Guadalupe City Council
May 10, 2022

Agenda Item No. 12

REPORT TO THE CITY COUNCIL OF THE CITY OF GUADALUPE
Agenda of May 10, 2022
_______________________________ _________________________________ Prepared by: Approved by:

Tom Brandeberry, LADG Todd Bodem, City Administrator
Lorena Zarate, Finance Director
SUBJECT:

Cannon Corporation and Labor Consultants of California request to add services due to continued need for inspection/labor compliance work, and authorize use of up to $150,000 for cost overages for the Le Roy Park and Community Center Project from the Park Development Fund.

RECOMMENDATION:

It is recommended that the City Council authorize up to $150,000 from the Park Development Fund and approve requests to add services and additional amounts of $16,480 for Cannon Corporation and $3,750 for Labor Consultants of California to their contracts to allow them to complete their work of inspection and labor compliance for the Le Roy Park and Community Center Project, due to the delay in completion of construction.

DISCUSSION:

The LeRoy Park and Community Center Project, due to change orders and add days, was extended through April 2022, as contractor Quincon had not reached the “substantial completion” requirements in their contract. Cannon Corporation and Labor Consultants of California are critically needed to ensure that all work, including punch lists and require contract deliverables, are completed by Quincon. As long as Quincon is on-site completing their remaining scope of work, Cannon, representing the City, must be on-site too as the construction inspector to ensure that Quincon meets substantial completion requirements. Labor Consultants of California also must continue their prevailing wage oversight until final payrolls are submitted and approved. While the scope of work is unchanged the time frame for doing the inspection work has lengthened by an additional two months. There are no remaining funds available for the LeRoy Park project that can cover these additional amounts.

Financial Error: In prior staff reports, Los Amigos de Guadalupe (LADG) reported that there were enough remaining funds to cover add services and change orders. However, as part of a reconciliation process, it was determined that LADG was counting the Statewide Parks Per Capita grant of $177,952 twice on the revenue side. This has left an approximate shortfall of $150,000 for the project, include the additional costs required for Cannon Corporation and Labor Consultants of California.

Tom Brandeberry

The error should have been identified and corrected much earlier. Tom Brandeberry, as CEO, accepts responsibility for this error. LADG and the Finance Director have implemented an additional step in the process to ensure this error does not happen in the future.

At the beginning of the project, an interfund loan was approved between the Park Development Fund and the CDBG Grant Fund. The Park Development Fund currently has $744,736 from the sale of a parcel to the Guadalupe Union School District that was given to the City by the developer of the Pasadera project in lieu of Quimby fees. This money will be used to fund new improvements to the City parks and/or other recreational facilities (to be decided by the City Council at a later time), but in the meantime, these funds were lent to the CDBG Grant Fund to cover the costs for design and construction of the Leroy Park project. Although the City was awarded CDBG grant funds for this purpose, grant funds are provided to the City on a reimbursement basis, and there is considerable lag time between the City’s request for reimbursement and receipt of payment. In order to minimize cash flow issues to the General Fund, staff previously advised the City Council of its desire to use the proceeds from the sale of the parcel to the school district to cover the costs of the Leroy Park project until completion at which time the Park Development Funds will be repaid and available for other uses (to be decided by the Council).

City staff is requesting that the City Council authorize use of the Park Development Fund to cover the excess expenses over available grant funds and donations to finish the Leroy Park and Community Center Project up to a maximum of $150,000 and thereby, avoid the expenditure affecting the General Fund, as this is an allowable use of the funds. If the Council approves the use of the Park Development Fund to cover the additional expenses for Cannon Corporation and Labor Consultants of California, which is included in the up to $150,000 total amount requested, there will still be up to $594,736 remaining in the Park Development Fund for other recreation and parks purposes.

ATTACHMENTS:

1. Resolution No. 2022-39

2. Cannon Corporation Additional Service Agreement No.3

3. Labor Consultants of California Additional Service Agreement No.2

RESOLUTION NO. 2022-39

A RESOLUTION OF THE CITY COUNCIL OF THE CITY GUADALUPE AUTHORIZING THE USE OF THE PARK

DEVELOPMENT FUND TO PAY FOR COST OVERAGES FOR THE LE ROY PARK AND COMMUNITY

CENTER PROJECT
WHEREAS, the City of Guadalupe owns and maintains LeRoy Park and Community Center; and WHEREAS, the City received state grants totaling $5.2 million to renovate LeRoy Park and Community Center; and
WHEREAS, Los Amigos de Guadalupe, in error, previously indicated there was available funding for the costs of project overruns, when there is an approximate shortfall of $150,000, and WHEREAS, the City entered into an agreement with Cannon Corporation in March 2019 to provide certain services for the renovation of Leroy Park and Community Center; and WHEREAS, the City entered into an agreement with Labor Consultants of California in July 2019 to provide certain services for the renovation of Leroy Park and Community Center; and WHEREAS, there has been a number of added construction days to complete the project; and WHEREAS, the contract period for Cannon and Labor Consultants of California to work on this project (December 2021) has passed, and
WHEREAS, Quincon’s continues to complete the Le Roy Park project and Cannon’s and Labor Consultants of California’s services are still required and a contract increase of $ 16,480 for Cannon Corporation and $3,750 for Labor Consultants of California is required for the proposed schedule, and WHEREAS, the City’s Park Development Fund has sufficient funds to cover the approximately $150,000 shortfall, which includes these two add services.

NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Guadalupe as follows:

SECTION 1: That the attached Additional Service Agreements with Cannon Corporation and Labor Consultants of California is approved, and the Mayor is authorized to sign the agreements on behalf of the City.

SECTION 2: Funds from the City’s Park Development Fund can be used to pay up to $150,000 for the estimated cost overages for the Le Roy Park and Community Center Project, including for the increased cost of services for Cannon Corporation in the amount of $16,480 and for Labor Consultants of California in the amount of $3,750.

SECTION 3: The City Clerk is hereby authorized to make minor changes herein to address clerical errors, so long as substantial conformance of the intent of this document is maintained. In doing so, the City ATTACHMENT 1

Clerk shall consult with the City Administrator and City Attorney concerning any changes deemed necessary.

PASSED, APPROVED AND ADOPTED at a regular meeting on the 10th day of May 2022 by the following vote:

MOTION:

AYES:

NOES:

ABSENT:

ABSTAIN:

I, Amelia M. Villegas, City Clerk of the City of Guadalupe DO HEREBY CERTIFY that the foregoing Resolution, being Resolution No. 2022-39, has been duly signed by the Mayor and attested by the City Clerk, all at a regular meeting of the City Council, held May 10, 2022, and that same was approved and adopted.

ATTEST:
______________________________ ____________________________________ Amelia M. Villegas, City Clerk Ariston Julian, Mayor
APPROVED AS TO FORM:
______________________________
Philip Sinco, City Attorney
Request for Additional Services
CM Services Agreement
Guadalupe Community Center and Leroy Park Renovation
(Sent via email)
200419 ASA03 1
April 12, 2022
Mr. Tom Brandeberry
President & CEO
Los Amigos de Guadalupe
4545 10th St.

Guadalupe, CA 93434
Subject: Guadalupe Community Center and Leroy Park Renovation ADDITIONAL SERVICE AGREEMENT NO.3
Dear Mr. Brandeberry,
Cannon has reviewed the labor and administrative costs associated with inspection and coordination activities directly related to unforeseen construction issues and work added to the contract since our last issued Additional Service Agreement (ASA) No.2. These items were not included in our original scope of work or in our ASA No.2 and have resulted in additional effort on Cannon’s part to ensure thorough contract administration and inspection through the extended date of project completion.

The nature and substance of these non-anticipated changes in scope and duration of work are based on additions or changes requested by the City, Project Architect, or Contractor, and changes due to unforeseen field conditions.

Our work associated with these changes has resulted in additional review and coordination of modifications to contract plans, additional meetings, field coordination and inspection, and review of change orders approved by the City.

As of ASA No.2, the construction completion date was extended to March 11th, 2022. The Contractor’s work has continued beyond this extended date of completion and is now expected to continue through April 22nd, 2022.

With the contractors expected date of completion scheduled for late April 2022, we will have approximately 1 additional month of construction observation and inspection work not included in our Additional Service Agreement No.2.

Considering this, we request that the city provide additional construction observation and inspection budget of $16,480 to cover our additional efforts on this project through the most current anticipated completion date of April 22nd, 2022.

Cannon has provided construction inspection services for the LeRoy Park and Community Center project since the start of construction in August of 2020. We remain committed to providing the city with high quality service to meet your needs throughout the final completion of this project. If you have any questions, or wish to discuss this matter further, please contact me at (805) 544-7407 or [email protected].

Sincerely,
Patrick R. Riddell, PE
Director, Construction Management Division
ATTACHMENT 2
Request for Additional Services
CM Services Agreement
Guadalupe Community Center and Leroy Park Renovation
(Sent via email)
200419 ASA03 2
ADDITIONAL SERVICES AGREEMENT No. 3
Client: City of Guadalupe Project Name: Guadalupe Community Center and Leroy Park Renovation Date: April 12, 2022 Project Number: 200419
Description of Additional Services and/or Materials:

Additional Construction Management Services and Inspection.

Additional Fee: $ 16,480.00
(Time and Materials, not to exceed without prior written authorization) Authorization:

In witness whereof, the parties hereto have caused this agreement consisting of the Request for Additional Services, the original signed agreement dated July 14, 2020 and any other necessary and applicable documents to be executed of the date and year first above written.

Any additions and/or corrections to this agreement will be addressed in a separate agreement.

City of Guadalupe Cannon
Sonia Rios-Ventura Patrick R. Riddell, PE
Community Development Manager Director, Construction Management Division Date Date
Request for Additional Services
CM Services Agreement
Guadalupe Community Center and Leroy Park Renovation
(Sent via email)
200419 ASA03 3
Labor Consultants of California INVOICE
Prevailing Wage & Labor Specialist
P. O. Box 1875
Hanford, CA. 93232
Phone 559-584-7499 Fax 559-584-0897
INVOICE # 2410
DATE: 4/18/2022
Bill To:

City of Guadalupe
918 Obispo Street
Guadalupe, CA. 93434
Attention: Tom Brandeberry, Los Amigos de Guadalupe
For:

Leroy Park Project/ CDBG No. 17-CDBG12099-2

DESCRIPTION AMOUNT
Federal and State Prevailing Wage Monitoring/ Labor Coordinator Services for the Leroy Park Project – Activities include: consultation and correspondence with the City of Guadalupe, LADG and project contractors regarding labor requirements for project; field visit to project on 2/11/22 – 4 workers interviewed for Quincon and JR Roofing; certified payroll records and other reporting docs reviewed for labor compliance; certified payroll review letters sent to Quincon on 12/21/21, 1/5/22, 2/9/22 and 3/23/22; preparation of Semi-Annual Labor Standards Enforcement Report sent to City of Guadalupe on 3/23/22;
$3,750.00
Total Contract: $26,250 (Date of Agreement: 7/23/2019) Per Exhibit B Compensation

1. Fees for Consultant’s services shall not exceed $26,250 without notice to and consent from City Council

2. Consultant will be paid as a percentage based on work completed at the following intervals: 25%, 50%, 75% and 100%

3. Final Payment will be made once the Davis-Bacon Project Summary has been submitted to the City and approved by City Council
Amended Contract Agreement for the City of Guadalupe effective on 8/23/21: $3,750 Period of Invoice: December 2021 to March 2022/ Amount of this Invoice: $3,750 Balance after Payment of this Invoice: $0 (from amended contract agreement) Richard Perez:

Make all checks payable to Labor Consultants of California $3,750.00
TOTAL $3,750.00
ATTACHMENT 3

Agenda Item No. 13

REPORT TO THE CITY COUNCIL OF THE CITY OF GUADALUPE
Agenda of May 10, 2022
________________________________ __________________________________ Prepared by: Approved by:

Michael Cash, Director of Public Safety Todd Bodem, City Administrator SUBJECT: Informational report from Public Safety staff on the feasibility of establishing a downtown residential permit parking area in the 1000 block of Guadalupe Street.

EXECUTIVE SUMMARY:

The City has no regulations in place that would prohibit or restrict the establishment of a residential permit parking area within the 1000 block of Guadalupe Street. The location has a mixed usage of residential units and businesses.

Currently, there are six (6) businesses and /or community centers and eight (8) residential units in the area. There are thirteen (13) marked street parking spaces and two (2) off-street residential parking locations.

