Agenda packet — Grover Beach City Council, January 10, 2022 (part 1 of 2)

AGENDA

GROVER BEACH CITY COUNCIL
MONDAY, JANUARY 10, 2022, 6:00 PM
Next Resolution No .22-00
Next Ordinance No. 22-00
Given public health conditions and consistent with Assembly Bill 361, which allows for a deviation of teleconference rules required by the Ralph M. Brown Act, City Council meetings will be held by teleconference only until further notice.

CALL TO ORDER

MOMENT OF SILENCE

FLAG SALUTE
ROLL CALL Council Members Anna Miller, Robert Robert, Daniel Rushing, Mayor Pro Tem Karen Bright, and Mayor Jeff Lee

CLOSED SESSION ANNOUNCEMENTS

AGENDA REVIEW
At this time the City Council will review the order of business to be conducted and receive requests for, or make announcements regarding, any change(s) in the order of the day. The Council should by motion adopt the agenda as presented or as revised.

CEREMONIAL CALENDAR

1. 2021 Employee of the Year – Cesar Zarate

2. Introduction of Deputy City Manager – Kristin Eriksson

PRESENTATIONS

3. Holiday of Lights Winners – Parks & Recreation Director Petker

PUBLIC COMMUNICATIONS
During this time, the Council will allow up to 15 minutes for Public Communication with additional communication, if necessary, allowed after the Regular Business Items. Any member of the public may address the Council for a period not to exceed three minutes total on any item of interest within the Meetings can be viewed on Channel 20 and are live streamed on the City’s website via www.slospan.org. Members of the public may provide public comment during the meeting by calling (805) 321-6639 to provide public comment via phone (the phone line will open just prior to the start of the meeting at 6:00 PM) or written public comments can be submitted via email to [email protected] prior to the Council meeting no later than 3:00 PM. If submitting written comments in advance of the meeting, please note the agenda item. Written comments will be read out loud during the City Council meeting on the appropriate agenda item subject to the customary 3-minute time limit.

Agenda: Grover Beach City Council Meeting Page 2
Monday, January 10, 2022
jurisdiction of this Council. The Council will listen to all communications; however, in compliance with the Brown Act, the Council cannot act on items not on the agenda.

CONSENT AGENDA
The following routine items listed below are scheduled for consideration as a group. Recommendations for each item are noted in parentheses. Members of the audience may speak on any item(s) listed on the Consent Agenda. Any Council Member, the City Attorney, or the City Manager may request that an item be withdrawn from the Consent Agenda to allow for full discussion. Items withdrawn from the Consent Agenda will be heard after the rest of the Consent Agenda is approved.

4. Minutes of the City Council Meeting on Monday, December 13, 2021. (Recommended Action: Approve the minutes as submitted or revised.)

VOICE VOTE

5. FY 2020-21 Annual Comprehensive Financial Report – Administrative Services Director Purcell
(Recommended Action: Receive and file the FY 2020-21 Annual Comprehensive Financial Report.)

VOICE VOTE

6. FY 2020-21 Citizens Oversight Committee Report for City Revenue Measures including K-14 Street Repair Bond, X-06 Transaction and Use Tax, and Measure F20 Transaction and Use Tax – City Manager Bronson and Administrative Services Director Purcell
(Recommended Action: Receive and file the FY 2020-21 Citizens Oversight Committee Report for City Revenue Measures.)

VOICE VOTE

7. Award of Professional Services North Half of City Sewer Mainline Video Inspection – Public Works Director/City Engineer Ray and Senior Engineer Munoz-Morris (Recommended Action: Authorize a Consulting Services Agreement with VIS, Inc. for professional services associated with the North Half of City Sewer Mainline Video Inspection Project and authorize the Mayor to execute the agreement on behalf of the City.)

ROLL CALL VOTE

8. Adoption of Findings Related to AB 361 Allowing Continued Teleconferencing Meetings – City Attorney Hale
(Recommended Action: Adopt required findings with respect to the City of Grover Beach’s continued utilization of teleconferencing meetings in conformance with AB 361 (Government Code Section 54953.)

VOICE VOTE

9. COVID-19 Response Update – City Manager Bronson
(Recommended Action: Receive an update on the countywide and City response to the COVID-19 pandemic.)

VOICE VOTE

10. Appointment to the Planning Commission – City Clerk Sims (Recommended Action: Confirm and approve the Mayor’s recommendation and adopt the Resolution to re-appoint David Halverson to a four-year term of office, scheduled to expire on May 31, 2026.)

ROLL CALL VOTE
Agenda: Grover Beach City Council Meeting Page 3
Monday, January 10, 2022

PUBLIC HEARING
None

REGULAR BUSINESS

11. Cannabis Lounges Policy Direction – Community Development Director Buckingham, Police Chief Peters and Senior Planner Castillo
(Recommended Action: Provide policy direction to staff on allowing and regulating existing commercial cannabis retailers to operate cannabis lounges for onsite consumption of cannabis products.)

ROLL CALL VOTE

12. 2022 City Council Committee Assignments to Boards, Commissions and Committees – City Manager Bronson
(Recommended Action: Adopt the Resolution confirming certain Council assignments and authorize the City Clerk to update FPPC Form 806 for posting on the City’s website.)

ROLL CALL VOTE

PUBLIC COMMUNICATIONS
Any member of the public may address the Council for a period not to exceed three minutes total on any item of interest within the jurisdiction of this Council. The Council will listen to all communications; however, in compliance with the Brown Act, the Council cannot act on items not on the agenda.

COUNCIL COMMITTEE REPORTS
This item gives the Mayor and Council Members the opportunity to present reports to the other members regarding committees, commissions, boards, or special projects on which they may be participating.

Central Coast Community Energy Jeff Lee
Five Cities Fire Joint Powers Authority Jeff Lee (Alt: Karen Bright) South SLO County Sanitation District (SSLOCSD) Jeff Lee (Alt: Karen Bright) Air Pollution Control District (APCD) Karen Bright (Alt: Anna Miller) Integrated Waste Management Authority (IWMA) Karen Bright (Alt: Robert Robert) SLO Council of Governments / SLO Regional Transit Authority Karen Bright (Alt: Jeff Lee) (SLOCOG / SLORTA)
South County Transit Committee Karen Bright (Alt: Jeff Lee) Homeless Services Oversight Council (HSOC) Anna Miller (Alt: Jeff Lee) Zone Three Advisory Committee Anna Miller (Alt: Daniel Rushing) SLO County Water Resources Advisory Committee (WRAC) Robert Robert (Alt: Staff) REACH Daniel Rushing (Alt: Robert Robert)
South County Chambers of Commerce Daniel Rushing (Alt: Anna Miller) Visit SLO CAL Daniel Rushing (Alt: Anna Miller)
League of California Cities - Policy Committee Reports and Other League Matters Transportation, Communication & Public Works Policy Committee Jeff Lee Agenda: Grover Beach City Council Meeting Page 4
Monday, January 10, 2022

COUNCIL COMMUNICATIONS
This item gives individual Council Members the opportunity to seek consensus for scheduling a specific item on a future agenda, authorizing staff time to provide background information and prepare a staff report for a future agenda, or to comment on Council business, City operations, projects or other items of community interest.

CITY MANAGER’S REPORTS AND COMMENTS
CITY ATTORNEY’S REPORTS AND COMMENTS

CLOSED SESSION
It is the intention of the City Council to meet in Closed Session concerning the following item:

ADJOURNMENT
* * * * *
Per Resolution No. 17-21, the public portion of City Council meetings will be scheduled to start at 6:00 p.m. and conclude no later than 11:00 p.m. Any open session items remaining on the agenda at 11:00 p.m. that have not been discussed or considered by the City Council will be continued to an adjourned meeting of the City Council (scheduled before the next regular meeting). However, the City Council may choose to continue the meeting past 11:00 p.m. upon a proper motion and a 4/5ths vote in favor of such an action. * * * * *
Staff reports or other written materials relating to each item of business referred to on this agenda are available from the City website www.groverbeach.org and on file in the City Clerk’s Office. A public counter copy is available for public inspection and reproduction during normal business hours at City Hall, 154 South 8th Street, Grover Beach, CA. Related materials submitted after distribution of the agenda packet are available in the City Clerk's Office during normal business hours. If you have questions regarding any agenda item, please contact the appropriate City Department. Any writings or documents regarding any item on this agenda, not exempt from public disclosure, provided to a majority of the City Council and distributed subsequent to distribution of the agenda packet will be made available for public inspection in the City Clerk’s Office during normal business hours.
* * * * *
Note: This agenda was prepared and posted pursuant to Government Code Section 54954.2. This agenda is subject to amendment up to 72 hours prior to the date and time set for the meeting. Please refer to the agenda posted at City Hall for any revisions or call the City Clerk’s Office at (805) 473-4567 for more information.
* * * * *
The agenda and staff reports are also available on the City’s website: www.groverbeach.org

CITY OF GROVER BEACH

POLICIES AND PROCEDURES FOR CONDUCT AND DECORUM AT COUNCIL MEETINGS (Pursuant to Resolution No. 07-44, adopted 04-16-07, revised 02-18-2020) The City Council and staff welcomes and encourages civic participation and debate on issues. The Council values the public’s opinion and in every Council meeting invite and encourages the public to address the Council on any matter of interest. The Council adopted these policies and procedures for appropriate conduct and decorum at Council meetings and establish guidance for public participation during Council meetings.

These policies will foster and provide greater clarity to preserve the intent of open government and maintain a positive environment for public input and City Council decision-making.

1.0 DECORUM AND ORDER – IN GENERAL

1.1 The presiding officer is responsible for the maintenance of order and decorum at all times.

1.2 The presiding officer shall determine all points of order subject to the right of any Council member to appeal to the City Council by majority vote. If any appeal is taken, the question shall be “Shall the decision of the presiding officer be sustained” in which event a majority vote of the Council shall govern and conclusively determine such question of order.

1.3 All Council members, staff members and members of the public should speak respectfully and avoid the use of profanity, vulgarity and slanderous comments. Recognizing that the First Amendment precludes the City Council form prohibiting speakers from speaking based upon the content of their speech, the presiding officer shall use their best efforts, short of enforcement action, to remind and encourage all participating in the meeting to keep their speech respectful towards others and within bounds appropriate for children and persons of sensitivity toward course language as a courtesy to others present or otherwise viewing Council meetings.

2.0 DECORUM AND ORDER – COUNCIL MEMBERS

2.1 Manner of Speaking.

Any Council member desiring to speak shall first address the presiding officer. Upon recognition by the presiding officer, the Council member shall speak only to the question under debate.

2.1(a) Questioning Staff.

A Council member desiring to question the staff should address his question to the City Manager, or, in appropriate cases, the City Clerk or City Attorney, who shall be entitled either to answer the inquiry or to designate some staff member for that purpose. Such a designation may be made at the time of any staff presentation or on the agenda listing for the item.

2.1(b) Interruptions.

Once recognized, a Council member shall not be interrupted while speaking unless called to order by the presiding officer; unless a point of order is raised by another Council member, or unless the speaker chooses to yield to questions from another Council member.

3.0 DECORUM AND ORDER – STAFF

3.1 City Manager Responsibilities
The City Manager is responsible for ensuring that members of the administrative staff observe the rules of decorum and order set forth in this Policy.

3.2 Addressing the City Council
Any administrative staff member desiring to address the City Council or members of the public shall first be recognized by the presiding officer. All remarks shall be addressed to the presiding officer and not to any individual Council Member or member of the public. Administrative staff members shall accord the utmost courtesy to the City Council, other administrative staff members and the public.

4.0 DECORUM AND ORDER – MEMBERS OF THE PUBLIC

4.1 Addressing the City Council
Any member of the public desiring to address the City Council or members of the public shall first be recognized by the presiding officer at the appropriate place on the agenda. All remarks shall be addressed to the presiding officer and not to any individual Council Member, City Manager, City Attorney or member of the administrative staff or member of the public.

4.2 Time Limitation for Addressing the City Council
Public comment when addressing the City Council shall be generally limited to three (3) minutes per speaker. Depending on the extent of the agenda and the number of persons desiring to speak on an issue, the presiding officer may, at the beginning of the hearing, set a different time limit for each speaker. Any person may speak for a longer period of time upon approval from the presiding officer, when deemed necessary, for instance when a person is speaking on behalf of a group or has a graphic or slide presentation requiring more time.

4.3 Failure to Yield, Disruptions
Any person who refuses to relinquish the floor after their allotted time or while attending the City Council meeting engages in conduct or speech which disrupts the business of the meeting shall be brought to order and/or removed from the room if the sergeant-at-arms is so directed by the presiding officer.

Disruptive remarks from the audience, stamping of feet, clapping, whistles, yells and similar demonstrations shall not be permitted by the presiding officer who may direct the sergeant-at-arms to remove such offenders from the room.

4.4 Prosecution
Aggravated cases shall be prosecuted on appropriate complaint signed by the presiding officer.

5.0 ENFORCEMENT OF DECORUM

5.1 The Chief of Police or his designee shall be the ex-officio sergeant-at-arms of the City Council. The sergeant-at-arms shall carry out all legal and valid orders and instructions given by the presiding officer for the purpose of maintaining order and decorum in the Council Chamber. Upon instructions from the presiding officer, it shall be the duty of the sergeant-at-arms to remove any disorderly person from the Council Chambers or place the disorderly person under arrest or both.

5.2 As set forth in Government Code Section 54957.9, in the event that any meeting is willfully interrupted by a person or group of persons so as to render the orderly conduct of such meeting unfeasible or impedes the ability of the Council to hold the meeting, and order cannot be restored by the removal of individuals who are willfully interrupting the meeting, the presiding officer may order the meeting room cleared and continue in session. Only matters appearing on the agenda may be considered in such a session. Duly accredited representatives of the press or other news media, except those participating in the disturbance, shall be allowed to attend any session held pursuant to this Section. Nothing in this Section shall prohibit the City Council from establishing a procedure for readmitting an individual or individuals not responsible for willfully disturbing the orderly conduct of the meeting.

Agenda Item No.1
2021 Employee of the Year - Cesar Zarate
(CC Mtg 1/10/2022 )
No Documentation for this Agenda Item –
2021 Employee of the Year - Cesar Zarate
Agenda Item No. 2
Introduction of Deputy City Manager - Kristin
Eriksson
(CC Mtg 1/10/2022 )
No Documentation for this Agenda Item –
Introduction of Deputy City Manager - Kristin Eriksson
Parks & Recreation
Department
Holiday of Lights
Decorating Contest Awards
GROVERBEACH.ORG
Kathy Petker, Parks & Recreation Director
Madison Ochotorena, Recreation Coordinator
Agenda Item No. 3
Holiday of Lights
GROVERBEACH.ORG
• Business and Residential Categories
• Public Self Nominated Businesses & Houses
• Virtual Nominations Included
• Parks, Recreation & Beautification Commission
Nominations & Winner Selections
Holiday of Lights - MapHub
GROVERBEACH.ORG
Credit-MapHub
GROVERBEACH.ORG
Prizes!
• Business and Residential Categories
• Public Self Nominated
Businesses & Residential
• Parks, Recreation & Beautification
Commission Nominations and Winner
Selections
GROVERBEACH.ORG
Businesses
Burger King
The Spoon Trade
Shell Beach Floral
Fin’s
Red Bee Coffee
Let’s Knit
Stacy Korsgaden Insurance
Proud Pooch
Kautz Chevron
Pizza Fresh
Velocity Tint
SLOCO Data
That’s Amoire
Orcutt Burger
The Learning Center
Nan’s Books
Ben’s Computer Outlet
Second Chances
Town & Coastal Real Estate
Julia’s Juice Bar
A Better Hair Day
GROVERBEACH.ORG
Business Winners!
GROVERBEACH.ORG
Residential
GROVERBEACH.ORG
Holiday of Lights Decorating Contest
GROVERBEACH.ORG

MINUTES

CITY COUNCIL MEETING
MONDAY, DECEMBER 13, 2021
Given public health conditions and consistent with Assembly Bill No. 361, which allows for a deviation of teleconference rules required by the Ralph M. Brown Act, City Council meetings will be held by teleconference only until further notice.

CALL TO ORDER Mayor Lee called the meeting to order on Monday, December 13, 2021, at 6:00 p.m., with all Council Members teleconferencing.

MOMENT OF SILENCE
FLAG SALUTE The flag salute was led by Grover Beach Police Sergeants Ituralde and Rabena.

ROLL CALL
City Council: Council Members Anna Miller, Robert Robert, Daniel Rushing, Mayor Pro Tem Bright and Mayor Jeff Lee were present via video conference.

City Staff: City Manager Matthew Bronson, City Attorney David Hale, City Clerk Wendi Sims, Police Chief John Peters, Community Development Director Bruce Buckingham, Administrative Services Director Deanne Purcell, Public Works Director/City Engineer Greg Ray, Parks & Recreation Program Kathy Petker, and Deputy City Clerk Nicole Retana were also present.

CLOSED SESSION ANNOUNCEMENTS
None

AGENDA REVIEW
Action: Upon unanimous consensus, the Council adopted the agenda with the revision, combining item 3 with item 1 in the Ceremonial Calendar.

CEREMONIAL CALENDAR

1. Proclamations for Commander Limon and Sergeants Ituralde & Rabena – Chief Peters said a few words, and Council Member Robert read the proclamation for Sergeant Rabena, Council Member Robert read the proclamation for Sergeant Ituralde and Mayor Lee read the proclamation for Commander Limon.

ORDER OF THE DAY: Upon consensus of the City Council the Order of the Day was amended to move Item 3. Presentation from Senator Laird’s Office to Retiring Police Officers before Item 2. Holiday Event Update.

3. Presentation from Senator Laird’s Office to Retiring Police Officers – Senator John Laird thanked the retiring Police Officers and gave a brief update regarding information from his office.

ORDER OF THE DAY: At this time, the Order of the Day resumed to the agenda as posted.

Agenda Item No. 4
Minutes: City Council Meeting Page 2
Monday, December 13, 2021

PRESENTATIONS

2. Holiday Event Update - presentation presented by Parks, Recreation Director Petker PUBLIC COMMUNICATIONS The Mayor opened the floor to any member of the public calling into the meeting on the teleconference line (805) 321-6639, for comment on items of interest which were within the jurisdiction of the City Council but were not listed on the agenda. No one responded and the Mayor closed the Public Communications segment for this portion of the meeting.

CONSENT AGENDA
Prior to consideration of the Consent Agenda, Mayor Lee invited public comment on the items under the Consent Agenda. At this time Mayor Lee asked if there was anyone on the teleconference line that wanted to make any public comments. • Jana Nichols
With no further comments Mayor Lee closed public comment.

It was motioned by Mayor Pro Tem Bright and seconded by Council Member Rushing to approve Consent Agenda Item Nos. 4, 5, 6, 7, 8, 9, 10, 11, and 12 as recommended. The motion carried on the following roll call vote:

AYES: Council Members – Miller, Robert, Rushing, Mayor Pro Tem Bright, and Mayor Lee
NOES: Council Members - None.

ABSENT: Council Members - None
ABSTAIN: Council Members - None

4. Treasure’s Report for the Period November 1, through November 30, 2021.

Action: Approved the Treasure’s Report as submitted.

5. Treasure’s Report of the 2017 Streets Bond Account -$15,000,000 (Measure K14:

Grover Beach Street Rehabilitation; Safety Improvement Bond Measure) for the Period of November 1, through November 30, 2021.

Action: Approved the Treasure’s Report as submitted.

6. Minutes of the City Council Meeting on Monday, November 22, 2021.

Action: Approved minutes as submitted.

7. City Council Meeting Schedule for Calendar Year 2022 Action: Adopted the proposed City Council meeting schedule for calendar year 2022.

8. Resolution Updating Records Retention Schedules
Action: Adopted Resolution No. 21-36 to update the Records Retention Schedules.

Resolution No. 21-36: A Resolution of the City Council of the City of Grover Beach, California, Adopting a Records Retention Schedule Authorizing Destruction of Certain City Records and Rescinding Resolution No. 92-17.

Minutes: City Council Meeting Page 3
Monday, December 13, 2021

9. Authorization to Establish the Job Classification of Management Analyst/Police Department, Set the Salary Schedule and Approve a Side Letter Agreement to the Police Management and Confidential Employee Group’s Memorandum of Understanding
Action: Adopted Resolution No. 21-37 to amend the Classification and Compensation Plan to add the job classification of the Management Analyst/Police Department, set the salary schedule and approved a side letter agreement to the Police Management and Confidential Employee Group’s Memorandum of Understanding.

Resolution NO. 21-37: A Resolution of the City Council of the City of Grover Beach, California, Amending the Classification and Compensation Plan to Establish the Job Classification of Management Analyst/Police Department, Set the Salary Schedule and Approve a Side Letter Agreement to the Police Management and Confidential Employee Group’s Memorandum of Understanding.

10. Award of Construction Contract for 2021 Water Main Project, CIP 4004 Action: Awarded the construction contract for the 2021 Water Line Project, CIP 4004 to R Baker, Inc., in the amount of $404,175.50 for the Base Bid; authorized the City Manager to sign and affirm construction change orders up to an aggregate of $40,417.50; authorized an encumbrance of $91,050 from the Water Fund; and authorized the Mayor to execute the contract on behalf of the City.

11. Commercial Cannabis Tax Rates Amendments
Action: Adopted Resolution No. 21-38 to amend the Commercial Cannabis Tax Rates affecting distribution, manufacturing and testing businesses.

