maturity (in months)
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 29 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 3 – Cash and Investments (Continued)
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 as of year-end for each investment type:

Minimum
Rating Unrated Aaa
Local Agency Investment Fund $ N/A 4,362,911 4,362,911 $ - $ Certificates of deposit N/A 10,954 10,954 -
Money Market Accounts N/A 9,577,794 9,577,794 -
Cash Held by Bond Trustee 1,597,668 N/A 1,597,668 -
Total $ 15,549,327 15,549,327 $ - $
Investment Type
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 were 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-wide investments as of June 30, 2021.

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 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, 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.

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 30 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 3 – Cash and Investments (Continued)
At June 30, 2021, the balances held in bank accounts were (comprised of deposits, CD’s and money market accounts) collateralized by the pledging financial institution, but not in the City’s name. At June 30, 2021, total cash held in bank was $11,441,112 of which $11,191,112 was in excess of federal depository insurance limits.

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.

LAIF is a governmental investment pool managed and directed by the California State Treasurer and is not registered with the Securities and Exchange Commission. An oversight committee comprised of California State officials and various participants provide oversight to the management of the fund. The daily operations and responsibilities of LAIF fall under the auspices of the State Treasurer's office. The City is a voluntary participant in the investment pool.

Note 4 – Notes Receivable and Deferred Loans Receivable Loans as of fiscal year ended June 30, 2021 were as follows:

Balance Balance
June 30, 2020 Additions Deletions June 30, 2021
Governmental Funds
Local Business Promissory Notes 79,844 $ - $ (12,880) $ 66,964 $ Developer Loans 110,046 - - 110,046
Rehabilitation Loans 63,602 1,948,708 (217,524) 1,794,786 $ 63,602 2,138,598 $ (230,404) $ 1,971,796 $
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 31 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 4 – Notes Receivable and Deferred Loans Receivable (Continued) Local Business Promissory Notes
Original Balance as of
Date of Note Principal Interest Rate Maturity Date Collateral June 30, 2021 April 1, 2011 200,000 2% October 1, 2024 Security Agreement $ 66,964 $ 66,964
Developer Loans
Original Balance as of
Date of Note Principal Interest Rate Maturity Date Collateral June 30, 2021 February 19, 2008 836,120 $ 4% January 1, 2028 Deed of Trust $ 110,046 Rehabilitation Loans
Original Balance as of
Date of Note Principal Interest Rate Maturity Date Collateral June 30, 2021 May 24, 2006 132,400 $ 2% May 24, 2036 Deed of Trust 132,400 $ May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 May 24, 2006 17,500 2% May 24, 2036 Deed of Trust 17,500 May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 November 18, 2008 111,184 3% November 18, 2038 Deed of Trust 125,803 December 23, 2008 97,346 3% December 23, 2038 Deed of Trust 97,346 May 12, 2004 43,500 3% March 12, 2024 Deed of Trust 19,690 March 5, 2009 16,000 0% March 5, 2024 Deed of Trust 13,226 April 8, 2008 23,802 0% April 8, 2023 Deed of Trust 15,513 July 8, 2008 57,440 0% July 8, 2023 Deed of Trust 7,500 July 22, 2008 48,643 0% July 22, 2023 Deed of Trust 36,943 February 19, 2008 170,000 4% February 19, 2028 Deed of Trust 90,491 June 17, 2010 22,450 0% June 17, 2025 Deed of Trust 6,041 May 1, 2012 105,000 3% May 1, 2022 Security Agreement 28,688 April 11, 2014 91,511 3% April 11, 2024 Security Agreement 23,585 April 18, 2014 59,486 0% April 18, 2044 Deed of Trust 60,089

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 32 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 4 – Notes Receivable and Deferred Loans Receivable (Continued) Rehabilitation Loans (Continued)
Original Balance as of
Date of Note Principal Interest Rate Maturity Date Collateral June 30, 2021 April 19, 2020 10,000 1% N/A N/A 10,000
April 18, 2020 10,000 1% N/A N/A 10,000
April 17, 2020 10,000 1% N/A N/A 10,000
April 10, 2020 10,000 1% N/A N/A 10,000
April 17, 2020 10,000 1% N/A N/A 10,000
April 22, 2020 10,000 1% N/A N/A 10,000
April 24, 2020 10,000 1% N/A N/A 10,000
April 24, 2020 10,000 1% N/A N/A 10,000
April 15, 2020 10,000 1% N/A N/A 10,000
April 15, 2020 10,000 1% N/A N/A 10,000
August 25, 2014 38,531 0% August 25, 2044 Deed of Trust 38,531 October 21, 2014 89,715 0% October 21, 2044 Deed of Trust 89,715 June 8, 2017 104,777 3% June 8, 2027 Security Agreement 92,222 April 20, 2020 10,000 1% N/A N/A 10,000
April 14, 2020 10,000 1% N/A N/A 10,000
April 20, 2020 10,000 1% N/A N/A 10,000
April 19, 2020 10,000 1% N/A N/A 10,000
April 15, 2020 10,000 1% N/A N/A 10,000
April 16, 2020 10,000 1% N/A N/A 10,000
April 14, 2020 10,000 1% N/A N/A 10,000
April 17, 2020 10,000 1% N/A N/A 10,000
April 21, 2020 10,000 1% N/A N/A 10,000
April 21, 2020 10,000 1% N/A N/A 10,000
July 24, 2019 70,000 2% July 24, 2031 Security Agreement 68,427 January 10, 2020 87,955 2% January 10, 2032 Security Agreement 84,149 September 30, 2015 175,000 2% September 30, 2030 Security Agreement 126,425 January 11, 2018 70,000 2% January 11, 2018 Security Agreement 61,002 January 25, 2021 10,000 2% December 25, 2033 Security Agreement/Lien 9,500 $ 1,794,786
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 33 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 5 – Capital Assets – Capital asset activities for the year ended June 30, 2021 were as follows:

Balance Balance
July 1, 2020 Additions Retirements June 30, 2021
Governmental Activities
Capital assets, not being depreciated
Land $ - 7,707,583 $ - $ 7,707,583 $
Total capital assets, not being depreciated - 7,707,583 - 7,707,583 Capital assets, being depreciated
Buildings and improvements 10,555,334 8,491 - 10,563,825 Infrastructure 36,520,519 - - 36,520,519
Machinery and equipment 30,000 2,780,139 - 2,810,139
Total capital assets, being depreciated 38,491 49,855,992 - 49,894,483 Less accumulated depreciation for
Buildings and improvements (2,752,120) (260,153) - (3,012,273) Infrastructure (23,626,494) (869,726) - (24,496,220)
Machinery and equipment (134,329) (2,402,748) - (2,537,077) Total accumulated depreciation (1,264,208) (28,781,362) - (30,045,570) Total capital assets, being depreciated, net (1,225,717) 21,074,630 - 19,848,913 Governmental activities capital assets, net $ (1,225,717) 28,782,213 $ - $ 27,556,496 $ Business-Type Activities
Capital assets, not being depreciated
Land 1,871,203 $ - $ (1,266,396) $ 604,807 $
Construction in progress 1,001,728 - 1,266,396 2,268,124 Total capital assets, not being depreciated 1,001,728 1,871,203 - 2,872,931 Capital assets, being depreciated
Buildings and improvements 46,939 - - 46,939
Infrastructure 24,422,183 - - 24,422,183
Machinery and equipment 506,765 1,610,540 - 2,117,305
Total capital assets, being depreciated 506,765 26,079,662 - 26,586,427 Less: accumulated depreciation (448,861) (8,995,107) - (9,443,968) Total capital assets, being depreciated, net 57,904 17,084,555 - 17,142,459 Business-type activities capital assets, net $ 1,059,632 18,955,758 $ - $ 20,015,390 $ Packet Pg. 61
Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 34 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 5 – Capital Assets (Continued)
Depreciation expense was charged to the following functions in the Statement of Activities:

Government Activities:

General Government 33,994 $
Public Safety 178,303
Public Works 529,473
Parks and Recreation 273,344
Community Development 249,094
$ 1,264,208
Business-Type Functions:

Water 242,246 $
Sewer 159,234
Solar 47,381
$ 448,861
Note 6 – Interfund Receivables, Payables and Transfers
Due From/To Other Funds
Current interfund balances and other short-term borrowings between funds were attributed to negative cash balances and are expected to be repaid shortly after the end of the fiscal year. The following is a summary of interfund balances as of June 30, 2021.

