Agenda packet — Grass Valley City Council, July 14, 2026 (part 1 of 2)

GRASS VALLEY
City Council Regular Meeting, Capital Improvements Authority and Redevelopment "Successor Agency"
Tuesday, July 14, 2026 at 6:00 PM
Council Chambers, Grass Valley City Hall | 125 East Main Street, Grass Valley, California Telephone: (530) 274-4310 – Fax: (530) 274-4399
E-Mail: [email protected] Web Site: www.cityofgrassvalley.com AGENDA
Any person with a disability who requires accommodations to participate in this meeting should telephone the City Clerk’s office at (530)274-4390, at least 48 hours prior to the meeting to make a request for a disability related modification or accommodation.

Mayor Hilary Hodge, Vice Mayor Haven Caravelli, Councilmember Jan Arbuckle, Councilmember Joe Bonomolo, Councilmember Tom Ivy

MEETING NOTICE
City Council welcomes you to attend the meetings electronically or in person at the City Hall Council Chambers, located at 125 E. Main St., Grass Valley, CA 95945. Regular Meetings are scheduled at 6:00 p.m. on the 2nd and 4th Tuesday of each month. Your interest is encouraged and appreciated.

This meeting is being broadcast “live” on Comcast Channel 17 & 18 by Nevada County Media, on the internet at www.cityofgrassvalley.com, or on the City of Grass Valley YouTube channel at https://www.youtube.com/@cityofgrassvalley.com Members of the public are encouraged to submit public comments via voicemail at (530) 274-4390 and email to [email protected]. Comments will be reviewed and distributed before the meeting if received by 5pm. Comments received after that will be addressed during the item and/or at the end of the meeting. Council will have the option to modify their action on items based on comments received. Action may be taken on any agenda item.

Agenda materials, staff reports, and background information related to regular agenda items are available on the City’s website: www.cityofgrassvalley.com. Materials related to an item on this agenda submitted to the Council after distribution of the agenda packet will be made available on the City of Grass Valley website at www.cityofgrassvalley.com, subject to City staff’s ability to post the documents before the meeting.

Please note, individuals who disrupt, disturb, impede, or render infeasible the orderly conduct of a meeting will receive one warning that, if they do not cease such behavior, they may be removed from the meeting. The chair has authority to order individuals removed if they do not cease their disruptive behavior following this warning. No warning is required before an individual is removed if that individual engages in a use of force or makes a true threat of force. (Gov. Code, § 54957.95.)

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City of Grass Valley, CA AGENDA July 14, 2026
Council Chambers are wheelchair accessible and listening devices are available. Other special accommodations may be requested to the City Clerk 72 hours in advance of the meeting by calling (530) 274-4390, we are happy to accommodate.

CALL TO ORDER

PLEDGE OF ALLEGIANCE

ROLL CALL
AGENDA APPROVAL - The City Council reserves the right to hear items in a different order to accomplish business in the most efficient manner.

REPORT OUT OF CLOSED SESSION

INTRODUCTIONS AND PRESENTATIONS

CITY UPDATE
PUBLIC COMMENT - Members of the public are encouraged to submit public comments via voicemail at (530) 274-4390 and email to [email protected]. Comments will be reviewed and distributed before the meeting if received by 5pm. Comments received after 5pm will be addressed during the item and/or at the end of the meeting. Council will have the option to modify their action on items based on comments received. Action may be taken on any agenda item. There is a time limitation of three minutes per person for all emailed, voicemail, or in person comments, and only one type of public comment per person. Speaker cards are assigned for public comments that are on any items not on the agenda, and within the jurisdiction or interest of the City. Speaker Cards can be pulled until the opening of public comment at which time sign ups will no longer be allowed.

These cards can be found at the City Clerks desk. If you wish to speak regarding a scheduled agenda item, please come to the podium when the item is announced. When recognized, please begin by providing your name and address for the record (optional). Thirty minutes of public comment will be heard under this item in order of the speaker card assigned and the remaining general public comments will be heard at the end of the meeting. We will begin with number one.

CONSENT ITEMS -All matters listed under the Consent Calendar are to be considered routine by the City Council and/or Grass Valley Redevelopment Agency and will be enacted by one motion in the form listed. There will be no separate discussion of these items unless, before the City Council and/or Grass Valley Redevelopment Agency votes on the motion to adopt, members of the Council and/or Agency, staff or the public request specific items to be removed from the Consent Calendar for separate discussion and action but Council action is required to do so (roll call vote).Unless the Council removes an item from the Consent Calendar for separate discussion, public comments are invited as to the consent calendar as a whole and limited to three minutes per person.

1. Approval of the Regular Meeting Minutes of June 23, 2026.

Recommendation: Council approve minutes as submitted.

2. Approval of the Special Council and Planning Commission Workshop Meeting Minutes of June 30, 2026.

Recommendation: Council approve minutes as submitted.

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City of Grass Valley, CA AGENDA July 14, 2026

3. Three (3) month extension of Agreement for Public Safety Dispatch Services CEQA: Not a project
Recommendation: Authorize Interim City Manager/Police Chief to sign the 3 month extension to the Agreement for Public Safety Dispatch Services

4. Title: City of Grass Valley Audited Financial Statements and Supplemental Information Fiscal Year Ended June 30, 2025.

CEQA: Not a Project.

Recommendation: Pass a Motion to receive and file the City of Grass Valley Audited Financial Statements and Supplemental Information for Fiscal Year Ended June 30, 2025.

5. Title: Park Restroom Maintenance Services and Parks Division Staffing CEQA: Not a Project.

Recommendation: That the City Council: 1) Approve the addition of one full-time Maintenance Worker I position in the Parks Division, effective August 1, 2026. 2) Authorize the Finance Director to amend the Fiscal Year 2026-27 General Fund budget by transferring appropriations from the Ultimate Building Maintenance contract to the appropriate salary, benefit, and contractual services accounts.

6. Joyce Dr Soil Remediation Project – Authorization to Bid CEQA: Initial Study – Mitigated Negative Declaration adopted by Planning Commission Recommendation: That Council authorize the advertisement for bids for the Joyce Dr Soil Remediation Project

7. 2026 Annual Street Rehabilitation Project – Authorization to Bid CEQA: Categorically Exempt – Section 15301 “Existing Facilities” Recommendation: That Council 1) approve the findings that the project is categorically exempt from the provisions of the California Environmental Quality Act (CEQA); and 2) authorize the advertisement for bids for the 2026 Annual Street Rehabilitation Project.

8. Local Buyback and Compost Facility Feasibility Study– Nevada County Not a project
Recommendation: That the City Council 1) Review the proposal for a joint feasibility study with Nevada County to evaluate the development of a shared facility for CRV (California Redemption Value) local buyback, clear plastic recycling, and composting; 2) Authorize the Interim City Manager to enter into any necessary agreements, subject to legal review.

9. Consideration of a School Resource Officer Agreement with the Grass Valley School District
CEQA: Not CEQA

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City of Grass Valley, CA AGENDA July 14, 2026
Recommendation: Approve the Agreement between the City of Grass Valley and the Grass Valley School District to provide School Resource Officer services for the period of July 1, 2026 through June 30, 2029.

ITEMS REMOVED FROM CONSENT CALENDAR FOR DISCUSSION OR SEPARATE ACTION AND /

OR ANY ADDED AGENDA ITEMS

REORGANIZATION RELATED ITEMS

PUBLIC HEARING

10. Annual Approval of the Consumer Price Index (CPI) Adjustment to the Special Emergency Medical and Fire Response Tax.

CEQA: Not a Project
Recommendation: That Council 1) Approve a rate increase to the Special Emergency Medical and Fire Response Tax of 2.7% based on the December 2025 CPI. 2) Adopt Resolution 2026-45 requesting that the Nevada County Auditor place the adjusted Measure A special tax for 2026/2027 on the tax rolls.

11. Adopt ten Resolutions confirming the Engineer’s Reports, approving the assessment diagrams and annual assessment levies, and requesting the Nevada County AuditorController to place the Fiscal Year 2026–27 assessments for the City’s Landscaping and Lighting Districts (LLDs) and Benefit Assessment Districts (BADs) on the property tax roll.

CEQA: Not a Project.

Recommendation: That the City Council: Hold a public hearing regarding the proposed assessments for Fiscal Year 2026–27; and 1)Adopt the following resolutions related to the Commercial Landscaping and Lighting District (District No. 1988-1): a.

Resolution No. 2026-35 – Confirming the diagram and assessment, and levying the assessment for FY 2026–27 b. Resolution No. 2026-36 – Requesting the County Auditor to place the assessment on the tax roll for District No. 1988-1. 2) Adopt the following resolutions related to the Residential Landscaping and Lighting District (District No. 1988-2): a. Resolution No. 2026-37 – Confirming the diagram and assessment, and levying the assessment for FY 2026-27 b. Resolution No. 2026-38 – Requesting the County Auditor to place the assessment on the tax roll for District No. 1988-2 3) Adopt the following resolutions related to the Morgan Ranch Unit 7 Benefit Assessment District (District No. 2003-1): a. Resolution No. 2026-39 – Confirming the diagram and assessment, and levying the assessment for FY 2026- 27 b. Resolution No. 2026-40 – Requesting the County Auditor to place the assessment on the tax roll for District No. 2003-1. 4) Adopt the following resolutions related to the Morgan Ranch West Assessment District (District No. 2010-1): a.

Resolution No. 2026-41 – Confirming the diagram and assessment, and levying the assessment for FY 2026–27. b. Resolution No. 2026-42 – Requesting the County Auditor to place the assessment on the tax roll for District No. 2010-1. 5) Adopt the following resolutions related to the Ridge Meadows Assessment District (District No. 2016-1): a. Resolution No. 2026-43 – Confirming the diagram and assessment, and levying the assessment for FY 2026-27. b. Resolution No. 2026-44 – Requesting the County Auditor to place the assessment on the tax roll for District No. 2016-1

12. Collection of Delinquent Sewer and/or Water Accounts on the Nevada County Property Tax Roll

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City of Grass Valley, CA AGENDA July 14, 2026
CEQA: Not a Project
Recommendation: After holding a public hearing, adopt Resolution 2026-34 requesting that the County of Nevada levy and collect delinquent sewer and water charges on the Nevada County property tax roll.

ADMINISTRATIVE

13. Downtown Grass Valley Roundabout Project – Project Approval and Environmental Document
CEQA: Class 1 and Class 2 Categorical Exemptions – Section 15301 Existing Facilities and Section 15302 Replacement or Reconstruction
Recommendation: That Council 1) approve that the Downtown Grass Valley Roundabout Project is exempt from California Environmental Quality Act under Class 1 and Class 2 Categorical Exemptions and 2) authorize Staff to file a Notice of Exemption with Nevada County Clerk Recorder.

BRIEF REPORTS BY COUNCIL MEMBERS

CONTINUATION OF PUBLIC COMMENT

ADJOURN

POSTING NOTICE
This is to certify that the above notice of a meeting of The City Council, scheduled for Tuesday, July 14, 2026, at 6:00 p.m., was posted at city hall, easily accessible to the public, as of 5:00 p.m. Friday, July 10, 2026.
________________________
Taylor Whittingslow, City Clerk

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GRASS VALLEY
City Council Regular Meeting, Capital Improvements Authority and Redevelopment "Successor Agency"
Tuesday, June 23, 2026 at 6:00 PM
Council Chambers, Grass Valley City Hall | 125 East Main Street, Grass Valley, California Telephone: (530) 274-4310 – Fax: (530) 274-4399
E-Mail: [email protected] Web Site: www.cityofgrassvalley.com

MINUTES

CALL TO ORDER
Meeting called to order at 6:02 pm.

PLEDGE OF ALLEGIANCE
Mayor Hodge led the pledge of allegiance.

ROLL CALL

PRESENT
Councilmember Joe Bonomolo
Councilmember Tom Ivy
Vice Mayor Haven Caravelli
Mayor Hilary Hodge
ABSENT
Councilmember Jan Arbuckle

AGENDA APPROVAL -
Motion made to approve the agenda by Vice Mayor Caravelli, Seconded by Councilmember Bonomolo.

Voting Yea: Councilmember Bonomolo, Councilmember Ivy, Vice Mayor Caravelli, Mayor Hodge

REPORT OUT OF CLOSED SESSION
Noting to report on item #1, and on Item #2 The City Council provided direction to initiate litigation against certain fire truck manufacturers and private equity firms under state and federal anti-trust laws for anticompetitive mergers, acquisitions and other unfair practices that sharply inflated the cost of fire trucks and parts and delayed delivery to fire departments nationwide, including the Grass Valley Fire Department. Once the lawsuit is formally commenced, the action, the defendants, and the other particulars shall be disclosed to any person upon inquiry.

INTRODUCTIONS AND PRESENTATIONS

CITY UPDATE

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Item # 1.

City of Grass Valley, CA MINUTES June 23, 2026

1. Sierra Nevada Conservancy Grant & California Air Resources Board (CARB) Grant Announcements

PUBLIC COMMENT -
Speakers 1 thru 13

CONSENT ITEMS -
Public comment: Matthew Coulter
Motion made to approve the consent as submitted by Councilmember Bonomolo, Seconded by Councilmember Ivy.

Voting Yea: Councilmember Bonomolo, Councilmember Ivy, Vice Mayor Caravelli, Mayor Hodge

2. Approval of the Regular Meeting Minutes of June 9, 2026 Recommendation: Council approve minutes as submitted.

3. Title: Corrected Appropriation Limit for Fiscal Year 2026-27 CEQA: Not a Project.

Recommendation: It is recommended that the City Council adopt Resolution No. 2026- 32 establishing the corrected Appropriation Limit for the City of Grass Valley for Fiscal Year 2026-27 and superseding Resolution No. 2026-24 adopted on June 9, 2026.

4. Title VI Program – Adopt Implementation Plan
CEQA: N/A – Not a Project
Recommendation: That Council adopt the City of Grass Valley Title VI Implementation Plan

5. ADA Transition Plan – Appoint ADA Coordinator
CEQA: N/A – Not a Project
Recommendation: That Council appoint City Engineer Bjorn Jones as the City’s ADA Coordinator

6. Adoption of Community and Outreach Coordinator Position, Modification of Authorized Staffing, and Budget Amendment
CEQA: Not a project
Recommendation: That the City Council: 1) Adopt the Community and Outreach Coordinator job description and authorize the creation of one (1) part-time Community and Outreach Coordinator position not to exceed 960 hours annually; 2) Authorize the conversion of the currently budgeted and authorized part-time Community Services Analyst (CSA) position to one (1) full-time Community Services Analyst position; 3) Eliminate the currently authorized full-time Community Engagement Specialist position and reallocate the associated funding to support the newly created Community and Outreach Coordinator position; 4) Approve the associated budget amendment; and 5) Authorize the City Manager to make any necessary administrative changes to implement these staffing modifications.

7. Calling and Giving Notice of Holding a General Municipal Election on November 3, 2026 CEQA: Not a project

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Item # 1.

City of Grass Valley, CA MINUTES June 23, 2026
Recommendation: Adopt Resolution No. 2026-33 calling and giving notice of holding a General Municipal Election on Tuesday, November 3, 2026, for the election of two Council Members for the City of Grass Valley

ITEMS REMOVED FROM CONSENT CALENDAR FOR DISCUSSION OR SEPARATE ACTION AND /

OR ANY ADDED AGENDA ITEMS

REORGANIZATION RELATED ITEMS

PUBLIC HEARING

ADMINISTRATIVE

CONTINUATION OF PUBLIC COMMENT
Continuation of speakers 14 thur 18 (noted changes no speaker #14).

Virtual public comments attached.

BRIEF REPORTS BY COUNCIL MEMBERS
Councilmember Bonomolo visited a convalescent hospital. Councilmember Ivy with Councilmember Bonomolo attended an Adhoc Committee and bike pump track meeting, and the pioneer energy meeting. Vice Mayor Caravelli attended the ERC executive meeting, Thursday Night Market, and clarify that she does lives in the City Limits. Mayor Hodge is thankful for Councilmember Arbuckle's service at the league of California & national levels.

ADJOURN
Meeting adjourned at 7:12 pm.
______________________________ ______________________________ Hilary Hodge, Mayor Taylor Whittingslow, City Clerk

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Item # 1.

CITY OF GRASS VALLEY CITY COUNCIL MEETING

GENERAL PUBLIC COMMENT SIGN IN SHEET
WELCOME to the City of Grass Vattey City Council meeting! Pubtic Comments provide an opportunity for the pubtic to address the City CounciI on any subject which is not on the agenda but in the jurisdiction of the council. lf you wish to speak, please indicate in the appropriate box when you sign in and take the number corresponding to your name. Each individual can have up to 3 minutes of pubtic comment. At the beginning of the meeting, there witl be an atlotted 30 minutes of generat pubtic comments and the remainder of comments witt be heard at the end of the agenda.

Speakers witt be calted in order of the numbers given.

When you are recognized by the mayor:

1. Please stand before the podium and give your name and address. (optionat)

2. Please limit your comments to three minutes per speaker.

3. lf previous speakers have made the same point, you may simply indicate your support or disagreement, unless you have new information.

Thank you for your participation . GIZSI Lo1la
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Item # 1.

EMERGENCY

EVACUATION
ROUTE

PROTECT OUR
FAMILIES!
Join your neighbors demanding that the City make Doris Drive safer! WE WANT TO:

Make it easier to escaPe in an emergency: tmprove the egress and ingress from North Church Slreet throuSh where Doris Drive enters the Cypress Hills Subdivisjon above our neighborhood. Specifically, gravel and mainrain the upper portion of Doris Drive where no maintenance now occurc. The city needs to maintain the condition of that as a gravel road such that regular cars can easily use it in the event of an emerSency evacualion.

Slow cars down & improve safety signage: Creale lraffic catminS/stowinS infrastructure such as improved signage around the blind corner where Doris Drive heads up hill and reflective mirrors on either side of tha! blind corner so oncoming lraffic can see around lhe corner and speed tables on Doris Drive

COME TO THE GV CITY COUNCIL
MEETING TUESDAYJUNE 23 at 6:00
I 25 East Main Street Grass Valley
We will present the signatures on petitions that we have gathered from the neighborhood and ask the Council for their support to save our lives.

You will have an opportunity to present public comments about why you want the City to act. But you don't have to speak - just standing together with all of us will make a big difference.

Questionsl Call or email lzzy (530) 913-1844 [email protected]

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Item # 1.
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Item # 1.

DORIS DRIVE COMMUNITY SURVEY
This survey is intended to learn about the safety concerns, needs and interests of the residents of the Doris Drive/Slide Creek Ravine neighborhood. We are residents of the community working as volunteers collecting information that we can use to persuade Grass Valley City officials to enact needed changes, such as improvements to ingress and egress, as well as improving traffic safety.

We are part of the newly enlarged Washington Hill Fire Safe Coalition, which brings our residents lots of important benefits. These benefits include access to flre safe information and land management tools such as weed whackers and leaf blowers. We collect information from residents about their community fire safe activities - such as putting on a new roof, brushing a wooded area, or putting up fire resistance fencing - and use that to prove that we are working to reduce our fire risk. Residents that are part of the Coalition can receive an "insurance certificate" that may reduce your insurance fee. To access these benefits, we need your email address (separate from the petition).

Questions
1 . Can you describe your fire safe activities, either recently completed or planned for this year?

2. Can you document any fire safety expenses that you have incurred or plan to incur in the next year?

3. Do you need help with fire safe brushing activitjes?

4. Will you need special assistance in an emergency evacuation?

5. Are you concerned about ingress and egress in this neighborhood? Would you be willing to sign a petition asking the City to improve traffic and safety in our neighborhood?

6. Would you be willing to participate in a work day in the neighborhood?

7. Do you have any questions?
We will record these answers response sheets that include the address and names of the people that are surveyed. This information will be compiled for use in proving that our rcsidents have met the thresholds of time volunteered and money spent to quality for the insurance ceriificate. lt will also be used to identify volunteers who will help with work, as well as folks that will need our help.

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Item # 1.

Survey Questions (one per household)

1. Describe your fire safe activities, either recently completed or planned

2. Have you, or do you plan to spend $ on fire safety expenses? How much?

3. Do you need help with fire safe brushing activities?

4. Will you need special assistance in an emergency evacuation?

5. Are you worried about roads in this neighborhood? (sign petition)

6. Would you participate in a work day in the neighborhood?

7. Do you have any questions?
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Item # 1.

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PETITION FOR TRAFFIC SAFETY & CALMING MEASURES
We, the residents of North Church Street and Doris Drive and all side streets, between Richardson Street and the Cypress Hills subdivision, do hereby request that the Grass Valley Traffic Safety Review Committee and the City Engineering Division develop and propose Traffic Safety & Calming Measures for our neighborhood.

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Item # 1.

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Item # 1.

Primary Reasons for this petition
Speed of Vehicles
Volume of CutThrough Traffic
Pedestrian Safety
Other: Lack of well maintained
emergency 2nd access/eg ress road
Description, Time of Day and Days
All day, every day and night
All day, every day and night
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During fires, or when maintenance activities by
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Primary Reasons for this petition
Speed of Vehicles
Volume of Cut-Through Traffic
Pedestrian Safety
Other: Lack of well maintained
emergency 2"d access/egress road
Description, Time of Day and Days
All day, every day and night
All day, every day and night
All day, every day
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Primary Reasons for this petition
Speed of Vehicles
Volume of CulThrough Traffic
Pedestrian Safety
Other: Lack of well maintained
emergency 2nd access/eg ress road
Description, Time of Day and Days
All day, every day and night
All day, every day and night
All day, every day
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Item # 1.

PETITION FOR TRAFFIC SAFETY & CALMING MEASURES
We, the residents of North Church Street and Doris Drive and all side streets, between Richardson Street and the Cypress Hills subdivision, do hereby request that the Grass Valley Trafiic Safety Review Committee and the City Engineering Division develop and propose Traffic Safety & Calming Measures for our neighborhood.

Primary Reasons for this petition
Speed of Vehicles
Volume of Cut-Through Traffic
Pedestrian Safety
Other: Lack of well maintained
emergency 2nd access/eg ress road
Description, Time of Day and Days
All day, every day and night
All day, every day and night
All day, every day
During fires, or when maintenance activities by
the City or utilities close North Church Street
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Item # 1.

Primary Reasons for this petition
Speed of Vehicles
Volume of Cut-Through Traffic
Pedestrian Safety
Other: Lack of well maintained
emergency 2"0 access/egress road
Description, Time of Day and Days
All day, every day and night
All day, every day and night
AII day, every day
During fires, or when maintenance activities by
the City or utilities close North Church Street
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Primary Reasons for this petition
Speed of Vehicles
Volume of Cut-Through Traffic
Pedestrian Safety
Other: Lack of well maintained
emergency 2^o access/egress road
Description, Time of Day and Days
All day, every day and night
All day, every day and night
All day, every day
During fires, or when maintenance activities by
the City or utilities close North Church Street
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Primary Reasons for this petition
Speed of Vehicles
Volume of Cut-Through Traffic
Pedestrian Safety
Other: Lack of well maintained
emergency 2* access/egress road
Description, Time of Day and Days
All day, every day and night
All day, every day and night
All day, every day
During fires, or when maintenance activities by
the City or utilities close North Church Street
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PETITION FOR TRAFFIC SAFETY & CALMING MEASURES
We, the residents of North Church Street and Doris Drive and all side streets, between Richardson Street and the Cypress Hills subdivision, do hereby request that the Grass Valley Trafiic Safety Review Committee and the City Engineering Division develop and propose Traffic Safety & Calming Measures for our neighborhood. 5 c\4 trIc.. L.,.
/

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Item # 1.

PETITION FOR TRAFFIC SAFEW & CALMING MEASURES
We, the residents of North Church Street and Doris Drive and all side streets, between Richardson Street and the Cypress Hills subdivision, do hereby request that the Grass Valley Traffic Safety Review Committee and the City Engineering Division develop and propose Traffic Safety & Calming Measures for our neighborhood.

Primary Reasons for this petition
Speed of Vehicles
Volume of CutThrough Traffic
Pedestrian Safety
Other: Lack of well maintained
emergency 2"d access/egress road
Description, Time of Day and Days
All day, every day and night
All day, every day and night
All day, every day
During fires, or when maintenance activities by
the City or utilities close North Church Street
Signature Print Name Address Phone
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Item # 1.

Primary Reasons for this petition
Speed of Vehicles
Volume of Cut-Through Traffic
Pedestrian Safety
Other: Lack of well maintained
emergency 2"d access/eg ress road
Description, Time of Day and Days
All day, every day and night
All day, every day and night
All day, every day
During fires, or when maintenance activities by
the City or utilities close North Church Street
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Signature Print Name Address Phone
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Page 28 ends

Item # 1.

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Item # 1.

Primary Reasons for this petition
Speed of Vehicles
Volume of Cut-Through Traffic
Pedestrian Safety
Other: Lack of well maintained
emergency 2"0 accessiegress road
Description, Time of Day and DaYs
All day, every day and night
All day, every day and night
All day, every day
During fires, or when maintenance activities by
the City or utilities close North Church Street
Signature
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Print Name Address Phone
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s*t'!.*..c 2*.-l*:,hto $30-1t3-5711

Page 30 ends

Item # 1.

GRASS VALLEY
Special Joint City Council Meeting & Planning Commission Meeting Tuesday, June 30, 2026 at 5:30 PM
Council Chambers, Grass Valley City Hall | 125 East Main Street, Grass Valley, California Telephone: (530) 274-4310 – Fax: (530) 274-4399
E-Mail: [email protected] Web Site: www.cityofgrassvalley.com

MINUTES

CALL TO ORDER
Meeting called to order at 5:30 pm.