East Side of 1000 Guadalupe Street
Residential Units 1048 #A and 1048 #B Guadalupe Street
1032 #A, 1032 #B, 1032 #C, 1032 #D Guadalupe Street
Businesses 1030 Guadalupe Street (Post Office)
Parking three (3) street public parking spaces
three (3) street green marked spaces (Post Office)
two (2) off-street car-port parking spaces (1032 #A,#B,#C,#D Guadalupe Street)
West Side of 1000 Guadalupe Street
Residential Units 1095 Guadalupe Street
1085 Guadalupe Street
Businesses 1065 Guadalupe Street (Dune Center)
1055 Guadalupe Street (Cultural Center)
1045 Guadalupe Street (Yellow House)
1025 Guadalupe Street (Veterans Memorial Building)
Michael Cash

Parking seven (7) street public parking spaces
1035 Guadalupe Street (off-street parking lot)
1025 Guadalupe Street ((off-street parking lot)
The community concern is not day-time parking but parking at night. There is posted signage that reads, “Parking between the hours of 12:00 midnight and 6:00 am is prohibited and you will be issues a citation”. This is mostly enforced Thursday evenings to facilitate street-sweeping activity Friday mornings. Residents have requested night street parking for their personal vehicles.

RECOMMENDATION:

It is recommended that the City Council:
1) Receive presentation from staff; and
2) Accept public testimony; and
3) Close public comment; and
4) Deliberate and file the report; or
5) Direct staff to prepare an ordinance; or
6) Direct staff to return to Council when a draft ordinance is ready for consideration; or 7) Continue to another Council meeting for further discussion and deliberation BACKGROUND:

Public Safety staff had received a city departmental request to enforce the downtown posted, “No Overnight Street Parking between the hours of 12 midnight and 6 a.m.” parking regulation to enable the weekly Friday morning street sweeping contracted activity.

Several area residents have received parking citations for illegally parking in the area after hours. They have sent in written complaints and stated there are no available parking spaces for their residents. They are requesting city officials to assist with the problem.

Staff research has determined that within this one-block location, 1000 Guadalupe Street, only four (4) residential units do not have off-street parking. They do have two (2) marked public parking spaces directly in front of their addresses.

DISCUSSION:

In bringing this information to Council, we would like to know if you have a desire to enact an ordinance to address the residents’ concerns.

As an example, the City of San Luis Obispo has a “Residential Parking Permit District” program for predominantly residential communities with limited parking and a “Downtown Residential Overnight Parking Program” with parking in selected off-site parking structures, limited to downtown residents only. The City of Santa Barbara also has a residential parking permit program.

Staff is looking forward to an informative discussion with Council along with input from the public as well as other departments to determine what direction we will go with this topic.

ATTACHMENT:

1. City of Santa Barbara Residential Parking Program and application package

2. City of San Luis Obispo Residential Parking District Information Guide

3. City of San Luis Obispo Downtown Residential Overnight Parking Program (DROP)

4. Correspondence from resident at 1056 Guadalupe Street

5. Parking citation #20000321 (dismissed due to improper issuance) ATTACHMENT 1

ATTACHMENT 2

Parking Services Division
1260 Chorro Street, Suite B, San Luis Obispo, CA 93401
805.781.7230
Downtown Residential Overnight Parking Program (DROP)

INTRODUCTION
In recognition of the increased demand for off-site overnight residential parking in the downtown area, the City is providing an overnight parking option in two of the parking structures which is limited to downtown residents only. Vehicles participating in the program must be parked on the third or fourth levels of the designated parking structure only. Downtown residents wishing to utilize the overnight parking option must: 1) Provide proof of downtown residency, 2) Sign up to participate in the Downtown Residential Overnight Parking program and; 3) Pay the appropriate fees at the Parking Services Office. Below are the structure locations where overnight parking is allowed:
• 842 Palm Street Parking Structure - Enter off Palm Street between Chorro and Morro Street
• 871 Marsh Street Parking Structure - Enter off Marsh Street between Chorro and Morro Street
Overnight parking at other locations, including on downtown streets, is NOT allowed under this program and will result in parking citation(s). For more information on overnight parking on downtown streets, please see the No 3 AM to 5 AM Parking Map on the City's website.

PROXCARD AND OVERNIGHT PARKING PERMIT
Participation in the Downtown Residential Overnight Parking Program will require using the appropriate Parking Services' structure Proxcard and the display of a valid Overnight Parking Permit Hangtag. No RVs, motorcycles or trailers are allowed in City parking structures. Due to height limits, loaded roof racks are highly discouraged.

Proxcards
Proxcards use smartcard technology to provide "contactless" access to the specific parking structure. Participants must scan the Proxcard for every entry and every exit - even when the gates are in the up/open position. Proxcards are programmed for each particular parking structure and will not function at the other structures.

Overnight Parking Permit Hangtag
All vehicles participating in the Downtown Residential Overnight Parking program will be required to display a valid overnight parking permit hangtag - displayed on the rear view mirror of the vehicle - while parked in the structure. Any vehicle parked overnight without the appropriate hangtag properly displayed or not parked on the third or fourth levels, will be assessed a $10 overnight parking charge each time the hangtag is not properly displayed or the vehicle is parked on the incorrect level. This amount is payable within three (3) days; failure to pay may result in non-renewal of Proxcard and overnight parking permit.

ATTACHMENT 3

ATTACHMENT 4
ATTACHMENT 5

Agenda Item No. 14

REPORT TO THE CITY COUNCIL OF THE CITY OF GUADALUPE
Agenda of May 10, 2022

_______________________________ _________________________________ Prepared by: Approved by:

Lorena Zarate, Finance Director Todd Bodem, City Administrator SUBJECT: Fiscal Year 2020-21 Audited Financial Statements and Single Audit Report RECOMMENDATION:

That the City Council receive and accept the City of Guadalupe Financial Statements for the Year ended June 30, 2021 along with the Independent Auditor’s Report and accept the Single Audit Report for 2021.

DISCUSSION:

An audit of the City’s accounting records for fiscal year 2020-21 has been performed by Badawi and Associates, Certified Public Accountants. The City received an unqualified audit opinion which indicates that the financial statements 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 for the period under audit.

As described in the Management’s Discussion and Analysis section, the financial analysis of the government wide statements includes long and short-term information about the City’s overall financial condition. Total net position of the City as a whole increased approximately $4 million as compared to fiscal year 2019-20. Total assets increased about $4.9 million, and total liabilities increased about $991,000. Total government wide revenues increased about $2.6 million, which is about 21% from the prior year. Total government wide expenses increased about $677,000 or about 6.5% from the prior year. Please see Pages 8 to 11 of the Management’s Discussion and Analysis section for further details on the government-wide statements from Staff.

The financial analysis of the fund statements, more specifically for governmental funds, provide information on near-term inflows, outflows and balances of spendable resources in a more detailed manner. Total fund balance for governmental funds, including the General Fund, increased by $453,000 during fiscal year 2020-21. Total revenues for governmental funds increased $1.5 million. Total expenditures for governmental funds increased about $3.1 million, mainly due to capital outlay. Please see Pages 12 to 13 for further details on the fund statements from Staff.

In regard to the General Fund, total revenues increased by about $164,000 as compared to fiscal year 2019-20. The General Fund saw an increase in revenues from taxes of about $434,000, of which Lorena Zarate

approximately $207,000 are related to sales tax from the new measure. The General Fund saw a decrease of about $406,000 in revenue from licenses and permits, specifically related to the number of homes built in one year versus the other in Pasadera. In regard to expenditures, the General Fund saw an increase of about $742,000 from prior year. The increase in expenditures resulted from an increase in public safety of about $624,000. Overall, the General Fund’s expenditures exceeded revenues in the amount of $115,266 for fiscal year 2020-21, resulting in a positive fund balance of $370,356 compared to $485,621 from fiscal year 2019-20. This represents an absorption of reserves from the General Fund instead of an increase to reserves, which was one of the City-wide goals for fiscal year 2020-21.

As compared to the budget for the General Fund, revenues exceeded expectations by about $3,500.

Revenue for building permits did not meet the budget related to the Pasadera and Escalante Meadows developments. The City received a $160,698.71 reimbursement for fire mutual aid and $99,777 in CARES funding that was not originally budgeted for. Please see visual graphic below.

In regard to expenditures in comparison to the budget for the fiscal year 2020-21, the General Fund was over budget overall by $363,979. Please see visual graphic below for comparison by department expenditures.

Category Budget Actual %
Property Tax 1,438,600 1,474,172 102.5%
Transfers from other funds 822,212 852,292 103.7%
Sales Tax 597,000 811,141 135.9%
Utility Users Tax 441,000 480,619 109.0%
Building Permit & Planning 606,699 290,619 47.9%
Business License 305,000 268,160 87.9%
Revenue from other agencies 192,500 261,138 135.7%
Franchise Fees 248,000 276,551 111.5%
COPS Grant 166,000 156,764 94.4%
Rental of Property 113,000 97,083 85.9%
Administrative Overhead 113,000 69,105 61.2%
Other 455,593 464,515 102.0%
Total Revenue 5,498,604 5,502,160 100.1%
Gen. Fund Revenue by Category

Departmental expenditures for the attorney department exceeded the annual budget specifically as it relates to costs for labor negotiations. Departmental expenditures for the Building Maintenance department exceeded the annual budget specifically as it relates to utilities, storm water permit and professional services for landscape and cleaning. Departmental expenditures for fire and police exceeded the budget as it relates to personnel costs. Departmental expenditures for the Parks and Rec department exceeded the annual budget specifically as it relates to utilities. Departmental expenditures for the Planning department exceeded the annual budget specifically as it relates to personnel costs and professional services.

In regard to enterprise funds, overall operating revenues increased by about $556,000 and overall operating expenses decreased by about $118,000 as compared to fiscal year 2020. Please see Page 13 for further details on enterprise funds from Staff.

For further analysis from Staff, please see the complete Management’s Discussion and Analysis section of the attachment, along with the Notes to the Basic Financial Statements which provide further details.

An audit of the City’s major federal programs for fiscal year 2020-21 has been performed by Badawi and Associates, as well. The City received an unqualified audit opinion which indicates that the City, complied, in all material respects, with the types of compliance requirements that could have a direct and material effect on each of its major federal programs. The City’s major federal programs include CDBG, COVID CARES funding, and transit monies.

On pages 9 to 13 of the Single Audit, Badawi & Associates have included their schedule of findings and management’s responses. The findings for fiscal year 2020-21 are the same as the findings in fiscal year 2019-20; there were two findings related to the audited financial statements and no findings related to the single audit. The first finding of the auditor is the insufficient fund balance in the General Fund and the ability of the City to continue as a going concern. The reason for this is because the General Fund did not maintain a sufficient fund balance level to ensure the continuity of the operations. Although the General Fund finished the year with a positive fund balance of $370,356, the fund decreased approximately $115,000 from prior fiscal year. This balance only represents 28 days of operating DEPARTMENT NAME Adopted Budget Actual Spent as of
6/30/2021 Variance 100%
City Council 15,628 15,153 (475) 97%
Administration 477,809 465,434 (12,375) 97%
City Attorney 90,000 92,065 2,065 102%
Finance 497,148 470,199 (26,949) 95%
Non Departmental 555,803 474,378 (81,425) 85%
Building Maintenance 166,445 185,766 19,321 112%
Police 2,203,718 2,381,508 177,790 108%
Fire 972,480 1,199,673 227,193 123%
Parks & Rec 180,672 202,124 21,452 112%
Building and Safety 201,077 238,460 37,383 119%
TOTAL ALL DEPARTMENTS: 5,360,780 5,724,759 363,979 107% 2020-21 GENERAL FUND EXPENDITURES

revenues and expenditures and is still far from the target of 15% reserves. This can put the City in a vulnerable position in times of economic stress. In addition, as of June 30, 2021, the General Fund owed internally to the Lighting and Assessment Fund and the Water Fund the amounts of $240,000 and $368,996, respectively. These interfund loans were made originally so that the General Fund could sustain its basic operations. The auditor is recommending that the City continue to analyze all potential cost cutting measures and revenue sources, and review options to adhere to a budget plan for the General Fund and other funds to increase the fund balance, as well as provide continued financing for City operations. Staff’s response to this finding included an explanation of the expected increase to the City’s revenues related to the Pasadera and Escalante Meadows developments, along with a steady increase in sales tax with the new Measure N that was passed in the November 2020 election. In addition, the City is currently working on bringing Cannabis to the City that will help with increasing revenues. The City has also received American Rescue Plan funds in fiscal year 2022. However, the City still needs to look at finding alternatives to sustain the current services provided to its residents with stable revenue streams. The remaining finding relates to internal controls in processes and segregation of duties among employees in the Finance Department. Staff’s response to these findings included an explanation of our current processes. Staff expects that the new accounting software will accommodate workflows and authorization parameters to improve our controls and segregation of duties. The estimated go-live date of the new accounting software is planned for November 2022.