Due From Due To
General Fund 785,619 $ - $
Water Fund 60,357 -
Garbage Fund - 60,357
Infrastructure Improvement Fund - 471,180
Gas Tax Fund - 4,082
Supplemental Local Law Enforcement - 2,040
CDBG Urban County Grant Fund - 9,130
SB1 Road Fund - 28,735
American Rescue Plan - 270,452
$ 845,976 845,976 $
Advances
During fiscal year 2009-2010 the City of Gonzales formalized an advance agreement between the City’s General Fund and the Water Fund for the amount of $594,000. The amount is payable by the General Fund to the Water Fund over a period of 20 years at an interest rate of 1 percent payable in annual payments of $33,057. During the fiscal year 2020- 2021, the General Fund did not make any payments.

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 35 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 6 – Interfund Receivables, Payables and Transfers (Continued) Interfund Transfers
In general, the City uses interfund transfers to (1) move revenues from the funds that collect them to the funds’ that statute or budget requires to expend them, (2) use unrestricted revenues collected in the General Fund to help finance various programs and capital projects accounted for in other funds in accordance with budgetary authorization, and (3) move cash to debt service funds from the funds responsible for payment as debt service payments become due. In general, the effect of the interfund activity has been eliminated from the government-wide financial statements.

Transfers In Transfers Out
Major Governmental Funds:

General Fund 315,726 $ - $
CDBG Block Grant - (25,000)
Proprietary Funds:

Water - (387,590)
Sewer - (285,860)
Garbage - (298,647)
Solar Energy 461,853 -
Electric 230,000 -
Nonmajor Governmental Funds:

Gas Tax Fund 157,689 -
Supplemental Local Law Enforcement Fund - (221,018)
Public Safety Fund 294,287 -
California Breeze Maintenance District Fund - (19,000)
Canyon Creek Park Maintenance District Fund - (15,000)
Housing Successor - (10,000)
SB1 Road Fund - (157,689)
Cipriani Estates Park & Maintenance District Fund - (10,000) Gonzales Industrial Park Landscape & Maintenance Fund - (10,000) CDBG Urban County Grant Fund - (14,805)
Shopping Center Fund - (4,946)
$ (1,459,555) 1,459,555 $
The following describe the significant transfers made during the year:
 The Supplemental Local Law Enforcement Fund transferred $221,018 to the Public Safety Fund in order to finance various programs.
 Various nonmajor funds transferred $315,726 to the General Fund, principally as reimbursements to the General Fund for various costs including administrative costs.
 Various nonmajor funds transferred $157,689 to the Gas Tax Fund for various street related projects accounted for in the Gas Tax Fund.

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 36 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 7 – Long-Term Debt
The City generally incurs long-term debt to finance projects or purchase assets which will have useful lives equal to or greater than the related debt.

Long-term debt payable at June 30, 2021 was comprised of the following individual issues:

Balance Retirements/ Balance Current
July 1, 2020 Additions Restatement June 30, 2021 Portion Governmental Activities Long Term Debt
Capital Leases
Pool Site Lease 1,214,915 $ - $ (95,342) $ 1,119,573 $ 98,108 $ Note Payable
Measure X Loan - 2,001,218 (209,978) 1,791,240 191,140
Total Governmental Activities Debt $ 3,216,133 - $ (305,320) $ 2,910,813 $ 289,248 $ Business-Type Activities Long Term Debt
Note Payable
2005 Water Tank & Sewer Expansion Refinance 1,143,635 $ - $ (192,698) $ 950,937 $ 199,207 $ Capital Leases
Solar Panel Energy Lease 1,504,865 - (198,108) 1,306,757 218,947 Solar Panel Energy Lease 1,335,177 - (104,780) 1,230,397 107,820 Total Business-Type Activities Debt $ 3,983,677 - $ (495,586) $ 3,488,091 $ 525,974 $ Compensated Absences
Governmental Activities $ 64,355 330,009 $ - $ 394,364 $ Net Pension Liability
Governmental Activities $ 344,620 2,421,150 $ - $ 2,765,770 $ Business-type Activities $ 563,078 69,138 $ - $ 632,216 $ Packet Pg. 64
Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 37 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 7 – Long-Term Debt (Continued)
Pool Site Lease – On March 1, 2016, the City entered into an agreement with the Gonzales Public Financing Authority to lease the pool site for $1,575,000 at 2.88% interest rate. Lease terminates on February 1, 2031.

Measure X Loan – On August 23, 2017, the City entered into a project loan agreement for the street rehabilitation.

The amount financed was $2,500,000 at 2.5% and monthly payments are determined by the lender. 2005 Water Tank & Sewer Expansion Refinance – On November 1, 2005 the Gonzales Public Financing Authority entered into a funding agreement with a financial institution to provide $3,131,500 for the Sewer Expansion and Water Tank Projects (the Project). The Note accrues interest at a rate of 4.55 percent. Principal and interest payments are due semi-annually on June 30th and December 30th.

The Financing Authority simultaneously entered into an installment sale agreement with the City of Gonzales where the Authority sells the Project to the City and the City purchases the Project from the Authority. The installment sale agreement accrues interest at the rate of 4.55 percent (the same rate as the Note) and the City is required to make semi-annual installment payments to the Authority in the same amounts due under the Note. The Authority has assigned the right to receive these installment payments to the Note holder.

In June of 2012, the above note was refinanced. The amount financed was $2,475,000 at the interest rate of 3.35 percent and payable in semi-annual installments on December 29th and June 29th of each year beginning on December 29, 2012.

Solar Panel Energy Lease – In February of 2012, the City entered into a lease purchase agreement for the purchase of Solar Panels. The amount financed was $2,697,589 and is payable over a 14 year term with lease payments commencing in October of 2012.

Solar Panel Energy Lease – In March of 2016, the City entered into a lease purchase agreement for the purchase of Solar Panels. The amount financed was $1,679,189 and is payable over a 15 year term with lease payments commencing in August of 2016.

The annual requirement to amortize the principal and interest on all long-term debt at June 30, 2021 were as follows:

Years ending June 30, Principal Interest Principal Interest 2022 289,248 $ 76,323 $ 525,974 $ 116,207 $
2023 296,873 68,699 558,151 96,615
2024 304,699 60,873 592,217 75,727
2025 312,733 52,839 628,283 53,462
2026 320,979 44,592 1,044,001 80,039
2027-2031 94,189 1,386,282 139,465 3,020
$ 397,515 2,910,813 $ 3,488,091 $ 425,069 $
Governmental Activities Business-Type Activities
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 38 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 8 – Fund Balance
Fund Balance and Retained Earnings Deficits – The following is a summary of deficit fund balances and retained earnings as of June 30, 2021:

Nonmajor Funds
Infrastructure Improvements Fund (481,556) $
Gas Tax Fund (1,531)
Public Safety Special Revenue Fund (1,705)
CDBG Urban County Grant Fund (9,130)
$ (493,922)
This deficit is expected to be relieved from future revenues or transfers from other funds.