PLEDGE OF ALLEGIANCE
Mayor Hodge led the pledge of allegiance.

ROLL CALL

PRESENT
Councilmember Jan Arbuckle
Councilmember Joe Bonomolo
Vice Mayor Haven Caravelli
Mayor Hilary Hodge
Commissioner Speights
Commissioner Wich
Vice Chair McDonald
ABSENT
Councilmember Tom Ivy
Commissioner Gross
Chair Brouillette
AGENDA APPROVAL - The City Council reserves the right to hear items in a different order to accomplish business in the most efficient manner.

Motion made by Councilmember Arbuckle, Seconded by Vice Mayor Caravelli.

Voting Yea: Councilmember Arbuckle, Councilmember Bonomolo, Vice Mayor Caravelli, Mayor Hodge, Commissioner Speights, Commissioner Wich, Vice Chair McDonald

WORKSHOP
Amy Wolfson, City Planner, led the Housing Workshop.

1. Welcome & Introductions: Staff will introduce facilitators and state the purpose of the workshop.

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Item # 2.

City of Grass Valley, CA MINUTES June 30, 2026

2. Project Overview & State Requirements: A presentation on the Housing Element update process, including the Regional Housing Needs Allocation (RHNA) a) Housing Needs Assessment: A review of local demographic data, special needs populations, and current affordability trends in your specific area b) Sites Inventory Analysis: An evaluation of vacant or underutilized land available to accommodate new housing growth

3. Tobacco and Housing: Presentation by Shannon Glaz on tobacco policies related to housing

4. Breakout Session: Candidate Rezone sites

5. Public Comment & Q&A

6. Next Steps

ADJOURN
Meeting adjourned at 7:00 pm.
____________________________ _____________________________ Hilary Hodge, Mayor Taylor Whittingslow, City Clerk
Adopted on: __________

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Item # 2.
438000.3
City of Grass Valley
City Council
Agenda Action Sheet
Title: Three (3) month extension of Agreement for Public Safety Dispatch Services CEQA: Not a project
Recommendation: Authorize Interim City Manager/Police Chief to sign the 3 month extension to the Agreement for Public Safety Dispatch Services Prepared by: Alex Gammelgard, Interim City Manager
Council Meeting Date: July 14, 2026 Date Prepared: July 8, 2026 Agenda: Consent
Background: The Grass Valley Police Department depends on Public Safety Dispatch Services provided via contract by the Nevada County Sheriff’s Office. The current contract was for 5 years, beginning July 1, 2021 and expiring on June 30, 2026. The City of Grass Valley (as well as the Town of Truckee and the City of Nevada City) is currently working toward a new multi-year agreement with the County of Nevada for a new contract. This extension is vital to maintaining the service agreement.

The cost for services for the 3-month extension will be commensurate with the cost as if the existing contract were continuing. As such, the annualized cost for FY26/27 was proposed by the County to be $773,054 – or 29.34% of the overall County dispatch budget of $2,634,811. The cost for this service was budgeted in the FY26/27 budget as adopted by the City Council in June.

Council Goals/Objectives: This item executes portions of the work tasks towards achieving /maintaining the Strategic Plan goal to maintain a Productive and Efficient Workforce
Fiscal Impact: None - Budgetted
Funds Available: Yes Account #: 100-201 - Police
Reviewed by: Interim City Manager
Attachments: Contract Extension

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Item # 3.

Amendment No. 1 to the Agreement for Public Safety Dispatch Services Page 1 of 2 AMENDMENT NO. 1

TO THE AGREEMENT FOR PUBLIC SAFETY DISPATCH SERVICES

BETWEEN THE CITY OF GRASS VALLEY, THE TOWN OF TRUCKEE, THE CITY OF

NEVADA CITY AND THE COUNTY OF NEVADA
THIS AMENDMENT is executed this ____ day of ___________________, 2026 by and between THE CITY OF GRASS VALLEY, THE TOWN OF TRUCKEE, THE CITY OF NEVADA CITY and COUNTY OF NEVADA (the “parties”). Said Amendment will amend the prior agreement between the parties entitled Agreement for Public Safety Dispatch Services executed on September 14, 2021, by Resolution No. 21-401.

WHEREAS, the parties desire to amend their agreement to extend the term of the Agreement from June 30, 2026 to September 30, 2026 (three months) and revise Exhibit A – Service Costs to allow for cost reimbursement through the extended term.

NOW, THEREFORE, the parties hereto agree as follows:

1. This amendment shall amend Section 1.1 Effective Dates to extend the term through September 30, 2026.

2. Exhibit A - Service Costs is amended to add the following:
• The total Regional Dispatch budget for Fiscal Year 2026/27 is $2,634,811. • The City of Grass Valley agrees to pay monthly on an allocated percentage of

29.34% of the annual Regional Dispatch budget or $773,054, which equates to $64,421.13 per month or a total of $139,263.39 for the three-month period. • The City of Nevada City agrees to pay monthly on an allocated percentage of

7.88% of the annual Regional Dispatch budget or $207,623, which equates to $17,301.93 per month or a total of $51,905.78 for the three-month period. • The Town of Truckee agrees to pay monthly on an allocated percentage of 16.53% of the annual Regional Dispatch budget, which equates to $36,294.52 per month or a total of $108,883.56 for the three-month period.

3. That in all other respects the prior agreement of the parties shall remain in full force and effect except as amended herein.

County of Nevada

By:________________________ Date:___________________________ Lisa Swarthout, Chair
Board of Supervisors

By:________________________ Date:___________________________ Shannan Moon
Sheriff-Coroner-Public Administrator
Attest:__________________________
Clerk of the Board of Supervisors

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Item # 3.

Amendment No. 1 to the Agreement for Public Safety Dispatch Services Page 2 of 2 Town of Truckee

By:________________________ Date:___________________________ Jennifer Callaway, Town Manager

City of Grass Valley

By:________________________ Date:___________________________ Alex Gammelgard, Interim City Manager
City of Nevada City

By:________________________ Date:___________________________ Carrie Wright, City Manager

Page 35 ends

Item # 3.

City of Grass Valley
City Council
Agenda Action Sheet
Title: City of Grass Valley Audited Financial Statements and Supplemental Information Fiscal Year Ended June 30, 2025.

CEQA: Not a Project.

Recommendation: Pass a Motion to receive and file the City of Grass Valley Audited Financial Statements and Supplemental Information for Fiscal Year Ended June 30, 2025.

Prepared by: Jennifer Styczynski, Finance Director
Council Meeting Date: 07/14/2026 Date Prepared: 07/07/2026 Agenda: Consent
Background: The City is required to prepare annual audited financial statements (AFS) that report the financial activity of all City funds. These statements provide information regarding the City’s financial position to the City Council, state and federal oversight agencies, investors, and the public.

This year’s AFS includes the Schedule of Expenditures of Federal Awards (SEFA), also known as the Single Audit, which is required when federal expenditures exceed $750,000 in a fiscal year. The Single Audit provides assurance to the federal government that the City has adequate internal controls and is in compliance with program requirements.

Discussion: Smith & Newell, CPAs completed the City’s audit for the fiscal year ended June 30, 2025, and issued an unmodified (“clean”) audit opinion stating:
“In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2025, 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.”
The City's total net position remained relatively stable during Fiscal Year 2024-25, increasing by approximately $10,700 to $105.97 million. At year-end, the City's assets exceeded its liabilities by approximately $106.0 million. Of that amount, approximately $90.6 million represents the City's investment in capital assets, while approximately $24.0 million is restricted for specific purposes, including capital projects, housing programs, and other legally restricted activities. The City continues

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Item # 4.
to report an unrestricted net position deficit of approximately $8.6 million, primarily attributable to pension-related accounting obligations and not a cash deficit.

Overall City-wide revenues from governmental and business-type activities increased by approximately $3.73 million compared to Fiscal Year 2023-24. The increase was primarily driven by implementation of the Measure B transactions and use tax, increased development activity, higher assessed property values, and continued strong investment earnings resulting from favorable interest rates. City-wide expenses decreased by approximately $3.17 million from the prior year, primarily due to annual pension and other post-employment benefit accounting adjustments and lower capital project expenditures, partially offset by increased labor, insurance, and operating costs.

The General Fund ended Fiscal Year 2024-25 with an unassigned fund balance of approximately $8.46 million, an increase of approximately $164,000 from the prior year. The increase reflects prudent expenditure management that helped offset inflationary pressures and higher public safety overtime costs while maintaining the City's financial stability.

In addition to the Annual Financial Statements, the City completed the required Single Audit due to federal grant expenditures exceeding the federal threshold during Fiscal Year 2024-25. The Single Audit, completed in accordance with Title 2, Code of Federal Regulations (CFR), Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), evaluates compliance with federal award requirements and related internal controls. The Single Audit Report and related schedules are included as attachments to this staff report.

The Independent Auditor’s Management Letter identified two repeat findings related to payroll tax withholdings and budgetary compliance.

The payroll tax withholding finding was reported as a repeat primarily due to the timing of the prior audit, which was completed in May 2025 and provided limited opportunity to implement corrective actions during the fiscal year under audit. The City completed its corrective action plan by July 31, 2025, including obtaining updated employee withholding forms, implementing a dual-verification process for payroll tax withholding elections, and providing additional payroll staff training. These controls remain in place, and the City continues to monitor payroll tax withholdings to ensure employee elections are accurately reflected in the payroll system.

The budgetary compliance finding noted that General Fund expenditures exceeded appropriations by $413,710 during Fiscal Year 2024-25. The finding is reported as a repeat primarily because the Fiscal Year 2023-24 audit was issued after most of the Fiscal Year 2024-25 budget activity had occurred, limiting the City's ability to fully implement and demonstrate the effectiveness of corrective actions during the audit period. Since issuance of the prior audit, the City has implemented a centralized Budget Amendment Log, established an Interim Budget Compliance Procedure, and incorporated routine budget-to-actual monitoring into its financial management practices. Finance reviews budget activity on an ongoing basis to identify potential variances, facilitate timely budget amendments, and strengthen compliance with

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Item # 4.
budgetary requirements. Quarterly budget-to-actual reports began being distributed to department directors in July 2026 to further strengthen budget oversight and accountability.

Management has reviewed the Annual Financial Statements, Single Audit Report, and Management Letter and concurs with the auditors' recommendations and corrective action plans.

Council Goals/Objectives: Completion of the annual audit promotes fiscal accountability, demonstrates compliance with applicable laws and regulations, provides transparency to the public and investors, and supports the City's goal of longterm fiscal sustainability.

Fiscal Impact: There is no fiscal impact associated with this action.

Funds Available: N/A Account #: N/A
Reviewed by: Interim City Manager
Attachments:
1) Financial Statements Together with Independent Auditor’s Report for the Year Ended June 30, 2025
2) Single Audit Act Reports and Schedules for the Year Ended June 30, 2025
3) Independent Auditor’s Management Letter
4) Independent Accountant’s Report on Applying Agreed-Upon Procedures to Appropriations Limit Calculations

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Item # 4.

CITY OF GRASS VALLEY,

CALIFORNIA

FINANCIAL STATEMENTS

TOGETHER WITH
INDEPENDENT AUDITOR’S REPORT

FOR THE YEAR ENDED
JUNE 30, 2025

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Item # 4.

THIS PAGE INTENTIONALLY LEFT BLANK

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Item # 4.

CITY OF GRASS VALLEY
Annual Financial Report
For the Year Ended June 30, 2025
Table of Contents
Page

INTRODUCTORY SECTION
List of Officials..............................................................................................................................................i

FINANCIAL SECTION
Independent Auditor’s Report....................................................................................................................1-4 Management’s Discussion and Analysis (Unaudited) .............................................................................5-13 Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position .........................................................................................................14-15 Statement of Activities................................................................................................................... 16 Fund Financial Statements:

Governmental Funds:

Balance Sheet ............................................................................................................................. 17 Reconciliation of the Governmental Funds Balance Sheet to the Government- Wide Statement of Net Position – Governmental Activities.................................................... 18 Statement of Revenues, Expenditures and Changes in Fund Balances...................................... 19 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Government-Wide Statement of Activities – Governmental Activities.................................................................. 20 Proprietary Funds:

Statement of Net Position ......................................................................................................21-22 Statement of Revenues, Expenses and Changes in Net Position................................................ 23 Statement of Cash Flows.......................................................................................................24-25 Fiduciary Funds:

Statement of Fiduciary Net Position........................................................................................... 26 Statement of Changes in Fiduciary Net Position........................................................................ 27 Notes to Basic Financial Statements ...............................................................................................28-61 Required Supplementary Information (Unaudited):

City Pension Plan – Schedule of Proportionate Share of the Net Pension Liability ............................ 62 City Pension Plan – Schedule of Contributions.................................................................................... 63 City Pension Plan – Notes to City Pension Plan .................................................................................. 64 City OPEB Plan – Schedule of Changes in the Net OPEB Liability and Related Ratios .................... 65 City OPEB Plan – Schedule of Contributions...................................................................................... 66 City OPEB Plan – Note to City OPEB Plan......................................................................................... 67 Budgetary Comparison Schedule – General Fund ............................................................................... 68 Budgetary Comparison Schedule – Measure “E”................................................................................. 69 Budgetary Comparison Schedule – Housing........................................................................................ 70 Notes to Budgetary Comparison Schedules ......................................................................................... 71

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Item # 4.

CITY OF GRASS VALLEY
Annual Financial Report
For the Year Ended June 30, 2025
Table of Contents
Page

FINANCIAL SECTION (CONTINUED)
Combining Nonmajor Fund Financial Statements:

Nonmajor Governmental Funds:

Combining Balance Sheet.............................................................................................................. 72 Combining Statement of Revenues, Expenditures and Changes in Fund Balances....................... 73 Special Revenue Funds:

Combining Balance Sheet ....................................................................................................... 74 Combining Statement of Revenues, Expenditures and Changes in Fund Balances................ 75 Permanent Funds:

Combining Balance Sheet ....................................................................................................... 76 Combining Statement of Revenues, Expenditures and Changes in Fund Balances................ 77 Fiduciary Funds:

Combining Statement of Fiduciary Net Position..................................................................... 78 Combining Statement of Changes in Fiduciary Net Position.................................................. 79

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Item # 4.

INTRODUCTORY SECTION
• List of Officials

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Item # 4.

CITY OF GRASS VALLEY
List of Officials
For the Year Ended June 30, 2025
-iCity Council
Hilary Hodge Mayor
Haven Caravelli Vice Mayor
Tom Ivy Council Member
Joe Bonomolo Council Member
Jan Arbuckle Council Member
City Officials
Tim Kiser City Manager
Jennifer Styczynski Deputy Finance Director
Alex Gammelgard Chief of Police
Vacant Community Development Director
Mark Buttron Fire Chief
David Riderman City Attorney

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Item # 4.

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Item # 4.

FINANCIAL SECTION
• Independent Auditor’s Report
• Management’s Discussion and Analysis
• Basic Financial Statements
• Required Supplementary Information
• Combining Nonmajor Fund Financial Statements

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Item # 4.

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Item # 4.

CERTIFIED PUBLIC ACCOUNTANTS
-1-
950 THARP ROAD, SUITE 502 YUBA CITY, CA 95993 TEL: (530) 673-9790 FAX: (530) 673-1305 [email protected]

SMITH & NEWELL
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of the City Council
City of Grass Valley
Grass Valley, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Grass Valley, California (City), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2025, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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

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

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

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Item # 4.
-2-
To the Honorable Mayor and Members of the City Council
City of Grass Valley
Grass Valley, California
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

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

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

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Item # 4.
-3-
To the Honorable Mayor and Members of the City Council
City of Grass Valley
Grass Valley, California
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, City Pension Plan information, City OPEB Plan information, and budgetary comparison information as listed in the table of contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements.

We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying combining nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information
Management is responsible for the other information included in the annual report. The other information comprises the introductory section but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.

In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

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Item # 4.
-4-
To the Honorable Mayor and Members of the City Council
City of Grass Valley
Grass Valley, California
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 25, 2026, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Smith & Newell CPAs
Yuba City, California
June 25, 2026

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Item # 4.

Management’s Discussion and Analysis
(Unaudited)

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CITY OF GRASS VALLEY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2025
-5-
This Management's Discussion and Analysis (MD&A) provides a narrative overview and analysis of the financial activities and financial position of the City of Grass Valley (City) for the fiscal year ended June 30, 2025. The information presented should be read in conjunction with the accompanying basic financial statements and notes to the financial statements.

FINANCIAL HIGHLIGHTS
 The City's total net position increased by approximately $10,700 during Fiscal Year 2024-25, ending the year at $105.97 million. Of this amount, $90.55 million is invested in capital assets and $24.03 million is restricted for specific purposes. The City reported an unrestricted net position deficit of approximately $8.61 million, which is largely attributable to pension-related accounting obligations that fluctuate annually.
 Overall City-wide revenues increased by approximately $3.73 million compared to Fiscal Year 2023-24. The increase was primarily driven by the implementation of the Measure B transactions and use tax, increased development activity, higher assessed property values, and strong investment earnings resulting from favorable interest rate conditions.  Overall City-wide expenses decreased by approximately $3.17 million compared to Fiscal Year 2023-24. The decrease was primarily attributable to annual pension and other post-employment benefit accounting adjustments and lower capital project expenditures, partially offset by increased labor, insurance, and operating costs.
 The General Fund reported an ending fund balance of approximately $8.46 million, an increase of $164,000 from the prior fiscal year. The increase was primarily attributable to prudent expenditure management that helped offset inflationary pressures and increased public safety overtime costs.

OVERVIEW OF THE ANNUAL FINANCIAL REPORT
This Annual Financial Report is organized into two sections:

1. Introductory Section, which includes a list of City officials; and

2. Financial Section, which includes the Independent Auditor’s Report, Management’s Discussion and Analysis (MD&A), the Basic Financial Statements, Notes to the Basic Financial Statements, Required Supplementary Information, and Combining and Individual Fund Financial Statements and Schedules.

The Basic Financial Statements
The Basic Financial Statements consist of two components: the Government-wide Financial Statements and the Fund Financial Statements. Together, these statements provide readers with both a broad overview and a more detailed analysis of the City’s financial activities and financial position.

Government-Wide Financial Statements
The Government-Wide Financial Statements provide a broad overview of the City's financial position and operations and consist of the Statement of Net Position and the Statement of Activities. These statements are prepared using the full accrual basis of accounting, similar to private-sector businesses, and include all capital assets and long-term liabilities.

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CITY OF GRASS VALLEY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2025
-6-
The Statement of Net Position presents information on all of the City's assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position. The Statement of Activities presents information showing how the City's net position changed during the fiscal year.

The City’s activities are reported in two categories:
• Governmental Activities – These activities include the City’s basic services, such as general government, public safety, public works, community development, and recreation and culture.

These services are primarily funded through taxes, property taxes, and grants. • Business-Type Activities – These activities include the City’s Water and Sewer operations, which are primarily financed through user charges and fees.

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

The City’s funds are classified into three categories: governmental, proprietary and fiduciary funds.

Governmental Funds
Governmental funds account for the same basic services reported as governmental activities in the Government-Wide Financial Statements. However, these statements focus on near-term inflows and outflows of spendable resources and balances available at fiscal year-end.

The Governmental Fund Financial Statements provide detailed information about the City's major funds and include reconciliations to the Government-Wide Financial Statements to help readers understand the relationship between short-term financial activities and long-term financial obligations.

For Fiscal Year 2024-25, the City's major governmental funds were:
• General Fund
• Measure E Fund
• Housing (HOME) Special Revenue Fund
• Capital Improvement Projects Fund
• Special Projects Fund
Proprietary Funds
Proprietary funds account for activities that are operated similarly to private businesses, where the costs of providing services are primarily recovered through user charges and fees.

The City's proprietary funds include:
• Water Enterprise Fund
• Sewer Enterprise Fund
These funds provide more detailed information regarding the City's business-type activities presented in the Government-Wide Financial Statements.

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CITY OF GRASS VALLEY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2025
-7-
Fiduciary Funds
Fiduciary funds are used to account for resources held by the City solely for the benefit of others.

The City's fiduciary funds include:
• Successor Agency to the Former Grass Valley Redevelopment Agency (Private Purpose Trust Fund)
• Whispering Pines Morgan Ranch Assessment Funds (Custodial Funds) Notes to the Basic Financial Statements
The Notes to the Basic Financial Statements provide additional information that is essential to understanding the data presented in the Government-Wide and Fund Financial Statements.

Combining and Individual Fund Financial Statements and Schedules Combining and Individual Fund Financial Statements and Schedules provide additional detail for nonmajor funds and supplement the information presented in the Basic Financial Statements.

GOVERNMENT-WIDE FINANCIAL ANALYSIS
Net position may serve over time as a useful indicator of a government's financial position. As of June 30, 2025, the City's assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources by approximately $105.97 million. The following summary presents the City's net position as of June 30, 2025, and June 30, 2024.
2024 2025 2024 2025 2024 2025
Current and Other Assets $ 33,323,880 $ 34,877,921 $ 13,363,977 $ 13,652,942 $ 46,687,857 $ 48,530,863 Capital Assets 63,997,624 63,567,805 38,887,161 36,578,899 102,884,785 100,146,704 Total Assets 97,321,504 98,445,726 52,251,138 50,231,841 149,572,642 148,677,567 Employer Pension Contributions 7,589,947 5,784,618 2,233,066 887,411 9,823,013 6,672,029 Employer OPEB Contributions 1,029,573 838,048 94,865 77,218 1,124,438 915,266 Total Deferred
Outflows of Resources 8,619,520 6,622,666 2,327,931 964,629 10,947,451 7,587,295 Current Liabilities 3,237,911 2,639,334 532,459 1,464,021 3,770,370 4,103,355 Long-Term Liabilities 35,646,069 34,874,698 7,595,487 4,450,918 43,241,556 39,325,616 Total Liabilities 38,883,980 37,514,032 8,127,946 5,914,939 47,011,926 43,428,971 Deferred Pension Adjustments 2,671,601 2,494,534 786,022 382,683 3,457,623 2,877,217 Deferred OPEB Adjustments 3,746,819 3,652,861 345,233 336,575 4,092,052 3,989,436 Total Deferred
Inflows of Resources 6,418,420 6,147,395 1,131,255 719,258 7,549,675 6,866,653 Net Position
Invested in Capital Assets
Net of Related Debt 57,354,363 57,541,929 34,283,743 33,005,536 91,638,106 90,547,465 Restricted 22,860,534 24,027,736 - - 22,860,534 24,027,736 Unrestricted (19,576,273) (20,162,700) 11,036,125 11,556,737 (8,540,148) (8,605,963) Total Net Position $ 60,638,624 $ 61,406,965 $ 45,319,868 $ 44,562,273 $ 105,958,492 $ 105,969,238 City of Grass Valley
Net Position
Governmental
Activities
Business-Type
Activities
Total
Activities

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CITY OF GRASS VALLEY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2025
-8-
Overall, the City's total net position increased by approximately $10,700 during Fiscal Year 2024-25, with governmental activities increasing by approximately $768,300 and business-type activities decreasing by approximately $757,600. Approximately 85.4% of total net position is invested in capital assets, including land, buildings, infrastructure, utility systems, equipment, and vehicles. Total restricted net position increased by approximately $1.17 million. The City continues to report a deficit unrestricted net position of approximately $8.61 million, primarily attributable to pension-related accounting obligations recognized under governmental accounting standards.

The following analysis summarizes changes in net position for the fiscal year ended June 30, 2025.

Revenues
The City’s total revenues for governmental and business-type activities were approximately $39.72 million for the fiscal year ended June 30, 2025. Significant revenues collected by the City during Fiscal Year 2024- 25 were derived from sales taxes (39.2%), charges for services (25.6%), and property taxes (14.8%).

The following summarizes variances in key revenues sources compared to the prior fiscal year:

1. Charges for Services – Charges for services increased by approximately $435,000 compared to the prior year. The increase was primarily attributable to higher development activity, resulting in increased planning, engineering, and building permit revenues. Additionally, Fiscal Year 2024-25 represented the first full year of Cannabis Excise Tax collections, further contributing to the increase in this revenue category.

2. Sales Tax - Sales tax revenues increased by approximately $1.69 million compared to the prior year, primarily due to the implementation of the Measure B transactions and use tax. Measure B was approved by voters in March 2024, with tax collections beginning in October 2024, resulting in Fiscal Year 2024-25 being the first year the City recognized Measure B revenues.

3. Property Tax - Property tax revenues increased by approximately $204,800, primarily due to growth in the City's assessed valuation. Continued increases in property values and new development within the City contributed to the year-over-year growth in this stable revenue source.

4. Use of Money and Property - Revenue from the use of money and property increased by approximately $314,000. The increase was primarily attributable to the City's continued implementation of a laddered investment strategy that capitalized on favorable interest rate conditions throughout the fiscal year. Additionally, investment earnings were impacted by the required recognition of fair value adjustments under governmental accounting standards. These unrealized gains and losses reflect market conditions as of June 30, 2025, and are accounting entries only, as the City generally holds investments to maturity and does not anticipate realizing these fluctuations.

5. Transient Occupancy Taxes (TOT) - Transient Occupancy Tax revenues increased by approximately $85,800 compared to the prior year. The increase reflects continued strengthening in tourism and lodging activity following several years of slower growth after the COVID-19 pandemic. This revenue source has continued its gradual recovery as travel patterns have normalized.

6. Miscellaneous Revenues - Miscellaneous revenues increased by approximately $137,800 due primarily to one-time and variable revenue sources, including payroll reimbursements, reimbursements for law enforcement-related costs, and proceeds from a legal settlement. Because these revenues are largely nonrecurring in nature, similar levels of revenue should not necessarily be expected in future fiscal years.