ATTACHMENTS:

1. Financial Statements for the Year Ended June 30, 2021

2. Single Audit Report for the Year Ended June 30, 2021 City of Guadalupe
Guadalupe, California
Basic Financial Statements
For the Year Ended June 30, 2021
ATTACHMENT 1

CITY OF GUADALUPE

GUADALUPE, CALIFORNIA

BASIC FINANICAL STATEMENTS
FOR THE YEAR ENDED June 30, 2021
Prepared by:

FINANCE DEPARTMENT
City of Guadalupe
Basic Financial Statements
For the year ended June 30, 2021
Table of Contents
Page

FINANCIAL SECTION
Independent Auditors’ Report ............................................................................................................................. 1 Management’s Discussion and Analysis .............................................................................................................. 5 Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position ............................................................................................................................... 23 Statement of Activities ..................................................................................................................................... 24 Fund Financial Statements:

Governmental Fund Financial Statements:

Balance Sheet ................................................................................................................................................. 28 Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position ........................................................................... 29 Statement of Revenues, Expenditures and Changes in Fund Balance ................................................. 30 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities ............................................................................................................................... 31 Proprietary Fund Financial Statements:

Statement of Net Position ........................................................................................................................... 32 Statement of Revenues, Expenses and Changes in Fund Net Position ................................................. 34 Statement of Cash Flows .............................................................................................................................. 36 Fiduciary Fund Financial Statements:

Statement of Fiduciary Net Position........................................................................................................... 38 Statement of Changes in Fiduciary Net Position ...................................................................................... 39 Notes to Basic Financial Statements ............................................................................................................... 43 Required Supplementary Information (Unaudited):

Budgets and Budgetary Accounting ................................................................................................................. 85 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual:

Budgetary Comparison Schedule - General Fund ...................................................................................... 86 Budgetary Comparison Schedule – Community Development ............................................................... 87 Schedule of the City’s Proportionate Share of the Net Pension Liability .................................................... 88 Schedule of Plan Contributions ......................................................................................................................... 88 Schedule of Changes in Total OPEB Liability and Related Ratios ............................................................... 89 City of Guadalupe
Basic Financial Statements
For the year ended June 30, 2021
Table of Contents, Continued
Page
Supplementary Information:

Non-Major Governmental Funds:

Combining Balance Sheet ................................................................................................................................ 92 Combining Statement of Revenues, Expenditures and
Changes in Fund Balances ........................................................................................................................... 94 INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of the City Council
of the City of Guadalupe
Guadalupe, California
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 Guadalupe, California (City) as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

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

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

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

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

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

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 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.

Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information, schedule of the City’s proportionate share of the net pension liability, schedule of plan contributions, and schedule of changes in total other postemployment benefits on pages 5-18 and 85-89, be presented to supplement the basic financial statements.

Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual nonmajor fund financial statements on pages 92 to 95 are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining and individual nonmajor fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements are fairly stated in all material respects in relation to the basic financial statements as a whole.
2 To the Honorable Mayor and Members of the City Council of the City of Guadalupe
Guadalupe, California

Emphasis of Matter Regarding Going Concern
The accompanying financial statements have been prepared assuming that the City will continue as a going concern. As discussed in Note 15 to the financial statements, the City continues to have expenditures higher than revenues in the General Fund. In addition, the General Fund has a large interfund loans payable balance. There are doubts about the General Fund’s ability to repay the interfund loans payable without having a significant impact on the City’s operations. These conditions raise doubt about the City’s ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 15.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 31, 2022, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Badawi & Associates, CPAs
Berkeley, California
March 31, 2022
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4 MANAGEMENT’S DISCUSSION AND ANALYSIS
Fiscal Year Ended June 30, 2021

INTRODUCTION
This discussion and analysis of the City of Guadalupe financial performance provides an overview of the City’s financial activities for the fiscal year ended June 30, 2021. For the most complete picture of the City, please read this document in conjunction with the City’s basic financial statements, and the accompanying notes to the basic financial statements. Comparisons between this year and the prior year are presented showing percentage changes.

FINANCIAL HIGHLIGHTS
x Total assets of the City at the close of the most recent fiscal year ended at about $32 million with an overall increase of about $4.9 million from the prior year. Governmental activities ended at over $17.6 million and experienced an increase in assets of about $3.8 million. Business­type activities increased assets by about $1.1 million, ending the year at over $14.4 million in assets. Total primary government assets exceeded liabilities by over $25 million. x Total liabilities of the City on June 30, 2021 were at about $8 million. Liabilities increased for governmental activities by about $975,000 and increased for business­type activities by about $15,000. The City experienced an overall increase in liabilities of almost $991,000. x As of the close of the current fiscal year, the City’s total net position increased by about $4 million.

Net position for Governmental activities increased by about $2.9 million and business­type activities increased by about $1.1 million. The City experienced an increase of about 19 percent in total net position from the prior year.
x Governmental funds reported combined ending fund balances of about $4.1 million. The General Fund ended the current fiscal year with a positive fund balance of approximately $370,000. This represents a decrease of fund balance of about $115,000 from prior year, when it closed at about $485,000.
x In FY 2020­21, 36 more homes were permitted for the Pasadera development within the City. The “Pasadera Development” will include approximately 800 homes and approximately 250,000 square feet of commercial space. Project build out is estimated to occur within 10 to 15 years. 5 City of Guadalupe
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2021

OVERVIEW OF THE FINANCIAL STATEMENTS
The City’s Annual Financial Report consists of four main components: (1) management’s discussion and analysis, (2) the basic financial statements, (3) required supplementary information, and (4) combining fund financial statements. The basic financial statements include two kinds of statements that present different views of the City, the government­wide and the fund financial statements. x The government­wide financial statements provide both long­term and short­term information about the City’s overall financial status.
x The fund financial statements focus on individual parts of the City government, reporting the City’s operations in more detail than the government­wide statements.

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

Government­Wide Financial Statements
The government­wide statements report information about the City as a whole using accounting methods similar to those used by private sector companies. The statement of net position includes all of the City’s assets and liabilities, as well as any deferred outflows or inflows of resources. The statement of activities includes all current year revenues and expenses regardless of when cash is received or paid. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial health of the City is improving or declining.

The government­wide financial statements of the City are divided as follows:
x Governmental activities – Most of the City’s basic services are included here, such as police, fire public works, community development, parks and recreation and general government. x Business­type activities – Certain services provided by the City are funded by customer fees. Among these are water and sewer services, solid waste and transit services.

Fund Financial Statements
A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Fund financial statements provide more detailed information about the City’s largest funds, not the City as a whole. The City has 24 funds that are considered governmental, four funds that are considered proprietary, and one fund that is considered fiduciary.
6 City of Guadalupe
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2021
OVERVIEW OF THE FINANCIAL STATEMENTS ­ continued
The City has three types of fund financial statements:

Governmental funds ­ Governmental funds tell how general government services such as police, fire and public works were financed in the short­term as well as what remains for future spending. Most of the City’s basic services are included in governmental funds, which focus on (1) short­term inflows and outflows of spendable resources, and (2) the remaining year­end balances available for spending. Because this information does not encompass the additional long­term focus of the government­wide statements, reconciliations that explain the relationship (or differences) between governmental funds and governmental activities follow the governmental funds statements.

Additional information regarding the City’s ability to continue as a going concern is available in Note 15 of the Financial Statements.

Proprietary Funds – Services for which customer fees are intended to finance the costs of operations are generally reported in proprietary funds. Proprietary fund statements, like the government wide statements, provide short­term and long term financial information about the activities of the City that operate as businesses, such as water and sewer services.

Fiduciary Funds – Fiduciary Fund statements provide information about the financial relationships in which the City acts solely as a trustee or agent for the benefit of others, to whom the resources belong. The City elected to serve as the successor agency for its former redevelopment agency which was dissolved by state law. The successor agency activity is accounted for in a private purpose trust fund.

The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All of the City’s fiduciary activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary net position. We exclude these activities from the City’s government­wide financial statements because the City cannot use these resources to finance operations.

Notes to the Basic Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in the government­wide and fund financial statements.
7 City of Guadalupe
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2021

FINANCIAL ANALYSIS OF THE GOVERNMENT WIDE STATEMENTS
This section provides analysis of the government­wide financial statements including long­term and shortterm information about the City’s overall financial condition. The following tables address the financial results of the City as a whole.

Analysis of net position
Total net position of the primary government increased approximately $4 million at the close of the fiscal year ending June 30, 2021. Total assets increased about $4.9 million, deferred outflows increased $138,000, total liabilities increased $990,000 and deferred inflows increased $13,000. The following analysis of governmental and business­type activities provides more detailed information explaining these changes.

Governmental activities:

Total assets increased $3.8 million largely due to an increase in noncurrent assets, specifically related to non­depreciable assets, which include construction in progress of Leroy Park.

Total
Percent
2021 2020 2021 2020 2021 2020 Change
Assets
Current As sets 6,418,998 $ 5,319,814 $ 6,730,972 $ 5,459,175 $ $ 13,149,970 $ 10,778,989 22.0% Noncurrent Ass ets 11,238,665 8,570,892 7,694,965 7,817,777 18,933,630 16,388,669 15.5% Total Assets 17,657,663 13,890,706 14,425,937 13,276,952 32,083,600 27,167,658 18.1% Deferred Outflows of Resources
Deferred amounts 1,016,302 1,142,084 146,376 134,020 1,288,460 1,150,322 Liabilities
Current Liabilities 1,264,496 704,834 416,854 328,192 $ 1,681,350 $ 1,033,026 62.8% Noncurrent Liabilities 4,153,934 3,737,647 2,197,356 2,271,089 6,351,290 6,008,736 5.7% Total Liabilities 5,418,430 4,442,481 2,614,210 2,599,281 8,032,640 7,041,762 14.1% Deferred Inflows of Resources
Deferred pensions 248,912 272,678 27,114 37,532 299,792 286,444 Net Position
Net investment in
capital assets 11,234,961 8,530,354 5,917,746 5,939,410 $ 17,152,707 $ 14,469,764 18.5% Restricted 4,540,531 3,205,072 147,033 147,033 4,687,564 3,352,105 39.8% Unrestricted (1,519,811) (2,666,853) 5,866,210 4,687,716 3,199,357 3,167,905 1.0% $ 10,215,615 13,108,639 $ 11,930,989 $ 10,774,159 $ 25,039,628 $ 20,989,774 $ 19.3% Governmental
Activities
Business­Type
Activities
Total Primary
Government
8 City of Guadalupe
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2021
FINANCIAL ANALYSIS OF THE GOVERNMENT WIDE STATEMENTS ­ continued Governmental Activities ­ continued
Deferred outflows of resources increased about $125,000. Deferred Pension Plan information is located in Note 9 to the financials.

Total liabilities increased about $975,000 mainly due to an increase in accounts payable and unearned revenue.

Deferred inflows increased $23,000. Detailed Pension Plan information is located in Note 9 to the financials.

Business­type activities:

Total assets increased about $1.1 million due to an increase in cash and investments and other current assets.

Deferred Pension outflows increased about $12,000. Detailed Pension Plan information is located in Note 9 to the financials.

Total liabilities increased about $15,000 due primarily to a slight increase in current liabilities over noncurrent liabilities.

Deferred Pension inflows decreased about $10,000. Detailed Pension Plan information is located in Note 9 to the financials.
9 City of Guadalupe
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2021
FINANCIAL ANALYSIS OF THE GOVERNMENT WIDE STATEMENTS ­ continued The City’s net position increased by about $4 million during the current fiscal year. Information about changes in net position is summarized.