Note 9 – Operating Lease – Rooftops for Solar Panels
On March 2012, the City entered into a lease agreement with a Winery, for the rental of their rooftops in connection with the solar panels purchased by the City. The lease rental payments are equal to $5,000 annually for the first ten years and $10,000 for the sixteenth year, with a three percent annual escalator applied to each subsequent year of the agreement which terminates on December 31, 2042.

Note 10 – Deferred Outflows/Inflows of Resources
GASB No. 65 establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows or resources, certain items that were previously reported as assets and liabilities.

In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows or resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position or fund balance that applies to a future period(s) and thus, will not be recognized as an outflow of resources (expense/expenditure) until then. The City has one item to report in this category:
 The City has $1,405,050 in pension related items that qualify to be reported in deferred outflows of resources.

The pension related deferred outflows of resources are described in Note 13.

In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represent an acquisition of net position or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has two items to report in this category:
 The City has $319,187 in pension related items that qualify to be reported in deferred inflows of resources. The pension related deferred inflows of resources are described in Note 13.

Unavailable revenues arise only under a modified accrual basis of accounting and is reported only in the governmental funds balance sheet. The City has $1,971,796 in notes and loans receivable reported as deferred inflows of resources reported for unavailable revenues. Of this amount $1,605,382, $110,046, $66,964, and $189,404 is reported in the Community Block Grant Fund, Infrastructure Improvements Fund, AQMD Fund, and Housing Successor Fund, respectively See Note 4 for details.

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 39 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 11 – Risk Management
The City provides for workers' compensation and liability through a self-funded joint powers agency, Monterey Bay Area Self Insurance Authorities. Joint Powers Agreement (JPA) accounts are not separately maintained for each participant.

Description of Self-Insurance Pool Pursuant to Joint Powers Agreement The City is a member of the Monterey Bay Area Self Insurance Authority (MBASIA). MBASIA is composed of 10 California public entities and is organized under a joint powers agreement pursuant to California Government Code 6500 et seq. The purpose of MBASIA is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group-purchased insurance for property and other coverage.

General Liability: The City is self-insured for the first $10,000 of each liability claims. Claims above $10,000 up to $499,000 are paid by MBASIA. Claims above $499,000 up to $20 million are covered by insurance purchased by MBASIA.

Workers’ Compensation: The City does not retain a self-insured portion of workers’ compensation claims. Annual premiums for coverage up to statutory levels are paid to MBASIA based on the level of claims activity. A third party claims administrator is contracted by MBASIA to manage claims activity.

Adequacy of Protection
During the past three fiscal (claims) years none of the above programs of protection have had settlements or judgments that exceeded insured coverage. There have been no significant reductions in insured liability coverage from coverage in the prior year. Audited financial statements for MBASIA can be obtained from their management at 100 Pine Street, 11th Floor, San Francisco, CA 94111.

Note 12 – Commitments and Contingencies
General
The City participates in a number of Federal and State assisted grant programs which are subject to financial and compliance audits. Audits for these programs and the respective findings are to be determined at a future date, and the City expects the amount, if any, of the expenditures which may be disallowed by the granting agency to be immaterial.

The City is a defendant in various lawsuits and claims. The City attorney anticipates that actual or potential claims against the City, not covered by insurance, would not materially affect the financial position of the City.

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 40 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 13 – Pension Plan
Plan Description – The City contributes to the California Public Employees' Retirement System (PERS), an agent multiple-employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of PERS' annual financial report may be obtained from their Executive Office - 400 P Street - Sacramento, CA 95814.

Funding Policy – Active plan members in the Plan are required to contribute 7% of their covered salary for both miscellaneous and public safety members. The City contributes 3.5% of the employees required share of 7%. The City is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration. The required employer contribution rate for the fiscal year ended June 30, 2021 was 8.794%, 14.810%,

7.732%, and 11.114% for the miscellaneous, safety, PEPRA miscellaneous, and PEPRA safety, respectively. The contribution requirements of plan members are established by State statute and the employer contribution is established and may be amended by PERS.

The Plans’ provisions and benefits in effect at June 30, 2021, are summarized as follows:

Miscellaneous Safety
Hire Date
Prior to
January 1, 2013
Prior to
January 1, 2013
Benefit Formula 2.0% at 60;
maximum 2%
COLA

2.0% at 55;
maximum 2%
COLA
Benefit Vesting Schedule 5 years service 5 years service Benefit Payments monthly for life monthly for life
Retirement Age 60 55
Monthly Benefits, as a % of Eligible Compensation 2.00% 2.00% Required Employee Contribution Rates 7.00% 7.00%
Required Employer Contribution Rates 8.794% 14.810%
PEPRA
Miscellaneous
PEPRA Safety
Police and Fire
Hire Date
On or after
January 1, 2013
On or after
January 1, 2013
Benefit Formula 2.0% at 62;
maximum 2%
COLA

2.0% at 57;
maximum 2%
COLA
Benefit Vesting Schedule 5 years service 5 years service Benefit Payments monthly for life monthly for life
Retirement Age 62 57
Monthly Benefits, as a % of Eligible Compensation 2.00% 2.00% Required Employee Contribution Rates 6.25% 9.50%
Required Employer Contribution Rates 7.732% 11.114%
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 41 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 13 – Pension Plan (Continued)
Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all employers be determined on an annual basis by the actuary and shall be effective on July 1 following the notice of change in the rate. Funding contributions for the Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.

For the year ended June 30, 2021, the contributions recognized as part of the pension expense is as follows:

Contributions – employer $ 569,900
Contributions – employee $ 246,961
Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions As of June 30, 2021, the City reported net pension liabilities for its proportionate shares of the net pension liability as follows:

Proportionate Share of
Net Pension Liability
Total Net Pension Liability – Miscellaneous $ 1,769,575 Total Net Pension Liability – Safety $ 1,628,411
General Information about the Pension Plan
The City’s net pension liability is measured as the proportionate share of the net pension liability. The net pension liability of each Plan is measured as of June 30, 2020, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2019 rolled forward to June 30, 2020 using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability for the Plan as of June 30, 2020 and 2021 was as follows:

Miscellaneous Safety
Proportion – June 30, 2020 0.03936% .02256%
Proportion – June 30, 2021 0.04195% .02444%
Change – Increase/(Decrease) 0.00260% .00188%

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 42 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 13 – Pension Plan (Continued)
For the year ended June 30, 2021, the City recognized pension expense of $917,602. At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:

Deferred Outflows
of Resources
Deferred Inflows
of Resources
Pension contributions subsequent to
measurement date 569,900 $ - $
Change in employer's proportion 529,723 (117,806)
Changes of assumptions - (18,045)
Difference between employer's contributions and
proportionate share of contributions - (183,336)
Differences between projected and actual investment
earnings - 87,961
Differences between expected and actual
experience - 217,466
Total 1,405,050 $ (319,187) $
The $569,900 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 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:

Year Ended
June 30
2022 136,280 $
2023 249,433
2024 87,302
2025 42,946
Total 515,961 $
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 43 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 13 – Pension Plan (Continued)
Actuarial Methods and Assumptions – The collective total pension liability for the June 30, 2020 measurement period was determined by an actuarial valuation as of June 30, 2019, with update procedures used to roll forward the total pension liability to June 30, 2020. The collective total pension liability was based on the following assumptions:

Valuation Date June 30, 2019
Measurement Date June 30, 2020
Actuarial Cost Method Entry-Age Normal Cost Method in
accordance with the requirements of
GASB Statement No. 68
Actuarial Assumptions:

Discount Rate 7.15%
Inflation 2.50%
Payroll Growth 2.50%
Salary Increases Varies by Entry Age and Service
Mortality Rate Table Derived using CalPERS' Membership
Date for all Funds
1 Post Retirement Benefit
Increase
Contract COLA up to 2.75% until
Purchasing Power Protection
Allowance Floor on Purchasing Power
applies
1 The mortality table used was developed based on CalPERS-specific data. The table includes 15 years of mortality improvements using Society of Actuaries Scale 90% of scale MP 2016. For more details on this table, please refer to the December 2017 experience study report (based on CalPERS demographic data from 1997 to 2015) that can be found on the CalPERS website.

All other actuarial assumptions used in the June 30, 2018 valuation was based on the results of an December 2017 experience study report (based on CalPERS demographic data from 1997 to 2015), including updates to salary increase, mortality and retirement rates. The Experience Study can be obtained at CalPERS’ website.

Change of assumptions – None.

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 44 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 13 – Pension Plan (Continued)
Discount rate – The discount rate used to measure the total pension liability for PERF C 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. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected rate of 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 equivalent to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.

The long-term expected real rates of return by asset class can be found in CalPERS’ Comprehensive Annual Financial Report for the fiscal year ended June 30, 2020.

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

Asset Class1
New Strategic
Allocation
Real Return
Years 1-102
Real Return
Years 11+3
Global Equity 50% 4.80% 5.98%
Fixed Income 28% 1.00% 2.62%
Inflation Assets 0% 0.77% 1.81%
Private Equity 8% 6.30% 7.23%
Real Estate 13% 3.75% 4.93%
Infrastructure and Forestland 0% 0.00% 0.00%
Liquidity 1% 0.00% -0.92%
Total 100%
1 In the System’s CAFR, Fixed Income is included in Global Debt Securities; Liquidity is included in Shortterm Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities 2 An expected inflation of 2% used for this period
3 An expected inflation of 2.9% used for this period
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 45 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
Note 13 – Pension Plan (Continued)
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the City’s proportionate share of the net pension liability for each Plan, calculating using the discount rate of each Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower (6.15%) or 1-percentage point higher (8.15%) than the current rate:
1% Decrease
(6.15%)
Current Discount
Rate
(7.15%)
1% Increase
(8.15%)
Miscellaneous 2,930,303 $ 1,769,575 $ 810,502 $
Safety 2,775,055 $ 1,628,411 $ 687,481 $
Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net position is available in the separately issue CalPERS financial reports.

Note 14 – Subsequent Events
The City evaluated subsequent events for recognition and disclosure through March 1, 2022, the date which these financial statements were available to be issued. Management concluded that no material subsequent events have occurred since June 30, 2021 that required recognition or disclosure in such financial statements.

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report)

REQUIRED SUPPLEMENTARY INFORMATION
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 46 CITY OF GONZALES

BUDGETARY COMPARISON SCHEDULE

GENERAL FUND
YEAR ENDED JUNE 30, 2021
Variance with
Final Budget
Budgeted Amounts Actual Positive/
Original Final Amounts (Negative)
Revenue
Taxes and assessments 3,920,800 $ 4,193,552 $ 4,610,804 $ 417,252 $ Licenses, permits and impact fees 292,100 195,552 162,984 (32,568) Intergovernmental 248,500 552,298 991,759 439,461
Charges for services 42,000 20,806 69,306 48,500
Fines and forfeitures 53,000 55,538 72,274 16,736
Use of money and property 55,000 55,000 53,634 (1,366)
Other 405,450 500,950 339,567 (161,383)
Total revenue 5,573,696 5,016,850 6,300,328 726,632
Expenditures
Current
General government 633,928 722,761 1,152,041 (429,280)
Public safety 3,643,050 3,530,678 3,841,344 (310,666)
Public works 183,950 227,632 382,327 (154,695)
Parks and recreation 649,295 685,699 785,255 (99,556)
Community development 335,183 564,564 444,644 119,920
Debt service
Principal 95,342 95,342 95,342 -
Interest and fiscal charges 34,308 34,308 34,294 14
Total expenditures 5,860,984 5,575,056 6,743,738 (882,754) Revenue over (under) expenditures (287,288) (558,206) (443,410) (156,122) Other Financing Sources
Sale of assets - - 4,672 4,672
Transfers in (out) - net 131,667 87,200 315,726 184,059 Net Change in Fund Balance $ (155,621) (471,006) $ (123,012) $ 32,609 Fund Balance
Beginning of year 1,626,093
End of year $ 1,503,081
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BUDGETARY COMPARISON SCHEDULE

COMMUNITY DEVELOPMENT BLOCK GRANT
YEAR ENDED JUNE 30, 2021
Variance with
Final Budget
Budgeted Amounts Actual Positive/
Original Final Amounts (Negative)
Revenue
Loan repayments 115,000 $ 85,000 $ 133,994 $ 48,994 $
Use of money and property 15,000 15,000 64,685 49,685
Total revenue 130,000 100,000 198,679 98,679
Expenditures
Public works 120,000 120,000 24,762 95,238
Community development 71,000 271,000 61,245 9,755
Total expenditures 391,000 191,000 86,007 104,993
Revenue over expenditures (261,000) (91,000) 112,672 203,672 Other Financing Sources/(Uses)
Transfers in/(out) - net (25,000) (25,000) (25,000) -
Change in Fund Balance $ (116,000) (286,000) $ 87,672 $ 203,672 Fund Balance
Beginning of year 244,499
End of year $ 332,171
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 48 CITY OF GONZALES