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CITY OF GRASS VALLEY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2025
-9-
Expenses
Governmental and business-type activity expenses totaled approximately $39.27 million for the fiscal year ended June 30, 2025. Governmental activities accounted for approximately $30.41 million, or 77.4%, of total expenses, while business-type activities accounted for approximately $8.86 million. Public safety represented the City’s largest governmental function, comprising 22.6% of total governmental activity expenses.
2024 2025 2024 2025 2024 2025
Revenues
Program Revenues
Charges for Services $ 1,628,839 $ 2,063,583 $ 7,397,322 $ 8,114,949 $ 9,026,161 $ 10,178,532 Operating Grants and Contributions 2,831,427 3,205,300 - - 2,831,427 3,205,300 Capital Grants and Contributions 409,451 113,444 - - 409,451 113,444 General Revenues
Property Taxes 5,674,645 5,879,508 - - 5,674,645 5,879,508 Property Transfer Taxes 64,649 88,553 - - 64,649 88,553 Sales and Use Taxes 13,884,523 15,570,934 - - 13,884,523 15,570,934 Transient Occupancy Taxes 1,033,225 1,119,104 - - 1,033,225 1,119,104 Franchise Fees 1,010,504 1,078,631 - - 1,010,504 1,078,631 Interest and Investment Earnings 1,093,386 1,347,725 510,606 570,561 1,603,992 1,918,286 Miscellaneous 408,316 545,199 364 1,296 408,680 546,495 Gain (Loss) on Sale of Assets 46,085 26,000 - - 46,085 26,000 Total Revenues $ 28,085,050 $ 31,037,981 $ 7,908,292 $ 8,686,806 $ 35,993,342 $ 39,724,787 City of Grass Valley
Changes in Net Position
Activities Activities Activities
Governmental Business-Type Total
Charges for Services

25.6%
Operating Grants and Contributions

8.1%
Capital Grants and Contributions

0.3%
Property Taxes

14.8%
Property Transfer
Taxes

0.2%
Sales and Use Taxes

39.2%
Transient Occupancy
Taxes

2.8% Franchise Fees

2.7%
Interest and Investment
Earnings

4.8%
Gain (Loss) on Sale of Assets

0.1%
Miscellaneous

1.4%
Revenues - Fiscal Year 2024-25

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CITY OF GRASS VALLEY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2025
-10-
Governmental Activities
Expenses for governmental activities decreased by approximately $2.61 million compared to the prior fiscal year. The decrease was primarily attributable to annual pension-related actuarial adjustments, which can create significant year-to-year fluctuations in reported expenses, as well as lower expenditures within Public Protection, Public Ways and Facilities, and Recreation and Culture activities.

Excluding the impacts of pension-relating accounting adjustment, governmental activities experienced increased costed associated with the City’s CalPERS unfunded liability obligations, insurance premiums, and approved citywide labor agreements. These increases were partially offset by lower capital outlay expenditures within the Capital Projects Fund, Special Projects Fund, and Measure E Fund as several projects incurred lower expenditures during the current fiscal year compared to the prior year.

Business-Type Activities
Expenses for business-type activities decreased by approximately $556,500 compared to the prior fiscal year. Similar to governmental activities, the decrease was primarily attributable to annual pension and other post-employment benefit (OPEB) accounting adjustments, partially offset by increased operating and maintenance costs resulting from inflationary pressures affecting utility operations.

City-wide Changes in Net Position for Fiscal Year 2024-25 are summarized in the following table:
2024 2025 2024 2025 2024 2025
Expenses
General Government $ 4,525,266 $ 4,998,527 $ - $ - $ 4,525,266 $ 4,998,527 Public Protection 19,219,137 17,722,170 - - 19,219,137 17,722,170 Public Ways and Facilities 5,958,996 4,682,752 - - 5,958,996 4,682,752 Community Development 1,064,051 926,901 - - 1,064,051 926,901 Recreation and Culture 1,499,415 1,353,227 - - 1,499,415 1,353,227 Water Operations - - 3,177,954 2,730,488 3,177,954 2,730,488 Sewer Operations - - 6,237,152 6,128,093 6,237,152 6,128,093 Interest on Long-Term Debt 756,710 729,077 - - 756,710 729,077 Total Expenses 33,023,575 30,412,654 9,415,106 8,858,581 42,438,681 39,271,235 Excess (Deficiency) Before Transfers (4,938,525) 625,327 (1,506,814) (171,775) (6,445,339) 453,552 Transfers 292,416 556,758 (292,416) (556,758) - -
Change in Net Position (4,646,109) 1,182,085 (1,799,230) (728,533) (6,445,339) 453,552 Net Position - Beginning of Year 65,284,733 60,638,624 47,119,098 45,319,868 112,403,831 105,958,492 Prior Period Adjustment - (210,484) - - - (210,484)
Change in Accounting Principal - (203,260) - (29,062) - (232,322) Net Position - Beginning of Year Restated 65,284,733 60,224,880 47,119,098 45,290,806 112,403,831 105,515,686 Net Position - End of Year $ 60,638,624 $ 61,406,965 $ 45,319,868 $ 44,562,273 $ 105,958,492 $ 105,969,238 City of Grass Valley
Changes in Net Position
Activities Activities Activities
Governmental Business-Type Total

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CITY OF GRASS VALLEY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2025
-11-
Financial Analysis of the Government’s Funds
The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The fund financial statements focus on individual components of City government and provide more detailed information than the government-wide financial statements.

Governmental Funds
The City’s governmental funds provide information on near-term inflows, outflows, and balances of spendable resources. As of June 30, 2025, the City’s governmental funds reported combined ending fund balances of approximately $32.23 million.

The General fund is the City’s primary operating fund. At June 30, 2025, the General fund reported a total fund balance of approximately $8.46 million, representing an increase of approximately $164,000 from the prior fiscal year. The increase was primarily attributable to intentional cost containment efforts that reduced day-to-day operational expenditures, program costs, and capital outlay expenditures.

The Measure E fund is supported by a one-cent transactions and use tax and is utilized to fund police and fire staffing, capital outlay; and streets and parks improvement projects. As of June 30, 2025, the Measure E fund reported a total fund balance of approximately $4.55 million, an increase of approximately $866,300 from prior fiscal year. The increase was primarily due to lower expenditures associated with street rehabilitation and park capital improvement projects than originally anticipated. The remaining fund balance will be carried forward and utilized in future years for citywide streets and parks projects and public safety vehicle replacement needs. During Fiscal Year 2024-25, the City utilized approximately $6.53 million of Measure E funding for street streets and parks projects; public safety staffing, and public safety apparatus costs.

General Government

12.7%
Public Protection

45.1% Public Ways and
Facilities

11.9%
Community
Development

2.4%
Recreation and
Culture

3.4%
Water Operations

7.0%
Sewer Operations

15.6%
Interest on Long-Term Debt

1.9%
Expenses - Fiscal Year 2024-25

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CITY OF GRASS VALLEY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2025
-12-
Proprietary Funds
The City’s proprietary funds reported a decrease in net position of approximately $757,600 during Fiscal Year 2024-25. The decrease was primarily attributable to increased services and supplies expenditures, particularly maintenance costs within utility operations. These increases were partially offset by favorable adjustments to the City’s CalPERS pension and other post-employment benefit (OPEB) liabilities.

Capital Assets
As of June 30, 2025, the City’s investment in capital assets for governmental and business-type activities totaled approximately $100.15 million. Capital assets includes land, construction in progress, road and median improvements, buildings and improvements, infrastructure, furniture and equipment, and vehicles.

These investments support the City’s long-term service delivery objectives and ongoing maintenance and replacement of public infrastructure.

Additional information regarding the City's capital assets and current-year activity can be found in the notes to the financial statements under Significant Accounting Policies and Note 4, Capital Assets.

Economic Outlook
In June 2026, the City Council adopted the Fiscal Year 2026-27 budget. The adopted General Fund budget includes revenues of approximately $19.93 million and expenditures of approximately $19.95 million, resulting in a planned use of approximately $17,600 of available fund balance. The budget remains substantially balanced and reflects the City's continued efforts to maintain service levels while addressing inflationary pressures, labor costs, and ongoing operational needs.

The Fiscal Year 2026-27 budget also includes the continued strategic use of Measure E funding for public safety, street rehabilitation, park improvements, and other capital projects throughout the City.

The City will continue to monitor budget performance throughout the fiscal year and make adjustments as necessary in response to changing economic conditions. Particular attention will be given to trends in sales tax, property tax, development activity, investment earnings, inflationary pressures, and labor costs, as these factors have a significant impact on the City's long-term financial stability. The City will also continue to monitor long-term cost drivers, including increasing CalPERS unfunded accrued liability (UAL) obligations, which are projected to place additional pressure on future operating budgets. Proactive financial planning and ongoing evaluation of revenues, expenditures, and reserve levels will remain critical to maintaining the City's long-term fiscal sustainability. 2024 2025 2024 2025 2024 2025
Land $ 3,689,025 $ 3,689,025 $ 339,401 $ 339,401 $ 4,028,426 $ 4,028,426 Construction in Progress 15,534,826 3,740,587 807,225 817,130 16,342,051 4,557,717 Infrastructure 36,555,997 48,878,930 7,524,322 6,901,126 44,080,319 55,780,056 Buildings and Improvements 4,651,035 4,157,471 29,524,535 27,843,776 34,175,570 32,001,247 Equipment and Vehicles 3,541,001 3,080,342 691,678 677,466 4,232,679 3,757,808 Software 25,740 21,450 - - 25,740 21,450
Totals $ 63,997,624 $ 63,567,805 $ 38,887,161 $ 36,578,899 $ 102,884,785 $ 100,146,704 Activities Activities Activities
City of Grass Valley
Capital Assets (Net of Depreciation)
Governmental Business-Type Total

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CITY OF GRASS VALLEY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2025
-13-
Requests for Information
This Annual Financial Report is intended to provide citizens, taxpayers, investors, and creditors with a general overview of the City’s finances. If you have any questions about this report, need additional financial information, or would like to obtain component unit financial statements, contact the City of Grass Valley Finance Department, 125 East Main Street, Grass Valley, CA 95945. The telephone number is 530- 274-4301.

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Basic Financial Statements
• Government-Wide Financial Statements

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Item # 4.

CITY OF GRASS VALLEY
Statement of Net Position
June 30, 2025
Governmental Business-Type
Activities Activities Totals
ASSETS
Cash and investments $ 21,511,683 $ 11,490,751 $ 33,002,434 Receivables:

Accounts 776,341 1,463,431 2,239,772
Interest 2,599,229 28,767 2,627,996
Taxes 3,739,661 - 3,739,661
Intergovernmental 264,294 - 264,294
Prepaid costs 18,393 - 18,393
Loans receivable 5,966,723 - 5,966,723
Restricted cash and investments 1,597 669,993 671,590
Capital assets:

Non-depreciable 7,429,612 1,156,531 8,586,143
Depreciable, net 56,138,193 35,422,368 91,560,561
Total capital assets 63,567,805 36,578,899 100,146,704
Total Assets 98,445,726 50,231,841 148,677,567

DEFERRED OUTFLOWS OF RESOURCES
Deferred pension adjustments 5,784,618 887,411 6,672,029 Deferred OPEB adjustments 838,048 77,218 915,266
Total Deferred Outflows of Resources 6,622,666 964,629 7,587,295

LIABILITIES
Accounts payable 1,889,911 256,055 2,145,966
Salaries and benefits payable 376,266 63,502 439,768
Deposits payable 324,809 1,546 326,355
Unearned revenue 48,348 - 48,348
Interest payable - 20,959 20,959
Long-term liabilities:

Due within one year 2,973,366 1,121,959 4,095,325
Due in more than one year 19,150,978 2,736,676 21,887,654 Net pension liability 8,804,261 1,350,649 10,154,910
Total OPEB liability 3,946,093 363,593 4,309,686
Total Liabilities 37,514,032 5,914,939 43,428,971

DEFERRED INFLOWS OF RESOURCES
Deferred pension adjustments 2,494,534 382,683 2,877,217 Deferred OPEB adjustments 3,652,861 336,575 3,989,436
Total Deferred Inflows of Resources 6,147,395 719,258 6,866,653 The notes to the basic financial statements are an integral part of this statement. -14- Continued (Page 1 of 2)

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Item # 4.

CITY OF GRASS VALLEY
Statement of Net Position
June 30, 2025
Governmental Business-Type
Activities Activities Totals

NET POSITION
Net investment in capital assets 57,541,929 33,005,536 90,547,465 Restricted for:

General government 4,686,224 - 4,686,224
Public protection 553,050 - 553,050
Public ways and facilities 3,077,483 - 3,077,483
Community development 9,870,510 - 9,870,510
Capital projects 5,840,469 - 5,840,469
Unrestricted (20,162,700) 11,556,737 (8,605,963)
Total Net Position $ 61,406,965 $ 44,562,273 $ 105,969,238 The notes to the basic financial statements are an integral part of this statement. -15- Continued (Page 2 of 2)

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Item # 4.

CITY OF GRASS VALLEY
Statement of Activities
For the Year Ended June 30, 2025
Program Revenues
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Governmental activities:

General government $ 4,998,527 $ 131,006 $ 575,509 $ -
Public protection 17,722,170 1,029,895 1,839,715 -
Public ways and facilities 4,682,752 820,572 790,076 113,444 Community development 926,901 - - -
Recreation and culture 1,353,227 82,110 - -
Interest on long-term debt 729,077 - - -
Total Governmental Activities 30,412,654 2,063,583 3,205,300 113,444 Business-type activities:

Water 2,730,488 2,453,540 - -
Sewer 6,128,093 5,661,409 - -
Total Business-Type Activities 8,858,581 8,114,949 - -
Total $ 39,271,235 $ 10,178,532 $ 3,205,300 $ 113,444
General revenues:

Taxes:

Property taxes
Property transfer taxes
Sales and use taxes
Transient occupancy taxes
Franchise fees
Interest and investment earnings
Miscellaneous
Gain (loss) on sale of asset
Transfers
Total General Revenues and Transfers
Change in Net Position
Net Position - Beginning
Prior period adjustment
Change in accounting principle
Net Position - Beginning, Restated
Net Position - Ending
The notes to the basic financial statements are an integral part of this statement. -16-

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Item # 4.

Net (Expense) Revenue and
Changes in Net Position
Governmental Business-Type
Activities Activities Total
$ (4,292,012) $ - $ (4,292,012)
(14,852,560) - (14,852,560)
(2,958,660) - (2,958,660)
(926,901) - (926,901)
(1,271,117) - (1,271,117)
(729,077) - (729,077)
(25,030,327) - (25,030,327)
- (276,948) (276,948)
- (466,684) (466,684)
- (743,632) (743,632)
(25,030,327) (743,632) (25,773,959)
5,879,508 - 5,879,508
88,553 - 88,553
15,570,934 - 15,570,934
1,119,104 - 1,119,104
1,078,631 - 1,078,631
1,347,725 570,561 1,918,286
545,199 1,296 546,495
26,000 - 26,000
556,758 (556,758) -
26,212,412 15,099 26,227,511
1,182,085 (728,533) 453,552
60,638,624 45,319,868 105,958,492
(210,484) - (210,484)
(203,260) (29,062) (232,322)
60,224,880 45,290,806 105,515,686
$ 61,406,965 $ 44,562,273 $ 105,969,238
The notes to the basic financial statements are an integral part of this statement. -16-

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Basic Financial Statements
• Fund Financial Statements

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CITY OF GRASS VALLEY
Balance Sheet
Governmental Funds
June 30, 2025
Capital
Improvement
General Measure "E" Housing Projects
ASSETS
Cash and investments $ 6,873,263 $ 3,383,168 $ 1,286,229 $ - Receivables:

Accounts 643,372 19,569 - 15,324
Interest 13,951 8,700 2,432,457 -
Taxes 1,891,705 1,267,899 - -
Intergovernmental 18,115 - - -
Prepaid costs 818 - - -
Due from other funds 538,368 - - -
Loans receivable - - 5,218,581 -
Restricted cash and investments 1,597 - - -
Total Assets $ 9,981,189 $ 4,679,336 $ 8,937,267 $ 15,324

LIABILITIES
Accounts payable $ 894,743 $ 51,515 $ 1,360 $ 569,429
Salaries and benefits payable 257,915 78,480 - 6,374
Unearned revenue 48,348 - - -
Deposits payable 324,809 - - -
Due to other funds - - - 158,900
Total Liabilities 1,525,815 129,995 1,360 734,703

DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - - - -
Total Deferred Inflows of Resources - - - -

FUND BALANCES
Nonspendable 818 - 5,218,581 -
Restricted 212,212 - 3,717,326 -
Assigned - 4,549,341 - -
Unassigned 8,242,344 - - (719,379)
Total Fund Balances (Deficits) 8,455,374 4,549,341 8,935,907 (719,379) Total Liabilities, Deferred Inflows of
Resources and Fund Balances $ 9,981,189 $ 4,679,336 $ 8,937,267 $ 15,324 The notes to the basic financial statements are an integral part of this statement. -17-

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Item # 4.

Other
Special Governmental
Projects Funds Totals
$ 5,595,547 $ 4,373,476 $ 21,511,683
72,023 26,053 776,341
13,999 130,122 2,599,229
- 580,057 3,739,661
- 246,179 264,294
- 17,575 18,393
158,900 7,781 705,049
- 748,142 5,966,723
- - 1,597
$ 5,840,469 $ 6,129,385 $ 35,582,970
$ - $ 372,864 $ 1,889,911
- 33,497 376,266
- - 48,348
- - 324,809
- 546,149 705,049
- 952,510 3,344,383
- 12,192 12,192
- 12,192 12,192
- 765,717 5,985,116
- 697,314 4,626,852
5,840,469 4,231,795 14,621,605
- (530,143) 6,992,822
5,840,469 5,164,683 32,226,395
$ 5,840,469 $ 6,129,385 $ 35,582,970
The notes to the basic financial statements are an integral part of this statement. -17-

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Item # 4.

CITY OF GRASS VALLEY
Reconciliation of the Governmental Funds Balance
Sheet to the Government-Wide Statement of
Net Position - Governmental Activities
June 30, 2025
Total Fund Balance - Total Governmental Funds $ 32,226,395 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 Balance Sheet. 63,567,805 Other long-term assets are not available to pay for current period expenditures and therefore are reported as unavailable revenues in the governmental funds. 12,192 Deferred outflows of resources related to pension and OPEB are not reported in the governmental funds. 6,622,666 Deferred inflows of resources related to pension and OPEB are not reported in the governmental funds. (6,147,395) Certain liabilities are not due and payable in the current period and therefore are not reported in the governmental funds.

Pension obligation bonds (14,575,000)
Financed purchases (6,025,876)
Compensated absences (1,523,468)
Net pension liability (8,804,261)
Total OPEB liability (3,946,093)
Net Position of Governmental Activities $ 61,406,965
The notes to the basic financial statements are an integral part of this statement. -18-

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Item # 4.

CITY OF GRASS VALLEY
Statement of Revenues, Expenditures and
Changes in Fund Balances
Governmental Funds
For the Year Ended June 30, 2025
Capital
Improvement
General Measure "E" Housing Projects

REVENUES
Taxes and assessments $ 14,307,964 $ 7,017,687 $ - $ -
Licenses, permits and franchises 1,946,770 - - -
Fines and forfeitures 1,100 - - -
Intergovernmental revenues 1,530,425 3,028 - 145,172
Use of money and property 370,869 152,688 406,187 1
Charges for services 51,095 - - -
Other revenues 473,927 - - 71,172
Total Revenues 18,682,150 7,173,403 406,187 216,345

EXPENDITURES
Current:

General government 4,210,104 329,016 - -
Public protection 10,414,202 3,915,478 - -
Public ways and facilities 1,427,204 96,910 - 440,694
Community development 786,874 - 7,400 -
Recreation and culture 775,283 - - -
Debt service:

Principal 872,660 760,083 - -
Interest and other charges 578,552 150,525 - -
Capital outlay 63,791 645,004 - 999,054
Total Expenditures 19,128,670 5,897,016 7,400 1,439,748 Excess of Revenues Over (Under) Expenditures (446,520) 1,276,387 398,787 (1,223,403)

OTHER FINANCING SOURCES (USES)
Debt proceeds - 224,358 - -
Proceeds from sale of capital assets 10,000 - - -
Transfers in 601,157 - - 1,189,022
Transfers out - (634,418) - (63,437)
Total Other Financing Sources (Uses) 611,157 (410,060) - 1,125,585 Net Change in Fund Balances 164,637 866,327 398,787 (97,818) Fund Balances - Beginning (Deficit) 8,290,737 3,683,014 8,747,604 (621,561) Prior period adjustment - - (210,484) -
Fund Balance - Beginning, Restated 8,290,737 3,683,014 8,537,120 (621,561) Fund Balances - Ending (Deficit) $ 8,455,374 $ 4,549,341 $ 8,935,907 $ (719,379) The notes to the basic financial statements are an integral part of this statement. -19-

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Item # 4.

Other
Special Governmental
Projects Funds Totals
$ - $ 2,311,595 $ 23,637,246
- - 1,946,770
- 44,866 45,966
- 1,667,927 3,346,552
249,607 168,373 1,347,725
119,236 - 170,331
- 100 545,199
368,843 4,192,861 31,039,789
- 548,465 5,087,585
- 777,928 15,107,608
- 73,265 2,038,073
- 51,806 846,080
- - 775,283
- - 1,632,743
- - 729,077
985,000 546,697 3,239,546
985,000 1,998,161 29,455,995
(616,157) 2,194,700 1,583,794
- - 224,358
- 16,000 26,000
232,454 171,213 2,193,846
(47,454) (891,779) (1,637,088)
185,000 (704,566) 807,116
(431,157) 1,490,134 2,390,910
6,271,626 3,674,549 30,045,969
- - (210,484)
6,271,626 3,674,549 29,835,485
$ 5,840,469 $ 5,164,683 $ 32,226,395
The notes to the basic financial statements are an integral part of this statement. -19-

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Item # 4.

CITY OF GRASS VALLEY
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Government-Wide Statement of Activities - Governmental Activities For the Year Ended June 30, 2025
Net Change in Fund Balances - Total Governmental Funds $ 2,390,910 Amounts reported for governmental activities in the Statement of Activities are different because:

Governmental funds report capital outlay as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.

Expenditures for capital outlay 3,239,546
Less current year depreciation (3,919,119)
Various adjustments 249,754
Some revenues reported in the Statement of Activities will not be collected for several months after the City's year end and do not provide current financial resources and therefore are not reported as revenues in the governmental funds
Change in unavailable revenues (27,808)
Debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Position. Repayment of principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position.

Principal retirements 1,632,743
Proceeds from issuance of debt (224,358)
Certain changes in deferred outflows and deferred inflows of resources reported in the Statement of Activities relate to long-term liabilities and are not reported in the governmental funds.

Change in deferred outflows of resources related to pension and OPEB (1,996,854) Change in deferred inflows of resources related to pension and OPEB 271,025 Some 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.

Change in compensated absences 80,546
Change in net pension liability (671,457)
Change in total OPEB liability 157,157
Change in Net Position of Governmental Activities $ 1,182,085 The notes to the basic financial statements are an integral part of this statement. -20-

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Item # 4.

CITY OF GRASS VALLEY
Statement of Net Position
Proprietary Funds
June 30, 2025
Water Sewer Totals
ASSETS
Current Assets:

Cash and investments $ 2,170,075 $ 9,320,676 $ 11,490,751 Receivables:

Accounts 472,396 991,035 1,463,431
Interest 5,536 23,231 28,767
Total Current Assets 2,648,007 10,334,942 12,982,949
Noncurrent Assets:

Restricted cash and investments - 669,993 669,993
Capital assets:

Non-depreciable 234,752 921,779 1,156,531
Depreciable, net 7,732,813 27,689,555 35,422,368
Total capital assets 7,967,565 28,611,334 36,578,899
Total Noncurrent Assets 7,967,565 29,281,327 37,248,892 Total Assets 10,615,572 39,616,269 50,231,841

DEFERRED OUTFLOWS OF RESOURCES
Deferred pension adjustments 343,822 543,589 887,411
Deferred OPEB adjustments 24,668 52,550 77,218
Total Deferred Outflows of Resources 368,490 596,139 964,629

LIABILITIES
Current Liabilities:

Accounts payable 114,181 141,874 256,055
Salaries and benefits payable 24,597 38,905 63,502
Deposits payable - 1,546 1,546
Interest payable 7,180 13,779 20,959
Compensated absences 22,073 22,073 44,146
Bonds payable - 594,086 594,086
Loans payable 133,355 - 133,355
Finance purchases 175,361 175,011 350,372
Total Current Liabilities 476,747 987,274 1,464,021
Noncurrent Liabilities:

Compensated absences 78,819 162,307 241,126
Loans payable 353,551 - 353,551
Finance purchases 292,091 1,849,908 2,141,999
Net pension liability 523,301 827,348 1,350,649
Total OPEB liability 116,155 247,438 363,593
Total Noncurrent Liabilities 1,363,917 3,087,001 4,450,918 Total Liabilities 1,840,664 4,074,275 5,914,939
The notes to the basic financial statements are an integral part of this statement. -21- Continued (Page 1 of 2)

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Item # 4.