Resolution No. 21-38: A Resolution of the City Council of the City of Grover Beach, California Reducing Commercial Cannabis Tax Rates Assessed for Permitted Commercial Cannabis Distribution, Manufacturing, and Testing Businesses Operating in the City.

12. COVID-19 Response Update
Action: Received an update on the countywide and City response to the COVID-19 pandemic.

PUBLIC HEARINGS

13. Second Reading and Adoption of an Ordinance Adding Chapter 4.1 of Article V, Mandatory Organic Waste Disposal Reduction, to the City of Grover Beach Municipal Code to Comply with the Requirements of SB 1383 Mayor Lee read the title to the foregoing item, declared the Public Hearing open, and deferred to staff for a report.

Public Works Director/City Engineer Ray presented the staff report via PowerPoint presentation, he reviewed the Mandatory Organic Waste Disposal Reduction.

Mayor Lee invited public comment on this matter. No public comments were received at this time and the Mayor closed the Public Hearing.

Minutes: City Council Meeting Page 4
Monday, December 13, 2021
Action: It was moved by Council Member Miller and seconded by Council Member Robert to conducted a second reading and adoption of the Ordinance No. 21-04 adding Chapter

4.1 of Article V, Mandatory Organic Waste Disposal Reduction, to the Grover Beach Municipal Code in order to comply with the requirements of Senate Bill 1383 (SB 1383).

The motion carried on the following roll call vote:

AYES: Council Members – Miller, Robert, Rushing, Mayor Pro Tem Bright and Mayor Lee
NOES: Council Members – None
ABSENT: Council Members – None
ABSTAIN: Council Members – None
Ordinance No. 21-04: An Ordinance of the City Council of the City of Grover Beach, California, Adding Chapter 4.1 of Article V, Mandatory Organic Waste Disposal Reduction.

14. 2020 Urban Water Management Plan and Water Shortage Contingency Plan Updates Mayor Lee read the title to the foregoing item, declared the Public Hearing open, and deferred to staff for a report.

Public Works Director/City Engineer Ray presented the staff report via PowerPoint presentation, he reviewed the 2020 Urban Water Plan.

Mayor Lee invited public comment on this matter. No public comments were received at this time and the Mayor closed the Public Hearing.

Action: It was moved by Council Member Robert and seconded by Mayor Pro Tem Bright to Approve Resolution No. 21-39 to adopt the 2020 Urban Water Management Plan and updated Water Shortage Contingency Plan. The motion carried on the following roll call vote:

AYES: Council Members – Miller, Robert, Rushing, Mayor Pro Tem Bright and Mayor Lee
NOES: Council Members – None
ABSENT: Council Members – None
ABSTAIN: Council Members – None
Resolution No. 21-39 A Resolution of the City Council of the City of Grover Beach, California, Adopting the 2020 Urban Water Management Plan and 2020 Water Shortage Contingency Plan and Authorizing submittal to the Department of Water Resources.

15. Measure K-14 Street Repair Bond Issuance
Mayor Lee read the title to the foregoing item, declared the Public Hearing open, and deferred to staff for a report.

Administrative Services Director Purcell presented the staff report via PowerPoint presentation, she reviewed the Measure K-14 Street Repair Bond Issuance.

Minutes: City Council Meeting Page 5
Monday, December 13, 2021
Mayor Lee invited public comment on this matter. No public comments were received at this time and the Mayor closed the Public Hearing.

Action: It was moved by Council Member Mayor Pro Tem Bright and seconded by Council Member Miller to adopt Resolution No. 21-40 authorizing the issuance and sale of not to exceed $10,000,000 principal amount of General Obligation Bonds for Measure K-14 street repairs and authorizes actions related to the issuance of the General Obligation Bonds. The motion carried on the following roll call vote:

AYES: Council Members – Miller, Robert, Rushing, Mayor Pro Tem Bright and Mayor Lee
NOES: Council Members – None
ABSENT: Council Members – None
ABSTAIN: Council Members – None
Resolution No. 21-40: A Resolution of the City Council of the City of Grover Beach, California, Authorizing the Issuance and Sale of Not to Exceed $10,000,000 Principal Amount of General Obligation Bonds to Finance Improvements to Streets, and Authorizing Actions Related Thereto Measure K-14 Bond Issuance.

RECESS: Mayor Lee requested a 10-minute break, upon consensus of the City Council, the meeting recessed at 7:34 p.m.

RECONVENE: At 7:45 p.m. the meeting reconvened with all members of Council present.

At this time, Council Member Miller recused herself from item 16 due to her relationship with People’s Self Housing.

16. Development Application 21-20 for a Use Permit, Development Permit, and Lot Merger and Associated Disposition and Development Agreement to Construct a 53 Unit Affordable Housing Project (Applicant: People’s Self Help and Housing Authority of San Luis Obispo)
Mayor Lee read the title to the foregoing item, declared the Public Hearing open, and deferred to staff for a report.

Community Development Director Buckingham presented the staff report via PowerPoint presentation. He also, introduced Scott Smith, Housing Authority of San Luis Obispo (HASLO); Kenneth Trigueiro, People’s Self Help Housing (PSHH) and Murray Duncan, Architect who spoke on the proposed project.

Mayor Lee invited public comment on this matter.
• Janna Nichols
• Krista Jeffries
No further public comments were received at this time and the Mayor closed the Public Hearing.

Minutes: City Council Meeting Page 6
Monday, December 13, 2021
Action: It was moved by Mayor Pro Tem Bright and seconded by Council Member Robert to Approve Development Application 21-20 for a Use Permit, Development Permit and Lot Merger and Associated Disposition and Development Agreement for 53-unit affordable housing project with the modification to Condition G-1. The motion carried on the following roll call vote:

AYES: Council Members – Robert, Rushing, Mayor Pro Tem Bright and Mayor Lee NOES: Council Members – None
ABSENT: Council Members – None
ABSTAIN: Council Members - Miller
Resolution No. 21-41: A Resolution of the City Council of the City of Grover Beach, California, Approving Development Application 21-20 for a Use Permit, Development Permit, and Lot Merger. Including a State Density Bonus and Associated Disposition and Development Agreement Located at 164 South 13th Street and 1206 West Grand Avenue. (Applicant: People’s Self Help Housing & Housing Authority of San Luis Obispo) At 8:30 p.m. Council Member Miller returned to the meeting.

REGULAR BUSINESS

17. Appointment of Mayor Pro Tem
Mayor Lee read the title to the foregoing item and deferred to staff for a report.

City Attorney Hale presented brief overview of the appointment process for the Mayor Pro Tem position.

Mayor Lee invited public comment on this matter. No public comments were received at this time and the mayor Lee closed public comment.

Action: Council Member Bright accepted the appointment by Mayor Lee to serve a oneyear appointment as Mayor Pro Tem for the City of Grover Beach.

PUBLIC COMMUNICATIONS The Mayor opened the floor to any member of the public calling into the meeting on the teleconference line (805) 321-6639, for comment on items of interest which were within the jurisdiction of the City Council but were not listed on the agenda. No one was on the line for public comment.

COUNCIL COMMITTEE REPORTS
Mayor Pro Tem Bright reported on the SLO Council of Governments (SLOCOG) / Regional Transit Authority (SLORTA) and the Integrated Waste Management Authority (IWMA) meetings.

Mayor Lee reported on the South SLO County Sanitation District (SSLOCSD) meeting.

Minutes: City Council Meeting Page 7
Monday, December 13, 2021
LEAGUE OF CALIFORNIA CITES – POLICY COMMITTEE REPORTS AND OTHER LEAGUE

MATTERS
None.

COUNCIL COMMUNICATIONS
Council Member Miller reported a free Covid Vaccine Clinic for Children ages 5-11 on December 15th, from 3 p.m. to 6 p.m. at Grover Beach Elementary in the library. For additional information visit www.recoverslo.org/vaccines or (805) 781-5500.

Council Member Rushing wished everyone Happy Holidays and to stay safe, stay dry and stay awesome Grover Beach.

Mayor Pro Tem Bright wished everyone Happy & Safe Holidays.

Mayor Lee stated he was honored to judge the Avila Beach Dog Parade, participate at New Tech’s Political Salon Night and attended the Amp Surf ISA competition Closing Dinner/Beach Bonfire.

He also thanked the ISA for presenting the City of Grover Beach with a gracious plaque. He then mentioned that the local private sector Child Care Providers are having capacity issues and the homelessness report that was just released and the continued help from homeless services and organizations.

CITY ATTORNEY’S REPORTS AND COMMENTS
None.

CITY MANAGER'S REPORTS AND COMMENTS
City Manager Bronson discussed Coffee with Council on December 11th with Mayor Pro Tem Bright and Council Member Robert. He discussed the major storm coming and that the Public Works Department and other first responders are monitoring the storm and will respond accordingly. He also thanked City staff for the work on staff reports that allow the City Council to make informed decisions. Lastly, he wished everyone a Happy, Healthy and Safe Holiday season and the next regular Council meeting on Monday, January 10, 2022.

CLOSED SESSION
None.

Minutes: City Council Meeting Page 8
Monday, December 13, 2021

ADJOURNMENT
There being no further business to come before the City Council, Mayor Lee adjourned the meeting at 8:51 p.m.
_____________________________

JEFF LEE, MAYOR
Attest:
______________________________

WENDI SIMS, CITY CLERK
(Approved at CC Mtg ______)
Agenda Item No. 5

RECOMMENDATION
Receive and file the FY 2020-21 Annual Comprehensive Financial Report.

BACKGROUND
The Annual Comprehensive Financial Report (ACFR) is a set of financial statements comprising all financial activity of the City that has been reviewed by an independent auditor contracted by the Council using accepted standards and report formats to ensure the accuracy of the City’s financial practices and overall financial condition. The Government Finance Officers Association (GFOA) best practices recommend obtaining new auditors every five years. On March 8, 2021, Council authorized staff to enter into a three-year agreement with Glenn Burdette for independent financial audit services. Glenn Burdette conducted the audit, including financial statements, internal documents and controls for the fiscal year ending June 30, 2021.

The goal of the independent audit is to provide reasonable assurance that the financial statements of the City are free of material misstatements, whether due to fraud or error. The independent audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall financial statement presentation.

The Independent Auditors’ Report presented on page eight of the ACFR issued a clean and unmodified opinion, meaning the financial statements and other information reported in the ACFR present fairly in all material respects the financial position of the City as of June 30, 2021. In accordance with Government Auditing Standards, Glenn Burdette also issued a report on internal controls over financial reporting and did not identify any deficiencies in internal controls that would be considered a material weakness.

Financial Highlights
Key financial highlights for FY 2020-21 identified in the audit include:
• The Council adopted a five-year Capital Improvements Program (CIP) in June 2021 that identifies 22 projects for the next fiscal year 2022 with a budget of nearly $13.0 million. The largest funded category is streets and storm drains which includes several Measure K-14 funded street projects with a projected cost of $3.9 million, along with funding for major street projects of $1.7 million.

Staff Report: FY 2020-21 Annual Comprehensive Financial Report Page 3 January 10, 2022
• The City is in the sixth year of the multi-year Local Street Rehabilitation project funded by Measure K-14 which provides up to $48 million in bond funds for repair of residential streets over the next 25 years. Measure K-14 bond funds are solely used for this purpose with a separate category shown annually in the ACFR. The City has completed 11 street projects with Measure K-14 funds. As of June 30, 2021, total expenditures for street projects are $24.0 million; approximately $2.9 million of the total expenditures was spent on street projects in FY 2020-21.
• In FY 2020-21, the City completed CIP Project 4267 – Upgrade of 2”&4” Water Mains, using the awarded 2017 Community Development Block Grant, with a total expenditure for the project of $983,000.
• Measure F-20, a 1 percent transaction and use tax, was approved by voters in November 2020 and became effective in April 2021. Sales tax revenue from this new measure of $570,000 was reported for the last quarter of FY 2020-21 (April, May & June) and $2.2 million is projected for FY 2021-22.
• General Fund revenues increased by 10.1% or $1.3 million when compared to the previous fiscal year. This result is primarily attributable to the City’s tax revenues. Cannabis tax revenues generated $2.4 million in the current FY 2020-21 compared to $1.9 million in the previous year. Sales tax revenue reported an increase of approximately $1.0 million in part due to the new Measure F-20 sales tax added with the positive performance in the cannabis industry.
• The City’s General Fund revenue and other financing sources (uses) exceeded expenditures by $782,000 in fiscal year 2021. This positive outcome was primarily due to tax revenues (cannabis and sales tax) coming in higher than anticipated as mentioned above, lower training and education cost, due to pandemic restrictions on travel, and capital projects that were still in process and not completed by the end of the fiscal year. • The City’s General Fund continues to maintain a healthy reserve level of 32% of operating expenditures compared to the Council’s reserve goal of 25%.

Overall, the audit affirmed that the City ended FY 2020-21 in a positive financial position with higher than budgeted revenues and lower than budgeted expenditures leading to a level of reserves above the Council’s policy goal in the General Fund. Staff would still recommend caution with these reserves since most of these higher revenues were generated by the new cannabis industry that is continuing to evolve. Staff is presenting the FY 2021-22 mid-year financial report to the Council on February 14 along with the updated five-year General Fund financial forecast.

A representative from Glenn Burdette will be in attendance at the meeting to answer any questions regarding the report.

FISCAL IMPACT
The recommended action has no fiscal impacts.

Staff Report: FY 2020-21 Annual Comprehensive Financial Report Page 3 January 10, 2022

ALTERNATIVES
The Council has the following alternatives to consider:

1. Receive and file the FY 2020-21 Annual Comprehensive Financial Report; or

2. Provide alternate direction to staff.

PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act.

ATTACHMENTS

1. FY 2020-21 Annual Comprehensive Financial Report

2. City of Grover Beach External Communication Letter
Annual Comprehensive
Financial Report
For the Fiscal Year Ended June 30, 2021
Attachment 1
This page intentionally left blank.

CITY OF GROVER BEACH,

CALIFORNIA

ANNUAL COMPREHENSIVE

FINANCIAL REPORT
For the Fiscal Year Ended
June 30, 2021
Prepared by
Department of Administrative Services
Presented by
Deanne Purcell, Director of Administrative Services

CITY OF GROVER BEACH
Annual Comprehensive Financial Report
Table of Contents
i

INTRODUCTORY SECTION
Letter of Transmittal ..............................................................................................................................................1 Organization of City Government ..........................................................................................................................6 Directory of City Officials........................................................................................................................................7

FINANCIAL SECTION
Independent Auditors’ Report...............................................................................................................................8 Management’s Discussion and Analysis...............................................................................................................10 Basic Financial Statements
Government-Wide Financial Statements:

Statement of Net Position.......................................................................................................................24 Statement of Activities ...........................................................................................................................25 Fund Financial Statements:

Governmental Funds:

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

Statement of Net Position ..................................................................................................................31 Statement of Revenues, Expenses, and Changes in Net Position ......................................................32 Statement of Cash Flows....................................................................................................................33 Fiduciary Funds:

Statement of Fiduciary Net Position...................................................................................................35 Statement of Changes in Fiduciary Net Position ................................................................................36 Notes to the Basic Financial Statements.......................................................................................................37 Required Supplemental Information Section
Note to the Required Supplemental Information................................................................................................70 Budgetary Comparison Schedule – General Fund................................................................................................71 Budgetary Comparison Schedule – Street Rehabilitation and Repair Fund.........................................................72 Budgetary Comparison Schedule – Home Fund...................................................................................................73 Schedule of Proportionate Share of Net Pension Liability...................................................................................74

CITY OF GROVER BEACH
Annual Comprehensive Financial Report
Table of Contents
ii
Schedule of Pension Contributions......................................................................................................................78 Supplemental Information Section
Explanation of Funds............................................................................................................................................82 Combining Balance Sheet Nonmajor Governmental Funds..........................................................................84 Combining Statement of Revenues, Expenditures, and Change in Fund Balances – Nonmajor Governmental Funds.........................................................................................................88 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget to Actual – Nonmajor Governmental Funds:

Gas Tax Fund ...........................................................................................................................................92 Gas Tax RMRA Fund ................................................................................................................................93 Public Safety Grants Fund .......................................................................................................................94 Park Construction Fund...........................................................................................................................95 Transportation Impact Fees Fund ...........................................................................................................96 Law Enforcement Impact Fees Fund.......................................................................................................97 Administrative Impact Fees Fund............................................................................................................98 Fire Impact Fees Fund .............................................................................................................................99 Storm Water Impact Fees Fund ............................................................................................................100 Wastewater Impact Fees Fund..............................................................................................................101 Parks Facilities Impact Fees Fund..........................................................................................................102 Recreation Facilities Impact Fees Fund.................................................................................................103 Water Impact Fees Fund .......................................................................................................................104 State Mandated ADA Fund....................................................................................................................105 Subsidized Senior Transportation Fund ................................................................................................106 Local Transportation Fund ....................................................................................................................107 CDBG Non-Entitlement Fund……………………………………………………………………………………………………………108 Underground Utilities Fund...................................................................................................................109 Capital Projects Fund……………………………………………………………………………………………………………………….110 Street Improvements Fund ...................................................................................................................111 Combining Statement of Fiduciary Net Position – Private Purpose Trust Funds........................................112 Combining Statement of Changes in Fiduciary Net Position – Private Purpose Trust Funds......................113 Combining Statement of Fiduciary Net Position – Custodial Funds............................................................114 Combining Statement of Changes in Fiduciary Net Position – Custodial Funds..........................................115

CITY OF GROVER BEACH
Annual Comprehensive Financial Report
Table of Contents
iii
Schedule of Debt Service Coverage………………………………………………………………………………………………………..116 STATISTICAL SECTION (Unaudited)
Explanation of Statistical Section .......................................................................................................................117 Financial Trends Information:

Net Position by Component.........................................................................................................................118 Changes in Net Position...............................................................................................................................120 Fund Balances of Governmental Funds.......................................................................................................124 Changes in Fund Balances of Governmental Funds.....................................................................................126 Revenue Capacity Information:

Tax Revenue by Source – General Fund ......................................................................................................128 Net Taxable Assessed Value History............................................................................................................129 Assessed Value of Taxable Property............................................................................................................130 Direct and Overlapping Property Tax Rates ................................................................................................132 Principal Property Taxpayers.......................................................................................................................134 Property Tax Levies and Collections............................................................................................................136 Direct and Overlapping Sales Tax Rates ......................................................................................................137 Taxable Sales By Category ...........................................................................................................................138 Debt Capacity Information:

Ratios of Outstanding Debt by Type............................................................................................................140 Ratios of General Bonded Debt Outstanding ..............................................................................................141 Direct and Overlapping Governmental Activities Debt ...............................................................................142 Legal Debt Margin........................................................................................................................................143 Demographic and Economic Information:

Demographics and Economic Statistics.......................................................................................................144 Full-Time Equivalent Government Employees by Function ........................................................................145 Operating Indicators by Function/Program.................................................................................................146 Capital Asset Statistics by Function/Program..............................................................................................148

COMPLIANCE AND INTERNAL CONTROL SECTION
Independent Auditors’ 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 ...........................................................................................................................................................150

INTRODUCTORY

SECTION
• Letter of Transmittal
• Organization of City Government
• Directory of City Officials
Mattlieui Bronson
City Mai'iager
City of Grover Beach
Mayor Jeff Lee Mayor Pi-o Tein Kareii Briglit
CouncilMemberAnnaMiller';Coui'icif MeinLier Robei't Robert, Council Member Dai-iiel Rusliing Deceinber 13, 2021
To the Honorable Mayor, Members of tlie City Council and Citizens of tlie City of Grover Beach, We are pleased to present t)ie City of Grover Beacli's Annual Compreliensive Financial Repoit (ACFR) for tlie fiscal year ended June 30, 2021. Tlie City follows a policy of preparing a complete set of financial statements in conformity with accorinting principles generally accepted in tlie United States of Ainerica after tlie end of eacli fiscal year. Tliese financial stateinents are audited by a licensed ceitified public accounting filln. Tlie financial statement audit lias been completed, and we liereby issue tlie Annual Compreliensive Financial Report of the City of Grover Beacli for tlie fiscal year ending June 30, 2021.

Tliis repoit consists of inanagement's representations conceianing the finances of tlie City of Grover Beacli.

Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in tliis repoit. To provide a reasonable basis for making these representations, management of tl'ie City of Grover Beacli lias established a compreliensive internal control 'framework tliat is designed botli to protect the City's assets fi'om loss, tlieft, or misrise and to communicate sufficient reliable information for the City of Grover Beacli's financial statements to be in confori'nity with accormting principles generally accepted in tlie United States of America. Because tlie cost of internal controls sliould not outweigli their benefits, tlie City of Grover Beacli's compreliensive framework of internal controls lias been designed to provide reasonable ratlier tlian absolute assurance tliat tlie financial statements will be free from material misstatement. As management, we asseit tliat, to tlie best of orir knowledge and belief, tliis financial report is complete and reliable in all material respects.