BUDGETARY COMPARISON SCHEDULE

MEASURE X FUND
YEAR ENDED JUNE 30, 2021
Variance with
Final Budget
Budgeted Amounts Actual Positive/
Original Final Amounts (Negative)
Revenue
Taxes and assessments $ 233,147 233,147 279,520 $ 46,373 $ Total revenue 233,147 233,147 279,520 46,373
Expenditures
Debt service
Principal 186,517 186,517 209,978 (23,461)
Interest 80,938 46,630 46,645 34,293
Total expenditures 233,147 267,455 256,623 10,832
Change in Fund Balance $ (34,308) - $ 22,897 $ 57,205
Fund Balance
Beginning of year -
End of year $ 22,897
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 49 CITY OF GONZALES SCHEDULE OF THE CITY’S NET PROPORTIONATE SHARE OF NET PENSION LIABILITY LAST 10 YEARS* YEAR ENDED JUNE 30, 2021 Proportion of the net pension
liability
Proportionate share of the net
pension liability
Covered -
employee
payroll
Proportionate share of the net pension
liability as a percentage of
covered-employee payroll
Plan's fiduciary net
position
Plan's fiduciary net
position as a percentage of
the Total Pension Liability
2015 0.05204% 1,286,053 $ 1,112,163 $ 115.64% 4,587,216 $ 78.100% 2016 0.03955% 1,084,895 $ 982,675 $ 110.40% 5,044,102 $ 82.298% 2017 0.03916% 1,360,265 $ 947,145 $ 143.62% 4,725,496 $ 77.648% 2018 0.03895% 1,535,641 $ 1,378,772 $ 111.38% 5,518,046 $ 78.229% 2019 0.01890% 712,326 $ 1,366,906 $ 52.11% 4,468,191 $ 86.250% 2020 0.03936% 1,576,056 $ 1,678,041 $ 93.92% 6,694,872 $ 80.945% 2021 0.04195% 1,769,575 $ 1,820,163 $ 97.22% 6,952,747 $ 79.712% 2015 0.02316% 868,678 $ 992,049 $ 87.56% 3,422,038 $ 79.750%2016 0.01684% 693,833 $ 1,039,081 $ 66.77% 3,797,755 $ 84.550% 2017 0.02010% 1,040,872 $ 1,098,540 $ 94.75% 4,298,623 $ 84.550% 2018 -0.02090% 1,248,529 $ 1,181,291 $ 105.69% 4,968,043 $ 79.916% 2019 0.02135% 1,252,487 $ 1,297,002 $ 96.57% 5,511,384 $ 81.483% 2020 0.02256% 1,408,172 $ 1,395,445 $ 100.91% 6,011,305 $ 81.021% 2021 0.02444% 1,628,411 $ 1,509,649 $ 107.87% 6,814,985 $ 80.714% Miscellaneous
Safety
*Fiscal year 2014-15 was the first year of implementation, therefore only seven years are shown. Changes of Assumptions: None Packet Pg. 78
Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial 50 CITY OF GONZALES SCHEDULE OF CONTRIBUTIONS LAST 10 YEARS* YEAR ENDED JUNE 30, 2021 Contractually required
contribution (actuarially
determined)
Contributions in relation to the
actuarially determined
contributions
Contributions
deficiency
(excess) Covered-employee payroll
Contributions as a
percentage of coveredemployee payroll
2015 160,656 $ (160,656) $ - $ 1,112,163 $ 14.45%
2016 137,778 $ (137,778) $ - $ 982,675 $ 14.02%
2017 185,525 $ (185,525) $ - $ 947,145 $ 19.59%2018 231,233 $ (231,233) $ - $ 1,378,772 $ 16.77% 2019 149,308 $ (149,308) $ - $ 1,366,906 $ 10.92%
2020 189,303 $ (189,303) $ - $ 1,678,041 $ 8.90%
2021 232,321 $ (232,321) $ - $ 1,820,163 $ 10.40%
2015 161,844 $ (161,844) $ - $ 992,049 $ 16.31%2016 152,643 $ (152,643) $ - $ 1,039,081 $ 14.69% 2017 159,930 $ (159,930) $ - $ 1,098,540 $ 14.56%
2018 185,473 $ (185,473) $ - $ 1,181,291 $ 15.70%
2019 193,362 $ (193,362) $ - $ 1,297,002 $ 14.91%
2020 235,139 $ (235,139) $ - $ 1,395,445 $ 16.85%
2021 274,368 $ (274,368) $ - $ 1,509,649 $ 18.17%
Miscellaneous
Safety
*Fiscal year 2014-15 was the first year of implementation, therefore only six years are shown.

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SUPPLEMENTAL ONLY INFORMATION
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) See accompanying notes. 51
CITY OF GONZALES COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2021 California
Supplemental Ag Industrial Breeze
Infrastructure Gas Local Law Public Park Federal Housing Maintenance Improvements Tax Enforcement Safety Grant AQMD Successor District ASSETS
Cash and investments - $ - $ - $ 807 $ 4,900 $ 35,245 $ 447,818 $ 125,720 $ Accounts receivable -
Due from other governments - 17,625 29,655 1,166 - - - - Interest receivable - - - - - - - 112
Notes and loans receivable - 110,046 - - - 66,964 189,404 - Total assets $ 17,625 110,046 $ 29,655 $ 1,973 $ 4,900 $ 102,209 $ 637,222 $ 125,832 $

LIABILITIES
Accounts payable and accrued expense 10,376 15,074 - 3,678 - - - 2,178 Due to other funds 4,082 471,180 2,040 - - - - -
Total liabilities 19,156 481,556 2,040 3,678 - - - 2,178

DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - 110,046 - - - 66,964 189,404 -
Total deferred inflows of resources - 110,046 - - - 66,964 189,404 -

FUND BALANCE
Restricted
Lighting, landscape & park maintenance - - - - - - - 123,654 Low-income housing activities - - - - - 35,245 447,818 - Community development - - - - 4,900 - - -
Street improvements - - - - - - - -
Public safety - - 27,615 - - - - -
Unassigned (1,531) (481,556) - (1,705) - - - -
Total fund balance (481,556) (1,531) 27,615 (1,705) 4,900 35,245 447,818 123,654 Total liabilities, deferred inflows
Special Revenue
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial See accompanying notes. 52
CITY OF GONZALES COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS (CONTINUED) JUNE 30, 2021 Cipriani Gonzales
Estates Park & Industrial Park Intersection Circulation Maintenance Landscape & Improvements Police Park Fire System District Maintenance Impact Fees Impact Fees Impact Fees Impact Fees Impact Fees ASSETS
Cash and investments 668,546 $ 296,273 $ 385,389 $ 33,024 $ 1,999 $ 14,463 $ 252,550 $ Due from other governments - - - - - - -
Interest receivable 287 60 54 - - - -
Notes and loans receivable - - - - - - -
Total assets $ 296,333 668,833 $ 385,443 $ 33,024 $ 1,999 $ 14,463 $ 252,550 $

LIABILITIES
Accounts payable and accrued expense 1,037 652 - - - 1,532 4,110 Due to other funds - - - - - - -
Total liabilities 652 1,037 - - - 1,532 4,110

DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - - - - - - -
Total deferred inflows of resources - - - - - - -

FUND BALANCE
Restricted
Lighting, landscape & park maintenance 667,796 295,681 - - - - - Low-income housing activities - - - - - - -
Community development - - 385,443 - 1,999 - -
Street improvements - - - - - - 248,440
Public safety - - - 33,024 - 12,931 -
Unassigned - - - - - - -
Total fund balance 667,796 295,681 385,443 33,024 1,999 12,931 248,440 Total liabilities, deferred inflows
of resources and fund balance 668,833 $ 296,333 $ 385,443 $ 33,024 $ 1,999 $ 14,463 $ 252,550 $ Special Revenue
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial See accompanying notes. 53
CITY OF GONZALES COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS (CONTINUED) JUNE 30, 2021 Debt Service
Storm Total
Drainage Public Public Uses Sphere of CDBG American Non-major Facility Facilities Mitigation Influence General Plan SB1 Urban Rescue Shopping Governmental Impact Fees Impact Fees Fees Impact Fees Impact Fees Road County Grant Plan Center Funds ASSETS
Cash and investments 38,823 $ 102,150 $ 8,658 $ 259,603 $ 81,381 $ - $ - $ - $ - $ 4,207,589 $ Due from other governments - - - - - 28,735 - 270,452 - 347,633 Interest receivable - 42 9 86 1 - - - - 1,095
Notes and loans receivable - - - - - - - - - 366,414
Total assets $ 102,192 38,823 $ 8,667 $ 259,689 $ 81,382 $ 28,735 $ - $ 270,452 $ - $ 4,922,731 $