CITY OF GRASS VALLEY
Statement of Net Position
Proprietary Funds
June 30, 2025
Water Sewer Totals

DEFERRED INFLOWS OF RESOURCES
Deferred pension adjustments 148,268 234,415 382,683
Deferred OPEB adjustments 107,524 229,051 336,575
Total Deferred Inflows of Resources 255,792 463,466 719,258

NET POSITION
Net investment in capital assets 7,013,207 25,992,329 33,005,536 Unrestricted 1,874,399 9,682,338 11,556,737
Total Net Position $ 8,887,606 $ 35,674,667 $ 44,562,273 The notes to the basic financial statements are an integral part of this statement. -22- Continued (Page 2 of 2)

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Item # 4.

CITY OF GRASS VALLEY
Statement of Revenues, Expenses and
Changes in Net Position
Proprietary Funds
For the Year Ended June 30, 2025
Water Sewer Totals

OPERATING REVENUES
Charges for services $ 2,453,540 $ 5,661,409 $ 8,114,949 Other revenues 1,081 215 1,296

Total Operating Revenues 2,454,621 5,661,624 8,116,245

OPERATING EXPENSES
Salaries and benefits 981,681 1,559,641 2,541,322
Services and supplies 1,252,590 2,526,503 3,779,093
Depreciation 460,912 2,010,131 2,471,043
Total Operating Expenses 2,695,183 6,096,275 8,791,458
Operating Income (Loss) (240,562) (434,651) (675,213)

NON-OPERATING REVENUES (EXPENSES)
Interest income 157,563 412,998 570,561
Interest expense (35,305) (31,818) (67,123)
Total Non-Operating Revenues (Expenses) 122,258 381,180 503,438 Income (Loss) Before Transfers (118,304) (53,471) (171,775) Transfers out (219,235) (337,523) (556,758)
Change in Net Position (337,539) (390,994) (728,533)
Total Net Position - Beginning 9,234,814 36,085,054 45,319,868 Change in accounting principle (9,669) (19,393) (29,062) Total Net Position - Beginning, Restated 9,225,145 36,065,661 45,290,806 Total Net Position - Ending $ 8,887,606 $ 35,674,667 $ 44,562,273 The notes to the basic financial statements are an integral part of this statement. -23-

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Item # 4.

CITY OF GRASS VALLEY
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2025
Water Sewer Totals

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 2,418,671 $ 5,671,943 $ 8,090,614 Payments to suppliers (1,278,716) (2,688,812) (3,967,528) Payments to employees (998,500) (1,601,745) (2,600,245) Net Cash Provided (Used) by Operating Activities 141,455 1,381,386 1,522,841

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers to other funds (219,235) (337,523) (556,758)
Net Cash Provided (Used) by Noncapital Financing Activities (219,235) (337,523) (556,758)

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Purchase of capital assets - (162,781) (162,781)
Principal paid on debt (295,416) (734,640) (1,030,056)
Interest paid on debt (38,851) (41,622) (80,473)
Net Cash Provided (Used) by Capital and Related
Financing Activities (334,267) (939,043) (1,273,310)

CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments 157,804 407,874 565,678
Net Cash Provided (Used) by Investing Activities 157,804 407,874 565,678 Net Increase (Decrease) in Cash and Cash Equivalents (254,243) 512,694 258,451 Balances - Beginning 2,424,318 9,477,975 11,902,293
Balances - Ending $ 2,170,075 $ 9,990,669 $ 12,160,744
The notes to the basic financial statements are an integral part of this statement. -24- Continued (Page 1 of 2)

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Item # 4.

CITY OF GRASS VALLEY
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2025
Water Sewer Totals

ADJUSTMENTS TO RECONCILE OPERATING INCOME TO

NET CASH PROVIDED (USED) BY OPERATING

ACTIVITIES
Operating income (loss) $ (240,562) $ (434,651) $ (675,213) Adjustments to reconcile operating income to net cash
provided (used) by operating activities:

Depreciation 460,912 2,010,131 2,471,043
Decrease (increase) in:

Accounts receivable (35,950) 10,319 (25,631)
Pension adjustments - deferred outflows 508,958 836,697 1,345,655 OPEB adjustments - deferred outflows 5,638 12,009 17,647 Increase (decrease) in:

Accounts payable (26,126) (162,309) (188,435)
Salaries and benefits payable 4,069 7,320 11,389
Compensated absences 14,284 20,711 34,995
Net pension liability (390,472) (651,660) (1,042,132)
Total OPEB liability (4,626) (9,854) (14,480)
Pension adjustments - deferred inflows (151,904) (251,435) (403,339) OPEB adjustments - deferred inflows (2,766) (5,892) (8,658) Net Cash Provided (Used) by Operating Activities $ 141,455 $ 1,381,386 $ 1,522,841 The notes to the basic financial statements are an integral part of this statement. -25- Continued (Page 2 of 2)

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Item # 4.

CITY OF GRASS VALLEY
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2025
Private Total
Purpose Custodial Fiduciary
Trust Funds Funds Funds
ASSETS
Current Assets:

Cash and investments $ 807,067 $ 3,421 $ 810,488
Cash with fiscal agent 3,103 - 3,103
Receivables:

Accounts 164,487 - 164,487
Intergovernmental 1,733 - 1,733
Loans receivable 848,242 - 848,242
Total Assets 1,824,632 3,421 1,828,053

LIABILITIES
Current Liabilities:

Salaries and benefits payable 427 - 427
Loans payable 375,148 - 375,148
Total Current Liabilities 375,575 - 375,575
Noncurrent Liabilities:

Loans payable 6,384,665 - 6,384,665
Total Noncurrent Liabilities 6,384,665 - 6,384,665
Total Liabilities 6,760,240 - 6,760,240

NET POSITION
Restricted for individuals, organizations, and other governments (4,935,608) 3,421 (4,932,187) Total Net Position $ (4,935,608) $ 3,421 $ (4,932,187)
The notes to the basic financial statements are an integral part of this statement. -26-

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Item # 4.

CITY OF GRASS VALLEY
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Year Ended June 30, 2025
Private Total
Purpose Custodial Fiduciary
Trust Funds Funds Funds

ADDITIONS
Property taxes $ 650,190 $ - $ 650,190
Interest and investment income (153,612) - (153,612)
Other contributions 38,851 - 38,851
Total Additions 535,429 - 535,429

DEDUCTIONS
Program expenses of former redevelopment agency 9,567 - 9,567 Interest expense 230,342 - 230,342
Total Deductions 239,909 - 239,909
Change in Fiduciary Net Position 295,520 - 295,520
Total Net Position - Beginning (5,249,112) 3,421 (5,245,691) Prior period adjustment 17,984 - 17,984
Total Net Position - Beginning, Restated (5,231,128) 3,421 (5,227,707) Total Net Position - Ending $ (4,935,608) $ 3,421 $ (4,932,187) The notes to the basic financial statements are an integral part of this statement. -27-

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Basic Financial Statements
• Notes to Basic Financial Statements

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-28-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The City of Grass Valley was incorporated in 1893, under the laws and regulations of the State of California.

The City operates under a Council-Manager form of government and provides the following services:
public safety, highways and streets, health and sanitation, culture and recreation, public improvements, planning and zoning, general administrative services, water and sewer.

Component Units
Generally accepted accounting principles require government financial statements to include the primary government and its component units. Component units of a governmental entity are legally separate entities for which the primary government is considered to be financially accountable and for which the nature and significance of their relationship with the primary government are such that exclusion would cause the combined financial statements to be misleading. The primary government is considered to be financially accountable if it appoints a majority of an organization’s governing body and is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to or impose specific financial burdens on the primary government.

Reporting for component units on the City’s financial statements can be blended or discretely presented.

Blended component units are, although legally separate entities, in substance part of the City’s operations and, therefore, data from these units are combined with data of the primary government. Discretely presented component units, on the other hand, would be reported in a separate column in the governmentwide financial statements to emphasize it is legally separate from the government.

For financial reporting purposes, the City’s basic financial statements include all financial activities that are controlled by or are dependent upon actions taken by the City Council. The financial statements of the individual component units may be obtained by writing to the City of Grass Valley, 125 East Main Street, Grass Valley, California 95945.

Blended Component Units
Redevelopment Agency of the City of Grass Valley – The California redevelopment process provides communities at a local level with a comprehensive tool for economic development. These tools are the powers of land assembly and site preparation for private development, the ability to finance necessary public improvements, the authority to impose conditions and restrictions for the quality of developments of an area, and the capability to broaden financing capabilities utilizing a variety of public and private sources.

The Agency provides services entirely for the benefit of the City of Grass Valley. The governing body is substantially the same as the primary government and the City and the component unit are financially interdependent; hence, the unit is presented by blending with the primary government. Pursuant to the provisions of the Redevelopment Restructuring Act, the Redevelopment Agency of the City of Grass Valley Successor Agency (Successor Agency) was created, and all of the assets, liabilities, and obligations of the former RDA were transferred to the Successor Agency on February 1, 2012.

Discretely Presented Component Units
There are no component units of the City which meet the criteria for discrete presentation.

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-29-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Basis of Presentation
Government-Wide Financial Statements
The Statement of Net Position and Statement of Activities display information on all of the nonfiduciary activities of the City and its blended component units. These statements include the financial activities of the overall government, except fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Interfund services provided and used are not eliminated in the process of consolidation. These statements distinguish between the governmental and business-type activities of the City. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees charged to external parties.

The Statement of Activities presents a comparison between direct expenses and program revenues for each different identifiable activity of the City's business-type activities and each function of the City's governmental activities. Direct expenses are those that are specifically associated with a program or function and; therefore, are clearly identifiable to a particular function. Program revenues include 1) charges paid by the recipients of goods and services offered by the program, 2) operating grants and contributions, and 3) capital grants and contributions. Taxes and other items not properly included among program revenues are presented instead as general revenues.

Fund Financial Statements
The fund financial statements provide information about the City’s funds, including fiduciary funds and blended component units. Funds are organized into three major categories: governmental, proprietary, and fiduciary. The emphasis is placed on major funds within the governmental and proprietary categories; each is displayed in a separate column. All remaining governmental and enterprise funds are separately aggregated and reported as nonmajor funds.

The City reports the following major governmental funds:
• The General fund is used to account for all revenues and expenditures necessary to carry out basic governmental activities of the City that are not accounted for through other funds. For the City, the General fund includes such activities as public safety, planning and zoning, general administrative services and public works.
• The Measure “E” fund is a special revenue fund used to account for Measure E revenues and expenditures.
• The Housing fund is a special revenue fund used to account for Housing revenues and expenditures.

Funding comes primarily from grant revenues.
• The Capital Improvement fund is a capital projects fund used to account for capital improvements of the City.
• The Special Projects fund is a capital projects fund used to account for special projects of the City.

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-30-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Basis of Presentation (Continued)
Fund Financial Statements (Continued)
The City reports the following major proprietary funds:
• The Water fund is an enterprise fund used to account for activity related to providing customers with water service and billing provided by the City.
• The Sewer fund is an enterprise fund used to account for activity related to providing customers with sewer service and billing provided by the City.

The City reports the following additional fund types:
• Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the City’s programs. • Private-purpose trust funds are used to report all fiduciary activities that (a) are not required to be reported in pension (and other employee benefit) trust funds or investment trust funds and (b) are held in a trust in which the assets are (a) administered through a trust in which the government itself is not a beneficiary, (b) dedicated to providing benefits to recipients in accordance with the benefit terms, and (c) legally protected from the creditors of the government. • Custodial funds are used to report fiduciary activities that are not required to be reported in pension (and other employee benefit) trust funds, investment trust funds, or private-purpose trust funds.

These include unapportioned property taxes and other custodial funds.

C. Basis of Accounting and Measurement Focus
The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus and the 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.

Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange, include property and sales tax, grants, entitlements, and donations. Under the accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied.

Revenues from sales tax are recognized when the underlying transactions take place. Revenues from grants, entitlements, and donations are recognized in the fiscal year in which all eligibility requirements have been satisfied.

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.

Property and sales taxes, interest, certain state and federal grants and charges for services are considered susceptible to accrual and are accrued when their receipt occurs within sixty days after the end of the fiscal year. Expenditures are generally recorded when a liability is incurred, as under accrual accounting.

However, debt service expenditures as well as expenditures related to claims and judgments are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in the various functions of the governmental funds. Proceeds of governmental long-term debt and acquisitions under capital leases are reported as other financing sources.

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-31-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Basis of Accounting and Measurement Focus (Continued) 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 enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation of capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

Fiduciary funds include private-purpose trust funds and custodial funds. These fiduciary funds are reported using the economic resources measurement focus and the accrual basis of accounting.

D. Non-Current Governmental Assets/Liabilities
Non-current governmental assets and liabilities, such as capital assets and long-term liabilities, are reported in the governmental activities column in the government-wide Statement of Net Position.

E. Cash and Cash Equivalents
For purposes of the accompanying Statement of Cash Flows, the City considers all highly liquid investments with a maturity of three months or less when purchased, including amounts held in the City’s investment pool, to be cash and cash equivalents.

F. Investments
The City pools cash and investments of all funds except cash and investments with fiscal agents. Each fund’s share in this pool is displayed in the accompanying financial statements as cash and investments.

Investment transactions are recorded on the trade date. The fair value of investments is determined annually.

Investments in nonparticipating interest-earning investment contracts are reported at cost; short-term investments are reported at amortized cost, investments in the State of California Local Agency Investment Fund, an external pool, are reported at amortized cost which approximates fair value, and the fair value of all other investments are obtained by using quotations obtained from independent published sources or by the safekeeping institution. The fair value represents the amount the City could reasonably expect to receive for an investment in a current sale between a willing buyer and seller.

Income from pooled investments is allocated to the individual funds based on the fund or participant’s average daily cash balance at quarter end in relation to the total pool investments. Income from non-pooled investments is recorded based on the specific investments held by the fund.

G. Restricted Cash and Investments
Restricted assets in the proprietary funds represent cash and investments held in the Sewer fund for debt service of $669,993. Restricted cash in the governmental funds represent cash and investments in the General fund for the pension obligation bonds and ADA.

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-32-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) H. Receivables
Receivables for governmental activities consist mainly of accounts, interest, taxes and amounts due from other governments. Management believes its receivables are fully collectible and, accordingly, no allowance for doubtful accounts is required.

Receivables for business-type activities consist mainly of user fees, interest, and taxes. Management believes its receivables are fully collectible and, accordingly, no allowance for doubtful accounts is required.

I. Other Assets
Inventory
Governmental fund inventories are recorded as expenditures at the time the inventory is purchased rather than when consumed. Records are not maintained of inventory and supplies on hand, although these amounts are not considered material.

Prepaid Items
Payments made for services that will benefit periods beyond June 30, 2025, are recorded as prepaid costs under both the accrual and modified accrual basis of accounting. The cost of prepaid items is recorded as expenditures/expenses when consumed rather than when purchased.

J. Loans Receivable
A total of $5,966,723 was recorded as loans receivable at June 30, 2025. These represent low interest notes and related accrued interest to finance multi-family and single-family construction and rehabilitation projects and homebuyer assistance for low-income families. Loan terms are 15 to 55 years with an interest rate at 0 to 5 percent. The primary source of funding for these loans comes from grants from the federal Community Development Block Grant (CDBG) program and Home Investment Partnerships (HOME) program. The CDBG and HOME grants contain monitoring requirements to ensure grant compliance. These requirements are reflected in the loan agreements.

K. Capital Assets
Capital assets, including public domain (infrastructure such as roads, bridges, sidewalks and sewer), are defined by the City as an asset with a cost greater than $5,000 and a useful life of more than one year. A capital project involves the construction of public assets (buildings, water, sewer, or other infrastructure) that costs more than $25,000 and extends the planned useful life of the asset by more than one year or has a planned useful life of more than one year. Capital assets are recorded at historical cost or estimated historical cost if actual historical cost is unavailable. Contributed capital assets are recorded at their fair value at the date of donation.

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-33-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) K. Capital Assets (Continued)
Capital assets used in operations are depreciated or amortized using the straight-line method over the assets’ estimated useful lives in the government-wide financial statements. The range of estimated useful lives by type of asset is as follows:

Depreciable Asset Estimated Lives
Equipment 3 to 25 years
Structures and improvements 5 to 50 years
Infrastructure 20 to 75 years
Intangibles (computer software) 5 to 10 years
Maintenance and repairs are charged to operations when incurred. Betterments and major improvements which significantly increase values, change capacities or extend useful lives are capitalized. Upon sale or retirement of capital 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.

L. Property Tax
Nevada County assesses properties, bills, collects, and distributes property taxes to the City. The County remits the entire amount levied and handles all delinquencies, retaining interest and penalties.

Property taxes are levied on a fiscal year (July 1 - June 30). The secured property tax assessments are due on November 1 and February 1 and become delinquent after December 10 and April 10, respectively. The unsecured property tax assessments are due on August 1 and become delinquent after August 31. Property taxes become a lien on the property effective January 1 of the preceding year.

The City recognizes property taxes when the individual installments are due provided they are collected within 60 days after year-end.

M. Interfund Transactions
Interfund transactions are reflected as either loans, services provided or used, reimbursements, or transfers.

Loans reported as receivables and payables are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the noncurrent portion of interfund loans) as appropriate and are subject to elimination upon consolidation. Any residual balances outstanding between the governmental activities and the business-type activities are reported in the government-wide financial statements as “internal balances”. Advances between funds, as reported in the fund financial statements, are offset by a nonspendable fund balance account in applicable governmental funds to indicate that they are not in spendable form.

Services provided or used, deemed to be at market or near market rates, are treated as revenues and expenditures or expenses. These services provide information on the net cost of each government function and therefore are not eliminated in the process of preparing the government-wide statement of activities.

Reimbursements occur when the funds responsible for particular expenditures or expenses repay the funds that initially paid for them. Such reimbursements are reflected as expenditures or expenses in the reimbursing fund and reductions to expenditures or expenses in the reimbursed fund.

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-34-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) M. Interfund Transactions (Continued)
All other interfund transactions are treated as transfers. Transfers between funds are netted as part of the reconciliation to the government-wide presentation.

N. Unearned Revenue
Under the accrual and modified accrual basis of accounting, revenue may be recognized only when it is earned. When assets are recognized in connection with a transaction before the earnings process is complete, those assets are offset by a corresponding liability for unearned revenue.

O. Compensated Absences
It is the City's policy to permit employees to accumulate a limited amount of earned but unused vacation leave and sick leave. In accordance with GASB Statement No. 101, Compensated Absences, leave is recognized when it is attributable to services already rendered, the leave accumulates, and the leave is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means.

Management evaluates sick leave for other City employees to determine the amount that is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means. In the governmentwide financial statements the accrued compensated absences is recorded as an expense and related liability, with the current portion estimated based on historical trends. In the governmental fund financial statements, the expenditures and liabilities related to those obligations are recognized only when they mature. In the proprietary funds the accrued compensated absences is recorded as an expense and related liability in the year earned. The City includes its share of social security and medicare taxes payable on behalf of the employees in the accrual for compensated absences.

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

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

Valuation Date June 30, 2023
Measurement Date June 30, 2024
Measurement Period June 30, 2023, to June 30, 2024
Q. Other Postemployment Benefits (OPEB)
For purposes of measuring the total OPEB liability, deferred outflows/inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s plan (OPEB Plan) and additions to/deductions from the OPEB Plans’ fiduciary net position have been determined on the same basis. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms.

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-35-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Q. Other Postemployment Benefits (OPEB) (Continued)
Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date June 30, 2024
Measurement Date June 30, 2025
Measurement Period June 30, 2024, to June 30, 2025
R. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to future periods and so will not be recognized as an outflow of resources (expense) until then. The City has two items that qualify for reporting in this category. These items relate to the outflows from changes in the net pension liability and total OPEB liability and are reportable on the Statement of Net Position.

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, represents an acquisition of net assets that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. The City has three items which qualify for reporting in this category. The first item, unavailable revenue is reported only in the governmental funds Balance Sheet.

The governmental funds report unavailable revenues for receivables that have not been received within the modified accrual period. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The second and third items relate to the inflows from changes in the net pension liability and total OPEB liability and are reportable on the Statement of Net Position.

S. Estimates
The preparation of basic financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

T. Implementation of Governmental Accounting Standards Board (GASB) Statements The following Governmental Accounting Standards Board (GASB) Statements have been implemented, if applicable, in the current financial statements.

Statement No. 101, Compensated Absences. The objective of this statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures.

Statement No. 102, Certain Risk Disclosures. The objective of this statement is to provide users of government financial statements with essential information about its risks related to a government’s vulnerabilities due to certain concentrations or constraints.

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-36-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) U. Future Accounting Pronouncements
The following GASB Statements will be implemented, if applicable, in future financial statements:

Statement No. 103 “Financial Reporting Model Improvements” The requirements of this statement are effective for fiscal years beginning after June 15, 2025. (FY 25/26) Statement No. 104 “Disclosure of Certain Capital Assets” The requirements of this statement are effective for fiscal years beginning after June 15, 2025. (FY 25/26) Statement No. 105 “Subsequent Events” The requirements of this statement are effective for fiscal years beginning after June 15, 2026. (FY 26/27)
NOTE 2: STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. Restatement of Net Position/Fund Balance
During the fiscal year ended June 30, 2025, the City recorded an adjustment reclassifying interest related to loans receivable and additional expenditure for sick leave due to the implementation of GASB No. 101, Compensated Absences, which was not previously reported in the financial statements resulting in an understatement of prior year interest earned of $210,484 and an understatement of prior year compensated absences of $232,322. The effect of implementing GASB No. 101 is shown in the table below.

During the fiscal year 2025, a change in accounting principle resulted in restatements of beginning fund balance and net position as follows:

Reporting Units Affected by Adjustments to
and Restatements of Beginning Balances
Governmental
Activities
Business-Type
Activities
Net Position, June 30, 2024, as previously reported $ 60,638,624 $ 45,319,868 Correction of an error ( 210,484) -
Change in accounting principle – GASB No. 101 ( 203,260) ( 29,062) Total Adjustments ( 413,744) ( 29,062)
Net Position, July 1, 2024, as restated $ 60,224,880 $ 45,274,874

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-37-
NOTE 2: STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (CONTINUED) A. Restatement of Net Position/Fund Balance (Continued) The impact of the restatement on the fund balance of the fund financial statements as previously reported is presented below:

Water Sewer
Private Purpose
Trust Fund
Fund Balance, June 30, 2024,
as previously reported $ 9,234,814 $ 36,085,054 $ 1,277,350 Adjustment associated with:

Correction of an error - - 17,984
Change in accounting principle –
GASB No. 101 ( 9,669) ( 19,393) -
Total Adjustments ( 9,669) ( 19,393) 17,984
Fund Balance, July 1, 2024, as restated $ 9,225,145 $ 36,065,661 $ 1,295,334 B. Deficit Fund Balance
The following major fund had a deficit fund balance at June 30, 2025:

Capital Improvement Projects $ 719,379
The following non-major governmental funds had deficit fund balances at June 30, 2025:

Prop 64 $ 533,750
Some of these deficits may be eliminated in the future through grant revenues. Certain amounts of these deficits will ultimately become the responsibility of the General fund.

NOTE 3: CASH AND INVESTMENTS
A. Financial Statement Presentation
As of June 30, 2025, the City’s cash and investments are reported in the financial statements as follows:

Governmental activities $ 21,513,280
Business-type activities 12,160,744
Fiduciary funds 813,591
Total Cash and Investments $ 34,487,615

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-38-
NOTE 3: CASH AND INVESTMENTS (CONTINUED)
A. Financial Statement Presentation (Continued)
As of June 30, 2025, the City’s cash and investments consisted of the following:

Cash:

Cash on hand $ 1,150
Deposits (less outstanding checks) 6,135,991
Cash with fiscal agent 674,693
Total Cash 6,811,834
Investments:

In City’s pool 27,675,781
Total Investments 27,675,781
Total Cash and Investments $ 34,487,615
B. Cash
At year end, the carrying amount of the City’s cash deposits (including amounts in checking, savings, and money market accounts) was $6,810,684 and the bank balance was $6,720,930. The difference between the bank balance and the carrying amount represents outstanding warrants and deposits in transit. In addition, the City had cash on hand of $1,150.

Custodial Credit Risk for Deposits - Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the City will not be able to recover its deposits or collateral securities that are in the possession of an outside party. The City’s investment policy requires that deposits in banks must meet the requirements of the California Government Code. Under this code, interest bearing deposits of more than $250,000 must be collateralized at 105 percent to 150 percent of the value of the deposit to guarantee the safety of the public funds. The first $250,000 of the City’s deposits are insured by the Federal Deposit Insurance Corporation (FDIC). Deposits of more than the $250,000 insured amount are collateralized. The City’s investment policy does not further limit its deposits.

C. Investments
The City has an investment policy, the purpose of which is to establish guidelines for the prudent investment of the City’s funds and outline the policies for maximizing the efficiency of the City’s cash management program. The ultimate goal is to enhance the economic status of the City while protecting its pooled investments.

The investment policy provides the basis for the management of a prudent, conservative investment program. Funds are invested to provide the maximum security of principal with secondary emphasis on achieving the highest return, while meeting daily cash flow needs. All investments are made in accordance with the Government Code and, in general, the investment policy is more restrictive than state law.

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-39-
NOTE 3: CASH AND INVESTMENTS (CONTINUED)
C. Investments (Continued)
Under the provisions of the City’s investment policy and the California Government Code, the City may invest or deposit in the following:

United States Treasury Bills, Bonds and Notes
Securities of the U.S. Government and its Agencies
State Obligations – CA and Others
Local Agency Obligations of California Issuers
Local Agency Investment Fund (State Pool) Demand Deposits (LAIF) Certificates of Deposit
Bankers’ Acceptances
Commercial Paper
Passbook Savings Accounts
Investment of Bond Proceeds
Fair Value of Investments - The City measures and records its investments using fair value measurement guidelines established by generally accepted accounting principles. These guidelines recognize a threetiered fair value hierarchy as follows:

Level 1: Quoted prices for identical investments in active markets; Level 2: Observable inputs other than quoted market prices; and, Level 3: Unobservable inputs
The City’s position in external investment pools is in itself regarded as a type of investment and looking through to the underlying investments of the pool is not appropriate. Therefore, the City’s investment in external investment pools is not recognized in the three-tiered fair value hierarchy described above.