Tlie City of Grover Beacli's financial statements liave been audited by Glenn Burdette, a licensed certified public accounting firi'n. Tlie goal of tlie independent audit was to provide reasonable assurance tliat tlie financial statements of tlie City of Grover Beacli for tlie fiscal year ended June 30, 2021, are free of material misstatement. Tlie independent audit involved examining, on a test basis, evidence suppoiting amounts and disclosures in tlie financial statements; assessing tlie accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. Tlie independent auditing firm concluded, based upon the audit, tliat tliere was a reasonable basis for rendering an ui'u'nodified opinion tliat tlie City of Grover Beacl'i's financial statements for tlie fiscal year ended June 30, 2021, are fairly presented in confori'nity witli accounting principles generally accepted in tlie United States of America. Tlie independent auditors' repoit is presented as tlie first component of tlie financial section of tliis repoit.

Tliis repoit contains financial inforination and data using the new financial repoiting forinat establis)ied for governments by the Goveriunental Accounting Standards Board (GASB). The GASB sets accounting and financial repoiting standards for governments in tlie United States of Ainerica. The financial repoiting standards require tliat management provide a narrative introduction, overview, and analysis to accompany 154South Eighth Street + Orover Beacli, California 93433 // www.grovei-beacli.oig AdtninistrativeServices/Water (805)473-45504>CityCouncil/City Manager (805) 473-4567 // City Clerk (805) 473-4568 CotnununityDevelopment - Building,Planning& Economic Development(805) 473-4520// Human Resorirces (805) 473-4564 Parks&Recreation (805) 473-4580 o>Police/Non-EmeWency (805)473-4511<*PublicWorks(805)473-4530 2 the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City of Grover Beach’s MD&A can be found immediately following the report of the independent auditors.

PROFILE OF THE CITY AND ITS OPERATIONS
The City of Grover Beach was incorporated in 1959 and is located on the Central Coast of California about midway between San Francisco and Los Angeles. The city is located in San Luis Obispo County, which is visited annually by a substantial number of tourists seeking to enjoy the area’s moderate climate, beautiful ocean views and sunsets, fine restaurants, and the relaxing atmosphere unique to coastal communities. The city has a population of 13,459 persons and about 55 percent of the city’s properties are residential.

The City operates under a council-manager form of government. Policy making and legislative authority are vested in the City Council consisting of the Mayor and four Council Members elected at large. The Council is responsible, among other matters, for passing ordinances, adopting the City budget, appointing committees, and hiring the City Manager and City Attorney. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for appointing other employees, and otherwise managing daily operations of the City.

The City provides a full range of municipal services including police protection, construction and maintenance of City streets, sanitary services, water system, storm drains, bridges and other infrastructure assets, and park maintenance, and community recreation activities. In terms of business type activities, the City provides water, wastewater, and storm water collection services through operation of its utility enterprises. Fire protection is provided through the Five Cities Fire Authority, Joint Powers Agency.

The City’s annual budget serves as the foundation for the City of Grover Beach’s financial planning and control system. All departments of the City submit requests for appropriations to the City Manager each fiscal year. The City Manager uses these requests as a starting point for developing a proposed budget which is presented to the City Council each fiscal year. The Council holds a public hearing on the proposed budget and then ultimately adopts a formal budget. The budget is adopted by fund, function, department, and object. The Council periodically reviews during the fiscal year the City’s actual financial activity in relationship to the original budget, and as necessary amends the original budget to reflect changing conditions.

Budget to actual comparisons are provided in this report for each governmental fund for which an appropriated annual budget has been adopted. The General Fund’s comparison is presented as required supplementary information in a separate section of this report immediately following the notes to basic financial statements. For the City’s other governmental-type funds, budget to actual comparison schedules are presented as optional information in the section of this report containing combining financial statements and individual fund schedules.

FACTORS AFFECTING FINANCIAL CONDITION
The information presented in the basic financial statements is perhaps best understood when it is considered in relationship to the City’s specific environment and the City’s plans. 3 Grover Beach Economy
The City of Grover Beach covers 2.31 square miles and is located along the beautiful Central Coast of California, 92 miles north of Santa Barbara and 150 miles south of Monterey. Grover Beach shares borders with Pismo Beach and Arroyo Grande and is just 20 minutes south of San Luis Obispo, home of Cal Poly State University. Grover Beach provides for a unique quality of life for over 13,000 residents and draws tourists with its moderate coastal climate and diverse recreational opportunities. Activities include weekly summer concert series, hiking, riding, and jogging along the white sandy beaches, dunes and sea cliffs, kayaking, fishing, clamming, surfing, golfing, horseback riding, wine tasting, and off-road vehicle riding.

The City provides an entrance to California’s only drivable stretch of beach.

Grover Beach is a community-oriented beach town offering a range of housing options with a median home price of $493,700. About 81 percent of the City’s total revenues, applicable to its governmental-type activities, are derived from tax revenues; approximately 37 percent is from local property taxes. Other top revenue generators are sales tax, transient occupancy tax, cannabis tax, and other taxes. There has been substantial progress with enhancing tourism infrastructure with over 400 new hotel rooms in the development planning, including the Grover Beach Lodge project, a unique public-private beachfront hotel located on State property at Pismo State Beach. In addition, the City has adopted a short-term rental (STR) ordinance to regulate and tax STRs which will increase the City’s transient occupancy tax revenues given visitor demand to rent such properties on the coast.

Another area of focus is the commercial cannabis industry where the City has taken the lead in San Luis Obispo County in allowing commercial cannabis businesses in a safe and responsible manner. The City’s favorable economic outlook for the next year and subsequent years of the financial forecast is due in large part to cannabis tax revenue. The first retail storefront opened in May 2018 and currently there are three operating retailers along with manufacturing and other cannabis-related businesses. Cannabis tax revenue for FY 2020-21 was $2.4 million and it is estimated that cannabis tax revenue will be approximately $2.45 million in FY 2021-22.

Long-Term Financial Planning
The City expects in fiscal year 2021-22 to complete capital improvement projects totaling more than $13.0 million. Additional projects are planned for subsequent fiscal years. The City will continue its practice of seeking out Federal, State, and Local grants and allocations to provide financing for the City’s capital projects. These projects in fiscal year 2021-22 include continued Street Rehabilitation work, which is being funded primarily by Measure K-14 passed by the citizens in November 2014. The first increment of $5,000,000 in bonds were sold in March 2015. An additional $8,000,000 in bonds were sold in April 2016 and $15,000,000 in December 2017 and staff will ask Council to approve the issuance of $10,000,000 in bonds in FY 2021-22 to continue the street rehabilitation work. To help fund capital projects and general City services, Grover Beach voters approved Measure F-20 in November 2020 which adds a 1% Transactions and Use Tax to the City’s existing 0.5% Transactions and Use Tax approved by voters in 2006. Measure F-20 will generate approximately $2,200,000 annually in general revenues to address community needs.

Cash Resources and Practices
During the fiscal year, almost all the idle cash was invested by the City in the State of California Local 4 Agency Investment Fund (a pooled investment arrangement among California governments). Investment revenue from this investment pool decreased to .33% at the end of fiscal year 2020-21 from .24% in the first quarter of fiscal year 2021-22. The City ended the fiscal year with approximately $28.4 million in cash and investments, which includes the proceeds from the Measure K-14 bond sales. This amount is more than sufficient to enable the City to move forward into the new fiscal year and conduct operations.

Risk Management
The City limits its exposure to losses from unfavorable events, employee injuries, and from the risk of damage to City property by participating with other governments in an insurance pool. Under the arrangement, the risk of loss is not transferred to the pool for the first $50,000 of each workers’ compensation claim and the first $30,000 of each liability claim. Losses above those amounts are covered by insurance provided by the insurance pool and its purchased excess insurance coverage.

Long-Term Debt Administration
The City’s enterprises issued water revenue bonds in 2020 in the amount of approximately $4.4 million, with debt service payments due each March and September, beginning in September 2020 and funded by utility rates. Debt currently is held by the Successor Agency in the amount of $3.0 million. Debt service payments are due on this obligation each February and August, and all payments have been made in a timely manner. With the sale of General Obligation Bonds approved by Measure K-14, the City’s governmental activities now have issued $28 million in long-term debt as of June 30, 2021.

Pension Benefits
The City directly participates in the Public Employees’ Retirement System (PERS) of the State of California for all employees. The City funds each fiscal year’s required contribution to the miscellaneous and public safety plans as determined by PERS based upon actuarial information. Additional information about the plan is included in the notes to basic financial statements.

Challenges for Fiscal Year 2022
In fiscal year 2021-22, there are continued near term fiscal uncertainties for the City to monitor. The worldwide COVID-19 pandemic that started at the beginning of the year 2020 continues to create a global health crisis though the advent of vaccinations has reduced the impacts of COVID-19 to local communities including Grover Beach. Other uncertainties include future revenues in the cannabis industry given the evolving nature of the industry, continued extent of an untaxed and unpermitted illicit market, and additional competition with cannabis businesses in nearby cities such as San Luis Obispo. Additional challenges include deferred maintenance needs in the City’s infrastructure particularly City buildings and facilities along with CalPERS pension costs. The City is in relatively better shape than other cities with a funded ratio of 72% and a $13.9 million unfunded pension liability, which is relatively smaller than other communities on a per capita basis. The City currently pays its pension expenditures on an annual basis but given the extent of pension costs, the Council used one-time reserves in fiscal year 2020-21 to help pay down a portion of the City’s unfunded liabilities in the amount of $500,000. The one-time pay down of pension costs will save the City an estimated $850,000 in lower pension costs over the next 16 years.

Staff Contributions
The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Administrative Services Department and City Manager's Office. We would like to express our appreciation to all members of the departments who assisted and contributed to the preparation of this report. Lastly, we must credit the City Council for their continued support for maintaining the highest standards of professionalism in the management of the City of Grover Beach's financial affairs.

Respectfully submitted,
1hvvvfecm
Deanne Purcell
Administrative Services Director
Matthew Bronson
City Manager
5 6

ORGANIZATIONAL STRUCTURE
Community of Grover Beach
City Council
City Manager
City
Management
Administrative
Services
Police Community
Development
Public Works Parks and
Recreation
7 DIRECTORY OF CITY OFFICIALS

ELECTED OFFICIALS
Mayor..................................................................................................................................Jeff Lee Mayor Pro Tem ........................................................................................................... Karen Bright Council Member........................................................................................................... Anna Miller Council Member....................................................................................................... Robert Robert Council Member...................................................................................................... Daniel Rushing City Clerk...................................................................................................................... Wendi Sims

EXECUTIVE MANAGEMENT
City Manager...................................................................................................... Matthew Bronson Administrative Services Director.............................................................................Deanne Purcell Community Development Director................................................................... Bruce Buckingham Parks and Recreation Director ....................................................................................Kathy Petker Police Chief ...................................................................................................................John Peters Public Works Director ................................................................................................. Gregory Ray

FINANCIAL

SECTION
• Independent Auditor’s Report
• Management’s Discussion and Analysis
• Basic Financial Statements (including
Notes)
• Required Supplemental Information
• Supplemental Information
Independent Auditors’ Report
Honorable Mayor and City Council
City of Grover Beach
Grover Beach, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Grover Beach, California (the City), as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

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

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.

The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Grover Beach, California, as of June 30, 2021, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended, in accordance with accounting principles generally accepted in the United States of America. 8 9
Honorable Mayor and City Council
City of Grover Beach

Page 2 ends

Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that management's discussion and analysis, budgetary comparison schedules – General and Major Special Revenue Funds, the schedules of proportionate share of net pension liability and related ratios, and the schedules of pension contributions, identified in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of the financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and schedules, schedule of debt service coverage and statistical section, are presented for purposes of additional analysis and are not a required part of the basic financial statements.

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

The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 13, 2021, 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 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.

Glenn Burdette Attest Corporation
San Luis Obispo, California
December 13, 2021

MANAGEMENT’S

DISCUSSION AND

ANALYSIS

CITY OF GROVER BEACH
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2021
10 The management’s discussion and analysis of the City of Grover Beach presents a narrative overview and analysis of the City’s financial activities for the fiscal year ended June 30, 2021. City management encourages readers to consider the information presented here in conjunction with the accompanying transmittal letter located in the introductory section and the City's financial statements, which follow this section.

FINANCIAL HIGHLIGHTS
Key financial highlights for the fiscal year ended June 30, 2021, are as follows:
• The Council adopted a five-year Capital Improvements Program (CIP) in June 2021 that identifies 22 projects for the next fiscal year 2022 with a budget of nearly $13.0 million. The largest funded category is streets and storm drains which includes several Measure K-14 funded street projects with a projected cost of $3.9 million, along with funding for major street projects of $1.7 million. • The City is in the sixth year of the multi-year Local Street Rehabilitation project funded by Measure K-14 which provides up to $48 million in bond funds for repair of residential streets over the next 25 years. The City has completed eleven street projects with Measure K-14 funds.

As of June 30, 2021, total expenditures for street projects are $24.0 million; approximately $2.9 million of the total expenditures was spent on street projects in FY 2020-21. • In FY 2020-21, the City completed CIP Project 4267 - Upgrade of 2” and 4” Water Mains, using the awarded 2017 Community Development Block Grant, with total expended for the project of $983,000.
• Measure F-20, a 1 percent transaction and use tax, was approved by voters in November 2020 and became effective in April 2021. Sales tax revenue from this new measure of $570,000 was reported for the last quarter of FY 2020-21 (April, May & June) and $2.2 million is projected for FY 2021-22.
• General Fund revenuesincreased by 10.1% or $1.3 million when compared to the previous fiscal year. This result is primarily attributable to the City’s tax revenues. Cannabis tax revenues generated $2.4 million in the current FY 2020-21 compared to $1.9 million in the previous year.

Sales tax revenue reported an increase of approximately $1.0 million in part due to the new Measure F-20 sales tax added with the positive performance in the cannabis industry. • The City’s General Fund revenue and other financing sources (uses) exceeded expenditures by $782,000 in fiscal year 2021. This positive outcome was primarily due to tax revenues (cannabis and sales tax) coming in higher than anticipated as mentioned above, lower training and education cost, due to pandemic restrictions on travel, and capital projects that were still in process and not completed by the end of the fiscal year.

CITY OF GROVER BEACH
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2021
11 OVERVIEW OF THE FINANCIAL STATEMENTS
The financial statements presented herein include all the activities of the City of Grover Beach using the integrated approach as prescribed by GASB Statement No. 34. This discussion and analysis are intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise of three components: (1) government-wide financial statements; (2) fund financial statements; and (3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. • The government-wide financial statements provide both long-term and short-term information about the City’s overall financial status.
• The fund financial statements focus on individual parts of the City government, reporting the City’s operations in more detail than the government-wide statements. - The governmental funds statements tell how government services, such as general government, public safety, community development, parks and recreation and public works were financed in the short-term as well as what remains for future spending.
- Proprietary fund statements offer short and long-term financial information about the activities the government operates like businesses, such as the City’s water and wastewater systems.

The basic financial statements also include notes that provide additional information essential to understanding the data contained in the government-wide and fund financial statements.

Figure A-1 on the next page summarizes the major features of the City's financial statements, including the portion of the City government they cover and the types of information they contain.

The remainder of this overview section of management’s discussion and analysis explains the structure and contents of each of the statements.

CITY OF GROVER BEACH
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2021
12 Figure A-1
Major Features of City of Grover Beach’s Government-Wide and Fund Financial Statements
Fund Statements
Government-wide
Statements
Governmental Funds Proprietary Funds
Scope Entire City
government
The activities of the
City that are not
proprietary or
fiduciary, such as
police, fire, and parks
Activities the City
operates similar to
private businesses: the
water and wastewater
systems
Required financial
statements
• Statement of net
position
• Balance sheet • Statement of net
position
• Statement of
activities
• Statement of
revenues,
expenditures, and
changes in fund
balances
• Statement of
revenues expenses,
and changes in net
position
• Statement of cash
flows
Accounting basis
and measurement
focus
Accrual accounting
and economic
resources focus
Modified accrual
accounting and
current financial
resources focus
Accrual accounting and
economic resources
focus
Type of
asset/liability
information
All assets and
liabilities, both
financial and capital,
and short-term and
long-term
Only assets expected
to be used up and
liabilities that come
due during the year or
soon thereafter; no
capital assets included
All assets and liabilities,
both financial and
capital, and short-term
and long-term
Type of
inflow/outflow
information
All revenues and
expenses during year,
regardless of when
cash is received or
paid
Revenues for which
cash is received during
or soon after the end
of the year; expenses
when goods or
services have been
received and payment
is due during the year,
or soon thereafter.

All revenues and
expenses during year,
regardless of when cash
is received or paid

CITY OF GROVER BEACH
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2021
13 Government-Wide Financial Statements
The Government-Wide Financial Statements report information about the City as a whole using accounting methods similar to those used by private-sector companies or the accrual basis of accounting. These statements include all assets of the City (including infrastructure) as well as all liabilities (including long-term debt).

The Statement of Net Position presents information on all the City’s assets and liabilities, as well as any deferred outflows or inflows, with the difference between them reported as net position.

Over time, increases or decreases in net position may serve as a useful indicator of whether the overall financial position of the City is improving or deteriorating.

The Statement of Activities includes all the City’s fiscal year’s revenue and expenditures regardless of when cash is received or paid. These government-wide statements report the City’s net position and how the City’s net position has changed during the fiscal year.

Both government-wide statements distinguish the City’s functions that are principally supported by taxes and charges for services (governmental activities) that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities include general government, public safety, community development, public works and parks and recreation. The business-type activities of the City include water, water conservation and wastewater.

Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The fund financial statements include statements for the three categories of activities – governmental, proprietary, and fiduciary. The governmental activities are prepared using the current financial resources measurement focus and the modified accrual basis of accounting. The business-type (proprietary) activities are prepared using the economic resources measurement focus and the accrual basis of accounting.

The fiduciary activities include agency funds, which only report a balance sheet and do not have a measurement focus, and trust funds which include activities of the dissolved Redevelopment Agency.

The fund financial statements provide more detailed information about the City's most significant funds, not the City as a whole. Some funds are required to be established by State law and by bond covenants, however management may establish other funds to help control and manage money for purposes or to show that it is meeting legal responsibilities for using certain taxes, grants, and other money.

The City has three types of fund financial statements:
• Governmental funds – Most of the City's basic services are reported in governmental funds, which focus on how money flows in and out of those funds and the balances left at fiscal yearend that are available for spending. These funds are reported using an accounting method called

CITY OF GROVER BEACH
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2021
14 modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental funds statements provide a detailed short-term view of the City’s general government operations, such as police, public works, community development, and parks and recreation, and the basic services it provides. Governmental funds information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the City's programs. Because this information does not encompass the additional long-term focus of the government-wide statements, reconciliations that explain the relationship (or differences) between governmental funds and the governmental activities follow the governmental funds statements. • Proprietary funds – Services for which the City charges customers a fee are generally reported in proprietary funds. Proprietary fund statements, like the government-wide statements, provide both long and short-term financial information about the activities the City operates like businesses, such as utility services.
• Fiduciary funds – The City’s fiduciary activities are reported in a separate statement of fiduciary net position and statement of changes in fiduciary net position. These activities are excluded from the City’s other financial statements since the City cannot use these assets to finance its operations. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes.

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

Required Supplementary Information
The notes to the basic financial statements are followed by a section of required supplementary information (RSI) that further explains and supports the information in the financial statements.

Other Supplementary Information
In addition to the basic financial statements, accompanying notes and required supplementary information, this report also presents certain other supplementary information including combining fund statements for the City’s non-major special revenue, capital projects and debt service funds, individual budget and actual statements for non-major and major funds and combining statement of net position for fiduciary funds.

CITY OF GROVER BEACH
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2021
15 GOVERNMENT-WIDE FINANCIAL ANALYSIS
Analysis of Net Position
The net position of the City increased $.16 million from $9.52 million to $9.68 million at June 30, 2021.
2020 2021 2020 2021 2020 2021
ASSETS
Current and other assets $ 16,475,045 $ 16,969,699 $ 13,129,787 $ 14,462,371 $ 29,604,832 $ 31,432,070 Net Capital assets 19,525,457 19,737,011 6,415,912 6,866,706 25,941,369 26,603,717 Total assets 36,000,502 36,706,710 19,545,699 21,329,077 55,546,201 58,035,787

DEFERRED OUTFLOWS OF

RESOURCES
Deferred outflows of resource 3,130,037 3,440,109 469,860 490,502 3,599,897 3,930,611 Total deferred outflows of
resources 3,130,037 3,440,109 469,860 490,502 3,599,897 3,930,611

LIABILITIES
Current and other liabilities 2,333,970 5,192,450 665,935 998,260 2,999,905 6,190,710 Long-term liabilities outstanding 39,586,154 39,066,355 5,806,828 6,255,661 45,392,982 45,322,016 Total liabilities 41,920,124 44,258,805 6,472,763 7,253,921 48,392,887 51,512,726

DEFERRED INFLOWS OF

RESOURCES
Deferred Inflows 650,040 402,606 585,659 369,803 1,235,699 772,409 Total deferred inflows of
resources 650,040 402,606 585,659 369,803 1,235,699 772,409

NET POSITION
Net investment in capital assets 19,087,485 19,441,210 6,219,860 * 6,673,989 25,307,345 26,115,199 Restricted 12,464,114 9,082,474 12,464,114 9,082,474
Unrestricted (34,991,224) (33,038,276) 6,737,277 7,521,866 (28,253,947) (25,516,410) $ (3,439,625) $ (4,514,592) $ 12,957,137 $ 14,195,855 $ 9,517,512 $ 9,681,263 * Net investment in capital assets restated for FY 2020 to exclude the water bonds payable that has not been spent yet for capital purposes. Unspent bond proceeds are reported as unrestricted and related portion reported in the same component of net position as the unspent proceeds, and therefore will not have any net effect on any classification of net position.