LIABILITIES
Accounts payable and accrued expense 1,532 $ 2,249 $ 1,532 $ - $ - $ - $ - $ - $ - $ 44,863 $ Due to other funds - - - - - 28,735 9,130 270,452 - 785,619 Total liabilities 2,249 1,532 1,532 - - 28,735 9,130 270,452 - 830,482

DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - - - - - - - - - 366,414
Total deferred inflows of resources - - - - - - - - - 366,414

FUND BALANCE
Restricted
Lighting, landscape & park maintenance - - - - - - - - - 2,536,902 Low-income housing activities - - - - - - - - - 483,063 Community development 37,291 99,943 7,135 259,689 81,382 - - - - 877,782 Street improvements - - - - - - - - - 248,440
Public safety - - - - - - - - - 73,570
Unassigned - - - - - - (9,130) - - (493,922)
Total fund balance 37,291 99,943 7,135 259,689 81,382 - (9,130) - - 3,725,835 Total liabilities, deferred inflows
of resources and fund balance 38,823 $ 102,192 $ 8,667 $ 259,689 $ 81,382 $ 28,735 $ - $ 270,452 $ - $ 4,922,731 $ Special Revenue
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial See accompanying notes. 54
CITY OF GONZALES COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE NON-MAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2021 California
Supplemental Ag Industrial Breeze
Infrastructure Gas Local Law Public Park Federal Housing Maintenance Improvements Tax Enforcement Safety Grant AQMD Successor District Revenue
Taxes and assessments - $ - $ - $ - $ - $ - $ - $ 144,153 $ Licenses, permits and impact fees - - - 5,077 - - - -
Intergovernmental - 384,993 220,996 - - - - -
Use of money and property - - 22 - - 1,378 63 812
Loan repayments - - - - - 12,881 59,945 -
Other revenue - - - - - - - -
Total revenue 384,993 - 221,018 5,077 - 14,259 60,008 144,965 Expenditures
Public safety - - - 299,364 - - - -
Public works 95,689 544,213 - - - 10,000 - -
Parks and recreation - - - - - - - 130,768
Community development - - - - - - 3,750 -
Capital outlay - - - - - - - -
Total expenditures 544,213 95,689 - 299,364 - 10,000 3,750 130,768 Revenue over (under) expenditures (95,689) (159,220) 221,018 (294,287) - 4,259 56,258 14,197 Other financing sources/(uses)
Operating transfers in/(out) - net 157,689 - (221,018) 294,287 - - (10,000) (19,000) - 157,689 (221,018) 294,287 - - (10,000) (19,000)
Change in Fund Balance (1,531) (95,689) - - - 4,259 46,258 (4,803) Fund Balance
Beginning of year (385,867) - 27,615 (1,705) 4,900 30,986 401,560 128,457 End of year (481,556) $ (1,531) $ 27,615 $ (1,705) $ 4,900 $ 35,245 $ 447,818 $ 123,654 $ Special Revenue
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial See accompanying notes. 55
CITY OF GONZALES COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE NON-MAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2021 Cipriani Gonzales
Estates Park & Industrial Park Intersection Circulation Maintenance Landscape & Improvements Police Park Fire System District Maintenance Impact Fees Impact Fees Impact Fees Impact Fees Impact Fees Revenue
Taxes and assessments 87,275 $ 110,837 $ - $ - $ - $ - $ - $ Licenses, permits and impact fees - - - 6,057 - 20,192 154,548 Intergovernmental - - - - - - -
Use of money and property 2,177 496 575 - - 4 113
Loan repayments - - - - - - -
Other revenue - - - - - - -
Total revenue 111,333 89,452 575 6,057 - 20,196 154,661 Expenditures
Public safety - - - - - 4,876 -
Public works 7,827 29,796 - - - - -
Parks and recreation 9,675 - - - - - -
Community development - - - - - - 110,707
Capital outlay - - - - - 30,000 -
Total expenditures 29,796 17,502 - - - 34,876 110,707
Revenue over (under) expenditures 71,950 81,537 575 6,057 - (14,680) 43,954 Other financing sources/(uses)
Operating transfers in/(out) - net (10,000) (10,000) - - - - - (10,000) (10,000) - - - - -
Change in Fund Balance 71,537 61,950 575 6,057 - (14,680) 43,954Fund Balance Beginning of year 605,846 224,144 384,868 26,967 1,999 27,611 204,486 End of year 667,796 $ 295,681 $ 385,443 $ 33,024 $ 1,999 $ 12,931 $ 248,440 $ Special Revenue
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial See accompanying notes. 56
CITY OF GONZALES COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE NON-MAJOR GOVERNMENTAL FUNDS (CONTINUED) YEAR ENDED JUNE 30, 2021 Debt Service
Storm Total
Drainage Public Public Uses Sphere of CDBG American Non-major Facility Facilities Mitigation Influence General Plan SB1 Urban Rescue Shopping Governmental Impact Fees Impact Fees Fees Impact Fees Impact Fees Road County Grant Plan Center Funds Revenue
Taxes and assessments - $ - $ - $ - $ - $ 157,689 $ - $ - $ 4,946 $ 733,712 $ Licenses, permits and impact fees 31,802 38,365 - 46,288 - - - - - 302,329 Intergovernmental - - - 142,287 - - - 270,452 - 1,018,728 Use of money and property - 302 67 702 24 - - - - 10,183 Loan repayments - - - - - - - - - 72,826
Other revenue - - - 40,000 - - - - - 40,000
Total revenue 38,667 31,802 67 229,277 24 157,689 - 270,452 4,946 2,177,778 Expenditures
General governement - - - - - - - 270,452 - 270,452
Public safety - - - - - - - - - 304,240
Public works - - - - - - - - - 687,525
Parks and recreation - - - - - - - - - 200,151
Community development 15,668 6,794 6,016 302,943 - - - - - 445,878 Capital outlay - - - - - - - - - 30,000
Total expenditures 6,794 15,668 6,016 302,943 - - - 270,452 - 1,938,246 Revenue over (under) expenditures 16,134 31,873 (5,949) (73,666) 24 157,689 - - 4,946 239,532 Other financing sources/(uses)
Operating transfers in/(out) - net - - - - - (157,689) (14,805) - (4,946) (10,482) - - - - - (157,689) (14,805) - (4,946) (10,482)
Change in Fund Balance 31,873 16,134 (5,949) (73,666) 24 - (14,805) - - 229,050 Fund Balance
Beginning of year 68,070 21,157 13,084 333,355 81,358 - 5,675 - - 3,496,784 End of year 37,291 $ 99,943 $ 7,135 $ 259,689 $ 81,382 $ - $ (9,130) $ - $ - $ 3,725,835 $ Special Revenue
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial BRYANT L. JOLLEY
CERTIFIED PUBLIC ACCOUNTANTS Bryant L. Jolley C.P.A.

Ryan P. Jolley C.P.A.

Darryl L. Smith C.P.A.

Luis A. Perez C.P.A.

Lan T. Kimoto
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL

OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER

MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS

PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Mayor and City Council
City of Gonzales, 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, each major fund, and the aggregate remaining fund information of the City of Gonzales, California, (the “City”) as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise City’s basic financial statements, and have issued our report thereon dated March 1, 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 financial statements, but not for the purpose of expressing an opinion on the effectiveness of City’s internal control. Accordingly, we do not express an opinion on the effectiveness of 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. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 59 Compliance and Other Matters
As part of obtaining reasonable assurance about whether City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statementss. 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 required to be reported under Government Auditing Standards.