At June 30, 2025, the City had the following recurring fair value measurements:

Fair Value Measurements Using
Investment Type Fair Value Level 1 Level 2 Level 3
Investments by Fair Value Level
Federal Agencies $11,326,623 $11,326,623
Certificates of Deposit 9,950,890 9,950,890 - -
Total Investments Measured at Fair Value 21,277,513 $21,277,513 $ - $ - Investments in External Investment Pools
LAIF 6,398,268
Total Investments $27,675,781
Interest Rate Risk - Interest rate risk is the risk of loss due to the fair value of an investment falling due to interest rates rising. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. To limit the exposure to fair value losses resulting from increases in interest rates, the City’s investment policy limits investment maturities to a term appropriate to the need for funds so as to permit the City to meet all projected obligations. Any investments that mature more than five years from the date of purchase cannot occur without prior approval of the City Council.

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-40-
NOTE 3: CASH AND INVESTMENTS (CONTINUED)
C. Investments (Continued)
As of June 30, 2025, the City had the following investments, all of which had a maturity of 5 years or less:

Maturities Weighted
Average
Interest Fair Maturity
Investment Type Rates 0-1 year 1-5 years Value (Years)
Federal Agencies 0.660-4.680% $10,319,383 $ 1,007,240 $11,326,623 0.33 Certificates of Deposit 0.850-5.290% 2,500,908 7,449,982 9,950,890 2.01 LAIF Variable 6,398,268 - 6,398,268 -
Total Investments $19,218,559 $ 8,457,222 $27,675,781 0.86 Credit Risk - Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The City’s investment policy sets specific parameters by type of investment to be met at the time of purchase. Presented below is the minimum rating required (where applicable) by the California Government Code or the City’s investment policy, and the actual rating as of year-end for each investment type.

Minimum Standard &
Legal Poor’s Moody’s % of
Investment Type Rating Rating Rating Portfolio
Federal Home Loan Bank - AA+ Aa1 21.23%
Federal Home Loan Bank Mortgage Corporation - AA+ Aa1 16.08% Federal Farm Credit Bank - AA+ Aa1 3.61%
Certificates of Deposit N/A Unrated Unrated 35.96%
LAIF N/A Unrated Unrated 23.12%
Total 100.00%
Custodial Credit Risk - Custodial credit risk for investments is the risk that, in the event of the failure of a depository financial institution, the City will not be able to recover its deposits or collateral securities that are in the possession of an outside party. To mitigate the custodial credit risk the City’s investment policy requires that all securities owned by the City shall be held in safekeeping by a third-party bank trust department.

Concentration of Credit Risk - Concentration of credit risk is the risk of loss attributed to the magnitude of the City’s investment in a single issuer of securities. When investments are concentrated in one issuer, this concentration presents a heightened risk of potential loss. The City’s investment policy contains limitations on the amount that can be invested in any one issuer. Investments in any one issuer (other than U.S.

Treasury Securities, mutual funds and external investment pools) at June 30, 2025, did not exceed 5 percent.

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-41-
NOTE 3: CASH AND INVESTMENTS (CONTINUED)
D. Investment in External Investment Pool
The City of Grass Valley maintains an investment in the State of California Local Agency Investment Fund (LAIF), managed by the State Treasurer. This fund is not registered with the Securities and Exchange Commission as an investment company but is required to invest according to California State Code. The Local Investment Advisory Board (Board) has oversight responsibility for LAIF. The Board consists of five members as designated by State Statute. At June 30, 2025, the City’s investment in LAIF valued at amortized cost was $6,398,268 and is the same as the value of the pool shares. There are no restrictions on withdrawal of funds. The total amount invested by all public agencies in LAIF on that day was $178.1 billion. Of that amount, 3.81 percent is invested in non-derivative financial products and 96.19 percent in structured notes and asset-backed securities.

NOTE 4: CAPITAL ASSETS
Capital assets activity for the year ended June 30, 2025, was as follows:

Balance Transfers/ Balance
July 1, 2024 Additions Retirements June 30, 2025
Governmental Activities
Capital Assets, Not Being Depreciated
Land $ 3,689,025 $ - $ - $ 3,689,025
Construction in progress 15,534,826 2,533,794 ( 14,328,033) 3,740,587 Total Capital Assets, Not Being Depreciated 19,223,851 2,533,794 ( 14,328,033) 7,429,612 Capital Assets, Being Depreciated
Infrastructure 79,927,817 318,757 14,577,787 94,824,361 Buildings and improvements 15,649,324 - - 15,649,324
Equipment 13,220,260 386,995 ( 123,398) 13,483,857
Vehicles 722,927 - ( 85,870) 637,057
Software 161,626 - - 161,626
Total Capital Assets, Being Depreciated 109,681,954 705,752 14,368,519 124,756,225 Less Accumulated Depreciation For:

Infrastructure ( 43,371,820) ( 2,573,611) - ( 45,945,431) Buildings and improvements ( 10,998,289) ( 493,564) - ( 11,491,853) Equipment ( 9,800,643) ( 785,046) 123,398 ( 10,462,291) Vehicles ( 601,543) ( 62,608) 85,870 ( 578,281)
Software ( 135,886) ( 4,290) - ( 140,176)
Total Accumulated Depreciation ( 64,908,181) ( 3,919,119) 209,268 ( 68,618,032) Total Capital Assets, Being Depreciated, Net 44,773,773 ( 3,213,367) 14,577,787 56,138,193 Governmental Activities Capital Assets, Net $ 63,997,624 ($ 679,573) $ 249,754 $ 63,567,805

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-42-
NOTE 4: CAPITAL ASSETS (CONTINUED)
Balance Adjustments/ Balance
July 1, 2024 Additions Retirements June 30, 2025
Business-Type Activities
Capital Assets, Not Being Depreciated
Land $ 339,401 $ - $ - $ 339,401
Construction in progress 807,225 9,905 - 817,130
Total Capital Assets, Not Being Depreciated 1,146,626 9,905 - 1,156,531 Capital Assets, Being Depreciated
Infrastructure 20,284,866 - ( 153,040) 20,131,826
Buildings and improvements 65,058,437 - 153,040 65,211,477 Equipment 2,381,705 152,876 ( 8,134) 2,526,447
Total Capital Assets, Being Depreciated 87,725,008 152,876 ( 8,134) 87,869,750 Less Accumulated Depreciation For:

Infrastructure ( 12,760,544) ( 508,467) 38,311 ( 13,230,700) Buildings and improvements ( 35,533,902) ( 1,795,488) ( 38,311) ( 37,367,701) Equipment ( 1,690,027) ( 167,088) 8,134 ( 1,848,981)
Total Accumulated Depreciation ( 49,984,473) ( 2,471,043) 8,134 ( 52,447,382) Total Capital Assets, Being Depreciated, Net 37,740,535 ( 2,318,167) - 35,422,368 Business-Type Activities Capital Assets, Net $ 38,887,161 ($2,308,262) $ - $ 36,578,899 Depreciation
Depreciation expense was charged to governmental activities as follows:

General government $ 76,298
Public protection 754,251
Public ways and facilities 2,536,958
Recreation and culture 551,612
Total Depreciation Expense – Governmental Activities $ 3,919,119 Depreciation expense was charged to the business-type activities as follows:

Water $ 460,912
Sewer 2,010,131
Total Depreciation Expense – Business-Type Activities $ 2,471,043 Construction in Progress
Construction in progress for governmental activities related primarily to work performed on City improvement projects. Construction in progress for business-type activities related primarily to work performed on the water system plan and wastewater treatment facility improvements.

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-43-
NOTE 5: UNEARNED REVENUES
At June 30, 2025, the components of unearned revenue were as follows:

General Fund
State grant advances received $ 48,348
Total $ 48,348
NOTE 6: INTERFUND TRANSACTIONS
Due From/To Other Funds
During the course of operations, transactions occur between funds to account for goods received or services rendered. These receivables and payables are classified as due from or due to other funds. In addition, when funds overdraw their share of pooled cash, the receivables and payables are also classified as due from or due to other funds. The following are due from and due to balances as of June 30, 2025:

Due From Due To
Other Funds Other Funds
General Fund $ 538,368 $ -
Capital Improvement Projects - 158,900
Special Projects 158,900 -
Nonmajor governmental funds 7,781 546,149
Total $ 705,049 $ 705,049
Transfers
Transfers are indicative of funding for capital projects, lease payments or debt service, reimbursement of various City operations and re-allocations of special revenues. The following are the interfund transfer balances as of June 30, 2025:

Transfers Transfers
In Out
General Fund $ 601,157 $ -
Measure “E” - 634,418
Capital Improvement Projects 1,189,022 63,437
Special Projects 232,454 47,454
Nonmajor governmental funds 171,213 891,779
Water - 219,235
Sewer - 337,523
Total $ 2,193,846 $ 2,193,846

Page 110 ends

Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-44-
NOTE 7: LONG-TERM LIABILITIES
The following is a summary of changes in long-term liabilities for the year ended June 30, 2025:

Amounts
Balance Adjustments/ Balance Due Within
Type of Indebtedness July 1, 2024 Additions Retirements June 30, 2025 One Year Governmental Activities
Pension obligation bonds $ 15,366,000 $ - ($ 791,000) $ 14,575,000 $ 811,000 Financed purchases 6,643,261 224,358 ( 841,743) 6,025,876 837,245 Compensated absences* 1,400,754 122,714 - 1,523,468 1,325,121 Total Governmental Activities $ 23,410,015 $ 347,072 ($1,632,743) $ 22,124,344 $ 2,973,366 Business-Type Activities
Direct borrowing loans payable $ 615,915 $ - ($ 129,009) $ 486,906 $ 133,355 Bonds 1,090,000 - ( 535,000) 555,000 555,000
Unamortized premium 78,172 - ( 39,086) 39,086 39,086
Bonds, net 1,168,172 - ( 574,086) 594,086 594,086
Financed purchases 2,819,331 - ( 326,960) 2,492,371 350,372 Compensated absences* 221,215 64,057 - 285,272 44,146
Total Business-Type Activities $ 4,824,633 $ 64,057 ($1,030,055) $ 3,858,635 $ 1,121,959 *The compensated absences activity shown in the table above is presented on a net increase basis as permitted by GASB Statement No. 101.

Compensated absences are generally liquidated by the fund where the accrued liability occurred. The financed purchases are liquidated by lease payments made by the departments leasing the equipment.

Individual issues of debt payable outstanding at June 30, 2025, are as follows:

Governmental Activities
Pension Obligation Bonds:
2020 Taxable Pension Obligation Bonds issued October 22, 2019, in the amount of $18,311,000, due in annual installments of $752,000 to $1,151,000, with an interest rate of

3.60%, and a maturity date on June 1, 2040. The bonds were used for the purposes of (a) refinancing the issuer’s outstanding “side fund” obligations in respect of retired miscellaneous employees to the California Public Employees’ Retirement System and (b) paying the costs associated with the issuance of the bonds. $ 14,575,000 Total Pension Obligation Bonds 14,575,000
Total Governmental Activities $ 14,575,000
Business-Type Activities
Loans from Direct Borrowings:

California Department of Water Resources Safe Drinking Water Loan, dated March 12, 1991, in the amount of $3,225,000, payable in semi-annual installments of $74,329, with an interest rate of 3.37%, and maturity on September 30, 2028. The loan proceeds were used to finance certain improvements to the City’s water system. $ 486,905 Total Loans from Direct Borrowings 486,905

Page 111 ends

Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-45-
NOTE 7: LONG-TERM LIABILITIES (CONTINUED)
Business-Type Activities (Continued)
Bonds:
2011 Wastewater Refunding Bonds, issued on August 1, 2011, in the amount of $5,930,000, due in annual installments of $311,000 to $555,000, with an interest rate of 2.0% to 5.0%, and a maturity date of August 1, 2025. The bonds were used to refund the Wastewater Certificates of Participation. 555,000
Total Bonds 555,000
Total Business-Type Activities $ 1,041,905
The City has pledged sewer operations revenue, net of specified operating expenses, to repay the loan from direct borrowings in the amount of $740,599 issued in March 1991.

Following is a schedule of debt payment requirements of governmental activities to maturity for long-term debt, excluding compensated absences that have indefinite maturities, and financed purchases which are reported in Note 8.

Governmental Activities
Pension Obligation Bonds
Year Ended
June 30 Principal Interest Totals
2026 $ 811,000 $ 524,700 $ 1,335,700
2027 831,000 495,504 1,326,504
2028 852,000 465,558 1,317,558
2029 874,000 434,916 1,308,916
2030 896,000 403,452 1,299,452
2031-2035 4,834,000 1,516,680 6,350,680
2036-2040 5,477,000 793,692 6,270,692
Total $ 14,575,000 $ 4,634,502 $ 19,209,502
Business-Type Activities
Loans from Direct Borrowings
Year Ended
June 30 Principal Interest Totals
2026 $ 133,355 $ 15,303 $ 148,658
2027 137,888 10,770 148,658
2028 142,566 6,092 148,658
2029 73,097 1,232 74,329
Total $ 486,906 $ 33,397 $ 520,303
Bonds
Year Ended
June 30 Principal Interest Totals
2026 $ 555,000 $ 11,794 $ 566,794
Total $ 555,000 $ 11,794 $ 566,794

Page 112 ends

Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-46-
NOTE 8: LEASES
Financed Purchase Agreements
The City has entered into certain financed purchase agreements under which the related equipment will become the property of the City when all terms of the agreements are met.

Present Value
of Remaining
Stated Payments at
Interest Rate June 30, 2025
Governmental activities 1.06-3.900% $ 6,025,876
Business-type activities 4.675% 2,492,371
Total $ 8,518,247
Equipment and related accumulated depreciation under capital lease are as follows:

Governmental Business-Type
Activities Activities
Equipment $ 8,800,924 $ 5,489,336
Less: accumulated depreciation ( 1,448,364) ( 2,652,038) Net Value $ 7,352,560 $ 2,837,298
As of June 30, 2025, annual amortization is as follows:

Year Ended Governmental Business-Type
June 30 Activities Activities
2026 $ 975,297 $ 404,041
2027 941,751 202,530
2028 917,400 215,059
2029 854,701 228,164
2030 808,689 241,869
2031-2035 2,066,415 1,437,940
2036 32,731 63,538
Total Requirements 6,596,984 2,793,141
Less: interest ( 571,108) ( 300,770)
Present Value of Remaining Payments $ 6,025,876 $ 2,492,371 NOTE 9: NET POSITION
The government-wide and proprietary fund financial statements utilize a net position presentation. Net position is categorized as net investment in capital assets, restricted and unrestricted. • Net investment in capital assets - consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction or improvement of those assets.

Page 113 ends

Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-47-
NOTE 9: NET POSITION (CONTINUED)
• Restricted net position - consists of net position with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. • Unrestricted net position - all other net position that does not meet the definition of “restricted” or “net investment in capital assets”.

Net Position Restricted by Enabling Legislation
The government-wide Statement of Net Position reports $24,027,736 of restricted net position, of which $3,026,782 is restricted by enabling legislation.

Net Position Flow Assumption
When a government funds outlays for a particular purpose from both restricted and unrestricted resources, a flow assumption must be made about the order in which the resources are considered to be applied. When both restricted and unrestricted net position are available, it is considered that restricted resources are used first, followed by the unrestricted resources.

NOTE 10: FUND BALANCES
As prescribed by GASB Statement No. 54, governmental funds report fund balance in classifications based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the funds can be spent. Fund balances for governmental funds can be made up of the following:
• Nonspendable fund balance - amounts that cannot be spent because they are either (a) not in spendable form, or (b) legally or contractually required to be maintained intact. The “not in spendable form” criterion includes items that are not expected to be converted to cash, for example:
inventories and prepaid amounts.
• Restricted fund balance - amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. • Committed fund balance - amounts that can only be used for the specific purposes determined by formal action of the City’s highest level of decision-making authority. The City Council is the highest level of decision-making authority for the City that can, by adoption of an ordinance commit fund balance. Once adopted, the limitation imposed remains in place until a similar action is taken to remove or revise the limitation. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period. • Assigned fund balance - amounts that are constrained by the City’s intent to be used for specific purposes. The intent can be established at either the highest level of decision-making authority, or by a body or an official designated for that purpose.
• Unassigned fund balance - the residual classification for the City’s General fund that includes all amounts not contained in the other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes.

Page 114 ends

Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-48-
NOTE 10: FUND BALANCES (CONTINUED)
The fund balances for all major and nonmajor governmental funds as of June 30, 2025, were distributed as follows:

Capital Other
Measure Improvement Special Governmental
General “E” Housing Projects Projects Funds Totals
Nonspendable:

Prepaid costs $ 818 $ - $ - $ - $ - $ 17,575 $ 18,393
Loans
receivable - - 5,218,581 - - 748,142 5,966,723
Subtotal 818 - 5,218,581 - - 765,717 5,985,116
Restricted for:

General 212,212 - - - - - 212,212
Housing - - 3,717,326 - - - 3,717,326
Gas tax - - - - - 236,348 236,348
Maintenance
districts - - - - - 217,118 217,118
Block grants - - - - - 132,372 132,372
Elizabeth
Daniels Park - - - - - 109,201 109,201
Animal shelter - - - - - 2,275 2,275
Subtotal 212,212 - 3,717,326 - - 697,314 4,626,852
Assigned:

Measure “E” - 4,549,341 - - - - 4,549,341
Special
Projects - - - - 5,840,469 - 5,840,469
Fire reserve - - - - - 352,783 352,783
Impact fees - - - - - 2,573,316 2,573,316
Vehicle
replacement - - - - - 18,780 18,780
Measure B - - - - - 1,232,827 1,232,827
Downtown
assessment - - - - - 54,089 54,089
Subtotal - 4,549,341 - - 5,840,469 4,231,795 14,621,605 Unassigned 8,242,344 - - ( 719,379) - ( 530,143) 6,992,822 Total $8,455,374 $ 4,549,341 $ 8,935,907 ($ 719,379) $ 5,840,469 $ 5,164,683 $ 32,226,395 Fund Balance Flow Assumption
When a government funds outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance), a flow assumption must be made about the order in which the resources are considered to be applied. When both restricted and unrestricted fund balance are available, it is considered that restricted fund balance is depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance.

Unassigned fund balance is applied last.

Page 115 ends

Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-49-
NOTE 10: FUND BALANCES (CONTINUED)
Fund Balance Policy
The City Council has adopted a fund balance policy for financial statement reporting. The policy establishes procedures for reporting fund balance classifications, establishes prudent reserve requirements and establishes a hierarchy of fund balance expenditures.

NOTE 11: PENSION PLAN
A. General Information about the Pension Plan
All qualified permanent and probationary employees are eligible to participate in the City’s separate Safety police, Safety fire, and Miscellaneous (all other) Employee Pension Plan, a cost-sharing multiple employerdefined benefit pension plan administered by the California Public Employees’ Retirement System (CalPERS). Benefit provisions under the Plan are established by State statute and City resolution.

CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

Effective January 1, 2013, the City added retirement tiers for the Miscellaneous and Safety Rate Tiers for new employees as required under the Public Employee Pension Reform Act (PEPRA). Classic employees are generally defined as employees who have been a member of any public retirement system who have had less than a six-month break in service. Applicable new hires to the City defined as classic employees as determined by PERS will be subject to the non-PEPRA plan. New non-classic employees hired on or after January 1, 2013, will be subject to new, lower pension formulas, caps on pensionable income levels and new definitions of pensionable income. In addition, new non-classic employees will be required to contribute half of the total normal cost of the pension benefit unless impaired by an existing Memorandum of Understanding. The cumulative effect of these PEPRA changes will ultimately reduce the City’s retirement costs.

Summary of Rate Tiers and Eligible Participants
Open for New Enrollment
Miscellaneous PEPRA Miscellaneous members hired on or after January 1, 2013 Safety Police PEPRA Safety police members hired on or after January 1, 2013 Safety Fire PEPRA Safety fire members hired on or after January 1, 2013 Closed to New Enrollment
Miscellaneous Miscellaneous members hired before January 1, 2013 Safety Police Safety police members hired before January 1, 2013 Safety Police Second Tier Safety police members hired before January 1, 2013 Safety Fire Safety fire members hired before January 1, 2013 Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 (age 52 for Miscellaneous Plan Members if membership date is on or after January 1, 2013) with statutorily reduced benefits. Retirement benefits are paid monthly for life. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following:
the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The costof-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

Page 116 ends

Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-50-
NOTE 11: PENSION PLAN (CONTINUED)
A. General Information about the Pension Plan (Continued) Benefits Provided (Continued)
Each Rate Tier’s specific provisions and benefits in effect at June 30, 2025, are summarized as follows:

Monthly Benefits
Benefit Retirement as a % of
Formula Age Eligible Compensation
Miscellaneous 2.5% @ 55 50 - 55 2.000% to 2.500%
Miscellaneous PEPRA 2.0% @ 62 52 - 67 1.000% to 2.500%
Safety Police 3.0% @ 50 50 3.000%
Safety Police Second Tier 3.0% @ 50 50 - 55 2.400% to 3.000% Safety Police PEPRA 2.7% @ 57 50 - 57 2.000% to 2.700%
Safety Fire 3.0% @ 55 50 - 55 2.400% to 3.000%
Safety Fire PEPRA 2.7% @ 57 50 - 57 2.000% to 2.700%
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for all Plans 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.

Employer Employee Employer Paid
Contribution Contribution Member
Rates Rates Contribution Rates
Miscellaneous 14.130% 8.000% 0.000%
Miscellaneous PEPRA 7.870% 7.750% 0.000%
Safety Police 27.320% 9.000% 0.000%
Safety Police Second Tier 24.330% 9.000% 0.000%
Safety Police PEPRA 13.760% 13.750% 0.000%
Safety Fire 24.330% 9.000% 0.000%
Safety Fire PEPRA 13.760% 13.750% 0.000%
For the year ended June 30, 2025, the contributions recognized as part of pension expense were as follows:

Contributions-Employee
Contributions-Employer (Paid by Employer)
Miscellaneous $ 403,128 $ -
Safety 1,214,206 -

Page 117 ends

Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-51-
NOTE 11: PENSION PLAN (CONTINUED)
B. Pension Liability, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pension
The City’s net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability is measured as of June 30, 2024, and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2023, rolled forward to June 30, 2024, 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 plan 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, 2024, and 2025, was as follows:

Proportion Proportion ChangeJune 30, 2024 June 30, 2025 Increase (Decrease) Miscellaneous 0.09283% 0.09402% 0.00119%
Safety 0.07872% 0.07691% ( 0.00181%)
As of June 30, 2025, the City reported a net pension liability for its proportionate share of the net pension liability of the Plan as follows:

Proportionate
Share of Net
Pension Liability
Miscellaneous $ 4,547,199
Safety 5,607,711
Total Net Pension Liability (Asset) $ 10,154,910
For the year ended June 30, 2025, the City recognized pension expense of $4,260,979. At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions subsequent to the measurement date $ 2,061,075 $ - Changes of assumptions 255,035 -
Difference between expected and actual experience 850,786 ( 30,220) Difference between projected and actual earnings on
pension plan investments 532,828 -
Difference between City contributions and proportionate share of contributions - ( 2,846,997)
Amortization due to differences in proportions 2,972,305 - Total $ 6,672,029 ($ 2,877,217)

Page 118 ends

Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-52-
NOTE 11: PENSION PLAN (CONTINUED)
B. Pension Liability, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pension (Continued)
$2,061,075 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, 2026. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized as pension expense as follows:

Year Ended
June 30
2026 $ 1,211,275
2027 842,928
2028 ( 138,016)
2029 ( 182,450)
Thereafter -
Total $ 1,733,737
Actuarial Assumptions
The total pension liability in the June 30, 2023, actuarial valuation was determined using the following actuarial assumptions:

Valuation Date June 30, 2023
Measurement Date June 30, 2024
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:

Discount Rate 6.90%
Investment Rate of Return 6.90%
Inflation 2.30%
Salary Increases Varies by entry-age and service
Mortality Rate Table Derived using CalPERS’ membership data for all funds Post-Retirement Benefit Increase Contract COLA up to 2.30% until Purchasing Power Protection Allowance Floor on Purchasing Power
applies
The mortality table used was developed based on CalPERS-specific data. The rates incorporate Generational Mortality to capture ongoing mortality improvement using 80 percent of Scale MP-2020 published by the Society of Actuaries. For more details, please refer to the CalPERS 2021 experience study that can be found on the CalPERS website.

Long-Term Expected Rate of Return
In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated and combined with risk estimates, are used to project compound (geometric) returns over the long-term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return.

Page 119 ends

Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-53-
NOTE 11: PENSION PLAN (CONTINUED)
B. Pension Liability, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pension (Continued)
Long-Term Expected Rate of Return (Continued)
The expected real rates of return by asset class are as follows:

Assumed Real Return
Asset Years 1-10
Asset Class Allocation (1, 2)
Global Equity – Cap-Weighted 30.0% 4.54%
Global Equity – Non-Cap-Weighted 12.0% 3.84%
Private Equity 13.0% 7.28%
Treasury 5.0% 0.27%
Mortgage-backed Securities 5.0% 0.50%
Investment Grade Corporates 10.0% 1.56%
High Yield 5.0% 2.27%
Emerging Market Debt 5.0% 2.48%
Private Debt 5.0% 3.57%
Real Assets 15.0% 3.21%
Leverage ( 5.0%) ( 0.59%)
Total 100.0%
(1) An expected price inflation of 2.30% used for this period (2) Figures are based on the 2021-22 Asset Liability Management Study Discount Rate
The discount rate used to measure the total pension liability for PERFC was 6.90 percent. 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.

Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the City’s proportionate share of the net pension liability for the Plan as of the measurement date, calculated using the discount rate for the Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:
1% Discount 1%
Decrease Rate Increase

5.90% 6.90% 7.90%
Miscellaneous $ 10,493,339 $ 4,547,199 ($ 347,349)
Safety 13,744,221 5,607,711 ( 1,046,811)

Page 120 ends

Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-54-
NOTE 11: PENSION PLAN (CONTINUED)
B. Pension Liability, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pension (Continued)
Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

NOTE 12: OTHER POSTEMPLOYMENT BENEFITS (OPEB)
A. General Information about the OPEB Plan
Plan Description
The only OPEB provided by the City is a contribution toward the cost of retiree medical coverage for qualifying retirees. No assets were accumulated in a trust that meets the criteria in paragraph 4 of Governmental Accounting Standards Board Statement No. 75.

Benefits Provided
Medical coverage is currently provided through CalPERS as permitted under the Public Employees’ Medical and Hospital Care Act (PEMHCA). This coverage requires the employee to satisfy the requirements for retirement under CalPERS, which requires either (1) attainment of age 50 (age 52, if a miscellaneous PEPRA member) with 5 years of State or public agency service or (2) an approved disability retirement. The employee must begin his or her pension benefit within 120 days of terminating employment with the City to be eligible to continue medical coverage through the City and to receive the employer subsidy described below.

Once eligible for medical coverage as a retiree, he or she may enroll within 60 days of retirement or during any future open enrollment period. Coverage may be continued at the retiree’s option for his or her lifetime.

A surviving spouse and other eligible dependents may also continue coverage.

As a PEMHCA employer, the City is obligated to contribute toward the cost of retiree medical coverage for the retiree’s lifetime or until coverage is discontinued. The City has several resolutions with CalPERS which define the City’s contributions to comply with PEMHCA. Additional benefits are provided to longservice retirees who meet other age and/or service requirements.

Page 121 ends

Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-55-
NOTE 12: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) A. General Information about the OPEB Plan (Continued)
Benefits Provided (Continued)
The City contributes toward the cost of retiree’s medical coverage as follows:
(1) For all employees who retire under PERS from the City meeting the requirements described in the first paragraph of this section, the City will contribute the required PEMHCA Minimum Employer Contribution (MEC). This MEC contribution is payable for the lifetime of the retiree or until CalPERS medical coverage is discontinued. The MEC generally continues to a surviving spouse, if covered by a CalPERS medical plan at the time of the retiree’s death. Additional details about these PEMHCA benefits are provided on the following page. (2) In addition to any benefits payable in 1) above, if the retiree satisfies the age and service conditions set by agreement for their unit, the City will contribute an additional amount toward the cost of coverage each month; the benefit amount is fixed for each employee at the date of his or her retirement. Election of CalPERS medical coverage is not required to receive this benefit. This additional benefit, if payable, ends at the earlier of age 65 or the retiree’s death; there is no continuation of this benefit to a surviving spouse.

Details on the requirements for these additional benefits and the amounts payable are provided in the chart below.

Unit Description Minimum Age Minimum Service Monthly Subsidy* Ben Ends ESE Department
Heads
55 for Misc Ees
50 for Safety Ees
Hired prior to 7/1/2011:
5 Years with the City
80% of Blue Shield Region 1
premiums for employee only
up to $500***
age 65**
Hired on or after 7/1/2011:
10 years with the City $250
1 Management &
Supervisory PERS retirement Retiring after 7/2/2006:25 years with the City $250 2 General
Employees PERS retirement Retiring after 7/1/2006:25 years with the City $250 3 Operating
Engineers &
Stationary
Engineers
PERS retirement Retiring after 7/1/2006:
25 years with the City $250
6 Police Officers PERS retirement Hired prior to 1/1/2016:
25 years with the City $300
8 Firefighters PERS retirement Hired prior to 1/1/2016:
25 years with the City
50% of premiums for the
lowest cost Region 1 plan for
employee and spouse
*Monthly benefits other than the PEMHCA minimum benefit are paid whether or not medical coverage is through the City. **There are 4 retirees with grandfathered lifetime benefits. ***Effectively $500, since 80% of the Blue Shield Region 1 exceeds $500.

Different benefits amounts may be payable to employees who retired prior to the valuation date.

Page 122 ends

Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-56-
NOTE 12: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) A. General Information about the OPEB Plan (Continued)
Benefits Provided (Continued)
The City has been under contract with CalPERS for medical plan coverage since 1994, though coverage for some groups began later, in 1999. Each PEMHCA resolution was adopted on an “unequal contribution” basis, where the employer’s contribution toward retiree medical benefits is determined by multiplying together (a) 5% times (b) the number of prior years the employer has been contracted with PEMHCA times (c) the contribution the employer makes towards active employee health benefits, but not less than the required Minimum Employer Contribution (MEC).

Despite the wording in these PEMHCA resolutions, however, the City’s practice has been to pay the full Minimum Employer Contribution ($157 per month for 2024), regardless of the number of years since each resolution was adopted. It was assumed this practice would continue and future retiree PEMHCA benefits were valued accordingly.

Employees Covered by Benefit Terms
At June 30, 2025, the following employees were covered by the benefit terms:

Active employees 107
Inactive employees or beneficiaries currently receiving benefits 46 Inactive employees entitled to but not receiving benefits 9 Total 162
B. Total OPEB Liability
The City’s total OPEB liability of $4,309,686 was measured as of June 30, 2025, and was determined by the actuarial valuation as of June 30, 2024.

Actuarial Assumptions and Other Inputs
The total OPEB liability in the June 30, 2024, actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified:

Valuation Date June 30, 2024
Measurement Date Last day of the current fiscal year (June 30, 2025) Funding Method Entry Age Normal Cost, level of percent of pay Municipal Bond Index Bond Buyer Obligation 20-Bond Municipal Bond Index Discount Rates 5.20% as of June 30, 2025, 4.21% as of June 30, 2024 Participants Valued Only current active employees, retired participants and covered dependents are valued. No future entrants are considered in this valuation.

Salary Increase 3.0% per year; since benefits do not depend on salary, this is used only to allocate the cost of benefits between service years and to determine the amortization payment component of the Actuarially Determined Contributions.

General Inflation Rate 2.50% per year
Healthcare cost trend rates 4.80% for 2024, decreasing to an ultimate rate of 3.90% for 2075 and later years
Mortality rates MacLeod Watts Scale 2022 applied generationally from 2017.

Page 123 ends

Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-57-
NOTE 12: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) B. Total OPEB Liability (Continued)
Actuarial Assumptions and Other Inputs (Continued)
Demographic actuarial assumptions used in the valuation are those published in the 2021 experience study of the California Public Employees Retirement System using data from 1997 to 2019, except for a different basis used to project future mortality improvement.

C. Changes in the Net OPEB Liability
The table below shows the changes in the total OPEB liability during the measurement period ending on June 30, 2025, for the City’s proportionate share.

Total OPEB
Liability
Balances at fiscal year ending June 30, 2024 $ 4,481,323 Changes during the period:

Service cost 267,804
Interest cost 196,839
Change of benefit terms 88,734
Change of assumptions ( 577,698)
Benefit payments ( 147,316)
Net Changes ( 171,637)
Balances at fiscal year ending June 30, 2025 $ 4,309,686 C. Changes in the Total OPEB Liability
Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current discount rate:
1% Decrease Current Rate 1% Increase

4.20% 5.20% 6.20%
Total OPEB liability $ 4,893,789 $ 4,309,686 $ 3,825,011 Sensitivity of the Total OPEB Liability to Changes in the Healthcare Trend Rates The following presents the total OPEB liability of the City if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2025:

Current Trend Current Trend
-1% Current Trend +1%
Total OPEB Liability $ 3,735,997 $ 4,309,686 $ 4,996,042

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-58-
NOTE 12: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) D. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
For the year ended June 30, 2025, the City recognized OPEB expense of $82,835. At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
Changes of assumptions $ 315,827 ($ 1,701,781)
Differences between expected and actual experience 599,439 ( 2,287,655) Total $ 915,266 ($ 3,989,436)
Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Fiscal
Year Ended
June 30
2026 ($ 484,508)
2027 ( 502,879)
2028 ( 509,188)
2029 ( 385,171)
2030 ( 384,605)
Thereafter ( 807,819)
($ 3,074,170)
NOTE 13: RISK MANAGEMENT
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters.

There is no claims liability to be reported based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated.

There are no significant reductions in insurance coverage from prior years and there have been no settlements exceeding the insurance coverages for each of the past three fiscal years.

The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City has joined together with other municipalities to participate in the Public Agency Risk Sharing Authority of California (PARSAC) for general liability, vehicle liability, and errors and omissions purposes. PARSAC is a public entity risk pool which serves as a common risk management program for 37 member cities and one fire district. The City pays an annual premium to PARSAC for its insurance coverage. The agreements with PARSAC provide that they will be self-sustaining through member premiums and will reinsure through commercial companies for excess coverage.

There are no significant reductions in insurance coverage from prior years and there have been no settlements exceeding the insurance coverages for each of the past three fiscal years.

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-59-
NOTE 14: SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY
On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (“the Bill”) that provides for the dissolution of all redevelopment agencies in the State of California. This action impacted the reporting entity of the City of Grass Valley that previously had reported a redevelopment agency within the reporting entity of the City as a blended component unit.

The Bill provides that upon dissolution of a redevelopment agency, either the City or another unit of local government will agree to serve as the “successor agency” to hold the assets until they are distributed to other units of state and local government. The City Council elected to become the Successor Agency for the former redevelopment agency in accordance with the Bill.

After enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the State of California cannot enter into new projects, obligations or commitments. Subject to the control of a newly established oversight board, remaining assets can only be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments).

In future fiscal years, successor agencies will only be allocated revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full and all assets have been liquidated.

The Bill directs the State Controller of the State of California to review the propriety of any transfers of assets between redevelopment agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually committed to a third party for the expenditure or encumbrance of those assets, the State Controller is required to order the available assets to be transferred to the public body designated as the successor agency by the Bill.

Management believes, in consultation with legal counsel, that the obligations of the former redevelopment agency due to the City are valid enforceable obligations payable by the successor agency trust under the requirements of the Bill. The City’s position on this issue is not a position of settled law and there is considerable legal uncertainty regarding this issue. It is reasonably possible that a legal determination may be made at a later date by an appropriate judicial authority that would resolve this issue unfavorably to the City.

In accordance with the timeline set forth in the Bill (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, 2012. Prior to that date, the final seven months of the activity of the redevelopment agency continued to be reported in the governmental funds of the City included in the fund financial statements as Former Redevelopment Agency Special Revenue Fund and Low/Moderate Income Housing Fund.

After the date of dissolution, the assets and activities of the dissolved redevelopment agency are reported in a fiduciary fund (private-purpose trust fund) in the financial statements of the City. The transfer of the assets and liabilities of the former redevelopment agency as of February 1, 2012, (effectively the same date as January 31, 2012) from governmental funds of the City to fiduciary funds was reported in the governmental funds as an extraordinary loss (or gain) in the governmental fund financial statements. The receipt of these assets and liabilities as of January 31, 2012, was reported in the private-purpose trust fund as an extraordinary gain (or loss).

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-60-
NOTE 14: SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT

AGENCY (CONTINUED)
Because of the different measurement focus of the governmental funds (current financial resources measurement focus) and the measurement focus of the trust funds (economic resources measurement focus), the extraordinary loss (gain) recognized in the governmental funds was not the same amount as the extraordinary gain (loss) that was recognized in the fiduciary fund financial statements.

A. Loans Receivable
The Agency has made loans to qualifying participants within the City of Grass Valley to provide housing to low- and moderate-income participants and to provide assistance to entities within the redevelopment area.

At June 30, 2025, loans receivable consisted of the following:

Balance Adjustments/ Balance
July 1, 2024 Additions Retirements June 30, 2025
Redevelopment Housing:

Springhill Garden Apts $ 717,000 $ - ($ 117,000) $ 600,000 Valley Commons 262,297 - ( 14,055) 248,242
Total Loans Receivable $ 979,297 $ - ($ 131,055) $ 848,242 Redevelopment Housing
On October 1, 2008, the City of Grass Valley Redevelopment Agency entered into an agreement with Springhill Gardens Associates, L.P. to provide a $600,000 loan for the development of Springhill Garden Apartments. The loan bears an interest rate of 3 percent and is payable in annual installments commencing in 2011 until January 15, 2040.

B. Long-Term Liabilities
The Agency generally incurs debt to finance projects or purchase assets, which will have useful lives equal to or greater than the related debt. The Agency’s debt issue and transactions related to governmental activities are summarized below and discussed in detail separately.

Amounts
Balance Adjustments/ Balance Due Within
Type of Indebtedness July 1, 2024 Additions Retirements June 30, 2025 One Year 2020A Tax Allocation Refunding Bonds $ 2,335,000 $ - ($ 170,000) $ 2,165,000 $ 175,000 Plus: premium 279,015 - ( 5,874) 273,141 5,874
2020B Tax Allocation Refunding Bonds 4,580,000 - ( 190,000) 4,390,000 195,000 Less: discount ( 69,054) - 726 ( 68,328) ( 726)
Total Successor Agency Trust $ 7,124,961 $ - ($ 365,148) $ 6,759,813 $ 375,148

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Item # 4.

CITY OF GRASS VALLEY
Notes to Basic Financial Statements
For the Year Ended June 30, 2025
-61-
NOTE 14: SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT

AGENCY (CONTINUED)
B. Long-Term Liabilities (Continued)
Bonds:
2020 Series A Tax Allocation Refunding Bonds, issued on May 28, 2020, in the amount of $2,955,000 and payable in annual installments of $145,000 to $255,000, with an interest rate of 4.00% and maturity on December 1, 2034. The bonds were used to refund the 2010 Tax Allocation Bonds. $ 2,165,000 2020 Series B Tax Allocation Refunding Bonds, issued on May 28, 2020, in the amount of $5,300,000 and payable in annual installments of $175,000 to $585,000, with an interest rate of 2.00% to 3.60% and maturity on December 1, 2038. The bonds were used to finance redevelopment activities and for the acquisition of capital assets. 4,390,000 Total Bonds $ 6,555,000
NOTE 15: OTHER INFORMATION
A. Commitments and Contingencies
At June 30, 2025, the City had construction commitments outstanding of approximately $3,310,630.

Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies.

Any disallowed claims, including amounts already collected, may constitute a liability of the appreciable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the government expects such amounts, if any, to be immaterial.

B. Subsequent Events
Management has evaluated events subsequent to June 30, 2025, through June 25, 2026, the date on which the financial statements were available for issuance. Management has determined no subsequent events requiring disclosure have occurred.

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Required Supplementary Information
(Unaudited)

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Item # 4.

CITY OF GRASS VALLEY
Required Supplementary Information
City Pension Plan
Schedule of Proportionate Share of the Net Pension Liability For the Year Ended June 30, 2025
Last 10 Years
Measurement Date 2014/2015 2015/2016 2016/2017 2017/2018 Miscellaneous
Proportion of the net pension liability 0.25762% 0.25637% 0.25883% 0.26760% Proportionate share of the net pension liability $ 7,067,820 $ 8,905,897 $ 10,203,070 $ 10,085,168 Covered payroll 2,720,788 2,845,140 2,773,466 2,711,644 Proportionate share of the net pension liability as a
percentage of covered payroll 259.77% 313.02% 367.88% 371.92% Plan fiduciary net position as a percentage of the
total pension liability 92.07% 72.46% 70.80% 71.60%
Safety
Proportion of the net pension liability 0.14104% 0.14610% 0.14705% 0.15134% Proportionate share of the net pension liability $ 5,811,191 $ 7,567,090 $ 8,786,698 $ 8,880,045 Covered payroll 2,776,953 2,575,241 2,902,953 3,240,879 Proportionate share of the net pension liability as a
percentage of covered payroll 209.27% 293.84% 302.68% 274.00% Plan fiduciary net position as a percentage of the
total pension liability 94.68% 74.20% 73.59% 75.52%
-62-

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Item # 4.
2018/2019 2019/2020 2020/2021 2021/2022 2022/2023 2023/2024

0.27139% 0.04686% -0.16808% 0.08208% 0.09283% 0.09402%
$ 10,867,668 $ 1,976,738 $ (3,054,690) $ 3,840,840 $ 4,641,661 $ 4,547,199 2,892,638 3,229,280 2,970,991 3,100,793 3,622,706 3,909,397 375.70% 61.21% -102.82% 123.87% 128.13% 116.31%

70.67% 94.71% 107.86% 90.59% 89.04% 89.68%

0.15536% 0.03239% -0.10849% 0.06208% 0.07872% 0.07691%
$ 9,698,412 $ 2,157,733 $ (3,807,408) $ 4,265,743 $ 5,883,924 $ 5,607,711 3,586,719 3,838,273 4,295,879 5,206,157 5,744,399 6,312,846 270.40% 56.22% -88.63% 81.94% 102.43% 88.83%

75.05% 94.82% 108.58% 92.01% 89.26% 90.59%
-62-

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Item # 4.

CITY OF GRASS VALLEY
Required Supplementary Information
City Pension Plan
Schedule of Contributions
For the Year Ended June 30, 2025
Last 10 Years
Fiscal Year 2015/2016 2016/2017 2017/2018 2018/2019
Miscellaneous
Contractually required contributions (actuarially determined) $ 539,907 $ 606,756 $ 632,072 $ 814,931 Contributions in relation to the actuarially determined contributions (539,907) (606,756) (632,072) (814,931)
Contribution deficiency (excess) $ - $ - $ - $ -
Covered payroll $ 2,845,140 $ 2,773,466 $ 2,711,644 $ 2,892,638 Contributions as a percentage of covered payroll 18.98% 21.88% 23.31% Safety
Contractually required contributions (actuarially determined) $ 747,813 $ 821,329 $ 910,702 $ 1,035,238 Contributions in relation to the actuarially determined contributions (747,813) (821,329) (910,702) (1,035,238) Contribution deficiency (excess) $ - $ - $ - $ -
Covered payroll $ 2,575,241 $ 2,902,953 $ 3,240,879 $ 3,586,719 Contributions as a percentage of covered payroll 29.04% 28.29% 28.10% 28.86% -63-

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Item # 4.
2019/2020 2020/2021 2021/2022 2022/2023 2023/2024 2024/2025 $ 936,148 $ 388,465 $ 474,705 $ 564,658 $ 403,128 $ 593,771 (18,566,415) (388,465) (474,705) (564,658) (403,128) (593,771) $ (17,630,267) $ - $ - $ - $ - $ -
$ 3,229,280 $ 2,970,991 $ 3,100,793 $ 3,622,706 $ 3,909,397 $ 4,240,875 574.94% 13.08% 15.31% 15.59% 10.31% 14.00%
$ 1,248,549 $ 906,738 $ 1,096,345 $ 1,227,774 $ 1,214,206 $ 1,467,304 (1,248,549) (906,738) (1,096,345) (1,227,774) (1,214,206) (1,467,304) $ - $ - $ - $ - $ - $ -
$ 3,838,273 $ 4,295,879 $ 5,206,157 $ 5,744,399 $ 6,312,846 $ 6,614,464

32.53% 21.11% 21.06% 21.37% 19.23% 22.18%
-63-

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Item # 4.

CITY OF GRASS VALLEY
Required Supplementary Information
City Pension Plan
Notes to City Pension Plan
For the Year Ended June 30, 2025
-64-
NOTE 1: SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Summary of Changes of Benefits or Assumptions
Benefit Changes: None
Changes of Assumption: None
NOTE 2: SCHEDULE OF CONTRIBUTIONS
Methods and assumptions used to determine the contribution rates were as follows:

Valuation Date June 30, 2022
Actuarial cost method Individual Entry Age Normal
Amortization method Level Percentage of Payroll and Direct Rate Smoothing Remaining Amortization Period Differs by employer rate plan but no more than 30 years Asset valuation method Fair value
Discount Rate 6.80%
Inflation 2.30%
Salary increases Varies based on entry age and service

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Item # 4.

CITY OF GRASS VALLEY
Required Supplementary Information
City OPEB Plan
Schedule of Changes in the Net OPEB Liability and Related Ratios For the Year Ended June 30, 2025
Last 10 Years*
2017/2018 2018/2019 2019/2020 2020/2021
Total OPEB Liability
Service Cost $ 381,204 $ 412,855 $ 439,142 $ 370,690
Interest 197,059 202,213 209,424 169,035
Change in benefit terms - - - -
Difference between expected and actual experience - - (1,532,906) - Changes of assumption 190,503 129,461 25,063 469,386
Benefit payments (170,170) (172,147) (207,097) (240,646) Net Change in Total OPEB Liability 598,596 572,382 (1,066,374) 768,465 Total OPEB Liability - Beginning 5,999,700 6,598,296 7,170,678 6,104,304 Total OPEB Liability - Ending (a) $ 6,598,296 $ 7,170,678 $ 6,104,304 $ 6,872,769 Plan Fiduciary Net Position
Contributions - employer $ 170,170 $ 172,147 $ 207,097 $ 240,646 Benefit payments (170,170) (172,147) (207,097) (240,646) Net Change in Plan Fiduciary Net Position - - - -
Plan Fiduciary Net Position - Beginning - - - -
Plan Fiduciary Net Position - Ending (b) $ - $ - $ - $ - Net OPEB Liability - Ending (a) - (b) $ 6,598,296 $ 7,170,678 $ 6,104,304 $ 6,872,769 Plan fiduciary net position as a percentage of the 0.00% 0.00% 0.00% 0.00% total OPEB liability
Covered-employee payroll $ 6,726,880 $ 7,095,244 $ 7,445,513 $ 8,622,451 Net OPEB liability as a percentage of covered-employee payroll 98.09% 101.06% 81.99% 79.71% * The City implemented GASB 75 for the fiscal year June 30, 2018, therefore only eight years are shown. -65-

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Item # 4.
2021/2022 2022/2023 2023/2024 2024/2025
$ 428,709 $ 277,668 $ 283,740 $ 267,804
156,736 211,689 226,046 196,839
- - - 88,734
(234,487) - (1,247,724) -
(1,984,454) (23,863) 74,687 (577,698)
(223,563) (235,158) (101,472) (147,316)
(1,857,059) 230,336 (764,723) (171,637)
6,872,769 5,015,710 5,246,046 4,481,323
$ 5,015,710 $ 5,246,046 $ 4,481,323 $ 4,309,686
$ 223,563 $ 235,158 $ 101,472 $ 147,316
(223,563) (235,158) (101,472) (147,316)
- - - -
- - - -
$ - $ - $ - $ -
$ 5,015,710 $ 5,246,046 $ 4,481,323 $ 4,309,686

0.00% 0.00% 0.00% 0.00%
$ 9,811,616 $ 11,822,437 $ 11,554,532 $ 12,594,282

51.12% 44.37% 38.78% 34.22%
-65-

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Item # 4.

CITY OF GRASS VALLEY
Required Supplementary Information
City OPEB Plan
Schedule of Contributions
For the Year Ended June 30, 2025
Last 10 Years*
2017/2018 2018/2019 2019/2020 2020/2021
Actuarially determined contributions $ 170,170 $ 172,147 $ 207,097 $ 240,646 Contributions in relation to the actuarially determined contribution (170,170) (172,147) (207,097) (240,646) Contribution deficiency (excess) $ - $ - $ - $ -
Covered-employee payroll $ 6,726,880 $ 7,095,244 $ 7,445,513 $ 8,622,451 Contributions as a percentage of covered-employee payroll 2.53% 2.43% 2.78% * The City implemented GASB 75 for the fiscal year June 30, 2018, therefore only eight years are shown. -66-

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Item # 4.
2021/2022 2022/2023 2023/2024 2024/2025
$ 223,563 $ 235,158 $ 101,472 $ 147,316
(223,563) (235,158) (101,472) (147,316)
$ - $ - $ - $ -
$ 9,811,616 $ 11,822,437 $ 11,554,532 $ 12,594,282

2.28% 1.99% 0.88% 1.17%
-66-

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Item # 4.

CITY OF GRASS VALLEY
Required Supplementary Information
City OPEB Plan
Note to City OPEB Plan
For the Year Ended June 30, 2025
-67-
NOTE 1: SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS
Discount Rate: Increased from 4.21 percent as of June 30, 2024, to 5.20 percent as of June 30, 2025.

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Item # 4.

CITY OF GRASS VALLEY
Required Supplementary Information
Budgetary Comparison Schedule
General Fund
For the Year Ended June 30, 2025
Variance with
Final Budget
Original Final Actual Positive
Budget Budget Amounts (Negative)

REVENUES
Taxes and assessments $ 14,276,868 $ 14,001,462 $ 14,307,964 $ 306,502 Licenses, permits and franchises 1,276,337 1,251,981 1,946,770 694,789 Fines and forfeitures 100 837 1,100 263
Intergovernmental revenues 1,799,933 1,872,164 1,530,425 (341,739) Use of money and property 286,525 379,872 370,869 (9,003) Charges for services 475,140 435,675 51,095 (384,580)
Other revenues 16,500 123,000 473,927 350,927
Total Revenues 18,131,403 18,064,991 18,682,150 617,159

EXPENDITURES
Current:

General government 3,498,176 3,818,687 4,210,104 (391,417) Public protection 10,554,932 10,392,127 10,414,202 (22,075) Public ways and facilities 1,356,406 1,363,725 1,427,204 (63,479) Community development 744,208 776,708 786,874 (10,166)
Recreation and culture 779,197 781,502 775,283 6,219
Debt service:

Principal 862,635 872,660 872,660 -
Interest 600,699 578,551 578,552 (1)
Capital outlay 125,000 131,000 63,791 67,209
.