Total net position
Governmental Activities Business-type Activities Total
The following analysis of governmental and business-type activities provides more detailed information for these changes.

Governmental Activities
• Current and other assets and deferred outflows of resources, in total, increased by $0.8 million. Deferred outflows of resources represent the unamortized portion of changes to the net pension liability, which increased by $0.3 million from the prior fiscal year. Cash

CITY OF GROVER BEACH
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2021
16 and investments increased by $0.5 million which is primarily due to an increase in tax revenues and decrease in expenditures for Measure K-14 projects. • Current and other liabilities increased by $2.8 million from the prior fiscal year. This was mainly due to an increase in accounts payable of $0.8 million and unearned revenue of $1.9 million. The unearned revenue was due to an error in an advanced payment from the State for the new district tax (Measure F-20). This amount will be adjusted each month for the actual revenue and should be zero by the end of FY 2021-22. • Restricted net position, representing amounts that must be used in accordance with external restrictions decreased $3.4 million. The remaining balance of unrestricted net position may be used to meet the City’s ongoing obligations to citizens and creditors.

Net position may serve over time as a useful indicator of a government’s financial position. For FY 2020-21, liabilities and deferred inflows exceeded assets and deferred outflows by $4.5 million.

Business-Type Activities
• Total assets and deferred outflows of resources increased by $1.8 million that is mainly due to increases in cash and investments that can be attributed to water and wastewater rate increases and lower salaries and benefit cost which can be attributed to where Public Works staff time is allocated based on current projects and operating needs. • Net investment in capital assets increased by $0.5 million due to capital asset additions, deletions or adjustments plus unspent bond proceeds and offset by capital related debt.

Additional capital asset information is in the Capital Asset section of this MD&A and in Note 4 to the financial statements.
• Business-type activities use the same accrual basis of accounting as the Proprietary Funds and are used to account for those activities that are supported primarily by user charges to external customers. This includes water, water conservation and wastewater services.

For FY 2020-21, assets and deferred outflows exceeded liabilities and deferred inflows by $14.2 million.

CITY OF GROVER BEACH
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2021
17 Analysis of Statement of Activities
The change in net position for governmental and business-type activities are as follows:
2020 2021 2020 2021 2020 2021

REVENUES
Charges for services $ 1,675,390 $ 1,231,800 $ 5,237,253 $ 5,583,990 $ 6,912,643 $ 6,815,790 Operating Contributions and Grants 2,919,414 1,405,720 2,919,414 1,405,720 Capital Contributions and Grants 1,737,261 639,160 1,737,261 639,160 General revenues:

Property taxes 6,209,369 6,509,477 6,209,369 6,509,477
Other taxes 6,191,702 7,843,083 6,191,702 7,843,083
Other revenues 190,669 36,937 96,634 183,816 287,303 220,753 Total revenues 18,923,805 17,666,177 5,333,887 5,767,806 24,257,692 23,433,983

EXPENSES
Governmental activities:

General Government 3,275,341 4,363,505 3,275,341 4,363,505 Public Safety 7,580,648 7,385,514 7,580,648 7,385,514
Community Development 1,064,355 698,932 1,064,355 698,932 Public Works 7,994,179 5,961,342 7,994,179 5,961,342
Parks and Recreation 517,919 373,201 517,919 373,201
Business-type activities:

Water 2,900,305 3,181,371 2,900,305 3,181,371
Water Conservation 13,278 9,265 13,278 9,265
Wastewater 1,142,702 1,297,102 1,142,702 1,297,102
Total expenses 20,432,442 18,782,494 4,056,285 4,487,738 24,488,727 23,270,232 Change in net position
before transfers (1,508,637) (1,116,317) 1,277,602 1,280,068 (231,035) 163,751 Transfers (650,199) 41,350 650,199 (41,350)
Change in net position (2,158,836) (1,074,967) 1,927,801 1,238,718 (231,035) 163,751 Net position - July 1 (1,280,789) (3,439,625) 11,029,336 12,957,137 9,748,547 9,517,512 Net position - June 30 $(3,439,625) $ (4,514,592) $ 12,957,137 $ 14,195,855 $ 9,517,512 $ 9,681,263 Program revenues:

Governmental Activities Business-type Activities Total

CITY OF GROVER BEACH
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2021
18 Parks and
Recreation
1%
Public Safety
32%
Public Works
26%
Community
Development
3%
Business-Type
Activities
19%
General
Government
19%

EXPENSES BY TYPE
FY 2020-21

CITY OF GROVER BEACH
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2021
19 Governmental Activities
Governmental activities decreased the City’s net position by $1.1 million. Total resources available during the year to finance governmental activities consisted of net position at July 1, 2020 of ($3.4) million, program revenues of $3.3 million, and general revenues of $14.4 million. Total expenses for governmental activities during the fiscal year were $18.8 million.

Key factors are as follows:
• Total revenue decreased by $1.2 million, from $18.9 million in the prior fiscal year to $17.7 million in the current fiscal year. This decrease is mainly attributed to grant revenues that were received in the prior year including: 1) $1.2 million CDBG grant for the upgrade of 2” and 4” water mains and 2) $1.4 million in various grants for the train station project.

There were decreases in other revenues due to COVID restrictions such as recreation rentals, classes, and special events. The decreases were offset by cannabis tax revenue that increased by $0.5 million. Sales tax also increased by approximately $1.0 million, in part due to the increase in cannabis sales along with the new Measure F-20 that became effective in the last quarter of FY 2020-21. Property tax revenue increased by $0.3 million as the real estate market continued to show increases in assessed value and median prices of homes.
• Total expenses for governmental activities decreased $1.6 million during the fiscal year, mainly due to decrease in CIP project costs of $2.7 million. This was offset by increases in salaries and benefits of $0.93 million, which include a one-time pension paydown of $0.5 million, economic development of $0.84 million for one-time micro grants, $0.1 for a new contract with a public affairs agency and $0.2 in one-time settlement expenses.

Business-Type Activities
The City’s net position from business-type activities increased by $1.2 million. The programs for the business-type activities include water, water conservation and wastewater utilities.

Key factors are as follows:
• Water net position increased by approximately $1.0 million. Operating revenues increased by $0.34 million due to an increase in charges for services and operating expenses increased by $0.35 mainly due to a change in the allocation of staff time to enterprise projects. A transfer in of $1.2 million was made from CDBG funds for the upgrade of water mains project.
• Wastewater net position increased minimally by approximately $0.23 million due to higher wastewater fees offset by higher operating expenditures.

CITY OF GROVER BEACH
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2021
20 FINANCIAL ANALYSIS OF THE CITY’S FUNDS
Governmental Funds
The focus on the City’s governmental funds is to account for the near-term inflows, outflows and balances of resources that are available for spending. This information is useful in assessing the City’s financing requirements. Specifically, unassigned fund balance is a useful measure of the agency’s net resources available to meet current and future needs at the end of the fiscal year.

Types of governmental funds reported by the City include the General Fund, Special Revenue Funds, Capital Projects Fund, and Debt Service Fund.

As of the fiscal year ended June 30, 2021, the City’s governmental funds reported a combined ending fund balance of $12.8 million, a decrease of $2.3 million. The most significant factor was the decrease in Street Rehabilitation and Repair Fund of $2.9 million that was due to construction cost for street repairs of $3.2 million. This decrease was offset by increases in the General Fund of $0.78 million mainly due to higher than anticipated tax revenues.

Approximately $3.7 million of the total fund balance is unassigned and available for spending at the City Council’s discretion. The remainder of the fund balance of $9.1 million is restricted on how the funds may be used.

For the fiscal year ended June 30, 2021, revenues for governmental funds overall totaled $17.7 million or $1.2 million lower than the prior fiscal year primarily due to $3.4 million in various grants awarded for various capital projects in the prior FY 2019-20 including the train station expansion and water main upgrades. This decrease was offset by FY 2020-21 increases in tax revenues, including the new cannabis tax that generated $2.4 million in FY 2020-21, and sales tax revenue that generated $3.8 million. Expenditures for governmental funds totaled $20.0 million and included construction costs for street rehabilitation projects and capital outlay for citywide sidewalk improvements and various other CIP projects and capital assets included on the next page under Capital Assets.

The City’s governmental funds are classified as major or nonmajor. Major funds meet the specified criteria of revenues, expenditures, assets, or liabilities of at least 10% of corresponding totals for all governmental and enterprise funds and at least 5% of the aggregate amount for all government and enterprise funds. A fund that does not meet the specified criteria can still be classified as a major fund if it is deemed important to financial statement users. For the current fiscal year 2020- 21, major funds included the General Fund, Street Rehabilitation and Repair Fund, and the Home Grant Fund. The City’s nonmajor funds that did not meet the specified criteria for a major fund are listed under Other Governmental Funds on the Governmental Funds Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balances.

Proprietary Funds
The City’s proprietary funds statements provide the same type of information found in the government-wide financial statements but in more detail. The proprietary fund financial statements provide separate information for each of the enterprise funds.

CITY OF GROVER BEACH
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2021
21 At the end of the fiscal year, the unrestricted net position for the Water, Water Conservation and Wastewater Funds are $7.0 million, $0.4 million, and $4.2 million respectively, for a combined total of $11.6 million unrestricted net position for the proprietary funds. Key factors concerning the finances of the enterprise funds have been addressed previously in the discussion of the City’s business-type activities.

CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
As of June 30, 2021, net capital assets of the governmental activities totaled $19.7 million and the net capital assets of the business-type activities totaled $6.9 million.

The following table presents summary information on the City’s capital assets as of June 30, 2020 and 2021:
2020 2021 2020 2021 2020 2021
Land $1,470,203 $1,470,203 $60,125 $60,125 $1,530,328 $1,530,328 Construction in progress 201,330 694,477 1,237,823 989,192 1,439,153 1,683,669 Capacity rights 1,598,578 1,598,578 1,598,578 1,598,578 Equipment 2,003,991 2,103,969 789,241 749,311 2,793,232 2,853,280 Infrastructure 23,702,615 24,065,887 9,967,708 10,950,816 33,670,323 35,016,703 Accumulated depreciation (7,852,682) (8,597,525) (7,237,563) (7,481,316) (15,090,245) (16,078,841) Net capital assets $19,525,457 $19,737,011 $6,415,912 $6,866,706 $25,941,369 $26,603,717 Governmental Activities Business-Type Activities Total
This year’s major capital assets additions included:
• Ramona Garden Park Playground - $71,000
• Cross Gutter Replacement - $64,000
• Citywide Sidewalk Improvements - $228,000
• 1 Portable air compressor - $25,000
• 1 Armored vehicle - $189,000
• Water main upgrade - $983,000
More detailed information about the City’s capital assets is presented in Note 4 to the basic financial statements section.

Debt Administration
As of June 30, 2021, the City had $40.2 million of outstanding long-term obligations related to governmental activities and $6.5 million related to business-type activities, for a total of $46.7 million. Debt outstanding as of June 30, 2021, with a comparison to prior year and the net change are as follows:

CITY OF GROVER BEACH
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2021
22 2020 2021 2020 2021 2020 2021
Bonds payable $28,297,291 $27,519,437 $4,456,000 $4,282,000 $32,753,291 $31,801,437 Loans payable 160,837 136,766 160,837 136,766
Early retirement incentive 38,041 24,274 13,789 10,927 51,830 35,201 Compensated absences 531,281 584,725 61,800 91,614 593,081 676,339 Capital lease payable 277,135 159,035 60,867 31,168 338,002 190,203 Net pension liability 11,388,522 11,799,688 1,476,216 2,076,965 12,864,738 13,876,653 Total long-term debt $40,693,107 $40,223,925 $6,068,672 $6,492,674 $46,761,779 $46,716,599 Governmental Activities Business-Type Activities Total
Total outstanding long-term debt for governmental activities decreased by $500,000 in fiscal year 2020-21, which was mainly due to increases in compensated absences and net pension liability, offset by principal payments on existing debt.

In November 2014, Grover Beach voters passed Ballot Measure K-14, which approved the sale of bonds, up to $48 million dollars. These funds are to be used to fund improvements to the residential streets in the city. The first bonds were issued on March 25, 2015 and were issued for $5 million dollars, payable over 20 years. The second series of bonds were issued on March 31, 2016 for $8 million dollars, also payable over 20 years. The third series of bonds were issued on December 20, 2017 for $15 million for a total of $28 million in bonds being issued. These series of bonds and future bonds will be placed on the property tax roll.

Total outstanding long-term debt for business-type activities increased by $400,000 in fiscal year 2020-21 which was also mainly due to increases in compensated absences and net pension liability offset by principal payments on existing obligations.

More detailed information about the City’s total long-term liabilities is presented in Note 6 to the financial statements.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The budget for fiscal year 2021-22 assumes a balanced budget with reserves that are currently maintained above the General Fund Reserve policy. General Fund fiscal year 2021-22 budgeted appropriations, including Capital Improvements are set at $19.2 million.

The fiscal year 2021-22 budget has proposed capital expenditures of $9.7 million for infrastructure related projects.

Capital improvements included in the $9.7 million listed above includes:
• Street Rehabilitation and Construction
• Mentone Basin Park Improvements
• Ramona Garden Park Rehabilitation
• Skate Park Improvements

CITY OF GROVER BEACH
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2021
23 • City Corporation Yard Improvements
• Citywide Disability Access Improvements
• City Hall Improvements
• Police Station Improvements
• Ramona Square Parking Lot Rehabilitation
• Annual Street Lighting Project
• Citywide Sidewalk Improvements
• Major Street Rehabilitation Projects
• Upgrade Water Mains
• Central Coast Blue Project
• Sewer System Upgrades
• Lift State Upgrades
As to the City's business-type activities, about $2.0 million is expected to be spent in fiscal year 2021-22 to conduct operations and make capital improvements.

The enterprise fund programs are solely funded by charges for services to system users.

REQUESTS FOR INFORMATION
This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City's finances and to demonstrate the City's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Administrative Services Director, City of Grover Beach, 154 South 8th Street, Grover Beach, CA 93433.

BASIC FINANCIAL

STATEMENTS

GOVERNMENT-WIDE

FINANCIAL STATEMENTS

CITY OF GROVER BEACH

STATEMENT OF NET POSITION
June 30, 2021
Governmental
Activities
Business-type
Activities Total
ASSETS
Cash and investments $ 15,981,627 $ 11,478,755 $ 27,460,382 Accounts receivable, net 1,909,017 1,462,696 3,371,713
Interest receivable 5,816 6,630 12,446
Inventory 98,361 98,361
Loans receivable 456,475 456,475
Loans receivable - Successor Agency 29,870 29,870
Internal balances (1,386,059) 1,386,059
Prepaids 1,211 1,211
Deposits 1,612 1,612
Capital assets:

Non-Depreciable:

Land 1,470,203 60,125 1,530,328
Construction in progress 694,477 989,192 1,683,669
Depreciable:

Equipment 2,103,969 749,311 2,853,280
Buildings and infrastructure 24,065,887 10,950,816 35,016,703 Capacity rights 1,598,578 1,598,578
Accumulated depreciation (8,597,525) (7,481,316) (16,078,841) Total assets 36,706,710 21,329,077 58,035,787

DEFERRED OUTFLOWS
Related to pensions 3,440,109 490,502 3,930,611
Total deferred outflows 3,440,109 490,502 3,930,611

LIABILITIES
Accounts payable 1,323,169 544,085 1,867,254
Accrued wages 457,951 64,296 522,247
Unearned revenue 1,921,282 1,921,282
Interest payable 332,478 35,970 368,448
Deposits 116,896 116,896
Noncurrent liabilites
Due within one year 1,157,570 237,013 1,394,583
Due in more than one year 39,066,355 6,255,661 45,322,016 Total Liabilities 44,258,805 7,253,921 51,512,726

DEFERRED INFLOWS
Related to pensions 402,606 369,803 772,409
Total deferred inflows 402,606 369,803 772,409

NET POSITION
Net investment in capital assets 19,441,210 6,673,989 26,115,199 Restricted for:

Street improvements 6,041,005 6,041,005
Transportation 22,467 22,467
Public safety 257,080 257,080
Community development projects 17,376 17,376
Administrative functions 22,305 22,305
Storm water functions 120,651 120,651
Wastewater functions 281,484 281,484
Park facilities 511,659 511,659
Recreation facilities 92,030 92,030
State mandated ADA 10,954 10,954
Underground utilities 227,521 227,521
Debt service 1,477,942 1,477,942
Unrestricted (33,038,276) 7,521,866 (25,516,410)
Total net position $ (4,514,592) $ 14,195,855 $ 9,681,263 The notes to financial statements are an integral part of this statement. 24 CITY OF GROVER BEACH

STATEMENT OF ACTIVITIES
For the Fiscal Year Ended June 30, 2021
Expenses Charges for Services
Operating
Contributions and
Grants
Governmental activities:

General government $ 4,363,505 721,381 $ 268,601
Public safety 7,385,514 46,924 228,572
Community development 698,932 187,500 350,655
Public works 5,961,342 218,552 557,892
Parks and recreation 373,201 57,443
Total governmental activities: 18,782,494 1,231,800 1,405,720 Business-type Activities:

Water 3,181,371 4,311,419
Water conservation 9,265
Wastewater 1,297,102 1,272,571
Total business-type Activities: 4,487,738 5,583,990
Total $ 23,270,232 $ 6,815,790 $ 1,405,720
Net position - end of fiscal year
The notes to financial statements are an integral part of this statement.

Investment income (loss)
Other revenues
Transfers
Total general revenues and transfers
Change in net position
Net position - beginning of fiscal year
Other taxes
Program Revenues
General Revenues:

Taxes:

Property tax
Sales and use tax
Cannabis tax
Transient occupancy tax
Franchise fees
25 Capital
Contributions and
Grants
Governmental
Activities
Business-type
Activities Total
$ - $ (3,373,523) $ - $ (3,373,523)
(7,110,018) (7,110,018)
(160,777) (160,777)
639,160 (4,545,738) (4,545,738)
(315,758) (315,758)
639,160 (15,505,814) (15,505,814)
1,130,048 1,130,048
(9,265) (9,265)
(24,531) (24,531)
1,096,252 1,096,252
$ 639,160 (15,505,814) 1,096,252 (14,409,562)
6,509,477 6,509,477
3,846,966 3,846,966
2,424,914 2,424,914
580,423 580,423
600,228 600,228
390,552 390,552
(22,612) 49,547 26,935
59,549 134,269 193,818
41,350 (41,350)
14,430,847 142,466 14,573,313
(1,074,967) 1,238,718 163,751
(3,439,625) 12,957,137 9,517,512
$ (4,514,592) $ 14,195,855 $ 9,681,263

Net (Expenses) Revenue and Changes in Net Position
26 BASIC FINANCIAL

STATEMENTS

FUNDS FINANCIAL

STATEMENTS

CITY OF GROVER BEACH

GOVERNMENTAL FUNDS

BALANCE SHEET
June 30, 2021
General Fund
Street
Rehabilitation
and Repair
Fund
Home Grant
Fund
Other
Governmental
Funds Totals
ASSETS
Cash and investments $ 6,029,776 $ 4,861,868 $ - $ 5,089,983 $ 15,981,627 Accounts receivable 1,252,979 656,038 1,909,017
Interest Receivable 3,996 1,820 5,816
Loans receivable 456,475 456,475
Due from funds 786,873 786,873
Prepaid expense 1,211 1,211
Deposits 1,612 1,612
Total assets $ 8,076,447 $ 4,861,868 $ 456,475 $ 5,747,841 $ 19,142,631

LIABILITIES AND FUND BALANCES
Liabilities:

Accounts payable $ 269,622 $ 714,715 $ - $ 338,832 $ 1,323,169 Accrued wages 448,440 9,511 457,951
Due to funds 300,466 486,407 786,873
Advances payable 1,386,059 1,386,059
Unearned revenue 1,921,282 1,921,282
Total liabilities 4,025,403 724,226 300,466 825,239 5,875,334 Deferred Inflows of Resources:

Unavailable revenue 456,475 456,475
Total deferred inflows of resources 456,475 456,475
Fund Balances:

Nonspendable
Prepaid expenses 1,211 1,211
Deposits 1,612 1,612
Restricted for:

Street improvements 4,137,642 1,903,363 6,041,005
Transportation 22,467 22,467
Public safety 257,080 257,080
Community development projects 17,376 17,376
Administrative functions 22,305 22,305
Storm water functions 120,651 120,651
Wastewater functions 281,484 281,484
Park facilities 511,659 511,659
Recreation facilities 92,030 92,030
State mandated ADA 10,954 10,954
Underground utilities 227,521 227,521
Debt service 1,477,942 1,477,942
Unassigned 4,048,221 (300,466) (22,230) 3,725,525
Total fund balances 4,051,044 4,137,642 (300,466) 4,922,602 12,810,822 Total liabilities, deferred inflows of resources, and fund balances $ 8,076,447 $ 4,861,868 $ 456,475 $ 5,747,841 $ 19,142,631 The notes to financial statements are an integral part of this statement. 27 CITY OF GROVER BEACH
June 30, 2021
$ 12,810,822
all assets are reported, including capital assets and accumulated depreciation.

Land 1,470,203
CIP 694,477
Equipment 2,103,969
Buildings and infrastructure 24,065,887
Capital assets at historical cost $ 28,334,536
Accumulated depreciation (8,597,525)
Net capital assets 19,737,011
it matures and is paid. In government-wide statements, it is recognized in the period that it is incurred. (332,478)
statement of net position, all liabilities, including long-term liabilities, are reported.