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 entity’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 entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

March 1, 2022
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Attachment: 2021 Gonzales Financial Statements (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report)

CITY OF

GONZALES

MANAGEMENT
REPORT
FOR THE YEAR ENDED JUNE 30, 2021
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Attachment: 2021 Gonzales Management Letter (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report)

TABLE OF

CONTENTS
Page
Required Communications 1 – 3
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Attachment: 2021 Gonzales Management Letter (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) BRYANT L. JOLLEY
CERTIFIED PUBLIC ACCOUNTANTS Bryant L. Jolley C.P.A.

Ryan P. Jolley C.P.A.

Darryl L. Smith C.P.A.

Luis A. Perez C.P.A.

Lan T. Kimoto
901 “N” STREET, SUITE 104 FIREBAUGH, CALIFORNIA 93622 PHONE 559.659.3045 FAX 559.659.0615 To the Honorable Mayor and City Council
City of Gonzales, California
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Gonzales for the year ended June 30, 2021. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and, if applicable, Government Auditing Standards and the Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated July 1, 2020.

Professional standards also require that we communicate to you the following information related to our audit.

Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by City of Gonzales are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2021. We noted no transactions entered into by the City during the year that were both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions for which there is a lack of authoritative guidance and consensus. All significant transactions have been recognized in the financial statements in the proper period.

We noted no transactions entered into by City of Gonzales during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.

Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were:

Management has determined the economic useful lives of fixed assets based on past history of similar types of assets, future plans as to their use, and other factors that impact their economic value to the City. We evaluated the key factors and assumptions used by management in computing depreciation expense and believe that it is reasonable in relation to the financial statements taken as a whole.

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Attachment: 2021 Gonzales Management Letter (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 2 Management’s estimate of the net pension liability and related deferrals is based on actuarial valuations which include significant assumptions regarding discount rate, inflation, payroll growth, projected salary increases and investment rate of return. We evaluated the key factors and assumptions used to develop the liability and related deferrals in determining that it is reasonable in relation to the financial statements taken as a whole.

The financial statement disclosures are neutral, consistent, and clear.

Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.

Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole.

Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.

Management Representations
We have requested certain representations from management that are included in the management representation letter dated March 1, 2022.

Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to City of Gonzales’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as City of Gonzales’s auditors.

However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

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Attachment: 2021 Gonzales Management Letter (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) 3 Other Matters
We applied certain limited procedures to the Budgetary Comparison Schedules, Proportionate Share of Net Pension Liability, and Schedule of Contributions which are required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.

We were engaged to report on supplementary information, as listed in the table of contents, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.

Restriction on Use
This information is intended solely for the information and use of the City Council and management of City of Gonzales and is not intended to be, and should not be, used by anyone other than these specified parties.

Very truly yours,
March 1, 2022
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Attachment: 2021 Gonzales Management Letter (2375 : Fiscal Year 2020-2021 Audited Financial Statements and Management Report) City of Gonzales

CITY MANAGER DEPARTMENT

STAFF REPORT
TO: Honorable Mayor Rios and City Council
DATE: March 21, 2022
FROM: Rene Mendez, City Manager
SUBJECT: Fiscal Year 2021-2022 Mid-Year Financial Report

RECOMMENDATION
It is recommended that your Council:
• Review and accept the FY 2021-2022 Mid-Year Financial Report; • Approve the Budget Adjustments as presented Attachment 1 under the Projection Budget Column Heading; and
• Approve the Interfund Loan Agreement between the Water Enterprise Fund and the SB1 Gas Tax Fund to pay for the City’s portion of the Gloria/Iverson/Johnson Canyon Road Project.

BACKGROUND
The Mid-Year Financial Report is intended to provide a status of the FY 2021-2022 City Budget midway through the Fiscal Year. The report is based on six months of expenditure and revenue activity ending December 31, 2021. Attachment 1 reflects a detail line-item report of all the budgets and funds, and the adjustments requested.

REVIEW AND ANALYSIS
Overall Status-General Fund
Overall, with the exception of a few areas, the City’s budget can be characterized as performing as anticipated. One area that is recommended for adjustment is the Public Works budget that reflects the appropriation of two existing positions in Public Works that were inadvertently left of the salaries and benefits allocation in the FY 2021-2022 Approved City Budget.

AGENDA
ITEM
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The year-end projection for the General Fund for expenditures is $7,259,278, which is $305,472 or 4% higher; and for revenues is $6,892,990, which is $154,184 or 2% higher than the Original Budget, which results in an increase to the Net City Cost of $151,288.

While the project numbers indicate an increase from the Original Budget, with the exception of Public Works budget, they reflect adjustments already approved by the Council. Specifically, the adjustments in the Amended Budget reflect the (1) modest employee salary and benefit increases authorized via the 3- year Memorandum of Understandings (MOUs) with the City’s three bargaining groups, and the adjustments to the two employee salaries and benefits resolutions; and (2) the conversion of three 8- month seasonal Firefighter positions to permanent full-time positions. While the Net Cost has increased slightly, as part of the FY 2021-2022 Approved Budget, the General Fund started the Fiscal Year with a healthy Fund Balance that can cover the increased net cost.

However, it is important to realize that this Mid-Year review is based on six months of activity and while we try our best, it is not an exact science, and there are likely to be some changes in expenditures and revenues. We will have a better handle of final activity in the Year-End Financial Report.

However, as it is typical with projections, there are a few expected changes in expenditures and revenues worth noting.

General Fund Expenditures
For example, some of the major General Fund changes in expenditures reflect:

1. In the General Government Building (Budget Unit 170), the increase is due to engineering work done on the emergency backup generator projects that is mostly being funded with a state grant.

2. A net increase in the Police Department Budget which is primarily the result of higher overtime costs to cover vacant positions. However, the Department has aggressively worked to recruit and fill positions and is making steady progress. Several positions have been filled and there are currently candidates going through the hiring process, which will hopefully result in the filling of the remaining vacant positions by the end of the fiscal year.

3. In the Fire Department Budget, the increase is due to the conversion of three 8-month seasonal Firefighter positions to permanent full-time positions.

4. In Public Works the increase is due to reflecting the appropriation for two existing positions that were inadvertently not included in the FY 2021-2022 Approved City Budget.

5. In the Recreation Budget, an allocation for existing personnel that had been incorrectly reflected in the After-School program budget.

6. The increase in the City Aquatics Budget is due to higher than anticipated program costs. Due to the uncertainties created by the pandemic, it was difficult to reflect and budget program costs in the FY 2021-2022 City Budget.

General Fund Revenues
On the revenue side, the changes in the General Revenues Budget, halfway through the Fiscal Year, most revenues are tracking as expected; however, the budget does reflect modest increases in Property Taxes, Sales Taxes, and Garbage Franchise Fees, which is helping to offset some of the increase in expenditures.

At this point, we are taking a very conservative approach for all revenues, but it is likely based on some recent activity and statewide projections, revenues may come in higher than anticipated. This picture will be significantly clearer as part of the Third Quarter Financial Report.

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It is also important to point out that while no adjustments are reflected to building and planning permit fee revenues based on the anticipated activity, it is possible that these revenues may come in less than anticipated.

Overall Status – Non-General Fund
Overall, most of the non-general fund budgets are on track and healthy and reflect no changes. However, the following few funds reflect requested changes.

COVID-19 (Fund 110) – reflects a significant increase in revenues and expenditures as a result of the grant received that was not final when the FY 2021-2022 City Budget was approved. These funds are being utilized to pay for the Community Health Workers and rental, utilities, and food assistance programs.