Total Expenditures 18,521,253 18,714,960 19,128,670 (413,710) Excess of Revenues Over (Under) Expenditures (389,850) (649,969) (446,520) 203,449

OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets - - 10,000 10,000
Transfers in 464,853 465,721 601,157 135,436
Transfers out (85,000) (85,000) - 85,000
Total Other Financing Sources (Uses) 379,853 380,721 611,157 230,436 Net Change in Fund Balances (9,997) (269,248) 164,637 433,885 Fund Balances - Beginning 8,290,737 8,290,737 8,290,737 - Fund Balances - Ending $ 8,280,740 $ 8,021,489 $ 8,455,374 $ 433,885 -68-

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Item # 4.

CITY OF GRASS VALLEY
Measure "E" - Major Special Revenue Fund
Variance with
Final Budget
Original Final Actual Positive
Budget Budget Amounts (Negative)

REVENUES
Taxes and assessments $ 7,350,000 $ 7,010,000 $ 7,017,687 $ 7,687 Intergovernmental revenue - - 3,028 3,028
Use of money and property 7,500 55,000 152,688 97,688
Total Revenues 7,357,500 7,065,000 7,173,403 108,403

EXPENDITURES
Current:

General government - - 329,016 (329,016)
Public safety 4,845,384 5,036,198 3,915,478 1,120,720
Public ways and facilities - - 96,910 (96,910)
Debt service:

Principal 580,000 583,784 760,083 (176,299)
Interest 74,000 79,045 150,525 (71,480)
Capital outlay 200,000 200,000 645,004 (445,004)
Total Expenditures 5,699,384 5,899,027 5,897,016 2,011
Excess of Revenues Over (Under) Expenditures 1,658,116 1,165,973 1,276,387 110,414

OTHER FINANCING SOURCES (USES)
Debt proceeds - - 224,358 224,358
Transfers out (6,291,440) (6,291,440) (634,418) 5,657,022 Total Other Financing Sources (Uses) (6,291,440) (6,291,440) (410,060) 5,881,380 Net Change in Fund Balances (4,633,324) (5,125,467) 866,327 5,991,794 Fund Balances - Beginning 3,683,014 3,683,014 3,683,014 - Fund Balances - Ending $ (950,310) $ (1,442,453) $ 4,549,341 $ 5,991,794 Required Supplementary Information
Budgetary Comparison Schedule
For the Year Ended June 30, 2025
-69-

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CITY OF GRASS VALLEY
Housing - Major Special Revenue Fund
Variance with
Final Budget
Original Final Actual Positive
Budget Budget Amounts (Negative)

REVENUES
Intergovernmental $ 425,000 $ 425,000 $ - $ (425,000)
Use of money and property 128,856 128,856 406,187 277,331 Total Revenues 553,856 553,856 406,187 (147,669)

EXPENDITURES
Current:

Community development 430,500 430,500 7,400 423,100
Total Expenditures 430,500 430,500 7,400 423,100
Net Change in Fund Balances 123,356 123,356 398,787 275,431 Fund Balances - Beginning 8,747,604 8,747,604 8,747,604 - Change in accounting principle - - (210,484) (210,484)
Fund Balances - Beginning 8,747,604 8,747,604 8,537,120 (210,484) Fund Balances - Ending $ 8,870,960 $ 8,870,960 $ 8,935,907 $ 64,947 Required Supplementary Information
Budgetary Comparison Schedule
For the Year Ended June 30, 2025
-70-

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Item # 4.

CITY OF GRASS VALLEY
Required Supplementary Information
Notes to Budgetary Comparison Schedules
For the Year Ended June 30, 2025
-71-
NOTE 1: BUDGETARY BASIS OF ACCOUNTING
Formal budgetary integration is employed as a management control device during the year. The City presents a comparison of annual budget to actual results for the General fund and major special revenue funds. The amounts reported on the budgetary basis are generally on a basis consistent with accounting principles generally accepted in the United States of America (GAAP).

The City follows these procedures annually in establishing the budgetary data reflected in the financial statements:
(1) The City Manager submits to the City Council a recommended draft budget for the fiscal year commencing the following July 1. The budget includes recommended expenditures and the means of financing them.
(2) The City Council reviews the recommended budget at regularly scheduled meetings, which are open to the public. The Council also conducts a public hearing on the recommended budget to obtain comments from interested persons.
(3) Prior to July 1, the budget is adopted through the passage of a resolution. (4) From the effective date of the budget, which is adopted and controlled at the department level, the amounts stated therein, as recommended expenditures become appropriations to the various City departments. The City Council may amend the budget by motion during the fiscal year. The City Manager may authorize transfers from one object or purpose to another within the same department.

From the effective date of the budget, which is adopted and controlled at the department level, the amounts stated therein, as recommended expenditures become appropriations to the various City departments. The City Council may amend the budget by motion during the fiscal year. The City Manager may authorize transfers from one object or purpose to another within the same department.

NOTE 2: EXPENDITURES IN EXCESS OF APPROPRIATIONS
For the fiscal year ended June 30, 2025, the City incurred expenditures in excess of appropriations as follows:

Appropriations Expenditures
Excess of
Expenditures
Over
Appropriations
General fund $ 18,714,960 $ 19,128,670 $ 413,710

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Combining Nonmajor Fund Financial Statements

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Nonmajor Governmental Funds

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CITY OF GRASS VALLEY
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2025
Special
Revenue Permanent
Funds Funds Totals
ASSETS
Cash and investments $ 4,262,254 $ 111,222 $ 4,373,476
Receivables:

Accounts 26,053 - 26,053
Interest 129,868 254 130,122
Taxes 580,057 - 580,057
Intergovernmental 246,179 - 246,179
Prepaid costs 17,575 - 17,575
Due from other funds 7,781 - 7,781
Loans receivable 748,142 - 748,142
Total Assets $ 6,017,909 $ 111,476 $ 6,129,385

LIABILITIES
Accounts payable $ 372,864 $ - $ 372,864
Salaries and benefits payable 33,497 - 33,497
Due to other funds 546,149 - 546,149
Total Liabilities 952,510 - 952,510

DEFERRED INFLOWS OF RESOURCES
Unavailable revenues 12,192 - 12,192
Total Deferred Inflows of Resources 12,192 - 12,192

FUND BALANCES
Nonspendable 765,717 - 765,717
Restricted 585,838 111,476 697,314
Assigned 4,231,795 - 4,231,795
Unassigned (530,143) - (530,143)
Total Fund Balances 5,053,207 111,476 5,164,683
Total Liabilities and Fund Balances $ 6,017,909 $ 111,476 $ 6,129,385 -72-

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CITY OF GRASS VALLEY
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended June 30, 2025
Special
Revenue Permanent
Funds Funds Totals

REVENUES
Taxes and assessments $ 2,311,595 $ - $ 2,311,595
Fines and forfeitures 44,866 - 44,866
Intergovernmental revenues 1,667,927 - 1,667,927
Use of money and property 163,964 4,409 168,373
Other revenues 100 - 100
Total Revenues 4,188,452 4,409 4,192,861

EXPENDITURES
Current:

General government 548,465 - 548,465
Public protection 777,928 - 777,928
Public ways and facilities 73,265 - 73,265
Community development 51,806 - 51,806
Capital outlay 546,697 - 546,697
Total Expenditures 1,998,161 - 1,998,161
Excess of Revenues Over (Under) Expenditures 2,190,291 4,409 2,194,700

OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets 16,000 - 16,000
Transfers in 171,213 - 171,213
Transfers out (891,779) - (891,779)
Total Other Financing Sources (Uses) (704,566) - (704,566) Net Change in Fund Balances 1,485,725 4,409 1,490,134
Fund Balances - Beginning 3,567,482 107,067 3,674,549
Fund Balances - Ending $ 5,053,207 $ 111,476 $ 5,164,683 -73-

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Nonmajor Governmental Funds
• Special Revenue Funds

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CITY OF GRASS VALLEY
Combining Balance Sheet
Nonmajor Special Revenue Funds
June 30, 2025
Gas Traffic Fire EPA
Tax Safety Reserve Brownfields
ASSETS
Cash and investments $ 124,044 $ - $ 360,983 $ -
Receivables:

Accounts - 13,236 4,816 -
Interest 1,161 - 654 -
Taxes 103,362 - - -
Intergovernmental - - - 6,955
Prepaid costs - - 17,575 -
Due from other funds 7,781 - - -
Loans receivable - - -
Total Assets $ 236,348 $ 13,236 $ 384,028 $ 6,955

LIABILITIES
Accounts payable $ - $ 5,455 $ 1,478 $ 2,450
Salaries and benefits payable - - - -
Due to other funds - 7,781 - 898
Total Liabilities - 13,236 1,478 3,348

DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - - 12,192 -
Total Deferred Inflows of Resources - - 12,192 -

FUND BALANCES
Nonspendable - - 17,575 -
Restricted 236,348 - - -
Assigned - - 352,783 -
Unassigned - - - 3,607
Total Fund Balances (Deficits) 236,348 - 370,358 3,607
Total Liabilities and Fund Balances $ 236,348 $ 13,236 $ 384,028 $ 6,955 -74-

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Developer Vehicle Measure B Maintenance Block Downtown
Fees Replacement Sales tax Districts Grants Prop 64 Assessment Totals $ 2,670,913 $ 18,741 $ 807,908 $ 215,379 $ 11,088 $ - $ 53,198 $ 4,262,254 6,417 - 825 - - - 759 26,053
5,554 39 - 534 121,794 - 132 129,868
- - 472,466 4,229 - - - 580,057
- - - - - 239,224 - 246,179
- - - - - - - 17,575
- - - - - - - 7,781
- - - - 748,142 - - 748,142
$ 2,682,884 $ 18,780 $ 1,281,199 $ 220,142 $ 881,024 $ 239,224 $ 54,089 $ 6,017,909 $ 109,568 $ - $ 20,859 $ 3,024 $ 510 $ 229,520 $ - $ 372,864 - - 27,513 - - 5,984 - 33,497
- - - - - 537,470 - 546,149
109,568 - 48,372 3,024 510 772,974 - 952,510
- - - - - - - 12,192
- - - - - - - 12,192
- - - - 748,142 - - 765,717
- - - 217,118 132,372 - - 585,838
2,573,316 18,780 1,232,827 - - - 54,089 4,231,795
- - - - - (533,750) - (530,143)
2,573,316 18,780 1,232,827 217,118 880,514 (533,750) 54,089 5,053,207 $ 2,682,884 $ 18,780 $ 1,281,199 $ 220,142 $ 881,024 $ 239,224 $ 54,089 $ 6,017,909 -74-

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CITY OF GRASS VALLEY
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
Nonmajor Special Revenue Funds
For the Year Ended June 30, 2025
Gas Traffic Fire EPA
Tax Safety Reserve Brownfields

REVENUES
Taxes and assessments $ - $ - $ - $ -
Fines and forfeitures - 44,866 - -
Intergovernmental revenues 817,884 - 249,691 56,571
Use of money and property 20,096 - 10,633 -
Other revenues - - 100 -
Total Revenues 837,980 44,866 260,424 56,571

EXPENDITURES
Current:

General government - - - 49,222
Public protection - 216,079 77,350 -
Public ways and facilities - - - -
Community development - - - -
Capital outlay - - - -
Total Expenditures - 216,079 77,350 49,222
Excess of Revenues Over (Under) Expenditures 837,980 (171,213) 183,074 7,349

OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets - - - -
Transfers in - 171,213 - -
Transfers out (891,779) - - -
Total Other Financing Sources (Uses) (891,779) 171,213 - - Net Change in Fund Balances (53,799) - 183,074 7,349
Fund Balances - Beginning (Deficits) 290,147 - 187,284 (3,742) Fund Balances - Ending (Deficits) $ 236,348 $ - $ 370,358 $ 3,607 -75-

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Developer Vehicle Measure B Maintenance Block Downtown
Fees Replacement Sales tax Districts Grants Prop 64 Assessment Totals $ 262,427 $ - $ 1,893,225 $ 84,553 $ - $ - $ 71,390 $ 2,311,595 - - - - - - - 44,866
- - - - - 543,781 - 1,667,927
101,280 691 10,087 7,589 11,282 - 2,306 163,964
- - - - - - - 100
363,707 691 1,903,312 92,142 11,282 543,781 73,696 4,188,452 - - 185,986 - - 313,257 - 548,465
- - 484,499 - - - - 777,928
- 11,787 - 61,478 - - - 73,265
- - - - 3,806 - 48,000 51,806
- - - - - 546,697 - 546,697
- 11,787 670,485 61,478 3,806 859,954 48,000 1,998,161
363,707 (11,096) 1,232,827 30,664 7,476 (316,173) 25,696 2,190,291 - 16,000 - - - - - 16,000
- - - - - - - 171,213
- - - - - - - (891,779)
- 16,000 - - - - - (704,566)
363,707 4,904 1,232,827 30,664 7,476 (316,173) 25,696 1,485,725 2,209,609 13,876 - 186,454 873,038 (217,577) 28,393 3,567,482 $ 2,573,316 $ 18,780 $ 1,232,827 $ 217,118 $ 880,514 $ (533,750) $ 54,089 $ 5,053,207 -75-

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Nonmajor Governmental Funds
• Permanent Funds

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CITY OF GRASS VALLEY
Combining Balance Sheet
Nonmajor Permanent Funds
June 30, 2025
Elizabeth
Daniels Animal
Park Shelter Totals
ASSETS
Cash and investments $ 108,952 $ 2,270 $ 111,222
Receivables:

Interest 249 5 254
Total Assets $ 109,201 $ 2,275 $ 111,476

LIABILITIES
Accounts payable $ - $ - $ -
Total Liabilities - - -

FUND BALANCES
Restricted 109,201 2,275 111,476
Total Fund Balances 109,201 2,275 111,476
Total Liabilities and Fund Balances $ 109,201 $ 2,275 $ 111,476 -76-

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CITY OF GRASS VALLEY
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
Nonmajor Permanent Funds
For the Year Ended June 30, 2025
Elizabeth
Daniels Animal
Park Shelter Totals

REVENUES
Use of money and property $ 4,316 $ 93 $ 4,409
Total Revenues 4,316 93 4,409

EXPENDITURES
Current:

General government - - -
Total Expenditures - - -
Net Change in Fund Balances 4,316 93 4,409
Fund Balances - Beginning 104,885 2,182 107,067
Fund Balances - Ending $ 109,201 $ 2,275 $ 111,476
-77-

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Fiduciary Funds
• Private Purpose Trust Funds
• Custodial Funds

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CITY OF GRASS VALLEY
Combining Statement of Net Position
Fiduciary Funds
June 30, 2025
Whispering Whispering
Pines Morgan Pines Morgan
Ranch Ranch
Reserve Redemption
Projects Housing 2001 2001 Totals
ASSETS
Current Assets:

Cash and investments $ 670,647 $ 136,420 $ - $ 3,421 $ 810,488 Cash with fiscal agent 3,103 - - - 3,103
Receivables:

Accounts - 164,487 - - 164,487
Interest 1,733 - - 1,733
Due from other funds - - - 30,899 30,899
Loans receivable - 848,242 - - 848,242
Total Assets 675,483 1,149,149 - 34,320 1,858,952

LIABILITIES
Current Liabilities:

Salaries and benefits payable 427 - - - 427
Due to other funds - - 30,899 - 30,899
Loans payable 375,148 - - - 375,148
Total Current Liabilities 375,575 - 30,899 - 406,474
Noncurrent Liabilities:

Loans payable 6,384,665 - - - 6,384,665
Total Noncurrent Liabilities 6,384,665 - - - 6,384,665
Total Liabilities 6,760,240 - 30,899 - 6,791,139

NET POSITION
Restricted for:

Successor Agency to the Redevelopment
Agency (6,084,757) 1,149,149 - - (4,935,608)
Individuals, organizations, and other
governments - - (30,899) 34,320 3,421
Total Net Position $ (6,084,757) $ 1,149,149 $ (30,899) $ 34,320 $ (4,932,187) Custodial Funds
Redevelopment Agency of the
City of Grass Valley
Successor Agency to the
Private Purpose Trust Funds
-78-

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Item # 4.

CITY OF GRASS VALLEY
Combining Statement of Changes in Net Position
Fiduciary Funds
For the Year Ended June 30, 2025
Whispering Whispering
Pines Morgan Pines Morgan
Ranch Ranch
Reserve Redemption
Projects Housing 2001 2001 Totals

ADDITIONS
Property taxes collected for other governments $ 650,190 $ - $ - $ - $ 650,190 Interest and investment earnings 31,424 (185,036) - - (153,612) Other contributions - 38,851 - - 38,851
Total Additions 681,614 (146,185) - - 535,429

DEDUCTIONS
Expenses of former redevelopment agency 9,567 - - - 9,567 Interest expense 230,342 - - - 230,342
Total Deductions 239,909 - - - 239,909
Change in Fiduciary Net Position 441,705 (146,185) - - 295,520 Total Net Position - Beginning (6,526,462) 1,277,350 (30,899) 34,320 (5,245,691) Prior period adjustment - 17,984 - - 17,984
Total Net Position - Beginning, Restated (6,526,462) 1,295,334 (30,899) 34,320 (5,227,707) Total Net Position - Ending $ (6,084,757) $ 1,149,149 $ (30,899) $ 34,320 $ (4,932,187) Redevelopment Agency of the
City of Grass Valley
Successor Agency to the
Private Purpose Trust Funds Custodial Funds
-79-

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CITY OF GRASS VALLEY,

CALIFORNIA

SINGLE AUDIT ACT

REPORTS AND SCHEDULES

FOR THE YEAR ENDED
JUNE 30, 2025

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CITY OF GRASS VALLEY
Single Audit Act
For the Year Ended June 30, 2025
Table of Contents
Page
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............................................................................1-2 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance.................................................3-5 Schedule of Expenditures of Federal Awards for the Year Ended June 30, 2025 ........................................ 6 Notes to Schedule of Expenditures of Federal Awards .............................................................................7-8 Schedule of Findings and Questioned Costs............................................................................................9-10 Schedule of Prior Year Findings and Questioned Costs............................................................................. 11 Management’s Corrective Action Plan ....................................................................................................... 12

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CERTIFIED PUBLIC ACCOUNTANTS
-1-
950 THARP ROAD, SUITE 502 YUBA CITY, CA 95993 TEL: (530) 673-9790 FAX: (530) 673-1305 [email protected]

SMITH & NEWELL
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 Members of the City Council
City of Grass Valley
Grass Valley, 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 Grass Valley, California, (City) as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City's basic financial statements and have issued our report thereon dated June 25, 2026.

Report on 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 the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control.

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

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We identified a certain deficiency in internal control, described in the accompanying schedule of findings and questioned costs as item 2025- 001 that we consider to be a significant deficiency.

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Item # 4.
-2-
To the Honorable Mayor and Members of the City Council
City of Grass Valley
Grass Valley, California
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the 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 financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

City’s Response to the Finding
Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the finding identified in our audit and described in the accompanying management’s corrective action plan. The City’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.

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.

Smith & Newell CPAs
Yuba City, California
June 25, 2026

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CERTIFIED PUBLIC ACCOUNTANTS
-3-
950 THARP ROAD, SUITE 502 YUBA CITY, CA 95993 TEL: (530) 673-9790 FAX: (530) 673-1305 [email protected]

SMITH & NEWELL
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM

AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY

THE UNIFORM GUIDANCE
To the Honorable Mayor and Members of the City Council
City of Grass Valley
Grass Valley, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City of Grass Valley, California's (City) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended June 30, 2025. The City's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.

In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2025.

Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above.

Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City’s federal programs.

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Item # 4.
-4-
To the Honorable Mayor and Members of the City Council
City of Grass Valley
Grass Valley, California
Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of each major federal program as a whole.

In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. • Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance.

Accordingly, no such opinion is expressed.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.

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

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Item # 4.
-5-
To the Honorable Mayor and Members of the City Council
City of Grass Valley
Grass Valley, California
Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.

Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the City of Grass Valley, California, (City) as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City's basic financial statements. We issued our report thereon dated June 25, 2026, which contained unmodified opinions on those financial statements. Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain 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 schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.

Smith & Newell CPAs
Yuba City, California
June 25, 2026

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Assistance Federal Grantor/
Listing Pass-Through Disbursements/
Federal Grantor/Pass-Through Grantor/ Program Title Number Grantor Number Expenditures U.S. Department of Housing and Urban Development
State Department of Housing and Community Development:

Community Development Block Grants/State's Program and
Non-Entitlement Grants in Hawaii 14.228 Outstanding Loans $ 754,465 Home Investment Partnerships Program 14.239 Outstanding Loans 5,296,181 Total U.S. Department of Housing and Urban Development 6,050,646 U.S. Department of Transportation
State Department of Transportation:

Highway Planning and Construction 20.205 CML-5023 (021) 13,265 Highway Planning and Construction 20.205 CML-5023 (027) 82,355 Highway Planning and Construction 20.205 BPMP-5023 (023) 150,028 Highway Planning and Construction 20.205 ATPL-5023 (028) 17,874 Total U.S. Department of Transportation 263,522
Environmental Protection Agency
Direct Program:

Brownfields Assessment and Cleanup Cooperative Agreement 66.818 98T42301 49,222 Total Environmental Protection Agency 49,222
U.S. Department of Homeland Security
State Office of Emergency Services:

Disaster Grants - Public Assistance (Presidentially
Declared Disasters) 97.036 FEMA-4699-DR-CA 92,512
Total U.S. Department of Homeland Security 92,512
Total Expenditures of Federal Awards $ 6,455,902

CITY OF GRASS VALLEY
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2025
See the accompanying Notes to Schedule of Expenditures of Federal Awards -6-

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CITY OF GRASS VALLEY
Notes to Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2025
-7-

1. REPORTING ENTITY
The accompanying Schedule of Expenditures of Federal Awards presents the activity of all federal financial assistance programs of the City of Grass Valley, California (City). The City’s reporting entity is defined in Note 1 to the City’s basic financial statements. All federal awards received directly from federal agencies as well as federal awards passed through other government agencies are included on the Schedule of Expenditures of Federal Awards. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position or cash flows of the City.

2. BASIS OF ACCOUNTING
Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements, regardless of the measurement focus applied. The accompanying Schedule of Expenditures of Federal Awards, is presented using the modified accrual basis of accounting for grants accounted for in the governmental fund types and the accrual basis of accounting for grants accounted for in the proprietary fund types, as described in the notes to the City financial statements. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowed or are limited as to reimbursements. In addition, the outstanding balance of prior years’ loans that have significant continuing compliance requirements have been included in total federal expenditures.

3. INDIRECT COST RATE
The City has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.

4. RELATIONSHIP TO FEDERAL FINANCIAL REPORTS
The amounts reported in the accompanying Schedule of Expenditures of Federal Awards agree or can be reconciled with amounts reported in the related federal financial assistance reports.

5. RELATIONSHIP TO BASIC FINANCIAL STATEMENTS
The amounts reported in the accompanying Schedule of Expenditures of Federal Awards agree or can be reconciled with amounts reported in the City’s basic financial statements.

6. PASS-THROUGH ENTITIES’ IDENTIFYING NUMBER
When federal awards were received from a pass-through entity, the Schedule of Expenditures of Federal Awards shows, if available, the identifying number assigned by the pass-through entity. When no identifying number is shown, the City determined that no identifying number is assigned for the program or the City was unable to obtain an identifying number from the pass-through entity.

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CITY OF GRASS VALLEY
Notes to Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2025
-8-

7. LOANS WITH CONTINUING COMPLIANCE REQUIREMENTS
The City participates in certain federal award programs that sponsor revolving loan programs, which are administered by the City. These programs require servicing arrangements with the City. The funds are returned to the programs upon repayment of the principal and interest. In accordance with Section 200.510 of the Uniform Guidance, the City has reported the outstanding balance of loans from previous years that have significant continuing compliance requirements as of June 30, 2025, along with the value of total outstanding and new loans made during the current year.

The programs listed below had the following aggregate, federally funded loans outstanding at June 30, 2025:

Assistance Amount Outstanding
Listing
Number Program Title July 1, 2024 June 30, 2025

14.228 Community Development Block Grants/State’s Program and Non-Entitlement Grants in Hawaii $ 754,465 $ 748,193

14.239 Home Investment Partnerships Program 5,296,181 5,218,581 Total Loans Outstanding $ 6,050,646 $ 5,966,774

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CITY OF GRASS VALLEY
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2025
-9-
SECTION I - SUMMARY OF AUDITOR’S RESULTS
Financial Statements Status

1. Type of auditor’s report issued Unmodified

2. Internal controls over financial reporting:
a. Material weaknesses identified? No
b. Significant deficiencies identified and not considered to be material weaknesses? Yes

3. Noncompliance material to financial statements noted? No Federal Awards

1. Internal control over major programs:
a. Material weaknesses identified? No
b. Significant deficiencies identified and not considered to be material weaknesses? No

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

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

4. Identification of major programs:

14.239 Home Investment Partnerships Program

20.205 Highway Planning and Construction

5. Dollar threshold used to distinguish between Type A and Type B programs? $750,000

6. Auditee qualified as a low-risk auditee under 2 CFR Section 200.520? No

SECTION II - FINANCIAL STATEMENT FINDINGS
Budget 2025-001

SECTION III - FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS None

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Item # 4.