Long-term liabilities relating to governmental activities consist of:

State loan 136,766
Early retirement incentive 24,274
Compensated absences payable 584,725
General obligation bonds 27,519,437
Capital lease 159,035
Net pension liability 11,799,688
Total long-term liabilities (40,223,925)
are not reported because they are applicable to future periods. In the statement of net position, deferred outflows and inflows of resources relating to pensions are reported. 3,037,503
collected within the prescribed time period after fiscal year-end. However, the revenues are included on the accrual basis used in the government-wide financial statements. 456,475
Total net position - governmental activities $ (4,514,592) The notes to financial statements are an integral part of this statement.

In governmental funds, deferred outflows and inflows of resources relating to pensions Certain revenues in the governmental funds are deferred because the revenues are not

RECONCILIATION OF THE GOVERNMENTAL FUNDS - BALANCE SHEET

TO THE STATEMENT OF NET POSITION
Total fund balances - governmental funds
In governmental funds, only current assets are reported. In the statement of net position, In governmental funds, interest on long-term debt is not recognized until the period in which Long-term liabilities: In governmental funds, only current liabilities are reported. In the 28 CITY OF GROVER BEACH

GOVERNMENTAL FUNDS

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES For the Fiscal Year Ended June 30, 2021
General Fund
Street
Rehabilitation
and Repair Fund
Home Grant
Fund
Other
Governmental
Funds Totals
Revenues:

Taxes $ 12,708,557 $ - $ - $ 1,644,002 $ 14,352,559
Licenses, permits, and fees 335,682 335,682
Intergovernmental 340,446 1,704,434 2,044,880
Charges for services 624,174 155,647 779,821
Fines and forfeitures 40,845 40,845
Use of money and property 72,378 3,928 27,646 103,952
Other 28,500 28,500
Total revenues 14,122,082 32,428 3,531,729 17,686,239
Expenditures:

General government 4,210,209 4,210,209
Public safety 7,165,935 69,687 7,235,622
Community development 547,071 159,662 706,733
Public works 1,202,725 3,191,446 221,522 4,615,693
Parks and recreation 327,463 8,460 335,923
Capital outlay 81,186 1,007,566 1,088,752
Debt service:

Principal 142,171 700,000 842,171
Interest 12,449 984,852 997,301
Total expenditures 13,689,209 3,191,446 3,151,749 20,032,404 Excess of revenues over (under) expenditures 432,873 (3,159,018) 379,980 (2,346,165) Other Financing Sources (Uses):

Transfers in 578,000 248,810 475,595 1,302,405
Transfers out (228,959) (1,032,096) (1,261,055)
Total other financing sources (uses) 349,041 248,810 (556,501) 41,350 Net change in fund balances 781,914 (2,910,208) (176,521) (2,304,815) Fund balances - July 1 3,269,130 7,047,850 (300,466) 5,099,123 15,115,637 Fund balances - June 30 $ 4,051,044 $ 4,137,642 $ (300,466) $ 4,922,602 $ 12,810,822 The notes to financial statements are an integral part of this statement. 29 CITY OF GROVER BEACH
$ (2,304,815)
statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which additions to capital outlay of $1,079,692 exceeds depreciation expense $(868,138) in the period. 211,554 government-wide statements, repayments of long-term debt are reported as reductions of liabilities. 842,171
becomes due. In the government-wide statements of activities, it is recognized in the period that it is incurred. Unmatured interest owing at the end of the period, less matured interest paid during the period but owing from the prior period was: 11,666 during the fiscal year. In governmental funds, however, expenditures for these items are measured by the amount of financial resources used (essentially the amounts paid). This fiscal year, vacation earned exceeded the amounts used by: (53,444) In the statement of activities, pension costs are recognized on the accrual basis.

This fiscal year, the difference between accrual-basis pension costs and actual employer contribution was: 146,340
In the statement of activities, early retirement incentive benefit costs are recognized on the accrual basis. This year, the difference between benefits paid and accrued was: 13,767 financing source in the period it is incurred. In the government-wide statements, the premium is amortized as interest over the life of the debt. Amortization of debt issue premium for the period is: 77,854
within the prescribed time period after the fiscal year-end. However, the revenues are included on the accrual basis used in the government-wide statements. (20,060) Changes in net position - governmental activities $ (1,074,967) The notes to financial statements are an integral part of this statement.

In governmental funds, certain revenues are deferred because revenues are not collected In governmental funds, repayments of long-term debt are reported as expenditures. In the In governmental funds, interest on long-term debt is recognized in the period that it In the statement of activities, compensated absences are measured by the amounts earned In governmental funds, pension costs are recognized when employer contributions are made.

In governmental funds, early retirement incentive benefit costs are recognized when paid.

In governmental funds, if debt is issued at a premium, the premium is recognized as an other

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF

GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
For the Fiscal Year Ended June 30, 2021
Total net change in fund balances - governmental funds
Capital outlays are reported in governmental funds as expenditures. However, in the 30 CITY OF GROVER BEACH

PROPRIETARY FUNDS

STATEMENT OF NET POSITION
June 30, 2021
Water Fund
Water
Conservation
Fund
Wastewater
Fund Totals
ASSETS
Current assets:

Cash and investments $ 7,945,105 $ 379,933 $ 3,153,717 $ 11,478,755 Accounts receivable,net 810,398 652,298 1,462,696
Interest receivable 4,593 219 1,818 6,630
Inventory at cost 98,361 98,361
Total current assets 8,858,457 380,152 3,807,833 13,046,442 Noncurrent assets:

Loans receivable 29,870 29,870
Advances receivable 1,386,059 1,386,059
Total noncurrent assets 29,870 1,386,059 1,415,929
Capital assets:

Land 60,125 60,125
Construction in progress 510,693 478,499 989,192
Equipment 311,335 437,976 749,311
Infrastructure 7,087,756 3,863,060 10,950,816
Capacity rights 1,598,578 1,598,578
7,969,909 6,378,113 14,348,022
Less accumulated depreciation (3,503,464) (3,977,852) (7,481,316) Total capital assets, net of accumulated depreciation 4,466,445 2,400,261 6,866,706 Total assets 13,354,772 380,152 7,594,153 21,329,077

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions 243,366 247,136 490,502
Total deferred outflows of resources 243,366 247,136 490,502

LIABILITIES
Current liabilities:

Accounts payable 272,756 551 270,778 544,085
Accrued payroll 34,594 399 29,303 64,296
Deposits 116,896 116,896
Accrued interest payable 35,113 857 35,970
Compensated absences - current 13,731 10,469 24,200
Early retirement - current 1,143 502 1,645
Capital leases - current 10,389 20,779 31,168
Revenue bonds - current 180,000 180,000
Total current liabilities 664,622 950 332,688 998,260
Noncurrent liabilities:

Revenue bonds, net of current 4,102,000 4,102,000
Compensated absences, net of current 38,251 29,163 67,414 Early retirement, net of current 5,637 3,645 9,282
Net pension liability 1,257,784 819,181 2,076,965
Total noncurrent liabilities 5,403,672 851,989 6,255,661 Total liabilities 6,068,294 950 1,184,677 7,253,921

DEFERRED INFLOWS OF RESOURCES
Related to pensions 268,679 101,124 369,803
Total deferred inflows of resources 268,679 101,124 369,803

NET POSITION
Net investment in capital assets 4,294,507 2,379,482 6,673,989 Unrestricted 2,966,658 379,202 4,176,006 7,521,866
Total net position $ 7,261,165 $ 379,202 $ 6,555,488 $ 14,195,855

The notes to financial statements are an integral part of this statement. 31 CITY OF GROVER BEACH

PROPRIETARY FUNDS

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION For the Fiscal Year Ended June 30, 2021
Water Fund
Water
Conservation
Fund
Wastewater
Fund Totals
Operating Revenues:

Charges for services $ 4,181,062 $ - $ 1,272,571 $ 5,453,633 Other operating revenues 130,357 130,357
Total operating revenues 4,311,419 1,272,571 5,583,990
Operating Expenses:

Salaries and benefits 1,024,022 6,465 769,616 1,800,103 Supplies and services 1,846,225 376,700 2,222,925
Non-capitalized equipment 48,523 2,800 22,659 73,982
Depreciation 156,747 126,935 283,682
Total operating expenses 3,075,517 9,265 1,295,910 4,380,692 Operating income (loss) 1,235,902 (9,265) (23,339) 1,203,298 Non-Operating Revenues (Expenses):

Grants $ 72,410 $ - $ 61,859 $ 134,269
Interest income 32,759 1,813 14,975 49,547
Interest expense (105,854) (1,192) (107,046)
Total non-operating revenues (expenses) (685) 1,813 75,642 76,770 Income (loss) before transfers 1,235,217 (7,452) 52,303 1,280,068 Transfers:

Transfers in 164,582 391,878 556,460
Transfers out (388,210) (209,600) (597,810)
Total transfers (223,628) 182,278 (41,350)
Change in net position 1,011,589 (7,452) 234,581 1,238,718 Net position - July 1 6,249,576 386,654 6,320,907 12,957,137 Net position - June 30 $ 7,261,165 $ 379,202 $ 6,555,488 $ 14,195,855

The notes to financial statements are an integral part of this statement. 32 CITY OF GROVER BEACH

PROPRIETARY FUNDS

STATEMENT OF CASH FLOWS
For the Fiscal Year Ended June 30, 2021
Water Fund
Water
Conservation
Fund
Wastewater
Fund Totals
Cash Flows From Operating Activities:

Receipts from customers $ 4,165,403 $ - $ 1,206,321 $ 5,371,724 Payments to suppliers (1,676,830) (3,099) (277,001) (1,956,930) Payments to employees (740,563) (6,324) (643,776) (1,390,663) Other receipts 130,357 130,357
Net cash provided (used) by operating activities 1,878,367 (9,423) 285,544 2,154,488 Cash Flows From Capital and Related Financing Activities:

Principal paid on capital debt (183,900) (19,799) (203,699) Interest paid (108,674) (2,009) (110,683)
Acquisition of capital assets (312,721) (421,757) (734,478) Net cash provided (used) by capital and related financing activities (605,295) (443,565) (1,048,860) Cash Flows From Noncapital Financing Activities:

Operating grants received 72,410 61,859 134,269
Cash received (paid) on loan made to Successor Agency 300,000 300,000 Advances to/from other funds (25,001) (25,001)
Transfers to other funds (388,210) (209,600) (597,810)
Transfers from other funds 164,582 391,878 556,460
Net cash provided (used) by noncapital financing activities (151,218) 519,136 367,918 Cash Flows From Investing Activities:

Interest income received 45,532 2,584 20,257 68,373
Net cash provided (used) by investing activities 45,532 2,584 20,257 68,373 Net increase (decrease) in cash and cash equivalents 1,167,386 (6,839) 381,372 1,541,919 Cash and cash equivalents - July 1 6,777,719 386,772 2,772,345 9,936,836 Cash and cash equivalents - June 30 $ 7,945,105 $ 379,933 $ 3,153,717 $ 11,478,755

The notes to financial statements are an integral part of this statement. 33 CITY OF GROVER BEACH

PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS (Continued)
For the Fiscal Year Ended June 30, 2021
Water Fund
Water
Conservation
Fund
Wastewater
Fund Totals
Reconciliation of operating income (loss) to net cash provided (used) by operating activities:

Operating income (loss) $ 1,235,902 $ (9,265) $ (23,339) $ 1,203,298 Adjustments to reconcile operating activities:

Depreciation expense 156,747 126,935 283,682
Changes in assets, deferred outflows of resources,
liabilities and deferred inflows of resources:

Receivables, net (13,570) (66,250) (79,820)
Inventories (4,668) - (4,668)
Deferred outflows (50,279) 29,637 (20,642)
Accounts payable 222,586 (299) 122,358 344,645
Accrued payroll 9,225 141 8,871 18,237
Deposits (2,089) - (2,089)
Compensated absences 16,230 13,584 29,814
Early retirement (1,989) (873) (2,862)
Net pension liability 459,379 141,370 600,749
Deferred inflows (149,107) (66,749) (215,856)
Net cash provided (used) by operating activities $ 1,878,367 $ (9,423) $ 285,544 $ 2,154,488

The notes to financial statements are an integral part of this statement. 34 CITY OF GROVER BEACH

FIDUCIARY FUNDS

STATEMENT OF FIDUCIARY NET POSITION
June 30, 2021
Successor Agency
Private-Purpose
Trust Funds
Custodial
Funds
ASSETS
Cash and investments $ 272,948 $ 339,583
Cash and investments with fiscal agent 287,127
Land held for projects 380,000
Total assets 940,075 $ 339,583

LIABILITIES
Accounts payable and other liabilities 14,193
Accrued interest payable 61,562
Due to other governments 328,001
Unearned revenue 242,847
Noncurrent liabilities
Due within one year 135,000
Due in more than one year 2,849,869
Total Liabilities 3,289,278 $ 342,194

NET POSITION
Restricted for:

Individuals, organizations, and other governments (2,349,203) (2,611) Total net position $ (2,349,203) $ (2,611)

The notes to financial statements are an integral part of this statement. 35 CITY OF GROVER BEACH

FIDUCIARY FUNDS

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
For the Fiscal Year Ended June 30, 2021
Successor Agency
Private-Purpose
Trust Funds Custodial Funds
Additions:

Taxes for other governments $ 563,070 $ 68,641
Interest 2,787
Security deposits 60,332
Building and planning deposits 95,922
Other 5,310
Total additions 565,857 230,205
Deductions:

Building and planning expense 70,244 19,014
Payment of tourism marketing district tax to other governments 150,718 56,910 Refunds 47,779
Transfers out 40,000
Other expense 2,374
Total deductions 220,962 166,077
Change in net position 344,895 64,128
Total net position-beginning (2,694,098) (66,739)
Total net position-ending $ (2,349,203) $ (2,611)
The notes to financial statements are an integral part of this statement. 36 NOTES TO THE

BASIC FINANCIAL

STATEMENTS

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
37 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The accompanying basic financial statements present the financial activity of the City of Grover Beach. There are no component units included in this report which meet the criteria of GASB Statement No. 14, The Financial Reporting Entity, as amended by GASB Statements No. 39, No. 61, and No. 80.

B. Basis of Presentation
The City’s basic financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Governmental Accounting Standards Board is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States of America.

UGovernment-wide Statements
The Statement of Net Position and the Statement of Activities display information about the City.

These statements include the financial activities of the overall City government, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. The City does not eliminate interfund services provided and used during the process of consolidation. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-exchange transactions.

The Statement of Activities presents a comparison between direct expenses and program revenues for each segment 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 function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, (b) grants and contributions that are restricted to meeting the operational needs of a particular program, and (c) fees, grants, and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.

UFund Financial Statements
The fund financial statements provide information about the City’s funds, including fiduciary funds.

Separate statements for each fund category—governmental, proprietary, and fiduciary—are presented. The emphasis of fund financial statements is on major individual funds, each of which is displayed in a separate column. All remaining governmental funds are aggregated and reported as nonmajor funds.

Proprietary fund financial statements include a Statement of Net Position; a Statement of Revenues, Expenses, and Changes in Net Position; and a Statement of Cash Flows for all

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
38 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Basis of Presentation (Continued)
Fund Financial Statements (Continued)
proprietary funds.

Proprietary funds are accounted for using the economic resources measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses, and Changes in Net Position presents increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which liability is incurred.

Operating revenues in the proprietary funds are those revenues that are generated from the primary operation of the fund. All other revenues are reported as nonoperating revenues.

Operating expenses are those expenses that are essential to the primary operations of the fund.

All other expenses are reported as nonoperating expenses.

Fiduciary funds are used to account for assets held by the City in a trustee capacity or as a custodian for individuals, private organizations, other governmental units, and/or other funds. Fiduciary Funds use the full accrual basis of accounting and a measurement focus on the periodic determination of additions, deductions, and net position restricted for others. Fiduciary funds are reported in the fund financial statements but are not included for government-wide reporting purposes.

C. Major Funds
GASB Statement No. 34, defines major funds and requires that the City’s major funds are identified and presented separately in the fund financial statements. All other funds, called nonmajor funds, are combined and reported in a single column, regardless of their fund-type.

Major funds are defined as funds that have either assets, liabilities, revenues, or expenditures/expenses equal to ten percent of their fund-type total. The General Fund is always a major fund. The City may also select other funds it believes should be presented as major funds.

The City reported the following major governmental funds in the accompanying financial statements:

UGeneral FundU
This fund accounts for all financial resources except those to be accounted for in another fund. It is the general operating fund of the City.

UStreet Rehabilitation and Repair Fund
This fund accounts for bond proceeds from the issuance of debt and is restricted to the improvements of City streets.

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
39 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Major Funds (Continued)
Home Grant Fund
The Home Investment Partnership Program (HOME) Fund can be used for the First Time Homebuyer Program, First Time Homebuyer Project, Owner Occupied Rehabilitation Program, Rental Rehabilitation, Rental New Construction Project and Tenant-Based Rental Assistance Programs.

The City reported the following major proprietary funds:

UWater Fund
This fund accounts for the activities of providing water to residents of the City.

UWastewater Fund
This fund accounts for the activities associated with the sewage treatment plant, pumping stations, and collection systems.

UWater Conservation Fund
This fund accounts for water conservation fees and is restricted to improving water conservation within the City.

D. Basis of Accounting
The government-wide, proprietary funds, and fiduciary funds financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting.

Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.

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

Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis, revenues from property taxes are recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Other revenues susceptible to accrual include other taxes, intergovernmental revenues, interest, and charges for services. Grant revenues are recognized in the fiscal year in which all eligibility requirements are met. Under the terms of grant agreements, the City may fund certain programs with a combination of cost-

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
40 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Basis of Accounting (Continued)
reimbursement grants, categorical block grants, and general revenues. Thus, both restricted and unrestricted net assets may be available to finance program expenditures/expenses. The City’s policy is to first apply restricted grant resources to such programs, followed by general revenues if necessary.

E. Compensated Absences
In compliance with Governmental Accounting Standards Board Statement No. 16, the City has established a liability for accrued sick leave and vacation in relevant funds. For governmental type funds, the current liability appears in the respective funds. All vacation paid is accrued when incurred in the government-wide and proprietary funds financial statements. This liability is set up for the current employees at the current rates of pay. If sick leave and vacation are not used by the employee during the term of employment, compensation is payable to the employee at the time of retirement. Sick leave is only payable to employees participating in the Public Employees’ Retirement System. Such compensation is calculated at the employee’s prevailing rate at the time of retirement or termination. Each fiscal year, an adjustment to the liability is made based on pay rate changes and adjustments for the current portion. The General Fund is primarily responsible for the repayment of the governmental portion of compensated absences.

F. Property Taxes
California Constitution Article XIII A limits the combined property tax rate to one percent of a property’s assessed valuation. Additional taxes may be imposed with voter approval. Assessed value is calculated at one hundred percent of a property’s fair value, as defined by Article XIII A, and may be increased no more than two percent per year unless a change in ownership occurs.

The State Legislature has determined the method of distributing the one percent tax levy among the various taxing jurisdictions.

Property tax revenues are recognized in the fiscal year for which taxes have been levied and collected within sixty days of fiscal year end. Property taxes are billed and collected as follows on the next page:

USecuredU UUnsecured
Valuation/Lien Date(s) January 1 January 1
Levy Date(s) July 1 July 1
Due Date(s) November 1 (50%) August 1
February 1 (50%)
Delinquency Date(s) December 10 (November) August 31
April 10 (February)

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
41 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) G. Capital Assets
All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Contributed capital assets are valued at their estimated fair value on the date contributed. Any donated capital assets or donated works of art and similar items are valued at their acquisition value rather than fair value. Any capital assets received in a service concession arrangement are valued at their acquisition value. The City’s policy is to capitalize all capital assets with costs exceeding the minimum thresholds at $5,000, except for infrastructure at $25,000 and with useful lives exceeding one year.

With the implementation of GASB Statement No. 34, the City was not required to record infrastructure assets existing or acquired prior to July 1, 2001. The City elected not to record such infrastructure assets. The City may elect to record such infrastructure assets in the future.

The purpose of depreciation is to spread the cost of capital assets equitably among all users over the life of these assets. The amount charged to depreciation expense each fiscal year represents that fiscal year’s pro rata share of the cost of capital assets. GASB Statement No. 34 requires that all capital assets with limited useful lives be depreciated over their estimated useful lives.

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

Structures and Improvements 50 years
Equipment 5-25 years
Infrastructure 15-50 years
H. Deferred Outflows and Inflows of Resources
Pursuant to GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, the City recognizes deferred outflows and inflows of resources.

In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows of resources. A deferred outflow of resources is defined as a consumption of net position by the government that is applicable to a future reporting period. The City has one item which qualifies for reporting in this category, refer to Note 7 for a detailed listing of the deferred outflows of resources the City has recognized.

In addition to liabilities, the Statement of Net Position will sometimes report a separate section for deferred inflows of resources. A deferred inflow of resources is defined as an acquisition of net position by the City that is applicable to a future reporting period. The City has two items which qualify for reporting in this category; refer to Note 7 and Note 15 for a detailed listing of the deferred inflows of resources the City has recognized.

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
42 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) I. Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenditures, or expenses as appropriate. Actual results could differ from those estimates.