Total
Percent
2021 2020 2021 2020 2021 2020 Change
Revenues
Program revenues:

Charges for services $ 906,437 $ 1,184,101 $ 5,131,604 $ 4,574,859 $ 6,038,041 $ 5,758,960 4.8% Operating grants and contributions 1,430,750 2,201,545 529,567 492,684 1,960,317 2,694,229 ­27.2% Capital grants and contributions 3,222,700 ­ 388,901 ­ 3,222,700 388,901 0.0% General revenue:

Sales tax 811,141 603,956 811,141 603,956 34.3%
Property tax 1,740,033 1,547,855 1,740,033 1,547,855 12.4% Utility users tax 480,619 442,934 480,619 442,934 8.5%
Other taxes 544,711 538,839 544,711 538,839 1.1%
Interest income 141,072 187,883 29,293 69,469 170,365 257,352 ­33.8% Other revenues 183,118 284,317 183,118 284,317 ­35.6%
Total revenues 9,460,581 6,991,430 5,690,464 5,525,913 15,151,045 12,517,343 21.0% Program Expenses
Public safety 3,807,341 3,195,866 3,807,341 3,195,866 19.1% Transportation 295,460 396,961 295,460 396,961 ­25.6%
Leisure, culture and social services 395,236 455,268 455,268 395,236 15.2% Community development 1,067,882 852,983 1,067,882 852,983 25.2% General government 1,476,764 1,480,926 1,476,764 1,480,926 ­0.3% Business­type activities ­ 3,988,734 ­ 4,081,144 3,988,734 4,081,144 ­2.3% Interest on long­term debt 9,742 20,868 9,742 20,868 ­53.3% Total expenses 7,112,457 6,342,840 3,988,734 4,081,144 11,101,191 10,423,984 6.5% Transfers 544,900 509,100 (544,900) (509,100) ­ ­ ­
Change in net position 2,893,024 1,157,690 1,156,830 935,669 4,049,854 2,093,359 93.5% Net position ­ beginning of year 10,215,615 9,057,925 10,774,159 9,838,490 20,989,774 18,896,415 11.1% Net position ­ end of year 13,108,639 $ 10,215,615 $ 11,930,989 $ 10,774,159 $ 25,039,628 $ 20,989,774 $ 19.3% City of Guadalupe
Changes in Net Position
Governmental
Activities
Business­type
Activities
Total Primary
Government
For the Fiscal Years Ended June 30, 2021 and 2020
10 City of Guadalupe
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2021
FINANCIAL ANALYSIS OF THE GOVERNMENT WIDE STATEMENTS ­ continued Analysis of the changes in net position:

Total government­wide revenues of the primary government increased $2.6, about 21% from the prior year, and total expenses increased about $677,000 or about 6.5% increase. These changes are discussed in more detail below.

Governmental Activities:

Total revenues for governmental activities increased about $2.4 million from the prior year. Total expenditures increased about $770,000.

Revenue
Capital grants and contributions increased about $3.2 million primarily due to CDBG grant funding for Leroy Park. Sales tax increased about $207,000. Property tax increased about $192,000.

Expenses
Public safety expenses increased about $611,000.

Business­Type Activities:

Total revenues for business­type activities increased about $164,000 from the prior year. Total expenses decreased about $92,000.

Revenue
Charges for services for Business­Type activities increased $556,000 primarily due to an increased water and sewer usage from customers. Authorized rate increases and CPI rate adjustments occurred in January 2021.

Expenses
Business­type activity expenses decreased about $92,000 mainly due to transit activity. 11 City of Guadalupe
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2021

FINANCIAL ANALYSIS OF THE FUND STATEMENTS
The City uses fund accounting to ensure and demonstrate compliance with finance­related legal requirements. The fund financial statements focus on individual parts of City Government, reporting City operations in more detail than the government­wide statements.

Governmental Funds:

The focus of the City’s governmental funds is to provide information on near­term inflows, outflows and balances of spendable resources. Total fund balance for governmental funds decreased by $453,000 during fiscal year 2021. Total revenues for governmental funds increased $1.5 million, total expenditures for governmental funds increased about $3.1 million. Reasons for these changes are discussed in more detail below.

General Fund
Total General Fund revenues increased $164,000 in the current year. Taxes increased by about $434,000, license and permits decreased about $406,000, charges for current services increased about $178,000.

Total General Fund expenditures increased about $742,000 this year, of which $624,000 is related to Public Safety.

Community Development Funds
Revenues for Community Development funds, related to CDBG, were up from prior year by about $1.8 million related to receipt of grant funds. Transfers to the Capital Improvements Project fund increased by about $2.5 million due to Leroy Park project.

Capital Improvement Program Fund
This is a fund for capital improvement projects, funded as capital expenditures are incurred.

Other Governmental Funds
Total other governmental funds revenues decreased $471,000. This decrease is related to the local transportation funds, primarily due to the receipt of the ATP Cycle 3 grant in the prior fiscal year. Total other government fund expenditures increased about $110,000, related to the Capital Facilities fund separately stated in the prior audited financial statements. 12 City of Guadalupe
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2021
FINANCIAL ANALYSIS OF THE FUND STATEMENTS ­ continued
Enterprise Funds:

The City’s four enterprise funds provide the same type of information found in the government­wide financial statements, but in more detail. Total operating revenues increased by more than $556,000. Total operating expenses decreased by about $118,000 over prior year. The discussion below provides a detailed explanation for each business­type fund.

Water Fund
Water fund operating revenues increased $446,000 compared to the prior year primarily due to increased water usage from residential customers, specifically related to the new development. Authorized rate increases and CPI rate adjustments increased on January 2021. Expenses in the current year decreased by $60,000, related to maintenance and operations. Contributed capital increased $408,000.

Wastewater Fund
Wastewater fund operating revenues increased over $187,000 compared to the prior year due to increased development from Pasadera. Operating expenses increased about $45,000 primarily due to an increase in maintenance and operation expenses.

Solid Waste Fund
The service provider was required to pay a surcharge until the current deficit is relieved and this occurred in the current fiscal year.

Transit Fund
Transit fund net operating income increased about $41,000 due to a decrease in maintenance and operation expenses.

Fiduciary Funds:

The City has one Fiduciary Fund which is used to account for resources held for the benefit of parties outside the government and is not reflected in the government wide financials because the resources of those funds are not available to support City programs. The accounting used for fiduciary funds is presented with the fund financials statements in the supplemental information section. 13 City of Guadalupe
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2021

GENERAL FUND BUDGETARY HIGHLIGHTS
A detailed budgetary comparison schedule for the year ended June 30, 2021 is presented as required supplementary information following the notes to the financial statements.

The following summarizes the original and final general fund budget compared with actual results for 2020­ 21:

Actual ending fund balance ended the year was $370,356. This was a decrease of about $115,000 from the prior year when it closed at $485,622. Key changes are summarized as follows:
ƒ Revenues were about $26,000 lower than estimated related to building permitting. ƒ Expenditures were about $330,000 more than estimated primarily due to Public Safety. 14 City of Guadalupe
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2021

CAPITAL ASSETS
Capital Assets Summary. The City of Guadalupe’s investment in capital assets for its governmental and business type activities as of June 30, 2021, amounts to about $18.9 million (net of accumulated depreciation). The investment in capital assets includes land, park improvements, buildings and building improvements, vehicles and equipment, streets, bikeways and water, wastewater and storm drain systems.

A summary of the City’s capital assets on June 30, 2021 follows:

Please see next page for detailed activity on capital assets. 15 City of Guadalupe
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2021
CAPITAL ASSETS ­ continued
Capital assets activity for the fiscal year ended June 30, 2021 was as follows:

Depreciation expense was charged to functions/programs as follows:

Additional information on the City’s capital assets can be found in Note 5 to the basic financial statements.

Balance Balance
June 30, 2020 Additions Deductions June 30, 2021
Governmental Activities:

Land $ $ $ 343,131 343,131 $
Construction in progress 362,305 3,044,716 3,407,021
Buildings and improvements 5,313,163 91,135 (15,650) 5,388,648 Accumulated depreciation (1,930,676) (148,139) (2,070,468) 8,347 Vehicles 895,432 26,791 (15,300) 906,923
Accumulated depreciation (743,243) (56,228) 15,300 (784,171) Equipment 631,674 51,316 682,990
Accumulated depreciation (561,165) (17,557) (578,722)
Infrastructure 7,740,634 7,158 7,747,792
Accumulated depreciation (3,480,363) (324,116) (3,804,479) Total governmental capital assets, net 8,570,892 $ $ 2,675,076 $ 11,238,665 (7,303) $ Business­Type Activities:

Land $ 248,425 $ 248,425
Construction in progress 491,039 450,979 (30,129) $ 911,889 Buildings and improvements 10,158,853 133,398 10,322,380 30,129 $ Accumulated depreciation (7,471,298) (240,351) (7,711,649) Vehicles 1,829,057 ­ 1,829,057
Accumulated depreciation (1,057,258) (150,080) (1,207,338) Equipment 545,158 ­ 545,158
Accumulated depreciation (530,823) (3,521) (534,344)
Infrastructure 7,240,758 48,801 7,289,559
Accumulated depreciation (3,636,134) (362,038) (3,998,172) Total business type capital assets, net 7,817,777 $ $ (122,812) $ 7,694,965 ­ $ 16 City of Guadalupe
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2021
LONG­TERM DEBT
On June 30, 2021, the City of Guadalupe had almost $2.1 million in long­term debt outstanding as summarized below:

Long­term debt governmental activity for the fiscal year ended June 30, 2021 was as follows:

Long­term debt business­type activity for the fiscal year ended June 30, 2021 was as follows:

Additional information about the City of Guadalupe’s long­term debt can be found in Note 6 to the basic financial statements.
17 City of Guadalupe
Management’s Discussion and Analysis
Fiscal Year Ended June 30, 2021
ECONOMIC FACTORS, NEXT YEAR’S BUDGET AND RATES
On July 31, 2018, the Council adopted the fiscal year 2019­21 budget (Resolution No. 2018­47). The General Fund portion of that budget contains a balanced budget.

Fiscal Outlook. In fiscal year 2019­20 the General fund increased from prior year’s negative fund balance, ending the year at $485,622, from a negative $15,325. In fiscal year 2020­21, the fund balanced decreased about $115,000. The primary goal is to preserve reserves and accumulate reserves. The City’s revenue continues to increase as the Pasadera Development adds additional homes this fiscal year. The Escalante Meadows Development is also expected to increase Building Permit and related construction fee revenues by fiscal year 2022. Other revenues showing steady increases are Sales Tax with the new Measure N that was passed with the November 2020 election, Property Tax with new development, Business License, Utility Users Tax and Franchise Fees. However, expenditures for the General Fund exceeded the budget and the revenues received. The City has received $99,777 from the CARES Act in fiscal year 2021 and will receive American Rescue Plan funds in fiscal year 2022. Amid the pandemic, the City still needs to look at finding alternatives to sustain recurring revenue streams for the future in order to build strong reserves and to continue to provide residents with current services.

CITY OF GUADALUPE ACTIVITIES
The City of Guadalupe utilizes grants as much as possible to carry out capital projects. Significant success has been achieved through this process. In conjunction with grants, the city seeks low interest loans when available. Infrastructure improvements continue to be a high priority. A continued focus for the future is improvements to the wastewater collection and water distribution systems, along with City parks. Measure A and Gas Tax funding is used for street maintenance projects.

CONTACTING THE CITY’S FINANCIAL MANAGEMENT TEAM
This financial report is designed to provide our citizens, taxpayers, customers and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the money it receives.

Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Guadalupe ­ Attn: Lorena Zarate, 918 Obispo Street, Guadalupe, CA 93434.
18 19
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22 City of Guadalupe
Statement of Net Position
June 30, 2021
Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:

Cash and investments $ 4,581,556 $ 4,502,174 $ 9,083,730 Accounts receivable 1,795,387 999,572 2,794,959
Prepaid expenses 360,070 899,827 1,259,897
Loans receivable 11,384 - 11,384
Internal balances (329,399) 329,399 -
Total current assets 6,418,998 6,730,972 13,149,970
Noncurrent assets:

Capital assets:

Non-depreciable 3,750,152 1,160,314 4,910,466
Depreciable, net 7,710,437 6,534,651 14,245,088
Total capital assets 11,460,589 7,694,965 19,155,554
Total noncurrent assets 11,460,589 7,694,965 19,155,554 Total assets 17,879,587 14,425,937 32,305,524

DEFERRED OUTFLOWS OF RESOURCES
Pension related amounts 970,777 146,376 1,117,153
OPEB related amounts 171,307 - 171,307
Total deferred outflows of resources 1,142,084 146,376 1,288,460

LIABILITIES
Current liabilities:

Accounts payable 743,503 209,146 952,649
Accrued salaries and wages payable 213,437 28,492 241,929 Interest payable - 32,935 32,935
Deposits payable 71,316 56,865 128,181
Unearned revenue 232,536 14,000 246,536
Long-term debt - due within one year 3,704 75,416 79,120 Total current liabilities 1,264,496 416,854 1,681,350
Noncurrent liabilities:

Net pension liability 3,286,535 495,553 3,782,088
Total OPEB liability 494,819 - 494,819
Long-term debt - due in more than one year 372,580 1,701,803 2,074,383 Total noncurrent liabilities 4,153,934 2,197,356 6,351,290 Total liabilities 5,418,430 2,614,210 8,032,640

DEFERRED INFLOWS OF RESOURCES
Pension related amounts 179,809 27,114 206,923
OPEB related amounts 92,869 - 92,869
Total deferred inflows of resources 272,678 27,114 299,792

NET POSITION
Net investment in capital assets 11,456,885 5,917,746 17,374,631 Restricted for:

Street maintenance 1,823,807 - 1,823,807
Other capital projects 746,948 - 746,948
Other purposes 1,954,180 147,033 2,101,213
Total restricted 4,524,935 147,033 4,671,968
Unrestricted (2,651,257) 5,866,210 3,214,953
$ 13,330,563 $ 11,930,989 $ 25,261,552
Primary Government
Total net position
See accompanying Notes to Basic Financial Statements.
23 City of Guadalupe
Statement of Activities
For the year ended June 30, 2021
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Primary Government:

Governmental activities:

General Government 1,476,764 $ 229,405 $ 250,975 $ - $
Public Safety 3,807,341 489,676 252,186 -
Transportation 295,460 909,886 - 108,678
Leisure, cultural and social services 455,268 17,857 17,703 3,114,022 Community development 845,958 169,499 - -
Interest on long-term debt 9,742 - - -
Total governmental activities 6,890,533 906,437 1,430,750 3,222,700 Business-type activities:

Water 2,028,265 2,695,280 52,481 -
Wastewater Treatment 1,479,778 2,296,971 55,311 -
Solid Waste - 5,364 - -
Transit 480,691 133,989 421,775 -
Total business-type activities 3,988,734 5,131,604 529,567 - Total primary government $ 10,879,267 $ 6,038,041 $ 1,960,317 $ 3,222,700 General Revenues and Transfers:

Taxes:

Property taxes
Sales taxes
Utilities Uses Tax
Other taxes
Total taxes
Investment earnings
Loss on disposal of assets
Other
Transfers
Total general revenues and transfers
Change in net position
Net position - beginning of year
Net position - end of year
Program Revenues
See accompanying Notes to Basic Financial Statements.
24 Governmental Business-Type
Total Activities Activities Total
$ (996,384) 480,380 $ - $ (996,384) $
(3,065,479) 741,862 - (3,065,479)
723,104 1,018,564 - 723,104
2,694,314 3,149,582 - 2,694,314
(676,459) 169,499 - (676,459)
(9,742) - - (9,742)
(1,330,646) 5,559,887 - (1,330,646)
- 2,747,761 719,496 719,496
- 2,352,282 872,504 872,504
- 5,364 5,364 5,364
- 555,764 75,073 75,073
- 5,661,171 1,672,437 1,672,437
$ 11,221,058 (1,330,646) 1,672,437 341,791
- 1,740,033 1,740,033
- 811,141 811,141
- 480,619 480,619
- 544,711 544,711
- 3,576,504 3,576,504
29,293 141,072 170,365
- (7,303) (7,303)
- 190,421 190,421
(544,900) 544,900 -
4,445,594 (515,607) 3,929,987
3,114,948 1,156,830 4,271,778
10,215,615 10,774,159 20,989,774
$ 13,330,563 $ 11,930,989 $ 25,261,552
$ 11,930,989
Net (Expense) Revenue
and Changes in Net Position
25 This page intentionally left blank
26 Governmental Fund Financial Statements
Proprietary Fund Financial Statements
Fiduciary Fund Financial Statements
27 City of Guadalupe
Balance Sheet
Governmental Funds
June 30, 2021
Other Total
Capital Govern- GovernCommunity Improvement mental mental General Development Program Funds Funds
ASSETS
Cash and investments 963,88 $ 7 $ 8 - $ 3,617,661 $ 4,581,55 $ 6 Accounts receivable 273,972 1,383,398 - 138,017 1,795,387 Prepaid expenses 342,599 - - 17,471 360,070
Interfund loans receivable 78,393 - 593,582 1,053,069 1,725,044 Loans receivable - 11,384 - - 11,384
Total assets $ 1,394,782 1,658,851 $ 593,59 $ 0 $ 4,826,218 $ 8,473,441

LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCE Liabilities:

Accounts payable $ 103,423 $ 25,684 $ 593,582 $ 20,814 $ 743,503 Accrued salaries and wages payable 205,867 - - 7,570 213,437 Deposits payable 71,316 - - - 71,316
Unearned revenue 232,536 - - - 232,536
Interfund loans payable 622,735 1,345,548 - 86,160 2,054,443 Total liabilities 1,235,877 1,371,232 593,582 114,544 3,315,235 Deferred inflows of resources:

Unavailable revenue 52,618 885,953 - 61,266 999,837
Total deferred inflows of resources 52,618 885,953 - 61,266 999,837 Fund Balances:

Nonspendable:

Prepaid expenses 342,599 - - 17,471 360,070
Restricted for:

Street maintenance - - - 1,823,807 1,823,807
Other capital projects - - - 746,948 746,948
Public safety - - - 185,499 185,499
Utility infrastructure - - - 786,054 786,054
Debt service - - - 32,003 32,003
Lighting and landscape - - - 950,624 950,624
Committed to:

Capital projects - - 8 141,866 141,874
General Reserve 13,878 - - - 13,878
Emergency Reserve 13,879 - - - 13,879
Unassigned - (862,403) - (33,864) (896,267)
Total fund balances 370,356 (862,403) 8 4,650,408 4,158,369 Total liabilities, deferred inflows
of resources, and fund balances $ 1,394,782 1,658,851 $ 593,59 $ 0 $ 4,826,218 $ 8,473,441 Major Funds
See accompanying Notes to Basic Financial Statements.
28 Total Fund Balances - Total Governmental Funds $ 4,158,369 Capital assets used in governmental activities were not current financial resources.

Therefore, they were not reported in the Governmental Funds Balance Sheet. The capital assets were adjusted as follows:

Non-depreciable 3,750,152
Depreciable, net 7,710,437
Total capital assets 11,460,589
Unavailable revenue recorded in the fund financial statements resulting from activities in which revenues were earned but funds were not available are reclassified as revenues in the Government-Wide Financial Statements. 999,837
Employer contributions for pension were recorded as expenditures in the governmental funds. However, in the Government-Wide Financial Statement these contributions are deferred. 487,477
In the Government-Wide Financial Statement certain OPEB amounts are deferred and amortized over a period of time, however, in the governmental funds no transactions are recorded. 78,438
In the Government-Wide Financial Statement certain pension amounts are deferred and amortized over a period of time, however, in the governmental funds no transactions are recorded. 303,491
Long-term liabilities were not due and payable in the current period. Therefore, they were not reported in the Governmental Funds Balance Sheet.

Net pension liability (3,286,535)
Net OPEB liability (494,819)
Long term liabilities - due within one year (3,704)
Long term liabilities - due in more than one year (372,580) Total long-term liabilities (4,157,638)
Net Position of Governmental Activities $ 13,330,563
Amounts reported for governmental activities in the Statement of Net Position were different because:

City of Guadalupe
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position
June 30, 2021
See accompanying Notes to Basic Financial Statements.
29 Statement of Revenues, Expenditures and Changes in Fund Balances For the year ended June 30, 2021
Other Total
Capital Govern- GovernCommunity Improvement mental mental General Development Program Funds Funds
REVENUES:

Taxes 3,042,483 $ - $ - $ 1,003,243 $ 4,045,726 $
Licenses and permits 578,659 - - 40,323 618,982
Fines and penalties 6,246 - - - 6,246
Revenues from other agencies 642,707 2,261,162 - 301,147 3,205,016 Charges for current services 291,114 - - 4,256 295,370
Interest 118,220 1,890 - 20,962 141,072
Other revenues 135,436 15,591 - 44,314 195,341
Total revenues 4,814,865 2,278,643 - 1,414,245 8,507,753 EXPENDITURES:

Current:

General government 1,232,529 - - - 1,232,529
Public safety 3,581,181 - - 16,749 3,597,930
Transportation - - - 282,538 282,538
Leisure, cultural and social services 199,869 201,441 - 19,480 420,790 Community development 422,917 - - 82,055 504,972
Capital outlay - 26,831 3,921,401 126,435 4,074,667
Debt service:

Principal 3,562 - - 12,840 16,402
Interest and fiscal charges 9,742 - - - 9,742
Total expenditures 5,449,800 228,272 3,921,401 540,097 10,139,570

REVENUES OVER (UNDER)
EXPENDITURES 2,050,371 (634,935) (3,921,401) 874,148 (1,631,817) OTHER FINANCING SOURCES (USES):

Transfers in 687,292 - 3,928,018 - 4,615,310
Transfers out (167,623) (2,948,334) - (321,275) (3,437,232) Total other financing sources (uses) (2,948,334) 519,669 3,928,018 (321,275) 1,178,078 Net change in fund balances (897,963) (115,266) 6,617 552,873 (453,739) FUND BALANCES:

Beginning of year 485,622 35,560 (6,609) 4,097,535 4,612,108 End of year $ 370,356 $ (862,403) $ 4,650,40 8 $ 8 $ 4,158,369 City of Guadalupe
Governmental Funds
Major Funds
See accompanying Notes to Basic Financial Statements.
30 Net Change in Fund Balances - Total Governmental Funds $ (453,739) Amounts reported for governmental activities in the Statement of Activities were different because:

Governmental funds reported capital outlay as expenditures. However, in the GovernmentWide Statement of Activities, the cost of those assets was allocated over their estimated useful lives as depreciation expense. This was the amount of capital assets recorded in the current period. 4,090,643
In the Government-Wide Statement of Activities, transfers of capital assets from governmental funds to enterprise funds are recorded as transfers out, whereas in the governmental funds no transfer out is recorded. (633,178) Disposed capital assets are recorded as other financing sources in the governmental funds if sold for an amount, but are recorded as a gain or (loss) on the Statement of Activities. (7,303) Depreciation expense on capital assets was reported in the Government-Wide Statement of Activities, but they did not require the use of current financial resources. Therefore, depreciation expense was not reported as expenditures in the governmental funds. (560,465) Accrued compensated leave payable is not recorded in the governmental funds, but the accrued payable increased in the Government-Wide Statement of Net Position causing an expense on the Statement of Activities. (53,460)
OPEB expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. (73,097) Repayment of debt principal was an expenditure in governmental funds, but the repayment reduced long-term liabilities in the Government-Wide Statement of Net Position.

Long-term debt repayments 36,834
Revenues that are not considered to be available are reported as unavailable revenues in the governmental funds, however, these amounts are recognized in the Government-Wide Statement of Activities. This amount represents the change in unavailable revenues. 960,131 Current year employer pension contributions are recorded as expenditures in the governmental funds, however, these amounts are reported as a deferred outflow of resources in the Government-Wide Statement of Net Position. 487,477 Pension expense is recorded as incurred in the Government-Wide Statement of Activities, however, pension expense is not recognized in the governmental funds. (678,895) Change in Net Position of Governmental Activities $ 3,114,948 City of Guadalupe
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities For the year ended June 30, 2021
See accompanying Notes to Basic Financial Statements.
31 City of Guadalupe
Statement of Net Position
Proprietary Funds
June 30, 2021
Wastewater (Nonmajor)
Water Treatment Transit Solid Waste Total
ASSETS
Current assets:

Cash and investments $ 2,985,73 1,175,870 $ 339,43 5 $ 4 $ 4,502,17 1,135 4 Accounts receivable, net of allowance 347,237 357,854 294,481 - 999,572 Prepaid expenses 860,211 39,616 - - 899,827
Interfund loan receivable, current portion 71,500 - - - 71,500 Total current assets 2,454,818 3,383,205 633,915 1,135 6,473,073 Noncurrent assets:

Interfund loan receivable, net of
current portion - 297,496 - 297,496 -
Capital assets:

Land 29,464 218,961 - - 248,425
Work in progress 418,619 493,270 - - 911,889
Buldings, infrastructure and improvements 5,541,868 12,052,727 17,344 - 17,611,939 Vehicles 68,251 113,286 1,647,520 - 1,829,057
Equipment 392,348 142,200 10,610 - 545,158
Less accumulated depreciation (3,580,058) (8,797,326) (1,074,119) - (13,451,503) Total capital assets 2,870,492 4,223,118 601,355 - 7,694,965 Total noncurrent assets 3,167,988 4,223,118 601,355 - 7,992,461 Total assets 5,622,806 7,606,323 1,235,270 1,135 14,465,534

DEFERRED OUTFLOWS OF RESOURCES
Pension related amounts 63,031 83,345 - - 146,376
Total deferred outflows of resources 63,031 83,345 - - 146,376 Enterprise Funds
See accompanying Notes to Basic Financial Statements.
32 City of Guadalupe
Statement of Net Position
Proprietary Funds
June 30, 2021
Wastewater (Nonmajor)
Water Treatment Transit Solid Waste Total

LIABILITIES
Current liabilities:

Accounts payable 47,910 116,529 44,707 - 209,146
Due to other funds 20,998 18,599 - - 39,597
Deposits payable 56,865 - - - 56,865
Accrued wages and benefits 14,301 14,191 - - 28,492
Unearned revenue - 14,000 - - 14,000
Interest payable 18,396 14,539 - - 32,935
Current portion of capital lease obligations - 4,870 - - 4,870 Current portion of certificates of participation 45,586 24,960 - - 70,546 Total current liabilities 204,056 207,688 44,707 - 456,451 Noncurrent liabilities:

Certificates of participation, net of
current portion 748,987 952,816 - - 1,701,803
Net pension liability 213,391 282,162 - - 495,553
Total noncurrent liabilities 1,166,207 1,031,149 - - 2,197,356 Total liabilities 1,370,263 1,238,837 44,707 - 2,653,807

DEFERRED INFLOWS OF RESOURCES
Pension related amounts 11,675 15,439 - - 27,114
Total deferred inflows of resources 11,675 15,439 - - 27,114

NET POSITION
Net investment in capital assets 1,872,090 3,444,301 601,355 - 5,917,746 Restricted for debt service 88,455 58,578 - - 147,033
Unrestricted 2,343,354 2,932,513 589,208 1,135 5,866,210 Total net position $ 6,435,392$ 1,190,56 4,303,899 $ 1,13 3 $ 11,930,98 5 $ 9 Enterprise Funds
See accompanying Notes to Basic Financial Statements.
33 City of Guadalupe
Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds
For the year ended June 30, 2021
Wastewater (Nonmajor)
Water Treatment Transit Solid Waste Total
OPERATING REVENUES:

Water sales $ - 2,538,906 $ -$ $ 2,538,90 - $ 6
Standby charges 29,654 - - - 29,654
Connection fees 41,257 15,941 - - 57,198
Sewer service charges - 1,891,364 - - 1,891,364
Refuse service charges - - - 5,364 5,364
Other revenues 85,463 389,666 133,989 - 609,118
Total operating revenues 2,695,280 2,296,971 133,989 5,364 5,131,604 OPERATING EXPENSES:

Personnel services 388,692 324,103 - - 712,795
Maintenance and operations 1,410,162 675,473 354,549 - 2,440,184 Depreciation 185,963 443,885 126,142 - 755,990
Total operating expenses 1,984,817 1,443,461 480,691 - 3,908,969 OPERATING INCOME (LOSS) 710,463 853,510 (346,702) 5,364 1,222,635 NONOPERATING REVENUES (EXPENSES):

Revenues from other agencies 52,481 55,311 421,775 - 529,567 Interest income 14,295 13,262 1,736 - 29,293
Interest expense (43,448) (36,317) - (79,765) -
Total nonoperating revenues (expenses) 23,328 32,256 423,511 - 479,095

INCOME (LOSS) BEFORE CONTRIBUTIONS
AND TRANSFERS 733,791 885,766 76,809 5,364 1,701,730
Contributed capital 437,767 195,411 - - 633,178
Transfers out (732,667) (410,411) (35,000) - (1,178,078) Total contributions and transfers (294,900) (215,000) (35,000) - (544,900) Change in net position 438,891 670,766 41,809 5,364 1,156,830

NET POSITION
Beginning of year 3,865,008 5,764,626 1,148,754 (4,229) 10,774,159 End of year $ 6,435,392 4,303,899 $ 1,190,56 $ 3 $ 11,930,98 1,135 $ 9 Enterprise Funds
See accompanying Notes to Basic Financial Statements.
34 This page intentionally left blank
35 City of Guadalupe
Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2021
Wastewater
Water Treatment
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers $ 2,573,293 $ 2,268,967
Cash received from connection fees 41,257 15,941
Cash received from standby charges and other agencies 29,654 - Cash paid to suppliers for goods and services (1,665,674) (604,235) Cash paid to employees and related benefits (377,396) (307,337) Net cash provided by (used in) operating activities 601,134 1,373,336 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Operating grants received 52,481 55,311
Internal activity - cash paid to (received from) other funds for interfund loan payments 85,832 18,599 Net transfers (294,900) (215,000)
Net cash provided by (used in) noncapital financing activities (156,587) (141,090) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Net change in insurance payable (24,977) (24,977)
Net changes in capital lease obligations (10,309) (22,820) Principal payments on certificates of participation (43,839) (24,180) Interest payments on certificates of participation (43,314) (36,732) Sale (Acquisition) of capital assets (437,767) (195,411) Net cash provided by (used in) capital and related financing activities (560,206) (304,120) CASH FLOWS FROM INVESTING ACTIVITIES:

Interest on investments 14,295 13,262
Net cash provided by (used in) investing activities 14,295 13,262 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (101,364) 941,388 CASH AND CASH EQUIVALENTS - Beginning of year 1,277,234 2,044,347 CASH AND CASH EQUIVALENTS - End of year $ 1,175,870 $ 2,985,735

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:

Operating income (loss) $ 710,463 $ 853,510
Adjustments to reconcile operating income (loss)
to net cash provided by (used in) operating activities:

Depreciation 185,963 443,885
Changes in assets, deferred outflows and inflows of resources, and liabilities Accounts receivable (57,483) (26,063)
Prepaid expenses (242,559) (19,448)
Deferred outflows pensions (5,321) (7,035)
Accounts payable (12,953) 90,686
Deposits payable 6,407 -
Accrued wages and benefits (1,133) 332
Net pension liability 22,236 29,401
Deferred inflows pensions (4,486) (5,932)
Total adjustments (109,329) 519,826
Net cash provided by (used in) operating activities $ 601,134 $ 1,373,336 Enterprise Funds
See accompanying Notes to Basic Financial Statements.
36 Solid
Transit Waste Total
$ 5,36 (45,794) $ 4 $ 4,801,830
- -57,198
- 29,654 -
(332,984) - (2,602,893)
- - (684,733)
(378,778) 1,601,056 5,364
32,874 - 140,666
(4,229) - 100,202
(35,000) - (544,900)
(2,126) (4,229) (304,032)
- - (49,954)
- - (33,129)
- - (68,019)
- - (80,046)
388,901 - (244,277)
388,901 - (475,425)
1,736 29,293 -
1,736 29,293 -
9,733 1,135 850,892
329,701 - 3,651,282
$ 339,434 $ 1,135 $ 4,502,174
$ 5,36 (346,702) $ 4 $ 1,222,635
126,142 - 755,990
(179,783) - (263,329)
- - (262,007)
- - (12,356)
21,565 - 99,298
- -6,407
- -(801)
- -51,637
- - (10,418)
(32,076) - 378,421
$ (378,778) $ 5,364 $ 1,601,056
Enterprise Funds
See accompanying Notes to Basic Financial Statements.
37 City of Guadalupe
Statement of Fiduciary Net Position
Fiduciary Fund
June 30, 2021
Private-Purpose
Trust Fund
ASSETS
Cash and investments $ 1,033,508
Cash with fiscal agent 306,536
Accounts receivable 146,035
Property held for resale 222,482
Capital assets, net of accumulated depreciation 129,539 Total assets 1,838,100

DEFERRED OUTFLOWS OF RESOURCES
Deferred loss on refunding 76,494
Total deferred outflows of resources 76,494

LIABILITIES
Accounts payable 20,554
Interest payable 55,888
Unearned revenue 439,819
Long-term liabilities:

Due within one year 225,000
Due after one year 3,897,529
Total liabilities 4,638,790

NET POSITION
Held in trust for other governments $ (2,724,196)
See accompanying Notes to Basic Financial Statements.
38 City of Guadalupe
Statement of Changes in Fiduciary Net Position
Fiduciary Fund
For the year ended June 30, 2021
RDA Successor Agency Successor Agency
Retirement to RDA Merged to RDA Private-Purpose
Obligation Area Housing Trust Fund
ADDITIONS:

Property taxes $ 528,797
Revenue from other agencies 113,690
Other revenues 4,501
Total additions 646,988
DEDUCTIONS:

Program expenses 118,527
Administration expenses 165,000
Interest on long-term liabilities 145,481
Depreciation 9,900
Total Deductions 438,908
Change in net position 208,080
NET POSITION:

Beginning of year (2,932,276)
End of year $ (2,724,196)
See accompanying Notes to Basic Financial Statements.
39 This page intentionally left blank
40 NOTES TO BASIC

FINANCIAL STATEMENTS
41 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of Guadalupe, California (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below.

A. Reporting Entity
The City of Guadalupe (the City) was incorporated on August 3, 1946. The City is a general law city under the laws of the State of California and operates under a Council Administrator form of government. The City provides the following services: public safety (police and fire), construction and maintenance of highways and streets, sanitation, culture and recreation, public improvements, planning, zoning and general administration. Enterprise funds, operated in a manner similar to a private business, include water, wastewater, and transit.

The City has defined its reporting entity in accordance with the Governmental Accounting Standards Board (GASB) Statement No. 14, amended by GASB Statements No. 39 and 61. These statements provide guidance for determining which organizations, functions and activities of a government should be included in the general purpose financial statements.

The criteria for inclusion in the basic financial statements are generally based upon the ability of the City to exercise oversight responsibility over such organizations, functions and activities. Oversight responsibility is generally defined as the existence of financial interdependency and/or the ability to appoint governing boards, to designate management, to significantly influence operations, to approve operating budgets or to control day to day activities.

The accompanying financial statements include all activities and reporting entities over which the City exercises oversight responsibility. Effective January 31, 2012, the Community Redevelopment Agency of the City of Guadalupe (the Agency) was dissolved through the Supreme Court decision on Assembly Bill 1X26. This action impacted the reporting entity of the City that previously had reported the Agency as a blended component unit. See Note 12 for additional information on the dissolution and reporting of the Agency as a Private Purpose Trust Fund.

In determining the financial reporting entity for the City of Guadalupe, the following governmental unit has met the criteria for inclusion in the City's financial statements.

Guadalupe Public Financing Authority
The Guadalupe Public Financing Authority (Authority) was established in 2000, and is a separate government entity under the laws of the State of California. The purpose of the Authority is to provide financing for the construction and acquisition of selected City facilities. The City Council of the City of Guadalupe and the Board of Directors of the Authority are legally separate boards; however, they share a common membership. Activities of the Authority are accounted for in the applicable City governmental or enterprise funds. Separate financial statements are not prepared for the Authority, as it is included in the accompanying financial statements as a blended component unit. 43 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued A. Reporting Entity, Continued
Other Governmental Agencies
Other governmental agencies provide various levels of services to residents of the City, either entirely or partially. The entities include, but are not limited to, the State of California, the County of Santa Barbara, as well as several school districts. Each of these agencies has an independently elected governing board or is dependent on an independently elected governing board other than the City Council of the City of Guadalupe.

The City has no ability to appoint or control the management of any of these entities and is not responsible for any operating losses or debts incurred. As a result of the above analysis, financial information for these agencies is not included within the scope of this report.

B. Basis of Accounting and Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity with its own self-balancing set of accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity, revenues, and expenditures or expenses. These funds are established for the purpose of carrying out specific activities or certain objectives in accordance with specific regulations, restrictions or limitations. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

Government-Wide Financial Statements
The government wide financial statements (i.e., the statement of net position and the statement of activities) report information on the primary government and its blended component units. The effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business type activities, which rely to a significant extent on fees and charges for support.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

These financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets, deferred inflows/outflows of resources, and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liabilities are incurred.
44 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Government-Wide Financial Statements, Continued
Certain types of transactions reported as program revenues for the City are reported in three categories:
x Charges for services
x Operating grants and contributions
x Capital grants and contributions
Certain eliminations have been made in regards to interfund activities, payables, and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. The following interfund activities have been eliminated:
x Due to/from other funds
x Transfers in/out
The City applies all applicable GASB pronouncements including all NCGA Statements and Interpretations currently in effect.

Fund Financial Statements
Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual proprietary funds are reported as separate columns in the fund financial statements.

Governmental Fund Financial Statements
Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in net position as presented in these statements to the net position presented in the government-wide financial statements. The City has presented all major funds that meet specific qualifications.

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 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. 45 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Governmental Fund Financial Statements, Continued
Non exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis, revenues from property taxes are recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations are recognized in the fiscal year in which all eligibility requirements have been satisfied.

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

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

The City reports the following funds as major governmental funds of the City.

General Fund accounts for resources traditionally associated with governmental activities that are not required legally or by sound financial management to be accounted for in another fund.

Community Development fund accounts for monies spent and activities performed under the Community Development Block Grant
Capital Improvement Program fund is used to account for projects approved by Council from various funding sources.

The Reconciliations of the Fund Financial Statements to the Government-Wide Financial Statements are provided.

Proprietary Fund Financial Statements
Proprietary fund financial statements include a Statement of Net Position, a Statement of Revenues, Expenses and Change in Net Position, and a Statement of Cash Flows for all 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 present 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 a liability is incurred. 46 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Proprietary Fund Financial Statements, Continued
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the enterprise funds are charges to customers for sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

For purposes of the Statement of Cash Flows, the City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The proprietary funds’ “deposits” in the City-wide cash management pool are, in substance, demand deposits and are, therefore, considered cash equivalents for purposes of the Statement of Cash Flows.

The City reports the Water, Wastewater, and Transit funds as major proprietary funds of the City.