Street Fund (Fund 130) – reflects a decrease of ($47,086) in the Fund’s Net Cost due to an adjustment to retirement costs and a slight uptick to the in-State revenues.

Except for a few minor adjustments, mainly to expected revenues, All Impact Funds and Assessment Funds are on track.

Both of the Successor Agency Funds are tracking as expected.

Water Enterprise Fund (Fund 520) and Sewer Enterprise Fund (Fund 530) have been increased on the expenditure side to cover an increase in loan to the Gonzales Electric Authority for the microgrid. A major milestone for the project was reached several weeks ago with the certification of the Environmental Initial Study and Mitigated Negative Declaration.

Garbage Fund (Fund 540) – has been adjusted to reflect an increase in the franchise fee to the General Fund as a result of increased activity.

Gonzales Electric Authority (Fund 560) – reflects an increase in revenues (transfers from sewer and water) and contractual services to complete all the work necessary to bring this project on-line. However, because most of these expenditures will be covered by Concentric or by GEA when the project goes to financing, all of the City expenditures will be reimbursed.

Interfund Loan Agreement
The loan agreement (Attachment 2) is recommended from the Water Enterprise Fund to the SB1 Gas Tax Fund to reimburse the County for the City’s portion of the cost, for the Gloria/Iverson/Johnson Canyon Road Project as per the agreement with the County. Based on the projected annual SB1 funds that will be received by the City, it is anticipated that this loan will be repaid in 5 years or less.

Explain Recommendation and How it Supports the Vision
Gonzales will continue to be a safe, clean, family-friendly community, diverse in its heritage, and committed to working collaboratively to preserve and retain its small-town charm.

Explain: The Annual Mid-Year Budget Report, while somewhat of a ministerial action, is a significant financial item presented to your Council for review. It supports the Vision, because it is a mid-way point look at the Budget that provides the necessary information to your Council and the public, to keep track of the resources necessary to carry out the Vision.

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Overall, the allocation of resources presented in the Mid-Year Budget Report under the Amended Budget Column, sets forth a budget that is within the financial resources of the City, but continues key programs necessary to further the Vision.

Explain how the Recommendation Directly Implements the Mission The City Council and Staff of the City of Gonzales will realize our Vision by providing the leadership, commitment, and resources necessary to provide excellent services that enhance the quality of life of our diverse community.

Explain: Please see the Vision above.

City services will be delivered in a cost-effective, respectful, and friendly manner to ensure the safety and well-being of the residents and the promotion of business, recreational, housing and employment opportunities in an environmentally sustainable manner.

Explain: The Mid-Year Report reflects adjustments that are well within available resources Strong fiscal policies allow us to provide appropriate infrastructure for:
• Public Safety X Yes ____No NA
• Housing Yes ____No X NA
• Recreation X Yes ____No NA
• Continuation of a proactive recreational programs like Kid-Power the Gonzales Youth Council Mental Health Project, and with the GUSD jointly funding a Clinical Social Worker Position, the contract with Sun Street, work on the annexation of the new growth area and other similar programs and initiatives to list a few.
• Environment X Yes ____No ____NA
• The City’s participation with 3CE (formally Monterey Bay Community Power), Gonzales Grows Green Initiative “G3”, implantation of the Climate Action Plan and the development of a microgrid for the GAIBP.
• Education X Yes ____No ____NA
• Strengthening of the partnership with the Gonzales Unified School District, which this year includes the joint funding of Licensed Clinical Social Worker. The work with Hartnell Salinas Valley Promise, as well as the other Salinas Valley Cities in workforce development.

Explain: Overall, the Mid-Year Budget Report reflects the Amended FY 2021-2022 Budget that supports many programs, activities, and initiatives to implement, and/or further the Vision and Mission of the City. Some of which are reflected above.

ALTERNATIVES
The Budget attempts to fund and further the Vision and Mission of the City consistent with Council direction. However, your Council has the alternative to provide direction to redirect, enhance, reduce, and/or eliminate any of the recommended changes to the City Budget, listed under the Projection Budget Column in Attachment 1.

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BUDGET IMPACT
Please see the Attachment 1, which provides the detail and the requested adjustments to the budget.

CONCLUSION
Final Thoughts
While we continue to focus on the post-pandemic recovery, it is important to acknowledge and celebrate that our Community has achieved a 100% vaccination rate! Our community’s response to the pandemic and that fact that the City’s financial health is healthy and continues to trend in a positive direction in many areas bodes well for the future. While certainly there have been challenges, we have steadily forged ahead. Yes, while the pandemic did drastically impact, there are many exciting projects and initiatives ahead for the community. These include but are not limited to, the development and construction of the Community Center Complex Project, the New Growth Area, the Microgrid Energy Project, a refresh of Downtown, and more intentional work on addressing mental health.

Attachments:

1. Budget Worksheets FY 21-22 Mid-Year

2. Loan Agreement
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Attachment: Budget Worksheets FY 21-22 Mid-Year (2376 : Fiscal Year 2021-2022 Mid-Year Financial Report) ATTACHMENT 1
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Attachment: Budget Worksheets FY 21-22 Mid-Year (2376 : Fiscal Year 2021-2022 Mid-Year Financial Report) Attachment 2

INTERFUND LOAN AGREEMENT
This Loan Agreement (“Agreement”) is executed as of March 01, 2022 (“Effective Date”), between the City of Gonzales Water Enterprise Fund (“Lender”) and the City of Gonzales SB1 Gas Tax Fund (“Borrower”). Lender agrees to lend Borrower, and Borrower agrees to repay Lender, an amount not to exceed the Principal Amount and interest accrued on the unpaid loan balance, in accordance with the following:

1. Purpose of the Loan. To provide funds to Borrower for use for a portion of the cost of the Gloria/Iverson/Johnson Canyon Road Project.

2. Principal Loan Amount. Not to exceed $567,410. The loan will be recorded as receivable to the Lender and payable to the Borrower.

3. Term of the Loan. The term of this loan shall be five (5) years, beginning on the Effective Date, and shall be repaid in full as of June 30, 2027.

4. Scheduled Payments. Borrower shall make payments annually against principal and interest.

The first payment shall commence on the date that is one year from the Effective Date of this Agreement. At a minimum, each annual scheduled payment shall equal the amount of any accrued interest through the date of payment, plus a principal payment equal to one-fifth (1/5) of the original principal amount. Current estimates indicate an annual payment of $114,430.19, principal and interest. Payments will be credited first to interest then due, and then to principal.

Borrower may make partial or complete payment of principal and earned interest at any time before its due date and without any prepayment penalty.

5. Rate of Interest. Interest shall accrue at a rate equal to .278%, calculated and accrued in the same manner that the City would otherwise earn interest on funds on deposit in the Local Agency Investment Fund (“LAIF”). The City’s LAIF interest rate as of the Effective Date of this note is .278%. Loan interest will be recorded as revenue to the Lender and expenditure to the Borrower.

6. General Provisions. This Agreement constitutes the full Agreement by and between the parties and no other representations have been made regarding the content of this Agreement.

This Agreement shall not be amended, modified, or altered in any respect unless such amendment, modification, or alteration has been reduced to writing and executed by both parties.

LENDER BORROWER
Gonzales Water Enterprise Fund SB1 Gas Tax Fund
___________________________ ___________________________ Rene Mendez, City Manager Rene Mendez, City Manager
City of Gonzales City of Gonzales
Packet Pg. 170 Attachment: Loan Agreement (2376 : Fiscal Year 2021-2022 Mid-Year Financial Report)