J. Cash Equivalents
For purposes of the Statement of Cash Flows, the City considers all highly liquid investment instruments purchased with a maturity of three months or less to be cash equivalents.

K. Fund Balances
Fund balances of the governmental funds are classified as follows:

Nonspendable Fund Balance – represents amounts that cannot be spent because they are either not in spendable form (such as inventory or prepaid insurance) or legally required to remain intact (such as notes receivable or principal of a permanent fund).

Restricted Fund Balance – represents amounts that are constrained by external parties, constitutional provisions or enabling legislation.

Committed Fund Balance – represents amounts that can only be used for a specific purpose because of a formal action by the City’s governing board. Committed amounts cannot be used for any other purpose unless the governing board removes those constraints by taking the same type of formal action. Committed fund balance amounts may be used for other purposes with appropriate due process by the governing board. Commitments are typically done through adoption and amendment of the budget. Committed fund balance amounts differ from restricted balances in that the constraints on their use do not come from outside parties, constitutional provisions, or enabling legislation.

Assigned Fund Balance – represents amounts which the City intends to use for a specific purpose, but that do not meet the criteria to be classified as restricted or committed. Intent may be stipulated by the governing board or by an official or body to which the governing board delegates the authority. Specific amounts that are not restricted or committed in a special revenue, capital projects, debt service, or permanent fund are assigned for purposes in accordance with the nature of their fund type or the fund’s primary purpose. Assignments within the general fund conveys that the intended use of those amounts is for a specific purpose that is narrower than the general purpose of the City.

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
43 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) K. Fund Balances (Continued)
Unassigned Fund Balance – represents amounts which are unconstrained in that they may be spent for any purpose. Only the general fund reports a positive unassigned fund balance. Other governmental funds might report a negative balance in this classification because of overspending for specific purposes for which amounts had been restricted, committed, or assigned.

When an expenditure is incurred for a purpose for which both restricted and unrestricted fund balance is available, the City considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the City considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds.

L. Net Position
GASB Statement No. 63 requires that the difference between assets added to the deferred outflows of resources and liabilities added to the deferred inflows of resources be reported as net position. Net position is classified as either net investment in capital assets, restricted, or unrestricted.

Net position that is net investment in capital assets consist of capital assets, net of accumulated depreciation, and reduced by the outstanding principal of related debt. Unspent bond proceeds should be reported as either restricted or unrestricted assets, as appropriate, and the related portion of the bonded debt should be reported in the same component of net position as the unspent proceeds, and therefore will not have any net effect on any classifications of net position.

Restricted net position is the portion of net position that has external constraints placed on it by creditors, grantors, contributors, laws, or regulations of other governments, or through constitutional provisions or enabling legislations. Unrestricted net position consists of net position that does not meet the definition of net investment in capital assets or restricted net position.

M. Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City California Public Employees’ Retirement System (CalPERS) Miscellaneous and Safety Plans and additions to/deductions from 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. The General Fund is primarily responsible for the repayment of the governmental portion of the pension liability.

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
44 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) N. Accounting Pronouncements
GASB Statements listed below were implemented in the current year financial statements:

Statement No. 84 "Fiduciary Activities" The provisions of this statement were effective for fiscal years beginning after December 15, 2019.

Statement No. 90 "Majority Equity Interests-an The provisions of this statement are effective Amendment of GASB Statements for fiscal years beginning after December 15, 2019.

No. 14 and No. 61"
GASB Statements listed below will be implemented in future financial statements:

Statement No. 87 "Leases" The provisions of this statement are effective for fiscal years beginning after June 15, 2021.

Statement No. 89 "Accounting for Interest Cost The provisions of this statement are effective Incurred before the End of a for fiscal years beginning after December 15, 2020.

Construction Period"
Statement No. 91 "Conduit Debt Obligations" The provisions of this statement are effective for fiscal years beginning after December 15, 2021.

Statement No. 92 "Omnibus 2020" The provisions of this statement are effective for fiscal years beginning after June 15, 2021.

Statement No. 93 "Replacement of Interbank Offered The provision of this statement except for paragraphs Rates" 11b, 13, and 14 are effective for fiscal years beginning after June 15, 2020. Paragraph 11b is effective for fiscal years beginning after December 31, 2021. Paragraphs
13 and 14 are effective for fiscal years beginning after June 15, 2021.

Statement No. 94 "Public-Private and Public-Public The provisions of this statement are effective Partnerships and Availability for fiscal years beginning after June 15, 2022.

Payment Arrangements"
Statement No. 96 "Subscription-Based Information The provisions of this statement are effective Technology Arrangements" for fiscal years beginning after June 15, 2022.

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
45 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) N. Accounting Pronouncements (Continued)
Statement No. 97 "Certain Component Unit Criteria, The provisions of this statement are effective and Accounting and Financial for fiscal years beginning June 15, 2021.

Reporting for Internal Revenue Code
Section 457 Deferred Compensation
Plans - an amendment of GASB
Statements No. 14 and No. 84, and a
supersession of GASB Statement
No. 32"
Statement No. 98 "The Annual Comprehensive The provisions of this statement are effective Financial Report" for fiscal years ending after December 15, 2021.

NOTE 2 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. Budgetary Information
Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for governmental funds. The City’s budget ordinance requires that by June 1P
stP each year, the City Manager must submit a preliminary budget that includes projected expenditures and the means of financing them, to the City Council for the fiscal year commencing the following July 1. As modified during public study sessions, the preliminary budget becomes the proposed budget. Following public hearings on the proposed budget, the final annual budget is adopted by the City Council in June of the next fiscal year. After adoption of the final budget, transfers of appropriations within a general fund department, or within other funds, can be made by the City Manager.

Budget modifications between funds; increases or decreases to a fund’s overall budget; transfers between general fund departments; or transfers that affect capital projects, must be approved by the City Council. Numerous properly authorized amendments are made during the fiscal year.

Budgetary control is enhanced by integrating the budget into the general ledger accounts.

Encumbrance accounting is employed (e.g., purchase orders) to avoid expenditures over budget.

Encumbrances outstanding at fiscal year-end are automatically rebudgeted in the following fiscal year.

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
46 NOTE 2 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued) B. Excess of Expenditures Over Appropriations
Excess of expenditures over appropriations in individual funds are as follows:

Major Funds:

General Fund:

General Government $ 51,087
Public Safety $ 52,071
Nonmajor Funds:

Special Revenue Fund:

Park Construction Fund $ 27,684
Local Transportation Fund $ 205,289
Debt Service Fund:

Street Improvements Fund $ 1,696,470
C. Deficit Fund Balances/Net Position
A deficit fund balance of $22,230 exists in the CDBG Non-Entitlement Fund and a deficit fund balance of $300,466 exists in the Home Grant Fund. This is due to the City incurring costs in advance of receiving revenue
NOTE 3 – CASH AND INVESTMENTS
Cash and investments are classified in the financial statements as shown below, based on whether their use is restricted under the terms of the City’s debt instruments or Agency’s agreements:

Cash and Investments $ 27,460,382
Total cash and investments, statement of net position 27,460,382 Cash and Investments 612,531
Cash and investments with fiscal agent 287,127
Total cash and investments, statement of fiduciary net position 899,658 Total cash and investments $ 28,360,040
On June 30, 2021, the City had the following cash and investments on hand:

Cash on hand $ 1,450
Pooled cash 11,247,773
Pooled investments 17,110,817
Total cash and investments $ 28,360,040

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
47 NOTE 3 – CASH AND INVESTMENTS (Continued)
Fair Value Measurements
The City categorizes its fair value investments within the fair value hierarchy established by generally accepted accounting principles. Investment securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. Investment securities classified in Level 2 of the fair value hierarchy are valued using matrix pricing or market corroborated pricing. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. Investment securities classified in Level 3 of the fair value hierarchy are valued using significant unobservable inputs.

At June 30, 2021, the City had investments in money market funds and the San Luis Obispo County Investment Pool which are measured under Level 2 of the fair value hierarchy. The City’s remaining investments are held in the Local Agency Investment Fund (LAIF), which is not subject to the fair value hierarchy.

Investments Authorized by the California Government Code and the City’s Investment Policy The table on the next page identifies the investment types that are authorized for the City by the California Government Code. The table also identifies certain provisions of the California Government Code that address interest rate risk, credit risk, and concentration of credit risk.

Authorized
Investment Type
Maximum
Maturity
Maximum
Percentage Of
Portfolio
Maximum
Investment
in One Issuer
Local Agency Bonds 5 years None None
U.S. Treasury Obligations 5 years 60% None
U.S. Agency Securities 5 years None None
Bankers' Acceptances 180 days 40% 30%
Commercial Paper 270 days 25% 10%
Negotiable Certificates of Deposit 1 year 20% None
Repurchase Agreements 1 year None None
Reverse Repurchase Agreements 92 days 20% of base value None Medium-Term Notes 5 years 30% None
Mutual Funds N/A 20% 10%
Money Market Funds N/A 20% 10%
Local Agency Investment Fund (LAIF) N/A None None
JPA Pools (other investment pools) N/A None None
Guaranteed Investment Contracts 15 months None None
Canadian Government Obligations 5 years None None

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
48 NOTE 3 – CASH AND INVESTMENTS (Continued)
Investments Authorized by Debt Agreements
Investment of note proceeds held by note trustees are governed by the provisions of the debt agreements, rather than the general provisions of the California Government Code or the City’s investment policy. The table on the following page identifies the investment types that are authorized for investments held by fiscal agents. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.

Authorized
Investment Type
Maximum
Maturity
Maximum
Percentage
Of
Portfolio
Maximum
Investment
in One Issuer
Money market accounts N/A None None
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer-term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity:

Investment Type
Carrying
Amount
12 Months Or
Less
13-24
Months
25-60
Months
More than 60
Months
LAIF $ 15,345,748 $ 15,345,748 $ - $ - $ -
San Luis Obispo County
Investment Pool 1,477,942 1,477,942
Held by bond trustees:

Money market funds 287,127 287,127
$ 17,110,817 $ 17,110,817 $ - $ - $ -
Remaining Maturity (in Months)
U

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
49 NOTE 3 – CASH AND INVESTMENTS (Continued)
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of rating by a nationally recognized statistical rating organization. Presented on the following page is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreements, and the actual rating as of fiscal year end for each investment type.

Minimum Exempt
Carrying Legal From
Investment Type Amount Rating Disclosure AAA AA Not Rated LAIF $ 15,345,748 N/A $ - $ - $ - $ 15,345,748
San Luis Obispo County
Investment Pool 1,477,942 N/A 1,477,942
Held by bond trustees:

Money market funds 287,127 N/A 287,127
$ 17,110,817 $ - $ - $ - $ 17,110,817
Rating as of Fiscal Year End
U
Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. There are no investments in any one issuer that represent 5% or more of total City’s investments.

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

None of the City’s deposits with financial institutions in excess of the Federal Depository Insurance Corporation’s limits were held in uncollateralized accounts.

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
50 NOTE 3 – CASH AND INVESTMENTS (Continued)
The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for investments. With respect to investments, custodial credit risk generally applies only to direct investments in marketable securities. Custodial credit risk does not apply to a local government’s indirect investment in securities with mutual funds or government investment pools (such as LAIF or the San Luis Obispo County Investment Pool).

U
Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is reported in the accompanying basic financial statements at the amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.

NOTE 4 – CAPITAL ASSETS
Capital asset activity for the City’s governmental activities for the fiscal year ended June 30, 2021, is as follows:

Balance
June 30, 2020 Additions Deletions
Transfers/
Reclass
Balance
June 30, 2021
Non-depreciable capital assets
Land $ 1,470,203 $ 1,470,203
Construction in progress 201,330 856,419 (363,272) 694,477 Total nondepreciable capital assets $ 1,671,533 $ 856,419 $ - $ (363,272) $ 2,164,680 Depreciable capital assets
Equipment $ 2,003,991 $ 223,273 $(123,295) $ 2,103,969
Buildings and improvements 23,702,615 363,272 24,065,887 Total depreciable capital assets 25,706,606 223,273 (123,295) 363,272 26,169,856 Accumulated depreciation
Equipment 1,196,611 289,704 (123,295) 1,363,020
Buildings and improvements 6,656,071 578,434 7,234,505
Total accumulated depreciation 7,852,682 868,138 (123,295) 8,597,525 Net depreciable capital assets $ 17,853,924 $(644,865) $ - $ 363,272 $17,572,331 Net capital assets $ 19,525,458 $ 211,554 $ - $ - $19,737,011

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
51 NOTE 4 – CAPITAL ASSETS (Continued)
Capital asset activity for the City’s business-type activities for the fiscal year ended June 30, 2021, is as follows:

Balance
June 30, 2020 Additions Deletions Transfers/Reclass
Balance
June 30, 2021
Non-depreciable capital assets
Land $ 60,125 $ - $ - $ - $ 60,125
Construction in progress 1,237,822 734,478 (983,108) 989,192 Total nondepreciable capital assets $ 1,297,947 $ 734,478 $ - $ (983,108) $ 1,049,317 Depreciable capital assets
Capacity rights $ 1,598,578 $ - $ - $ - $ 1,598,578
Equipment 789,241 (39,930) 749,311
Infrastructure 9,967,708 983,108 10,950,816
Total depreciable capital assets 12,355,527 (39,930) 983,108 13,298,705 Accumulated depreciation
Capacity rights 934,379 31,971 966,350
Equipment 426,889 77,977 (39,930) 464,936
Infrastructure 5,876,296 173,734 6,050,030
Total accumulated depreciation 7,237,564 283,682 (39,930) 7,481,316 Net depreciable capital assets 5,117,963 (283,682) 983,108 5,817,389 Net capital assets $ 6,415,910 $ 450,796 $ - $ - $ 6,866,706 Depreciation expense the City’s governmental and business-type activities for the fiscal year ended June 30, 2021, is as follows:

Governmental Activities:

General Government $ 22,983
Public Safety 225,664
Parks and Recreation 44,648
Public Works 574,843
Total depreciation expense - governmental activities $ 868,138 Business-type Activities:

Water $ 156,746
Wastewater 126,935
Total depreciation expense - business-type activities $ 283,681

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
52 NOTE 5 – INTERFUND TRANSACTIONS
Due from/due to:

Due From Due To
Other Funds Other Funds
Major Governmental Funds:

General Fund $ 786,873 $ -
Home Grant Fund 300,466
Nonmajor Governmental Funds:

CDBG Non-Entitlement Fund 486,407
$ 786,873 $ 786,873
Interfund transfers:

Transfers In Transfers Out
Major Governmental Funds:

General Fund $ 578,000 $ 228,959
Street Rehabilitation and Repair Fund 248,810
Nonmajor Governmental Funds:

Capital Projects Fund 475,596
Gas Tax Fund 54,432
Local Transportation Fund 192,440
Gas Tax Fund RMRA 189,824
State Mandated ADA Fund 6,000
Wastewater Development Impact Fees Fund 391,878
Parks Development Impact Fees Fund 32,940
CDBG Non-Entitlement Fund 164,582
Proprietary Funds:

Water Fund 164,582 388,210
Wastewater Fund 391,878 209,600
$ 1,858,866 $ 1,858,865
UAdvances receivable and payable:

Advances receivable and payable constitute long-term borrowing between funds. Each advance carries a state interest rate and has scheduled debt service payments. Interfund advances receivable and payable balance on June 30, 2021, are as follows:

Advance Receivable Advance Payable
General Fund $ - $ 1,386,059
Wastewater Fund 1,386,059
$ 1,386,059 $ 1,386,059

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
53 NOTE 6 – LONG-TERM LIABILITIES
U Changes in Long-Term Liabilities
Long-term liability activity for the fiscal year ended June 30, 2021, was as follows:

Balance Balance Due Within
June 30, 2020 Additions Deletions June 30, 2021 One Year Governmental Activities:

General obligations bonds $ 26,575,000 $ - $ 700,000 $ 25,875,000 $ 740,000 Unamortized premium 1,722,291 77,854 1,644,437 77,854
Total general obligation bonds 28,297,291 777,854 27,519,437 817,854 State loan 160,837 24,071 136,766 24,312
Early retirement incentive 38,041 13,767 24,274 10,078
Compensated absences 531,281 270,291 216,847 584,725 216,800 Capital leases 277,135 118,100 159,035 88,526
Net pension liability 11,388,522 1,747,384 1,336,218 11,799,688 Total governmental activities $ 40,693,107 $ 2,017,675 $ 2,486,857 $ 40,223,925 $ 1,157,570

Business-type Activities:

Water revenue bond $ 4,456,000 $ 174,000 $ 4,282,000 $ 180,000 Early retirement incentive 13,789 2,862 10,927 1,645
Compensated absences 61,800 53,974 24,160 91,614 24,200 Capital leases 60,867 29,699 31,168 31,168
Net pension liability 1,476,216 773,277 172,528 2,076,965 Total business-type activities $ 6,068,672 $ 827,251 $ 403,249 $ 6,492,674 $ 237,013 Compensated Absences
Governmental Accounting Standards Board Statement No. 16 identifies certain items that should be accrued as a liability as the benefits are earned by the employees but only to the extent it is probable that the employer will compensate the employees for the benefits through cash payments conditioned on the employee’s termination or retirement.

City employees accumulate earned but unused benefits which can be converted to cash at termination of employment. The non-current portion of these vested benefits, payable in accordance with various collective bargaining agreements, on June 30, 2021, total $584,725 for governmental activities and $91,613 for business-type activities.

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
54 NOTE 6 – LONG-TERM LIABILITIES (Continued)
UState Loan
The City entered into a loan agreement with the California Energy Resources Conservation and Development commission for an energy savings project. Loan funds were disbursed on a reimbursement basis. The project was completed on December 31, 2011. Loan payments began on December 22, 2012, and terminate December 22, 2026, with an annual interest rate of 1.00% payable on a semi-annual basis.

Future minimum payment obligations for the loan payable on June 30, 2021, as shown on the following page:

Fiscal year Ending June 30 Principal Interest Total
2022 24,312 1,307 25,619
2023 24,556 1,063 25,619
2024 24,800 819 25,619
2025 25,050 568 25,618
2026 25,302 317 25,619
2027 12,746 66 12,812
$ 136,766 $ 4,140 $ 140,906
General Obligation Bonds
The City is authorized to issue general obligation bonds in an amount not to exceed $48,000,000 to finance improvements to streets within the City. The bonds were authorized at an election of the registered voters of the City held on November 4, 2014.

On March 10, 2015, the City issued $5,000,000 of those bonds at a premium of $376,225. The bonds are payable semiannually on March 1 and September 1 of each year with interest rates varying from 3% to 5%. The bonds are subject to optional and mandatory redemption prior to maturity. As of June 30, 2021, $4,385,000 was still outstanding.

Future minimum payment obligations for the bonds on June 30, 2021, are as follows:

Fiscal year Ending June 30 Principal Interest Total
2022 145,000 170,056 $ 315,056
2023 150,000 162,682 312,682
2024 155,000 155,057 310,057
2025 165,000 147,056 312,056
2026 175,000 138,556 313,556
2027-2031 995,000 559,482 1,554,482
2032-2036 1,190,000 374,057 1,564,057
2037-2041 1,410,000 144,788 1,554,788
$ 4,385,000 $ 1,851,734 $ 6,236,734

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
55 NOTE 6 – LONG-TERM LIABILITIES (Continued)
UGeneral Obligation Bonds (Continued)
On April 16, 2016, the City issued $8,000,000 of those bonds at a premium of $509,358. The bonds are payable semiannually on March 1 and September 1 of each year with interest rates varying from 2% to 5%. The bonds are subject to optional and mandatory redemption prior to maturity. As of June 30, 2021, $7,175,000 was still outstanding.

Future minimum payment obligations for the bonds on June 30, 2021, are as follows:

Fiscal year Ending June 30 Principal Interest Total
2022 225,000 248,344 473,344
2023 235,000 237,969 472,969
2024 245,000 225,969 470,969
2025 260,000 213,344 473,344
2026 270,000 200,094 470,094
2027-2031 1,550,000 810,020 2,360,020
2032-2036 1,820,000 542,020 2,362,020
2037-2041 2,110,000 245,329 2,355,329
2042 460,000 7,475 467,475
$ 7,175,000 $ 2,730,564 $ 9,905,564
On December 5, 2017, the City issued $15,000,000 of those bonds at a premium of $1,110,466. The bonds are payable semiannually on March 1 and September 1 of each year with interest rates varying from 3% to 5%. The bonds are subject to optional and mandatory redemption prior to maturity. As of June 30, 2021, $14,315,000 was still outstanding.

Future minimum payment obligations for the bonds on June 30, 2021, are as follows:

Fiscal year Ending June 30 Principal Interest Total
2022 370,000 531,600 901,600
2023 390,000 512,600 902,600
2024 410,000 492,600 902,600
2025 430,000 471,600 901,600
2026 450,000 449,600 899,600
2027-2031 2,605,000 1,879,125 4,484,125
2032-2036 3,265,000 1,226,925 4,491,925
2037-2041 3,815,000 679,875 4,494,875
2042-2044 2,580,000 117,600 2,697,600
$ 14,315,000 $ 6,361,525 $ 20,676,525

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
56 NOTE 6 – LONG-TERM LIABILITIES (Continued)
Capital Leases
On August 24, 2017, the City entered a capital lease for five vehicles valued at $248,067, under an agreement which provided for title to pass upon expiration of the lease period. Future minimum lease payments are as follows:

Fiscal year Ending June 30 Principal
2022 54,520
Total minimum lease payments 54,520
Less amount representing interest (2,572)
Present value of net minimum lease payments $ 51,948
On August 14, 2018, the City entered a capital lease for police vehicles and equipment valued at $339,016, under an agreement which provided for title to pass upon expiration of the lease period. Future minimum lease payments are as follows:

Fiscal year Ending June 30 Principal
2022 73,381
2023 73,381
Total minimum lease payments 146,762
Less amount representing interest (8,507)
Present value of net minimum lease payments $ 138,255
Water Revenue Bond
On February 26, 2020, the City issued $4,456,000 of water revenue bonds to use for capital projects. The bonds are payable semiannually on March 1 and September 1 of each year with an interest rate of 2.43%.