Water Fund: This enterprise fund accounts for the operation of the City’s water utility, a self supporting activity, which renders a service on a user charge basis to residents and businesses.

Wastewater Treatment Fund: This enterprise fund accounts for the operations of the City’s wastewater treatment plant. The fund accounts for the operation of the City’s sewer utility, a self supporting activity, which renders a service on a user charge basis to residents and businesses.

Transit Fund: This enterprise fund accounts for the operations of the City’s transit service within the City and surrounding areas.

The City reports on non-major proprietary fund:

Solid Waste Fund: This enterprise fund accounts for the discontinued operations of the City’s solid waste collection and disposal services, which rendered service on a user charge basis to residents and businesses. It is anticipated that this fund will close in the fiscal year ending June 30, 2022.

Fiduciary Fund Financial Statements
Fiduciary fund financial statements consist of a Statement of Fiduciary Net Position and a Statement of Changes in Fiduciary Net Position. Fiduciary fund statement consist of a private purpose trust fund which accounts for the assets and liabilities of the former Redevelopment Agency.

C. Cash, Cash Equivalents and Investments
The City pools cash resources from all funds in order to facilitate the management of cash. The balance in the pooled cash account is available to meet current operating requirements. Cash in excess of current requirements is invested in various interest-bearing accounts and other investments for varying terms.
47 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Cash, Cash Equivalents and Investments, Continued
In accordance with GASB Statement No. 40, Deposit and Investment Disclosures (Amendment of GASB No. 3), certain disclosure requirements for Deposits and Investment Risks were made in the following areas:
• Interest Rate Risk
• Credit Risk
o Overall
o Custodial Credit Risk
o Concentrations of Credit Risk
In addition, other disclosures are specified including use of certain methods to present deposits and investments, highly sensitive investments, credit quality at year-end, and other disclosures.

In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. The City categorizes the fair value measurements of its investments based on the hierarchy established by generally accepted accounting principles. The fair value hierarchy, which has three levels, is based on the valuation inputs used to measure an asset’s fair value: Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The City does not have any investments that are measured using Level 3 inputs.

The City participates in an investment pool managed by the State of California entitled Local Agency Investment Fund (LAIF) which has invested a portion of the pooled funds in Structured Notes and Asset-Backed Securities. LAIF’s investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these Structured Notes and AssetBacked Securities are subject to market risk as to the change in interest rates.

Cash equivalents are considered amounts in demand deposits and short-term investments with a maturity date within three months of the date acquired by the City and are presented as “Cash and Investments” in the accompanying Basic Financial Statements.

The City considers all pooled cash and investments (consisting of cash and investments and restricted cash and investments) held by the City as cash and cash equivalents because the pool is used essentially as a demand deposit account from the standpoint of the funds. The City also considers all non-pooled cash and investments (consisting of cash with fiscal agent and restricted cash and investments held by fiscal agent) as cash and cash equivalents because investments meet the criteria for cash equivalents defined above.

D. Restricted Cash and Investments
Certain restricted cash and investments are held by fiscal agents for the redemption of bonded debt, for acquisition and construction of capital projects, and to meet bond indenture debt reserve requirements. 48 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued E. 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. The City’s policy is to capitalize all capital assets with costs exceeding $5,000 and with useful lives exceeding one year.

With the implementation of GASB Statement No. 34, the City has recorded all its public domain (infrastructure) capital assets, which include roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and lighting systems.

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.

Vehicles 5 – 10 years
Buildings and Improvements 20 – 35 years
Equipment 5 – 15 years
Infrastructure 10 – 50 years
F. Interest Payable
In the Government-Wide Financial Statements, interest payable on long-term debt is recognized as the liability is incurred for governmental fund types and proprietary fund types.

In the Fund Financial Statements, proprietary and fiduciary fund types recognize the interest payable when the liability is incurred, but governmental fund types do not recognize an interest payable.

Instead interest expense is recorded when the payment is made.

G. Long-Term Debt
Government-Wide Financial Statements
Long-term debt and other long-term obligations are reported as liabilities in the appropriate activities.

Bond premiums and discounts are amortized over the life of the bonds using the straight-line method.

Bonds payable is reported net of the applicable bond premium or discount. Bond issuance costs, except any portion related to prepaid insurance costs, are recognized as an expense in the period incurred.

Fund Financial Statements
The governmental fund financial statements do not present long-term debt. As such, long-term debt is shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position.
49 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued G. Long-Term Debt, Continued
Fund Financial Statements, Continued
Bond premiums and discounts are recognized during the current period as other financing sources or uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Bond proceeds are reported as other financing sources.

Proprietary Fund and Fiduciary Fund Financial Statements use the same principles as those used in the Government-Wide Financial Statements.

H. 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 tax assessment and collection is administered by the County of Santa Barbara.

Property taxes are billed and collected as follows:

Valuation/Lien Date(s)
Secured
January 1
Unsecured
January 1
Levy Date(s) September 1 January 1
Due Date(s) November 1 (50%)
February 1 (50%)
Upon Billing
Delinquency Date(s) December 10 (Nov.)
April 10 (Feb.)
August 31
I. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position (balance sheet) will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then.

In addition to liabilities, the statement of net position (balance sheet) will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. 50 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued J. Net Position
Government-Wide Financial Statements
In the Government-Wide Financial Statements, net position are classified in the following categories:

Net Investment in Capital Assets – This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that is attributed to the acquisition, construction, or improvement of the assets.

Restricted – This amount is restricted by external creditors, grantors, contributors, or laws or regulations of governments.

Unrestricted – This amount is all net position that does not meet the definition of “net investment in capital assets” or “restricted net position” as defined above.

When an expense is incurred for purposes for which both restricted and unrestricted net position is available, the City’s policy is to apply restricted net position first.

K. Fund Balances
Fund Financial Statements
In February 2009, the Governmental Accounting Standards Board (GASB) issued Statement 54, Fund Balance Reporting and Governmental Fund Type Definitions (GASB 54). The classifications of fund balances are as follows:

Non-spendable Fund Balances
This component consists of amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact.

Restricted Fund Balances
This component consists of amounts that have constraints placed on them either externally by third parties (creditors, grantors, contributors, or laws or regulations of other governments) or by law through constitutional provisions or enabling legislation. Enabling legislation authorizes the City to assess, levy, charge or otherwise mandate payment of resources (from external resource providers) and includes legally enforceable requirement (compelled by external parties) that those resources be used only for the specific purposes stipulated in the legislation.

Committed Fund Balances
This component consists of amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the City’s highest level of decision making authority which includes the City Municipal Code, Ordinances and Resolutions. Those committed amounts cannot be used for any other purpose unless the City removes or changes the specified use by taking the same type of action (City Municipal Code, Ordinance and Resolution) it employed previously to commit those amounts. 51 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued K. Fund Balances, Continued
Assigned Fund Balances
This component consists of amounts that are constrained by the City’s intent to be used for specific purposes, but are neither restricted nor committed. Such intent should be expressed by the City Council or its designated officials to assign amounts to be used. Constraints imposed on the use of assigned amounts can be removed with no formal Council actions.

Unassigned Fund Balance
This component consists of amounts that have not been restricted, committed or assigned to specific purposes.

Hierarchy of Expenditures to Classify Fund Balance Amounts The City has formally adopted a spending policy regarding the order in which restricted, committed, assigned, and unassigned fund balances are spent when more than one amount is available for a specific purpose. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources (committed, assigned and unassigned) as they are needed. When unrestricted resources (committed, assigned and unassigned) are available for use it is the City’s policy to use committed resources first, then assigned, and then unassigned as they are needed.

L. Compensated Leave Payable
In compliance with GASB Statement No. 16, the City has established a liability for accrued sick leave and vacation in relevant funds. For governmental 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 current employees at their 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. 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.

M. Pension
The City recognizes a net pension liability, which represents the City’s proportionate share of net pension liability reflected in the actuarial reports provided by the California Public Employees’ Retirement System (CalPERS) plan (Plan). The net pension liability is measured as of the City’s prior fiscal year‐end. Changes in the net pension liability are recorded, in the period incurred, as pension expense or as deferred inflows of resources or deferred outflows of resources depending on the nature of the change. The changes in the net pension liability that are recorded as deferred inflows of resources or deferred outflows of resources (that arise from changes in actuarial assumptions or other inputs and differences between expected or actual experience) are amortized over the weighted average remaining service life of all participants in the respective pension plan and are recorded as a component of pension expense beginning with the period in which they are incurred. 52 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued M. Pension, Continued
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’s CalPERS Plan and additions to/deductions from the Plan’s 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. Projected earnings on pension investments are recognized as a component of pension expense.

N. Other Postemployment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s plan (OPEB Plan) and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value. Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:
x Valuation Date - July 1, 2020
x Measurement Date - June 30, 2021
x Measurement Period - July 1, 2020 to June 30, 2021
O. Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, as prescribed by the GASB and the American Institute of Certified Public Accountants, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates.

P. New Pronouncements
The City adopted new accounting standards in order to conform to the following Governmental Accounting Standards Board Statements:
¾ GASB Statement No. 84, Fiduciary Activities – The objective of this statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. This Statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. There was no impact on net position as a result of this statement. 53 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued P. New Pronouncements, Continued
¾ GASB Statement No. 90, Majority Equity Interests – The primary objectives of this Statement are to improve the consistency and comparability of reporting a government’s majority equity interest in a legally separate organization and to improve the relevance of financial statement information for certain component units. The requirements of this statement did not apply to the City for the current fiscal year.
¾ GASB Statement No. 93, Interbank offered rates (except LIBOR removal and lease modifications) – The objective of this Statement is to address those and other accounting and financial reporting implications that result from the replacement of an interbank offered rate. The requirements of this statement did not apply to the City for the current fiscal year. ¾ GASB Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans – The primary objectives of this Statement are to (1) increase consistency and comparability related to the reporting of fiduciary component units in circumstances in which a potential component unit does not have a governing board and the primary government performs the duties that a governing board typically would perform; (2) mitigate costs associated with the reporting of certain defined contribution pension plans, defined contribution other postemployment benefit (OPEB) plans, and employee benefit plans other than pension plans or OPEB plans (other employee benefit plans) as fiduciary component units in fiduciary fund financial statements; and (3) enhance the relevance, consistency, and comparability of the accounting and financial reporting for Internal Revenue Code (IRC) Section 457 deferred compensation plans (Section 457 plans) that meet the definition of a pension plan and for benefits provided through those plans. The City added a disclosure regarding the 457 plan in Note 9.

2. CASH AND INVESTMENTS
The City maintains a cash and investment pool for all funds. Certain restricted funds that are held and invested by independent outside custodians through contractual agreements are not pooled. These restricted funds include cash and investment held by trustees.

The following is a summary of cash and investments at June 30, 2021:
54 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

2. CASH AND INVESTMENTS, Continued
A. Summary of Cash and Investments
Cash and investments as of June 30, 2021 consist of the following:

B. Deposits
The carrying amount of the City’s cash deposits was $2,127,989 at June 30, 2021. Bank balances before reconciling items were $2,282,849 at June 30, 2021. The City’s cash deposit was fully insured up to $250,000 by the Federal Deposit Insurance Corporation. The remaining amount was collateralized with securities held by the pledging financial institutions in the City’s name.

The California Government Code (Code) Section 53652 requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. The Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City's name.

The market value of pledged securities must equal at least 110% of the City’s cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits.

The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated to the various funds based on the period-end cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund.
55 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

2. CASH AND INVESTMENTS, Continued
C. Investments
Under the provisions of the City’s investment policy, and in accordance with the Code, the following investments are authorized:

Investments are stated at fair value using the aggregate method in all funds, resulting in the following investment income in all funds:

The City’s portfolio value fluctuates in an inverse relationship to any change in interest rate.

Accordingly, if interest rates rise, the portfolio value will decline. If interest rates fall, the portfolio value will rise. The portfolio for year-end reporting purposes is treated as if it were all sold. Therefore, fund balance must reflect the portfolio’s change in value. These portfolio value changes are unrealized unless sold. Generally the City’s practice is to buy and hold investments until maturity dates.

Consequently, the City’s investments are carried at fair value.

The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by Code Section 16429 under the oversight of the Treasurer of the State of California. The City’s investments with LAIF include a portion of the pool funds invested in Structured Notes and AssetBacked Securities. These investments include the following:

Structured Notes – are debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or have embedded forwards or options.
56 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

2. CASH AND INVESTMENTS, Continued
C. Investments, Continued
Asset-Backed Securities – the bulk of which are mortgage-backed securities, entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (such as Collateralized Mortgage Obligations) or credit card receivables.

As of June 30, 2021, the City had $7,940,699 invested in LAIF, which had invested 2.31% of the pool investment funds in Structured Notes and Asset-Backed Securities as compared to 3.37% in the previous year. The LAIF fair value factor of 1.00008297 was used to calculate the fair value of the investments in LAIF.