CITY OF GRASS VALLEY
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2025
-10-
2025-001 Budget (Significant Deficiency)
Criteria
California Government Code requires that appropriate budgets be adopted and amended as needed and that expenditures not exceed the approved budget.

Condition
For the year ended June 30, 2025, we noted that the City incurred expenditures in excess of appropriations of $413,710 in the General fund.

Cause
The City did not amend its budget for changes in the estimate of expenditures during the fiscal year.

Effect
Expenditures exceeded appropriations by $413,710 in the General fund.

Questioned Cost
No questioned costs were identified as a result of our procedures.

Context
Not applicable.

Repeat Finding
This is a repeat of prior year finding 2024-001.

Recommendation
We recommend that the City control and monitor expenditures so that they do not exceed the approved budget. If budget revisions are required, we recommend that the City take appropriate action to amend the budget.

Views of Responsible Officials and Planned Corrective Action Refer to separate Management’s Corrective Action Plan for views of responsible officials and management’s responses.

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CITY OF GRASS VALLEY, CALIFORNIA
Status of Prior Year Findings and Questioned Costs
And
Corrective Action Plan
For the Year Ended June 30, 2025
Compiled by: Jennifer Styczynski, Finance Director

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CITY OF GRASS VALLEY
Schedule of Prior Year Findings and Questioned Costs
For the Year Ended June 30, 2025
-11-
Audit Reference
2024-001
Status of Prior Year Recommendation
Budget
Recommendation
We recommend that the City control and monitor expenditures so that they do not exceed the approved budget. If budget revisions are required, we recommend that the city take appropriate action to amend the budget.

Status
Not Implemented

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CITY OF GRASS VALLEY
Management’s Corrective Action Plan
For the Year Ended June 30, 2025
-12-
2025-001 Budget (Significant Deficiency)
We recommend that the City control and monitor expenditures so that they do not exceed the approved budget. If budget revisions are required, we recommend that the City take appropriate action to amend the budget.

Management’s Response: Management agrees with the finding. The City acknowledges that General fund expenditures exceeded appropriations by $413,710 during fiscal year 2024-25.

The City notes that this finding is reported as a repeat finding; however, significant corrective actions have been implemented since the issuance of the Fiscal Year 2023-24 audit. The prior audit finding was issued after the majority of Fiscal Year 2024-25 budget activity had already occurred, limiting the City’s ability to fully implement and demonstrate the effectiveness of the corrective actions during the fiscal year under audit.

Since the prior finding, the City has implemented a centralized Budget Amendment Log maintained by the Finance Department, established an Interim Budget Compliance Procedure, and incorporated routine budgetto-actual monitoring into its financial management processes. Finance reviews budget-to-actual reports on an ongoing basis to identify potential budget concerns, monitor expenditure activity, and determine when budget amendments may be necessary. These efforts have strengthened budget oversight and improved communication regarding budgetary compliance.

Responsible Individual: Finance Director
Corrective Action Plan: The City has implemented and will continue the following corrective actions:
• Maintain and update the centralized Budget Amendment Log to track requested, pending, and approved budget
amendments.
• Continue Finance Department review of budget-to-actual reports throughout the fiscal year to identify potential budget variances and facilitate timely budget adjustments.
• Continue implementation of the Interim Budget Compliance Procedure, including coordination between departments,
administration, and finance regarding budget impacts of operational and City Council actions.
• Distribute quarterly budget-to-actual reports to department directors beginning in July 2026 to increase departmental awareness and accountability for budget performance.
• Evaluate additional system-based controls and workflow enhancements within the City’s financial software to further strengthen budget monitoring and compliance.

Anticipated Completion Date: Implemented and ongoing. Quarterly departmental reporting will commence in July 2026, with continued evaluation and enhancement of budget compliance procedures throughout the Fiscal Year 2026-27.

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Item # 4.

CERTIFIED PUBLIC ACCOUNTANTS
950 THARP ROAD, SUITE 502 YUBA CITY, CA 95993 TEL: (530) 673-9790 FAX: (530) 673-1305 [email protected]

SMITH & NEWELL
INDEPENDENT AUDITOR’S MANAGEMENT LETTER
To the Honorable Mayor and Members of the City Council
City of Grass Valley
Grass Valley, California
In planning and performing our audit of the financial statements of the City of Grass Valley, (City) as of and for the year ended June 30, 2025, 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, we considered the City’s system of internal control over financial reporting (internal control) as a basis for designing auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

However, during our audit we became aware of deficiencies in internal control other than significant deficiencies and material weaknesses and matters that are opportunities for strengthening internal controls and operating efficiency. The appendix that accompanies this letter summarizes our comments and suggestions regarding those matters. This letter does not affect our report dated June 25, 2026, on the financial statements of the City.

We will review the status of these comments during our next audit engagement. We have already discussed many of these comments and suggestions with various management, and we will be pleased to discuss them in further detail at your convenience, to perform any additional study of these matters, or to assist you in implementing the recommendations.

This communication is intended solely for the information and use of management, the City Council, and others within the City and is not intended to be, and should not be, used by anyone other than these specified parties.

Smith & Newell CPAs
Yuba City, California
June 25, 2026

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CITY OF GRASS VALLEY
Appendix A: Management Letter Comments
For the Year Ended June 30, 2025

CURRENT YEAR FINDING AND RECOMMENDATION
Payroll Withholdings
Criteria
Good internal controls over payroll requires that employee payroll tax withholdings agree to the amount authorized on the employee completed W-4.

Condition
During our walkthrough of payroll transactions, we noted that one of the twelve employee-selected federal payroll tax withholdings did not agree to amounts authorized on employee-completed W-4.

Cause
The City did not verify that federal payroll tax withholdings agreed to amounts authorized on employeecompleted W-4.

Effect
The City was withholding an amount for federal taxes different than what was authorized by the employee.

Questioned Cost
No questioned costs were identified as a result of our procedures.

Context
Not applicable.

Repeat Finding
This is a repeat of a prior year finding.

Recommendation
We recommend that the City review employee files to verify that correct payroll tax withholding statuses agree to what is provided by the employee on Form W-4.

Views of Responsible Officials and Planned Corrective Action Refer to separate Management’s Corrective Action Plan for views of responsible officials and management’s responses.

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Item # 4.

CITY OF GRASS VALLEY
Appendix B: Status of Prior Year Recommendations
For the Year Ended June 30, 2025

STATUS OF PRIOR YEAR RECOMMENDATIONS
Schedule of Expenditures of Federal Awards
Recommendation
We recommend that the City review the requirements of the Uniform Guidance to ensure that the expenditures reported on the SEFA are correctly stated.

Status
Implemented
Payroll Withholdings
Recommendation
We recommend that the City review employee files to verify that correct payroll tax withholding statuses agree to what is provided by the employee on Form W-4 and/or DE-4.

Status
Not Implemented

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Item # 4.

CITY OF GRASS VALLEY
Appendix C: Management’s Corrective Action Plan
For the Year Ended June 30, 2025
Payroll Withholdings
We recommend that the City review employee files to verify that correct payroll tax withholding statuses agree to what is provided by the employee on Form W-4.

Management’s Response: Management agrees with the finding. The City notes that this finding is reported as a repeat finding due primarily to the timing of the prior audit and implementation of corrective actions.

The original finding related to Fiscal Year 2023-24 was not reported until completion of the audit in May 2025. Because the fiscal year ended June 30, 2025, the City had limited opportunity to implement and demonstrate the effectiveness of corrective actions during Fiscal Year 2024-25, which is the period under audit for the current finding.

Upon receipt of the Fiscal Year 2023-24 audit findings, the City promptly implemented its corrective action plan and completed all corrective actions by July 31, 2025. These actions include obtaining updated employee withholding forms, implementing a dual-verification process for tax withholding elections, and providing additional training to payroll staff.

Responsible Individual: Finance Director
Corrective Action Plan: The corrective actions identified in response to the Fiscal Year 2023-24 finding were fully implemented as of July 31, 2025. The City will continue to follow these established procedures and perform ongoing monitoring to ensure employee withholding elections are accurately reflected in the payroll system.

Anticipated Completion Date: Implemented as of July 31, 2025; ongoing monitoring thereafter.

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CERTIFIED PUBLIC ACCOUNTANTS
-1-
950 THARP ROAD, SUITE 502 YUBA CITY, CA 95993 TEL: (530) 673-9790 FAX: (530) 673-1305 [email protected]

SMITH & NEWELL
INDEPENDENT ACCOUNTANT’S REPORT ON APPLYING AGREED-UPON

PROCEDURES TO APPROPRIATIONS LIMIT CALCULATION
To the Honorable Mayor and Members of the City Council
City of Grass Valley
Grass Valley, California
We have performed the procedures enumerated below, which were agreed to by the City of Grass Valley (City), related to the City’s compliance with the requirements of Section 1.5 of Article XIIIB of the California Constitution, for the year ended June 30, 2025. The City’s management is responsible for the compliance with those specified requirements.

The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of the compliance with the specified requirements. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.

The procedures and associated findings are as follows:

1. We evaluated the accuracy of the computation and adequacy of the documentation. We obtained the completed worksheets and compared the Limit and annual adjustment factors in those worksheets to the Limit and annual adjustment factors that were provided by the State Department of Finance. We also evaluated the City’s compliance with Government Code Section 37200.

Finding: The City did not use the correct per capita personal income factor; therefore, the calculation resulted in a ($82,426) material difference.

2. We determined compliance with the Appropriations Limit. We compared the proceeds of taxes subject to the calculated Limit.

Finding: No exceptions were noted as a result of our procedures.

3. We determined that the Appropriations Limit resulting from the completion of the various worksheets was adopted by the City Council. We noted that the Limit was approved by the City Council on June 25, 2024.

Finding: No exceptions were noted as a result of our procedures.

4. We compared the prior year Appropriations Limit presented in the current year Appropriations Limit calculation to the prior year Appropriations Limit adopted by the City Council.

Finding: The prior year Appropriations Limit presented in the current year Appropriations Limit calculation did not agree with the City Council’s FY 23-24 Appropriations Limit. The City’s established limit for FY 23-24 is $28,177,456 while the beginning Appropriations Limit balance is $28,177,038, causing a $373 difference.

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Item # 4.
-2-
To the Honorable Mayor and Members of the City Council
City of Grass Valley
Grass Valley, California
We were engaged by the City of Grass Valley to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on compliance with the specified requirements. Accordingly, we do not express such an opinion or conclusion.

Had we performed additional procedures; other matters might have come to our attention that would have been reported to you.

We are required to be independent of the City of Grass Valley and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.

This report is intended solely for the information and use of management of the City of Grass Valley, the City Council, and others within the City and is not intended to be, and should not be, used by anyone other than these specified parties.

Smith & Newell CPAs
Yuba City, California
June 25, 2026

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Item # 4.

CITY OF GRASS VALLEY
Appropriations Limit Worksheet
For the Year Ended June 30, 2025
-3-
Gann Limit for the fiscal year ended June 30, 2024 $ 28,177,038 Per capita personal income factor 1.0362
Population change factor 0.9942
Gann Limit Increase factor 1.03019004
Gann Limit for the fiscal year ended June 30, 2025 $ 29,027,704

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CITY OF GRASS VALLEY
Notes to Appropriations Limit Worksheet
For the Year Ended June 30, 2025
-4-
NOTE 1: PURPOSE OF LIMITED PROCEDURES REVIEW
Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), California governmental agencies are restricted as to the amount of annual appropriations from proceeds of taxes.

Effective for years beginning on or after July 1, 1990, under Section 1.5 of Article XIIIB, the annual calculation of the appropriations limit is subject to a limited procedures review in connection with the annual audit.

NOTE 2: METHOD OF CALCULATION
Under Section 10.5 of Article XIIIB, for fiscal years beginning on or after July 1, 1990, the appropriations limit is required to be calculated based on the limit for the fiscal year 1986-1987, adjusted for the inflation and population factors discussed at Notes 3 and 4 below.

NOTE 3: PER CAPITA PERSONAL INCOME FACTOR
The per capita personal income factor was obtained by using the percentage factor from the State Department of Finance letter dated May 2024. The CPI change was 3.62 percent. This percentage was converted to a ratio and for calculation purposes was 1.0362.

NOTE 4: POPULATION CHANGE FACTOR
There are three methods of calculating the change in population that a city may choose in determining the Gann Limit. 1) The change in population within its jurisdiction; 2) the change in population within its jurisdiction, combined with the changes in population within all counties having borders that are contiguous to that city; 3) the change in population within the incorporated portion of the City. The City may use either of these methods in any year.

The City has elected to use the change in population within its jurisdiction (1). Per the May 2024 letter from the State Department of Finance the population change percentage was (0.58). This percentage change was converted to the ratio factor of 0.9942.

NOTE 5: OTHER ADJUSTMENTS
A California government agency may be required to adjust its Appropriations Limit when certain events occur, such as the transfer of responsibility for municipal services to, or from, another government agency or private entity. The City had no such adjustments for the year ended June 30, 2025.

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Item # 4.

City of Grass Valley
City Council
Agenda Action Sheet
Title: Park Restroom Maintenance Services and Parks Division Staffing CEQA: Not a Project.

Recommendation: That the City Council:

1. Approve the addition of one full-time Maintenance Worker I position in the Parks Division, effective August 1, 2026.

2. Authorize the Finance Director to amend the Fiscal Year 2026-27 General Fund budget by transferring appropriations from the Ultimate Building Maintenance contract to the appropriate salary, benefit, and contractual services accounts.

Prepared by: Jennifer Styczynski, Finance Director
Council Meeting Date: 07/14/2026 Date Prepared: 07/07/2026 Agenda: Consent
Background: Since March 2021, the City has contracted with Ultimate Building Maintenance to provide daily cleaning services for park restroom facilities. The current agreement provides for cleaning services seven days per week at eleven restroom facilities and two shower/locker room facilities. Services include trash and debris removal, cleaning and sanitizing sinks, toilets, floors, counters, faucets, mirrors, and surrounding wall surfaces, as well as sweeping and mopping floors. The annual contract amount is up to $115,140.

Staff has evaluated the current service model and determined that bringing daytime restroom cleaning services in-house while contracting evening restroom clearing and locking services will improve operational efficiency, increase workforce flexibility, and reduce overall operating costs.

Discussion: The proposed staffing and service changes are intended to improve the efficiency of the Parks Division by assigning work according to employee skill level while maintaining a high level of service for park restroom facilities.

Under the proposed approach, a newly created full-time Maintenance Worker I position will assume responsibility for the daily cleaning and maintenance of park restrooms. Assigning these routine maintenance responsibilities to an entry-level maintenance employee allows experienced maintenance staff to focus on higher-priority and more technically demanding work, including equipment diagnostics and repairs, irrigation system maintenance, preventive maintenance activities, infrastructure repairs, technical landscaping projects, and other skilled assignments requiring greater experience and expertise.

After completing daily restroom cleaning responsibilities, the Maintenance Worker I is expected to have approximately three to four hours each day available to perform other

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Item # 5.
routine maintenance activities throughout the City's parks, including litter removal, mowing, landscape maintenance, and basic facility upkeep. This additional staffing capacity will improve the department's ability to complete routine maintenance activities while providing greater flexibility to respond to seasonal workload demands, special projects, and unexpected maintenance needs without diverting senior staff from skilled work.

To complement the in-house daytime maintenance program, staff recommends contracting with Gold Country Security to provide evening restroom clearing and locking services.

Services will include inspecting restroom facilities approximately one hour after sunset each evening, ensuring facilities are vacant prior to closing, locking restroom buildings, inspecting for vandalism or damage, and reporting maintenance concerns to City staff. The contract will cover seven park and parking lot locations, including two parks with multiple restroom facilities.

Contracting for these evening services allows the City to secure restroom facilities after normal Parks Division working hours without requiring overtime or extended work shifts for City employees. This approach provides a cost-effective means of ensuring park restrooms are closed and secured each evening while allowing Parks Division staff to focus on daytime maintenance and operational responsibilities during their regular work schedules.

Staff solicited proposals from five security service providers. Gold Country Security was the only firm to submit a proposal. The proposed annual contract cost is $21,240.

Council Goals/Objectives: This recommendation supports the City's Strategic Plan by promoting Fiscal Sustainability through a more cost-effective service delivery model while enhancing Parks and Recreation operations through improved maintenance efficiency, increased workforce flexibility, and continued high-quality service to park users.

Fiscal Impact: The current Ultimate Building Maintenance contract has an annual cost of up to $115,140.

The proposed Maintenance Worker I position has an estimated fully burdened annual cost of approximately $82,413. The proposed agreement with Gold Country Security will cost approximately $21,240 annually.

The combined annual cost of the proposed staffing and security services is approximately $103,653, representing an estimated annual General Fund savings of approximately $11,487 compared to the current contracted service model.

A budget amendment is required to implement these changes effective August 1, 2026. The amendment will transfer existing appropriations within the General Fund from the Ultimate Building Maintenance contract to the appropriate salary, benefit, and contractual services accounts. No additional General Fund appropriations are requested.

Account #: General Fund – Budget amendment to transfer appropriations from the Ultimate Building Maintenance contractual services account to the appropriate salary, benefits, and contractual services accounts.

Reviewed by: Interim City Manager
Attachments: None

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Item # 5.

City of Grass Valley
City Council
Agenda Action Sheet
Title: Joyce Dr Soil Remediation Project – Authorization to Bid CEQA: Initial Study – Mitigated Negative Declaration adopted by Planning Commission Recommendation: That Council authorize the advertisement for bids for the Joyce Dr Soil Remediation Project
Prepared by: Bjorn P. Jones, PE, City Engineer
Council Meeting Date: 07/14/2026 Date Prepared: 07/08/2026 Agenda: Consent
Background Information: The Joyce Dr Soil Remediation Project involves the excavation and disposal of approximately 15,000 tons of contaminated fill soil at a City owned property on the south side of Joyce Dr, Assessor’s Parcel Number 029-280-016.

Also included is clean fill import, grading for future development and chain link fencing.

An Initial Study was prepared for the project and the Planning Commission adopted a Mitigated Negative Declaration at their May 19, 2026 meeting.

Copies of the plans and specifications for the Joyce Dr Soil Remediation Project are available for review in the Engineering Division office at City Hall. The total project cost is estimated at $1,600,000.

The award of a construction contract is anticipated to occur in August 2026, with construction to follow shortly after. Staff requests that Council authorize the bidding process for construction of this project.

Council Goals/Objectives: The Joyce Dr Soil Remediation Project executes portions of work tasks towards achieving/maintaining Strategic Plan Goal – Economic Development and Vitality
Fiscal Impact: The Joyce Dr Soil Remediation Project is fully funded in the FY 2026/27 Capital Improvements Project budget by an Economic Community Revitalization Grant in the amount of $1,987,043.

Funds Available: Yes Account #: 300-406-61470
Reviewed by: Interim City Manager Attachments: N/A

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Item # 6.

City of Grass Valley
City Council
Agenda Action Sheet
Title: 2026 Annual Street Rehabilitation Project – Authorization to Bid CEQA: Categorically Exempt – Section 15301 “Existing Facilities” Recommendation: That Council 1) approve the findings that the project is categorically exempt from the provisions of the California Environmental Quality Act (CEQA); and 2) authorize the advertisement for bids for the 2026 Annual Street Rehabilitation Project.

Prepared by: Bjorn P. Jones, PE, City Engineer
Council Meeting Date: 7/14/2026 Date Prepared: 7/8/2026 Agenda: Consent
Background Information: The 2026 Annual Street Rehabilitation Project involves pavement resurfacing of Idaho Maryland Road between Railroad Avenue and Centerville Road. Project work includes hot mix asphalt removal and replacement, pavement markings/striping improvements, sidewalk installation, and drainage improvements.

The street improvements associated with this project are exempt from environmental review pursuant to Section 15301 “Existing Facilities” of the CEQA Guidelines.

Copies of the plans and specifications for the 2026 Annual Street Rehabilitation Project are available for review in the Engineering Division office at City Hall. The total project cost is estimated at $1,000,000.

Council Goals/Objectives: The 2026 Annual Street Rehabilitation Project executes portions of work tasks towards achieving/maintaining Strategic Plan Goal – City Infrastructure Investment
Fiscal Impact: The 2026 Annual Street Rehabilitation Project was fully funded in the FY 26/27 CIP Budget with a combination of RMRA, RSTP and Gas Tax funds.

Funds Available: Yes Account #: 300-406-61330
Reviewed by: City Manager Attachments: N/A

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Item # 7.

City of Grass Valley
City Council
Agenda Action Sheet
Title:

CEQA:

Local Buyback and Compost Facility Feasibility Study– Nevada County Not a project
Recommendation: That the City Council 1) Review the proposal for a joint feasibility study with Nevada County to evaluate the development of a shared facility for CRV (California Redemption Value) local buyback, clear plastic recycling, and composting; 2) Authorize the Interim City Manager to enter into any necessary agreements, subject to legal review.

Prepared by: Zac Quentmeyer, Deputy Public Works Director Council Meeting Date: 7/14/2026 Date Prepared: 7/9/2026 Agenda: Consent
Background Information: In July 2025, the City Council approved entering into an agreement with Nevada City to jointly fund a feasibility study for the development of a shared facility to support local California Redemption Value (CRV) buyback, composting, and clear plastic recycling operations. Shortly thereafter, Nevada City experienced a transition in its City Manager position, which delayed implementation of the agreement.

In the interim, Nevada County Solid Waste staff approached the City about partnering directly with the County to advance the feasibility study and share the project costs equally. The City of Grass Valley and Nevada County already have a Memorandum of Understanding (MOU) in place to share contract services through R3 Consulting. The attached amendment extends that MOU through November 2026 to accommodate the study schedule and authorize the additional work. A revised feasibility study proposal from R3 Consulting is also provided for review.

Staff have also determined that the feasibility study is eligible for funding through the City's available SB 1383 Local Assistance Grant funds, allowing the project to proceed without impacting the General Fund.

Council Goals/Objectives: The execution of this action attempts to achieve the following Strategic Goals – Community and Sense of Place.

Fiscal Impact: SB 1383 Local Assistance Grant Program will fully fund the City’s share of the study cost.

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Item # 8.

Funds Available: N/A Account #: N/A
Reviewed by: Interim City Manager
Attachments: Nevada County MOU Amendment, R3 Proposal

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Item # 8.

AMENDMENT NO. 3
TO

MEMORANDUM OF UNDERSTANDING

BETWEEN THE COUNTY OF NEV ADA AND THE CITY OF GRASS VALLEY THIS AMENDMENT No. 3 is executed this 16
th day of June, 2026 by and between CITY
OF GRASS VALLEY and COUNTY OF NEVADA. Said Amendment will amend the prior agreement between the parties entitled SB1383 Program Development Services executed on July 13, 2021 by Resolution No. 21-301, which Agreement was subsequently amended on June 14, 2022 with Resolution No. 22-266 and on April 23, 2024 by Resolution No. 24-175 WHEREAS, the parties desire to amend their agreement to allow for an extension to the term of the Agreement to November 30, 2026; and
NOW, THEREFORE, the parties hereto agree as follows:

1. This amendment shall be effective as of June 16, 2026.

2. That Paragraph 6 shall be changed to the following:
"Term of MOU: This MOU shall commence on July 17, 2021. All funds provided by this MOU shall be expended by November 30, 2026."

3. That in all other respects the prior agreement of the parties shall remain in full force and effect except as amended herein.

COUNTY OF NEVADA:

By: _
Chair, of the Board of Supervisors
Date: _
By:-------------
Attest: Clerk of the Board of Supervisors
CITY OF GRASS VALLEY:

Date: 06/16/2026
By:--------------
Attest: Deputy City Clerk

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Item # 8.
1504 Eureka Road, Suite 220, Roseville, CA 95661 | p 916.782.7821 | f 916.782.7824 | www.r3cgi.com Mr. Zac Quentmeyer, Deputy Public Works Director
City of Grass Valley
125 E. Main Street
Grass Valley, CA 95945
May 19, 2026
Ms. Stacy Manning, Sr. CDA Technician
Nevada County
950 Maidu Ave,
Nevada City, CA 95959
submitted via email: [email protected] [email protected] SUBJECT: Compost Facility Feasibility Study and Local Buyback – R3 Proposal Dear Ms. Manning and Mr. Quentmeyer,
R3 Consulting Group, Inc. (R3) is pleased to submit the attached proposal to Nevada County and the City of Grass Valley (collectively, the Jurisdictions) for a Compost Facility Feasibility and Local Buyback Study (Study).

Introduction
The objective of the Study is to provide the Jurisdictions with an analysis relative to the feasibility of developing a facility for the processing of compostable materials, including cannabis waste, and drop-off of CRV beverage containers and other source separated recyclable materials. This study is intended to provide the Jurisdictions with strategic direction and guidance on potential approaches for advancing an innovative infrastructure project focused on waste diversion and resource recovery.

Project Team
Katelyn Scholz, Sr. Managing Consultant, will serve as Project Lead and primary point of contact for this engagement. Kate will be supported Jordan Lane, Managing Consultant, who will serve as Lead Analyst for this scope of work. The team will receive guidance and leadership from by Nate Forst, Principal. Our team is also able to draw upon additional staff members on an as-needed basis. * * * * *
Thank you for this opportunity to be of service to the Jurisdictions. If you have any questions regarding our proposal or need additional information, please contact me.

Sincerely,
Katelyn Scholz | Sr. Managing Consultant
R3 Consulting Group, Inc.
650.799.3213 | [email protected]
Please note our new office address:
1504 Eureka Rd, Ste 220
Roseville, CA 95661

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Grass Valley City CouncilJuly 14, 2026

Grass Valley City Council
July 14, 2026