As of June 30, 2021, $4,282,000 is still outstanding.

Future minimum payment for the bonds on June 30, 2021, are on the following page:

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
57 NOTE 6 – LONG-TERM LIABILITIES (Continued)
Water Revenue Bond (Continued)
Fiscal year Ending June 30 Principal Interest Total
2022 180,000 101,865 281,865
2023 184,000 97,442 281,442
2024 188,000 92,922 280,922
2025 193,000 88,293 281,293
2026 198,000 83,542 281,542
2027-2031 1,065,000 342,201 1,407,201
2032-2036 1,202,000 204,649 1,406,649
2037-2040 1,072,000 52,898 1,124,898
$ 4,282,000 $ 1,063,812 5,345,812
The City has pledged future water system revenues, net of specific operating expenses, to repay the bonds on parity with a pledge that services all parity obligations. The bonds are payable solely from water customer net revenues. For the year ended June 30, 2021, principal and interest paid, and total customer net revenues were $281,671 and $1,317,920, respectively. This debt issue is subject to a reserve requirement in conjunction with parity debt issued by the City. The City is in compliance with the revenue rate covenant requiring net revenues of the water system to be at least equal to 1.2 times the amount necessary to pay principal and interest on the bonds and all other parity bonds.

NOTE 7 – PENSION PLANS
A. General Information about the Pension Plans
Plan Descriptions
All qualified permanent and probationary employees are eligible to participate in the City’s separate Safety (Police and Fire) or Miscellaneous Employee Pension Plans (Plans), cost-sharing multiple employer defined benefit plans administered by the California Public Employees’ Retirement System (CalPERS).

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

Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
58 NOTE 7 – PENSION PLANS (Continued)
A. General Information about the Pension Plans
are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

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

Prior to On or after
Hire Date January 1, 2013 January 1, 2013
Benefit formula 2.5% @ 55 2% @ 62
Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life
Retirement age 50-63 52-67
Monthly benefits, as a % of eligible compensation 1.426% to 2.418% 1.0% to 2.5% Required employee contribution rates 8.00% 6.75%
Required employer contribution rates 12.361% + $493,975 7.732% + $14,901 Miscellaneous
Prior to On or after
Hire Date January 1, 2013 January 1, 2013
Benefit formula 3.0% @ 55 2.7% @ 57
Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life
Retirement age 50 50-57
Monthly benefits, as a % of eligible compensation 3.00% 2.0% to 2.7% Required employee contribution rates 12.00% 13.00%
Required employer contribution rates 21.746% + $407,241 13.044% + $8,287 Safety-Police
Prior to On or after
Hire Date January 1, 2013 January 1, 2013
Benefit formula 1/2% @ 55 2.0% @ 55
Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life
Retirement age 50-55 50-55
Monthly benefits, as a % of eligible compensation 1.783% to 2.5% 1.426% to 2.0% Required employee contribution rates N/A N/A
Required employer contribution rates 0% + $37,421 N/A
Safety-Fire

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
59 NOTE 7 – PENSION PLANS (Continued)
A. General Information about the Pension Plans (Continued) Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the 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.

For the year ended June 30, 2021, the contributions recognized as part of pension expense for each Plan were as follows:

Miscellaneous Safety
Contributions-employer $ 831,877 $ 676,869
On June 30, 2021, the City reported net pension liabilities for its proportionate shares of the net position liability of each Plan as follows:

Proportionate Share of
Net Pension Liability
Miscellaneous $ 7,602,638
Safety 6,274,015
Total $ 13,876,653
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
The net pension liability was measured as of June 30, 2020, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2019, rolled forward to June 30, 2020, using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all Pension Plan participants, actuarially determined.

On June 30, 2021, the City’s proportionate share of the net pension liability for each Plan as of June 30, 2019, and June 30, 2020, was as follows:

Miscellaneous Safety
Proportion-June 30, 2019 0.17775% 0.09206%
Proportion-June 30, 2020 0.18024% 0.09417%
Change-Increase (Decrease) 0.00249% 0.00211%

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
60 NOTE 7 – PENSION PLANS (Continued)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
For the year ended June 30, 2021, the City recognized pension expense of $1,221,185 for the Miscellaneous Plan and $1,132,959 for the Safety Plan. Pension expense represents the change in the net pension liability during the measurement period, adjusted for actual contributions and the deferred recognition of changes in investment gain/loss, actuarial gain/loss, actuarial assumptions or method, and plan benefits. On June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to pension as follows:

Deferred Outflows of
Resources
Deferred Inflows of
Resources
Changes in assumptions $ - $ 54,225
Differences between expected and actual experience 391,787 Net difference between projected and actual earnings on retirement plan investments 225,848
Changes in proportion and differences between City
contributions and proportionate share of contributions 312,308 424,957 Adjustment due to differences in proportion 96,359 43,582 City contributions subsequent to the measurement date 827,979 $ 1,854,281 $ 522,764
Miscellaneous
Deferred Outflows of
Resources
Deferred Inflows of
Resources
Changes in assumptions $ - $ 20,899
Differences between expected and actual experience 486,518 Net difference between projected and actual earnings on retirement plan investments 136,361
Changes in proportion and differences between City
contributions and proportionate share of contributions 228,745 Adjustment due to differences in proportion 145,198
City contributions subsequent to the measurement date 1,308,253 $ 2,076,330 $ 249,644
Safety

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
61 NOTE 7 – PENSION PLANS (Continued)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
Deferred outflows of resources and deferred inflows of resources above represent the unamortized portion of changes to net pension liability to be recognized in future periods in a systematic and rational manner.

Deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date of $827,979 and $1,308,253 for the Miscellaneous and Safety Plans, respectively, will be recognized as a reduction of the net pension liability in the year June 30, 2022.

Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in the pension expenses as follows:

Miscellaneous Safety
2022 $ 27,875 $ 115,602
2023 202,404 192,328
2024 164,935 142,178
2025 108,324 68,325
$ 503,538 $ 518,433
Fiscal year ending June 30
Actuarial Assumptions
The total pension liability in the June 30, 2020, actuarial valuation was determined using the following actuarial assumptions on the next page:

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
62 NOTE 7 – PENSION PLANS (Continued)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
Valuation Date
Measurement Date
Actuarial Cost Method
Actuarial Assumptions:

Discount Rate
Inflation
Payroll Growth
Projected Salary Increase
Investment Rate of Return (1)
Mortality (2)
(1) Net of pension plan investment and administration expenses including inflation. (2)) The mortality table used was developed based on CalPERs' specific data. The table includes 15 years of mortality improvements using Society of Actuaries Scale 90% of scale MP 2016. For more details on this table please refer to 2017 experience study report (based on CalPERS demographic data from 1997 to 2015) that can be found on the CalPERS website.

Data for all Funds
Miscellaneous and Safety
June 30, 2019
June 30, 2020
Entry-Age Normal Cost Method

7.15%

2.50%

2.750%
Varies by Entry Age and Service

7.00%
Derived using CalPERS' Membership
Discount Rate
The discount rate used to measure the total pension liability was 7.15 percent. To determine whether the municipal bond rate should be used in the calculation of the discount rate for public agency plans (including PERF C), CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on testing the plans, the tests revealed the assets would not run out. Therefore, the current 7.15 percent discount rate is appropriate, and the use of municipal bond rate calculation is not deemed necessary. The long-term expected discount rate of 7.15 percent is applied to all plans in the Public Employees Retirement Fund, including PERF C. The stress test results are presented in a detailed report called “GASB Crossover Testing Report” that can be obtained at CalPERS’ website under the GASB No. 68 section.

CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability Management (ALM) review cycle that is scheduled to be completed in February 2022. Any changes to the discount rate will require Board action and proper stakeholder outreach. For these reasons, CalPERS expects to continue using a discount rate net of administrative expenses for GASB No. 67 and No. 68 calculations through at least the 2021-22 fiscal year. CalPERS will continue to check the materiality of the difference in calculation until such time as we have changed our methodology.

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
63 NOTE 7 – PENSION PLANS (Continued)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
Discount Rate (Continued)
The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS considered both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent.

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

Asset Class (1)
Assumed
Asset
Allocation
Real Return
Years 1-10 (2)
Real Return
Years 11+ (3)
Global Equity 50.0% 4.80% 5.98%
Fixed Income 28.0% 1.00% 2.62%
Inflation Assets 0.0% 0.77% 1.81%
Private Equity 8.0% 6.30% 7.23%
Real Assets 13.0% 3.75% 4.93%
Liquidity 1.0% -0.92%
Total 100.0%
(1) In the System's CAFR, Fixed income is included in Global Debt Securities; Liquidity is included in Short-term Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities. (2) An expected inflation of 2.00% used for this period. (3) An expected inflation of 2.92% used for this period.

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
64 NOTE 7 – PENSION PLANS (Continued)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in Discount Rate The following represents the City’s proportionate share of the net pension liability calculated using the discount rate of 7.15 percent, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower (6.15 percent) or 1- percentage point higher (8.15 percent) than the current rate:

Miscellaneous Safety
1% Decrease 6.15% 6.15%
Net Pension Liability $ 11,347,435 $ 9,424,174
Current Discount Rate 7.15% 7.15%
Net Pension Liability $ 7,602,638 $ 6,274,015
1% Increase 8.15% 8.15%
Net Pension Liability $ 4,508,431 $ 3,689,011
Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

C. Payable to the Pension Plan
On June 30, 2021, the City had no amount outstanding for contributions to the pension plan required for the fiscal year ended June 30, 2021.

NOTE 8 – OTHER POST EMPLOYMENT BENEFITS
The City provided an early retirement incentive under extremely specific criteria. Five employees qualified and opted to take the early retirement incentive. The City is refunding the employee’s medical costs up to $500 per month until eligible for Medicare. The maximum potential liability as of June 30, 2021, was $35,201.

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
65 NOTE 9 – LIABILITY, WORKERS’ COMPENSATION, AND PURCHASED INSURANCE A. UDescription of Self-Insurance Pool Pursuant to Joint Powers Agreement The City of Grover Beach is a member of the California Joint Powers Insurance Authority (Authority).

The Authority is composed of 123 California public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage.

The California JPIA began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board operates through a ninemember Executive Committee.

B. Primary USelf-Insurance Programs of the Authority
Each member pays an annual contribution at the beginning of the coverage period. A retrospective adjustment is then conducted annually thereafter, for coverage years 2012-13 and prior. Coverage years 2013-14 and forward are not subject to routine annual retrospective adjustment. The total funding requirement for self-insurance programs is based on an actuarial analysis. Costs are allocated to individual agencies based on payroll and claims history, relative to other members of the risksharing pool.

Primary Liability Program
Claims are pooled separately between police and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $3 million for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $3 million to $30 million for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs from $30 million to $50 million, are distributed based on the outcome of cost allocation within the first and second loss layers.

The overall coverage limit for each member, including all layers of coverage, is $50 million per occurrence. Subsidence losses have a sub-limit of $50 million per occurrence. The coverage structure includes retained risk that is pooled among members, reinsurance, and excess insurance. More detailed information about the various layers of coverage is available on the following website:
https://cjpia.org/coverage/risk-sharing-pools/.

Workers’ Compensation Program
Claims are pooled separately between public safety (police and fire) and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
66 NOTE 9 – LIABILITY, WORKERS’ COMPENSATION, AND PURCHASED INSURANCE (Continued) B. Primary USelf-Insurance Programs of the Authority (Continued) variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $1 million for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $1 million to $2 million for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs from $2 million to statutory limits are distributed based on the outcome of cost allocation within the first and second loss layers.

For FY 2020-21 the Authority’s pooled retention is $2 million per occurrence, with reinsurance to statutory limits under California Workers’ Compensation Law. Employer’s Liability losses are pooled among members to $2 million. Coverage from $2 million to $5 million is purchased through reinsurance policies, and Employer’s Liability losses from $5 million to $10 million are pooled among members.

C. UPurchased Insurance
Property Insurance
The City of Grover Beach participates in the all-risk property protection program of the Authority. This insurance protection is underwritten by several insurance companies. City of Grover Beach property is currently insured according to a schedule of covered property submitted by the City of Grover Beach to the Authority. City of Grover Beach property currently has all-risk property insurance protection in the amount of $50 million. There is a $10,000 deductible per occurrence except for non-emergency vehicle insurance which has a $2,500 deductible.

D. UAdequacy of Protection
During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in FY 2020-21.

NOTE 10 – CONTINGENCIES AND COMMITMENTS
The City is involved in various litigations. In the opinion of management and legal counsel, the disposition of all litigations pending will not have a material effect on the City’s financial statements.

The City has received state and federal funds for specific purposes that are subject to review and audit by the grantor agencies. Although such audits could generate expenditure disallowances under terms of the grants, it is believed that any required reimbursements will not be material. The City had the following

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
67 NOTE 10 – CONTINGENCIES AND COMMITMENTS (Continued)
construction contracts as of June 30, 2021: $413,272 for the 16th Street Project, $2,722,900 for the Street Rehabilitation and Repair, $71,663 for Citywide Disability Access Improvements, $57,644 for the Nacimiento Cross Gutter Project, and $217,290 for the Sidewalk Infill Project.

NOTE 11 – REVENUE LIMITATIONS IMPOSED BY CALIFORNIA PROPOSITION 218 Proposition 218, which was approved by the voters in November 1996, will regulate the City’s ability to impose, increase, and extend taxes, assessments, and fees. Any new, increased, or extended taxes, assessments, and fees subject to the provisions of Proposition 218, require voter approval before they can be implemented. Additionally, Proposition 218 provides that these taxes, assessments, and fees are subject to the voter initiative process and may be rescinded in the future years by the voters.

NOTE 12 – JOINT OPERATING AGREEMENTS
Wastewater operations. The City does not own and operate a separate wastewater treatment plant facility. Pursuant to a purchase agreement with the South San Luis Obispo County Sanitation District, the City’s waste is transported through City-owned, and City maintained lines for processing at the District’s plant. The City purchased up to 30 percent of the District’s treatment plant capacity. The cost of this purchased capacity is recorded as a capital asset of the wastewater enterprise, and this cost is being amortized to expense over 20 years using the straight-line method. The City is also obligated to pay to the District the costs of maintaining and operating the District’s plant, based upon the number of City’s customers, times certain rates, and such operating costs are to be paid monthly by the City. The City records such operating costs as expenses in its wastewater enterprise.

Water operations. The San Luis Obispo County Flood Control and Water Conservation District, a countywide agency, issued voter-approved general obligation bonds for the purpose of building Lopez Dam, a storage reservoir, water treatment plant, and other facilities to provide a primary municipal water supply.

The City has entered into a water supply agreement wherein the City has agreed to pay annually, regardless of water deliveries, a prorated percentage of certain costs. In addition, the City also pays the District a prorated share of operating, maintenance, pumping, and related operating costs which expensed in the City’s water enterprise fund.

NOTE 13 – FIVE CITIES FIRE AUTHORITY
The City of Grover Beach is a member of the Five Cities Fire Authority (FCFA), a joint powers authority between the Cities of Arroyo Grande, Grover Beach, and the Oceano Community Services District. FCFA was formed on July 9, 2010, for the purpose of providing a more efficient fire protection service within the City limits of Arroyo Grande and Grover Beach, as well as the towns of Oceano and Halcyon which are unincorporated areas of San Luis Obispo County. Each member contributes its pro rate share of operating costs to FCFA based on a funding formula, calculated annually. The FCFA governing board consists of one member appointed from each participating entity and shall be appointed as determined by the respective City Council or Board of Directors. All financial decisions are made by this three-member board. The City

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
68 NOTE 13 – FIVE CITIES FIRE AUTHORITY (Continued)
of Grover Beach contributed $2,015,115 to FCFA during the fiscal year ended June 30, 2021, for fire protections services. Separate financial statements may be obtained from the Five Cities Fire Authority at 140 Traffic Way in Arroyo Grande, California.

NOTE 14 – SUCCESSOR AGENCY
UBonds Payable
On December 8, 2005, the former Improvement Agency issued $4,390,000 of 2005 tax allocation bonds to refund the outstanding balance of the 2001 tax allocation notes and pay the costs of redevelopment activities within the Agency’s Improvement Project. The bonds are secured by a pledge of the Agency’s tax increment revenues excluding to be paid to other taxing authorities, pursuant to pass-through agreements, bear interest from 3.25 to 5.00 percent, and mature on August 1, 2035. On February 1, 2014, the Successor Agency assumed the tax allocation bonds previously held by the former Improvement Agency. As of June 30, 2021, the principal balance was $2,955,000.

The future minimum payment obligations for the bonds payable on June 30, 2021, are as follows:

Fiscal year Ending June 30 Principal Interest Total
2022 135,000 144,375 279,375
2023 145,000 137,375 282,375
2024 150,000 130,000 280,000
2025 160,000 122,250 282,250
2026 165,000 114,125 279,125
2027-2031 965,000 433,625 1,398,625
2032-2036 1,235,000 160,125 1,395,125
$ 2,955,000 $ 1,241,875 $ 4,196,875
ULoan Payable
On February 1, 2015, the Successor Agency assumed loans due to the City of Grover Beach previously held by the former Improvement Agency. There is no formal payment schedule. Loan payments are made when monies become available, with an annual interest rate of 0.5%. The amount due to the City of Grover Beach as of June 30, 2021, was $29,869.

CITY OF GROVER BEACH
Notes to Basic Financial Statements
June 30, 2021
69 NOTE 14 – SUCCESSOR AGENCY (Continued)
UChanges in Long-Term Liabilities
Long term liability activity for the fiscal year ended June 30, 2021, was as follows:

Balance Balance Due Within
July 1, 2020 Additions Deletions June 30, 2021 One Year Tax allocation bonds $ 3,085,000 $ 130,000 $ 2,955,000 $ 135,000 Loan payable 329,869 300,000 29,869
$ 3,414,869 $ - $ 430,000 $ 2,984,869 $ 135,000
NOTE 15 – DEFERRED INFLOWS OF RESOURCES
On June 30, 2021, deferred inflows of resources, reported in the governmental fund financial statements, consisted of the following:

Home
Grant Fund Total
Unavailable Revenue $ 456,475 $456,475
$ 456,475 $456,475

NOTE 16 – SUBSEQUENT EVENT
Events subsequent to June 30, 2021 have been evaluated through December 13, 2021, which is the date the financial statements were available to be issued. On December 13, 2021, the City adopted a resolution authorizing the issuance and sale of not to exceed $10,000,000 principal amount of General Obligation Bonds for Measure K-14 street repairs and authorizes actions related to the issuance of the General Obligation Bonds.

Note 17 – COVID-19 PANDEMIC
As noted in Management’s Discussion and Analysis, the City has been impacted by the COVID-19 pandemic. Due to the uncertainty surrounding the pandemic, the length and severity of the outbreak, and the volatility in the world investment markets, there is uncertainty as to how these events will affect City activities and investment income in the future.

REQUIRED

SUPPLEMENTAL

INFORMATION

CITY OF GROVER BEACH
Required Supplemental Information
June 30, 2021
70 Budgetary Information
Through the budget, the City Council sets the direction of the City, allocates its resources and establishes its priorities. The Annual Budget assures the efficient and effective use of the City’s economic resources, as well as establishing that the highest priority objectives are accomplished.

The Annual budget serves the fiscal period July 1 to June 30 and is a vehicle that accurately and openly communicates these priorities to the community, businesses, vendors, employees and other public agencies. Additionally, it establishes the foundation of effective financial planning.

The City prepares a one-year budget. The City Council adopts governmental fund budgets consistent with generally accepted accounting principles as legally required.

The City Council generally reauthorizes appropriations for continuing projects and activities. The City Council has the legal authority to amend the budget of any fund, at any time during the fiscal year. The budgetary legal level of control (the level on which expenditures may not legally exceed appropriations) is generally at the fund level. Budgeted expenditures may be reallocated within a fund by the City Manager, and within a department program by the department director, but any inter-fund transfers or reallocation must be approved by resolution of the City Council.

CITY OF GROVER BEACH

GENERAL FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

BUDGET TO ACTUAL
For the Fiscal Year Ended June 30, 2021
Original Final Actual Amounts
Variance with
Final Budget
Positive
(Negative)
Revenues:

Taxes $ 10,380,000 $ 10,928,000 $ 12,708,557 $ 1,780,557 Licenses, permits, and fees 378,500 378,500 335,682 (42,818) Intergovernmental 334,306 497,461 340,446 (157,015)
Charges for services 883,100 883,100 624,174 (258,926)
Fines and forfeitures 60,000 60,000 40,845 (19,155)
Use of money and property 275,000 275,000 72,378 (202,622) Total revenues 12,310,906 13,022,061 14,122,082 1,100,021 Expenditures:

General government 3,069,522 4,159,122 4,210,209 (51,087) Public safety 6,591,022 7,113,864 7,165,935 (52,071)
Community development 1,151,546 1,181,546 547,071 634,475 Public works 1,168,749 1,373,562 1,202,725 170,837
Parks and recreation 409,792 409,792 327,463 82,329
Capital outlay 115,000 81,186 33,814
Debt service:

Principal 57,277 57,277 142,171 (84,894)
Interest 13,791 13,791 12,449 1,342
Total expenditures 12,461,699 14,423,954 13,689,209 734,745 Excess of revenues over (under) expenditures (150,793) (1,401,893) 432,873 1,834,766 Other Financing Sources (Uses):

Transfers in 588,000 588,000 578,000 (10,000)
Transfers out (401,000) (749,511) (228,959) 520,552
Total other financing sources (uses) 187,000 (161,511) 349,041 510,552 Net change in fund balances 36,207 (1,563,404) 781,914 2,345,318 Fund balance - July 1 2,513,393 1,663,293 3,269,130
Fund balance - June 30 $ 2,549,600 $ 99,889 $ 4,051,044 $ 2,345,318 Budgeted Amounts
71 CITY OF GROVER BEACH

STREET REHABILITATION AND REPAIR FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

BUDGET TO ACTUAL
For the Fiscal Year Ended June 30, 2021
Original Final Actual Amounts
Variance with
Final Budget
Positive
(Negative)
Revenues:

Charges for services $ 5,000 $ 5,000 $ - $ (5,000)
Use of money and property 27,000 27,000 3,928 (23,072)
Other 28,500 28,500
Total revenues 32,000 32,000 32,428 428
Expenditures:

Public works 3,762,976 4,059,976 3,191,446 868,530
Total expenditures 3,762,976 4,059,976 3,191,446 868,530 Excess of revenues over (under) expenditures (3,730,976) (4,027,976) (3,159,018) 868,958 Other Financing Sources (Uses):

Transfers in 252,000 248,810 (3,190)
Transfers out (10,000) (10,000) 10,000
Total other financing sources (uses) (10,000) 242,000 248,810 6,810 Net change in fund balance (3,740,976) (3,785,976) (2,910,208) 875,768 Fund balance - July 1 6,171,462 6,171,462 7,047,850
Fund balance - June 30 $ 2,430,486 $ 2,385,486 $ 4,137,642 $ 875,768 Budgeted Amounts
72 CITY OF GROVER BEACH

HOME GRANT FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

BUDGET TO ACTUAL
For the Fiscal Year Ended June 30, 2021
Original Final Actual Amounts
Variance with
Final Budget
Positive
(Negative)
Expenditures:

Community development $ - $ - $ - $ -
Total expenditures
Net change in fund balance
Fund balance - July 1 (300,466) (300,466) (300,466)
Fund balance - June 30 $ (300,466) $ (300,466) $ (300,466) $ - Budgeted Amounts
73 CITY OF GROVER BEACH
Schedule of Proportionate Share of Net Pension Liability Miscellaneous Plan
Last 10 Years*
As of June 30, 2021
Fiscal Year 2014-15 2015-16 2016-17 2017-18 2018-19
Measurement Period 2013-14 2014-15 2015-16 2016-17 2017-18 Proportion of the net pension liability 0.059220% 0.177090% 0.171680% 0.172750% 0.175950% Proportionate share of the net pension liability $ 3,684,797 $ 4,740,779 $ 5,964,116 $ 6,810,002 $ 6,631,010 Covered payroll $ 2,201,206 $ 2,352,410 $ 2,544,097 $ 2,823,759 $ 3,007,940 Proportionate share of the net pension
liability as a percentage of covered payroll 167.40% 201.53% 234.43% 241.17% 220.45% Plan fiduciary net position as a percentage
of the total pension liability 81.15% 79.89% 75.87% 75.39% 77.69% Notes to schedule
Changes in assumptions:

1. In 2018, demographic assumptions and the inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate.

2. In 2017, as part of the Asset Liability Management review cycle, the discount rate was changed from 7.65% to 7.15%.

3. In 2016, the discount rate was changed from 7.5% (net of administrative expense) to 7.65% to correct for an adjustment to exclude administrative expense

4. In 2015, amounts reported as changes in assumptions resulted primarily from adjustments to expected retirement ages of general employees
*Fiscal year 2014-15 was the 1st year of implementation 74 2019-20 2020-21
2018-19 2019-20

0.177750% 0.180240%
$ 7,117,875 $ 7,602,638
$ 3,077,837 $ 3,138,281
231.26% 242.25%

77.73% 77.71%
75 CITY OF GROVER BEACH
Schedule of Proportionate Share of Net Pension Liability Safety Plan
Last 10 Years*
As of June 30, 2021
Fiscal Year 2014-15 2015-16 2016-17 2017-18 2018-19
Measurement Period 2013-14 2014-15 2015-16 2016-17 2017-18 Proportion of the net pension liability 0.058560% 0.089290% 0.089350% 0.088890% 0.090830% Proportionate share of the net pension liability $ 3,643,925 $ 3,611,809 $ 4,627,579 $ 5,311,534 $ 5,329,358 Covered payroll $ 1,308,085 $ 1,193,228 $ 1,400,666 $ 1,606,728 $ 1,611,098 Proportionate share of the net pension
liability as a percentage of covered payroll 278.57% 302.69% 330.38% 330.58% 330.79% Plan fiduciary net position as a percentage
of the total pension liability 78.83% 77.27% 72.69% 71.74% 73.39% Notes to schedule
Changes in assumptions:

2. In 2017, as part of the Asset Liability Management review cycle, the discount rate was changed from 7.65% to 7.15%.

3. In 2016, the discount rate was changed from 7.5% (net of administrative expense) to 7.65% to correct for an adjustment to exclude administrative expense

0.092060% 0.094170%
$ 5,746,863 $ 6,274,015
$ 1,724,360 $ 1,820,004
333.28% 344.73%

73.37% 73.12%
77 CITY OF GROVER BEACH

SCHEDULE OF CONTRIBUTIONS
Miscellaneous Plan
Last 10 Years*
As of June 30, 2021
Fiscal Year 2015 2016 2017 2018 2019
Contractually required contribution (actuarially determined) $ 387,424 $ 502,704 $ 564,258 $ 640,602 $ 739,558 Contribution in relation to the actuarially determined
contributions 387,424 502,704 564,258 640,602 739,558
Contribution deficiency (excess) - - - - -
Covered payroll $ 2,241,150 $ 2,201,206 $ 2,352,410 $ 2,544,097 $ 2,823,759 Contributions as a percentage of covered payroll 17.29% 22.84% 23.99% 25.18% 26.19% Notes to Schedule
Valuation Date: 6/30/2018
The actuarial methods and assumptions were used to set the actuarially determined contributions for the fiscal year 2020-21 were derived from the June 30, 2018 funding valuation report.

Actuarial Cost Method Entry Age Normal
Amortization Method/Period For details, see June 30, 2018 funding valuation report
Inflation 2.50%
Salary Increases Varies by entry age and service
Payroll Growth 2.75%
Investment Rate of Return 7.0% net of pension plan investment and administrative expenses; includes inflation
Retirement Age The probabilities of retirement are based on the 2010 CalPERS Experience Study for the
period from 1997 to 2007
Mortality The probabilities of mortality are based on
the 2010 CalPERS Experience Study for the
period from 1997 to 2007. Pre-retirement and
post-retirement mortality rates include 5 years
of projected mortality improvement using
Scale AA published by the Society of Actuaries.
* Fiscal year 2015 was the 1st year of implementation, therefore only seven years are shown. 78 2020 2021
$ 831,877 $ 827,979
831,877 827,979
- -
$ 3,007,940 $ 3,077,837

27.66% 26.90%
79 CITY OF GROVER BEACH

SCHEDULE OF CONTRIBUTIONS
Safety Plan
Last 10 Years*
As of June 30, 2021
Fiscal Year 2015 2016 2017 2018 2019
Contractually required contribution (actuarially determined) $ 329,602 $ 426,742 $ 477,038 $ 568,347 $ 569,000 Contribution in relation to the actuarially determined
contributions 329,602 426,742 477,038 568,347 569,000
Contribution deficiency (excess) - - - - -
Covered payroll $ 1,242,711 $ 1,308,085 $ 1,193,228 $ 1,400,666 $ 1,606,728 Contributions as a percentage of covered payroll 26.52% 32.62% 39.98% 40.58% 35.41% Notes to Schedule
Valuation Date: 6/30/2018
The actuarial methods and assumptions were used to set the actuarially determined contributions for the fiscal year 2020-21 were derived from the June 30, 2018 funding valuation report.

Actuarial Cost Method Entry Age Normal
Amortization Method/Period For details, see June 30, 2018 funding valuation report
Inflation 2.50%
Salary Increases Varies by entry age and service
Payroll Growth 2.75%
Investment Rate of Return 7.0% net of pension plan investment and administrative expenses; includes inflation
Retirement Age The probabilities of retirement are based on the 2010 CalPERS Experience Study for the
period from 1997 to 2007
Mortality The probabilities of mortality are based on
the 2010 CalPERS Experience Study for the
period from 1997 to 2007. Pre-retirement and
post-retirement mortality rates include 5 years
of projected mortality improvement using
Scale AA published by the Society of Actuaries.
* Fiscal year 2015 was the 1st year of implementation, therefore only seven years are shown. 80 2020 2021
$ 676,869 $ 808,253
676,869 1,308,253
- (500,000)
$ 1,611,098 $ 1,724,360

42.01% 75.87%
81 SUPPLEMENTAL

INFORMATION

NONMAJOR GOVERNMENTAL FUNDS
82 SPECIAL REVENUE FUNDS
Special revenue funds are used to account for revenues that are restricted by law or administrative actions to expenditures for specified purposes. Nonmajor special revenue funds used by the City are listed below:

Gas Tax - These funds are restricted in use to acquisition of rights of way, construction, maintenance, engineering, and administrative costs of the public street system. Income is derived from state excise taxes on fuel and is allocated to the City in accordance with Street and Highway Code Sections 2103-2108.

Gas Tax Road Maintenance and Rehabilitation Account - These funds are used to account for the receipt and expenditure of Senate Bill 1, an additional gas tax, that enable cities and counties to address significant maintenance, rehabilitation and safety needs on the local streets and road system.

Public Safety Grants – The purpose of this fund is to receive and track all Police Department State grant revenue and expenditures in accordance with prescribed regulations. Revenue for this fund is comprised of funds from the Citizens Option for Public Safety Program (COPs). Under the standard grant program allocation, the City is eligible to receive a minimum amount of $100,000 annually, with additional proportionate share based on population estimates determined by the California Department of Finance.

Parks Construction – This fund receives Park-In-Lieu fees from developers and is restricted to the acquisition, construction, major improvements, and rehabilitation.

Transportation Impact Fees – This fund accounts for fees generated by development for the construction of transportation improvements.

Law Enforcement Impact Fees – This fund accounts for fees generated by development. These funds may be used for law enforcement improvements related to expansion.

Administrative Impact Fees – This fund accounts for fees generated by development. These funds may be used for administrative improvements related to expansion.

Fire Development Impact Fees – This fund accounts for fees generated by development. These funds may be used for fire improvements related to expansion.

Storm Water Impact Fees – This fund accounts for fees generated by development. These funds may be used for storm water related expansion.

Wastewater Impact Fees – This fund accounts for fees generated by development. These funds may be used for wastewater related expansion.

Parks Facilities Impact Fees – This fund accounts for fees generated by development. These funds may be used for parks facilities related expansion.

Recreation Facilities Impact Fees – This fund accounts for fees generated by development. These funds may be used for recreation related expansion.

NONMAJOR GOVERNMENTAL FUNDS
83 Water Development Impact Fees – This fund accounts for fees generated by development. These funds may be used for water related expansion.

State Mandated ADA Fund – This fund accounts for the State Mandated Disability and Education Fee (SB 1186 Steinberg). Cities are required to collect four dollars from every business license or equivalent instrument. Cities are required to transmit thirty percent of the fees to the State on a quarterly basis for deposit in the Disability Access and Education Revolving Fund. Cities keep seventy percent of the fees to be used for ADA Certified Specialists Program.

Subsidized Senior Transportation – This fund accounts for expenditures related to the Senior Transportation program funded by Local Transportation Funds.

Local Transportation – This fund accounts for apportioned revenue from the state and is restricted in use to acquisition of rights of way, construction, maintenance, engineering, and administrative costs associated with the public street system, as well as transit-related costs. Income derived from state and federal grants generally administered by SLOCOG and Caltrans Local Assistance and include State Highway Account Urban and Regional (USHA and RSHA) Funds.

Community Development Block Grant (CDBG) Non-Entitlement – CDBG funds may be used for economic development, housing or public service projects which primarily benefit low- and moderate-income residents.

CAPITAL PROJECTS FUND
Capital projects funds are restricted, committed or assigned for capital outlay and include:

Underground Utilities – This fund accounts for underground utility developer fees restricted to the placement of utility lines underground in accordance with City Council priorities set by resolution.

Capital Projects – This fund was set up to account for capital projects in a central fund where the funding is transferred in from the funding source and the capital expenditures are appropriated and tracked by project.

DEBT SERVICE FUND
Debt service funds are cash reserves used to pay for the interest and principal payments on certain types of debt and include:

Street Improvements – This fund is held by the County of San Luis Obispo and pays the semiannual principal and interest payments for the general obligation bonds issued to finance street improvements within the City.

CITY OF GROVER BEACH

NONMAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEET
June 30, 2021
Gas Tax Gas Tax RMRA
Public Safety
Grants
Park
Construction
Transportation
Impact Fees
ASSETS
Cash and investments $ 486,813 $ 271,843 $ 235,526 $ 37,215 $ 131,392 Cash with fiscal agent
Accounts receivable 44,640
Loans receivable
Interest receivable 280 158 136 21 76
Total assets $ 487,093 $ 316,641 $ 235,662 $ 37,236 $ 131,468

LIABILITIES, DEFERRED INFLOWS OF RESOURCES,

AND FUND BALANCES
Liabilities:

Accounts payable $ 36,464 $ - $ - $ 705 $ -
Due to funds
Total liabilities 36,464 - 705
Deferred Inflows of Resources:

Unavailable revenue
Total deferred inflows of resources
Fund Balances:

Restricted 450,629 316,641 235,662 36,531 131,468
Unassigned
Total fund balances 450,629 316,641 235,662 36,531 131,468 Total liabilities, deferred inflows of resources, and
fund balances $ 487,093 $ 316,641 $ 235,662 $ 37,236 $ 131,468 Special Revenue Funds
84 Law
Enforcement
Impact Fees
Administrative
Impact Fees
Fire Development
Impact Fees
Storm Water
Impact Fees
Wastewater
Impact Fees
Parks Facilities
Impact Fees
Recreation
Facilities Impact
Fees
$ 10,358 $ 22,292 $ 11,047 $ 120,581 $ 281,323 $ 474,854 $ 91,978 6 13 7 70 161 274 52
$ 10,364 $ 22,305 $ 11,054 $ 120,651 $ 281,484 $ 475,128 $ 92,030 $ - $ - $ - $ - $ - $ - $ -
-
10,364 22,305 11,054 120,651 281,484 475,128 92,030
10,364 22,305 11,054 120,651 281,484 475,128 92,030
$ 10,364 $ 22,305 $ 11,054 $ 120,651 $ 281,484 $ 475,128 $ 92,030 85 CITY OF GROVER BEACH

NONMAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEET
June 30, 2021
Water
Development
Impact Fees
State Mandated
ADA
Subsidized
Senior
Transportation
Local
Transportation
CDBG Non
Entitlement
ASSETS
Cash and investments $ 17,534 $ 11,075 $ 22,861 $ 1,006,185 $ - Cash with fiscal agent
Accounts receivable 536,452
Loans receivable
Interest receivable (158) 14 580
Total assets $ 17,376 $ 11,075 $ 22,875 $ 1,006,765 $ 536,452

LIABILITIES, DEFERRED INFLOWS OF RESOURCES,

AND FUND BALANCES
Liabilities:

Accounts payable $ - $ 121 $ 408 $ 2,140 $ 72,275
Due to funds 486,407
Total liabilities 121 408 2,140 558,682
Deferred Inflows of Resources:

Unavailable revenue
Total deferred inflows of resources
Fund Balances:

Restricted 17,376 10,954 22,467 1,004,625
Unassigned (22,230)
Total fund balances 17,376 10,954 22,467 1,004,625 (22,230) Total liabilities, deferred inflows of resources, and
fund balances $ 17,376 $ 11,075 $ 22,875 $ 1,006,765 $ 536,452 Special Revenue Funds
86 Debt Service
Fund
Underground
Utilities
Capital
Projects
Street
Improvements Total
$ 227,391 $ 151,773 $ 1,477,942 $ 5,089,983
-
74,946 656,038
-
130 - 1,820
$ 227,521 $ 226,719 $ 1,477,942 $ 5,747,841
$ - $ 226,719 $ - $ 338,832
486,407
226,719 825,239
-
-
227,521 1,477,942 4,944,832
(22,230)
227,521 1,477,942 4,922,602
$ 227,521 $ 226,719 $ 1,477,942 $ 5,747,841
Capital Projects Funds
87 CITY OF GROVER BEACH

NONMAJOR GOVERNMENTAL FUNDS

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES For the Fiscal Year Ended June 30, 2021
Gas Tax Gas Tax RMRA
Public Safety
Grants
Park
Construction
Transportation
Impact Fees
Revenues:

Property taxes $ - $ - $ - $ - $ -
Intergovernmental 303,424 244,968 156,727
Charges for services 11,004 20,378
Use of money and property 2,220 1,317 1,168 167 592
Other
Total revenues 305,644 246,285 157,895 11,171 20,970
Expenditures:

Public safety 69,687
Community development
Public works 199,835
Parks and recreation 8,460
Capital outlay 192,431
Debt service:

Principal
Interest
Total expenditures 199,835 262,118 8,460
Excess of revenues over (under) expenditures 105,809 246,285 (104,223) 2,711 20,970 Other Financing Sources (Uses):

Transfers in
Transfers out (54,432) (189,824)
Total other financing sources (uses) (54,432) (189,824) Net change in fund balances 51,377 56,461 (104,223) 2,711 20,970 Fund balances - July 1 399,252 260,180 339,885 33,820 110,498 Fund balances - June 30 $ 450,629 $ 316,641 $ 235,662 $ 36,531 $ 131,468 Special Revenue Funds
88 Law
Enforcement
Impact Fees
Administrative
Impact Fees
Fire
Development
Impact Fees
Storm Water
Impact Fees
Wastewater
Impact Fees
Parks Facilities
Impact Fees
Recreation
Facilities
Impact Fees
$ - $ - $ - $ - $ - $ - $ -
916 1,475 1,861 5,783 18,779 27,729 4,957
47 103 48 557 2,810 2,264 423
963 1,578 1,909 6,340 21,589 29,993 5,380
-
963 1,578 1,909 6,340 21,589 29,993 5,380
(391,878) (32,940)
(391,878) (32,940)
963 1,578 1,909 6,340 (370,289) (2,947) 5,380
9,401 20,727 9,145 114,311 651,773 478,075 86,650
$ 10,364 $ 22,305 $ 11,054 $ 120,651 $ 281,484 $ 475,128 $ 92,030 89 CITY OF GROVER BEACH

NONMAJOR GOVERNMENTAL FUNDS

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES For the Fiscal Year Ended June 30, 2021
Water
Development
Impact Fees
State
Mandated
ADA
Subsidized
Senior
Transportation
Local
Transportation
CDBG Non
Entitlement
Revenues:

Taxes $ - $ - $ - $ - $ -
Intergovernmental 5,000 344,120 350,655
Charges for services 17,376 5,389
Use of money and property 96 4,027
Other
Total revenues 17,376 5,389 5,096 348,147 350,655
Expenditures:

Public safety
Community development 159,662
Public works 1,088 18,198
Parks and recreation
Capital outlay
Debt service:

Principal
Interest
Total expenditures 1,088 18,198 159,662
Excess of revenues over (under) expenditures 17,376 5,389 4,008 329,949 190,993 Other Financing Sources (Uses):

Transfers in
Transfers out (6,000) (192,440) (164,582)
Total other financing sources (uses) (6,000) (192,440) (164,582) Net change in fund balances 17,376 (611) 4,008 137,509 26,411 Fund balances - July 1 11,565 18,459 867,116 (48,641)
Fund balances - June 30 $ 17,376 $ 10,954 $ 22,467 $ 1,004,625 $ (22,230) Special Revenue Funds
90 Debt Service
Fund
Underground
Utilities Capital Projects
Street
Improvements Totals
$ - $ - $ 1,644,002 $ 1,644,002
299,540 1,704,434
40,000 155,647
1,072 10,735 27,646
-
1,072 339,540 1,654,737 3,531,729
69,687
159,662
2,401 221,522
8,460
815,135 1,007,566
700,000 700,000
984,852 984,852
815,135 1,687,253 3,151,749
1,072 (475,595) (32,516) 379,980
475,595 475,595
(1,032,096)
475,595 (556,501)
1,072 (32,516) (176,521)
226,449 1,510,458 5,099,123
$ 227,521 $ - $ 1,477,942 $ 4,922,602
Capital Project Funds
91 CITY OF GROVER BEACH