D. Risk Disclosures
Interest Risk: Interest rate risk is the market value fluctuation due to overall changes in the interest rates.

It is mitigated by limiting the average maturity of the City’s portfolio not to exceed three years.

Investments held in the City Treasury grouped by maturity date at June 30, 2021, are shown below:

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

At June 30, 2021, the City’s deposits and investments were rated as follows:

Custodial Credit Risk: For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. None of the City’s investments were subject to custodial credit risk.
57 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

2. CASH AND INVESTMENTS, Continued
E. Investment Valuation
Investments (except money market accounts that are included as part of restricted cash and investments) are measured at fair value on a recurring basis. Recurring fair value measurements, are those that Governmental Accounting Standards Board (GASB) Statements require or permit in the statement of net position at the end of each reporting period. Fair value measurements are categorized based on the valuation inputs used to measure an asset’s fair value: Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs.

Investments’ fair value measurements at June 30, 2021 are described below:

3. INTERFUND TRANSACTIONS
A. Interfund Loans Receivable
At June 30, 2021, the City had the following interfund loans:

General Fund
Capital
Improvement
Program
Non-Major
Governmental
Funds Water Fund Total
General Fund - $ 13,739 $ 240,000 $ 368,996 $ 622,735 $ Community Development 78,393 522,419 744,736 - 1,345,548 Non-Major Governmental Fund - 17,827 68,333 - 86,160
Water Fund - 20,998 - - 20,998
Sewer Fund - 18,599 - - 18,599
Total 78,393 $ 593,582 $ 1,053,069 $ 368,996 $ 2,094,040 $ Loans From
58 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

3. INTERFUND TRANSACTIONS, Continued
A. Interfund Loans Receivable, Continued
Interfund loans occur when one fund loans another fund amounts for a specific purpose. The City intends to pay amounts back to the appropriate loaning fund in a manner similar to how an external loan would be paid, with a set payment schedule and interest based on the LAIF interest rate. The purpose of the interfund loans to the General Fund was to reduce a negative cash balance and support continued operations. The purpose of the Library Fund interfund loan was to pay the library lease payments, which will be supported through development fees in future years. In the fiscal year ending June 30, 2020, the Park Development Fund loaned proceeds from the sale of property to the Community Development Fund to aid in liquidity for community projects.

The remaining loans are short term balances. The General Fund loaned the Community Development Fund $78,393 to cover negative cash. The entire balance due from other funds to the Capital Improvement Program is for services rendered before June 30, 2021 but were paid after that date. They will be paid back in the fiscal year ending June 30, 2022.

As of June 30, 2021, future minimum payments on the General Fund loans were as follows:

The Community Development Fund is intended to settle the loan from the Park Development Fund of $744,736 in the fiscal year ending June 30, 2022. The Library Fund interfund loan does not have a set payment schedule. All other loans will be paid in the fiscal year ending June 30, 2022.

B. Transfers
Interfund transfers are used to move revenues from the fund with collection authorization to the debt service fund as debt service principal and interest payments become due and to move unrestricted fund revenues to finance various programs that the government must account for in other funds in accordance with budgetary authorizations, including amounts provided as matching funds for various grant programs. Interfund transfers to the General Fund are for the variable cost allocation plan for services provided to other funds of the City.
59 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

3. INTERFUND TRANSACTIONS, Continued
B. Transfers, Continued
At June 30, 2021 the City had the following transfers in/out which arose in the normal course of operations:

The transfers from the Water and Wastewater funds to the Capital Improvement Fund were to pay for capital projects related to those funds. The Capital Improvement Fund transferred back the projects to the Water and Wastewater funds in the form of capital assets which is not shown in the Capital Improvement Program Fund financial statements, but is recorded in the Water and Wastewater Funds as additions to capital assets.

4. LOANS AND NOTES RECEIVABLE
The City has made various loans under Community Development Block Grants to qualified homeowners and businesses. Under the terms of the business loans, repayments are due in monthly installments through 2022. Under the terms of the homeowner agreements, repayments of the loans are only required upon the sale of the home. The outstanding balance of the total loans receivable was $11,384 at June 30, 2021 and the business loans receivable portion was $5,066.

At June 30, 2021, the aggregate maturities of the City’s business loans and notes receivable were as follows:

The homeowner loans receivable amount of $6,318 does not have a fixed repayment schedule. 60 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

5. CAPITAL ASSETS
A. Government-Wide Financial Statements
The following is a summary of changes in the capital assets for the governmental activities during the fiscal year:

Depreciation expense by program for capital assets for the year ended June 30, 2021 was as follows:
61 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

5. CAPITAL ASSETS, Continued
A. Government-Wide Financial Statements, Continued
The following is a summary of changes in the capital assets for business-type activities during the fiscal year:

Depreciation expense for the year ended June 30, 2021 was as follows:

Balance
June 30, 2020 Additions Transfer
Balance
June 30, 2021
Non-depreciable assets:

Land 248,425 $ -$ -$ 248,425 $
Construction in progress 491,039 450,979 (30,129) 911,889 Total non-depreciable assets 739,464 450,979 (30,129) 1,160,314 Depreciable assets:

Buildings and improvements 10,158,853 133,398 30,129 10,322,380 Vehicles 1,829,057 - - 1,829,057
Equipment 545,158 - - 545,158
Infrastructure 7,240,758 48,801 7,289,559 -
Total depreciable assets 19,773,826 182,199 30,129 19,986,154 Less accumulated Depreciation:

Buildings and improvements, and
infrastructure 7,471,298 240,351 - 7,711,649
Vehicles 1,057,258 150,080 - 1,207,338
Equipment 530,823 3,521 534,344 -
Infrastructure 3,636,134 362,038 - 3,998,172
Total accumulated depreciation 12,695,513 755,990 - 13,451,503 Total depreciable assets, net 7,078,313 (573,791) 30,129 6,534,651 Total capital assets $ 7,817,777 $ (122,812) $ 7,694,965 - $ 62 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

5. CAPITAL ASSETS, Continued
B. Governmental Fund Financial Statements
The governmental fund financial statements do not present general government capital assets but are shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position.

6. LONG-TERM DEBT
A. Governmental Activities
For the year ended June 30, 2021, governmental activities long-term liabilities activity was as follows:

Capital Lease Obligations
The City leases vehicles and equipment under capital leases with terms that expire in December 2021.

Amortization on the assets leased is included in depreciation expense.

Compensated Absences
Compensated absences in the governmental funds are generally liquidated by the General Fund on a pay-as-you-go basis.

B. Business-Type Activities
For the year ended June 30, 2021, business-type activities long-term liabilities activity was as follows:
63 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

6. LONG-TERM DEBT, Continued
B. Business-Type Activities, Continued
Certificates of Participation 2000 – Original Issue $1,429,800 On December 21, 2000, the City issued certificates of participation through the Guadalupe Financing Authority which were purchased by the US Department of Agriculture (USDA) Rural Utilities Service (RUS), amounting to $1,429,800, in an agreement which included a grant of $875,200 for water and sewer line replacement. Under the terms of the agreement, the City has pledged net water revenues and net wastewater revenues for the payment of debt service. For the fiscal year ending June 30, 2021, the net water and wastewater revenues were $591,276 and $478,198 respectively. The principal and interest payments for the debt during the fiscal year ended June 30, 2021 totaled $77,164. The certificates of participation bear interest at 4.5% per annum, with principal and interest payments due semiannually through August 1, 2040. At June 30, 2021, the principal balance outstanding was $992,240.

The annual debt service requirements on the Certificates of Participation 2000 are as follows:

Certificates of Participation 2005 – Original Issue $1,203,900 On July 27, 2005, the City issued certificates of participation which were purchased by the US Department of Agriculture (USDA) Rural Utilities Service (RUS), amounting to $1,203,900, in an agreement which included a grant for water tank construction and upgrades. Under the terms of the agreement, the City has pledged tax increment revenues for the payment of debt service. Where tax increment revenues are no longer available for the payment of debt service, the City has pledged net water revenues for the payment of debt service. For the fiscal year ending June 30, 2021, the net water revenues were $591,276 and the principal and interest payments for the debt during the fiscal year were $71,326. The certificates of participation bear interest at 4.125% per annum, with principal and interest payments due semiannually through July 28, 2035. At June 30, 2021, the principal balance outstanding was $780,109.
64 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

6. LONG-TERM DEBT, Continued
B. Business-Type Activities, Continued
The annual debt service requirements on the Certificates of Participation-2005 are as follows:

Capital Lease Obligations
The City leases vehicles and equipment under capital leases that have terms that expire in December 2021. Amortization on the assets leased is included in depreciation expense.

7. FUND BALANCE
The City Council approved through resolution the creation of two reserve accounts within the General Fund: General Reserve, and Emergency Reserve.

General Reserve
The General Reserve’s purpose is to provide funding to meet operational appropriation requirements in the event that the City experiences shortfalls in the collection of General Fund revenues or major unanticipated increases in expenditures. At a minimum, the balance is to be set at 10% of the City’s annual operating budget. Use of funds from the General Reserve may only be made after City Council approval.

Emergency Reserve
The General Reserve’s purpose is to provide emergency funding as a result of a declared emergency or to fund an unanticipated urgent event affecting or threatening the public health, safety, and welfare of the City. At a minimum, the balance is to be set at 5% of the City’s annual operating budget. Use of funds from the General Reserve may only be made after City Council approval. 65 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

8. JOINT EXERCISE OF POWERS AGREEMENT
The City of Guadalupe participates in two joint ventures under joint powers agreements.

A. Central Coast Water Authority
The Central Coast Water Authority (CCWA) is a joint powers authority organized in 1991 for the purpose of providing the financing, construction, operation and maintenance of certain local (non state owned) facilities required to deliver water from the State Water Project to certain water purveyors and users in Santa Barbara County. CCWA is composed of eight members, all of which are public agencies.

The Board of Directors is made up of one representative from each participating entity. Votes on the Board are apportioned between the entities based upon each entity’s pro rata share of the water provided by the project.

Each participant is required to pay to CCWA an amount equal to its share of the total cost of “fixed project costs” and certain other costs in the proportion established in the Water Supply Agreement. This includes the participant’s share of payments to the State Department of Water Resources (DWR) under the State Water Supply Contract (including capital, operation, maintenance, power and replacement costs of the DWR facilities), debt service on CCWA bonds and all CCWA operating and administrative costs. Each participant is required to make payments under its Water Supply Agreement solely from the revenues of its water system. The City’s share of State water payments was $763,833 for the year ended June 30, 2021. The City’s allocation of CCWA’s operating expenses for the year ended June 30, 2021 was $137,696.

Additional information and complete financial statements for the CCWA may be obtained by contacting The Central Coast Water Authority at 255 Industrial Way, Buellton, CA 93427.

B. California Joint Powers Insurance Authority
The City is a member of the California Joint Powers Insurance Authority (CJPIA). CJPIA is composed of 118 California public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 et seq. The purpose of CJPIA 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 coverages. The CJPIA’s pool 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 nine member Executive Committee.

Self Insurance Program of CJPIA:

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 primary 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 risk-sharing pool.
66 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

8. JOINT EXERCISE OF POWERS AGREEMENT, Continued
B. California Joint Powers Insurance Authority, Continued 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 $30,000 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 $30,000 to $750,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs from $750,000 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 $40 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/.

Primary 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 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 $50,000 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 $50,000 to $100,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs from $100,000 to statutory limits are distributed based on the outcome of cost allocation within the first and second loss layers.

For fiscal year 2020-21, CJPIA’s pooled retention is $1 million per occurrence, with reinsurance to statutory limits under California Workers’ Compensation Law. Employer’s Liability losses are pooled among members to $1 million. Coverage from $1 million to $5 million is purchased through reinsurance policies, and Employer’s Liability losses from $5 million to $10 million are pooled among members.

Employer’s Liability losses are pooled among members to $2 million. Coverage from $2 million to $5 million is purchased as part of a reinsurance policy, and Employer’s Liability losses from $5 million to $10 million are pooled among members.

Purchased Insurance under CJPIA:

Property Insurance: The City participates in the all risk property protection program of CJPIA. This insurance protection is underwritten by several insurance companies. City property is currently insured according to a schedule of covered property submitted by the City to CJPIA. There is a $10,000 deductible per occurrence except for non emergency vehicle insurance which has a $2,500 deductible. 67 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

8. JOINT EXERCISE OF POWERS AGREEMENT, Continued
B. California Joint Powers Insurance Authority, Continued Adequacy of Protection under CJPIA:

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 2020-21.

Additional information and complete financial statements for the CJPIA may be obtained by contacting the California Joint Powers Insurance Authority at 8081 Moody Street, La Palma, CA 90623

9. EMPLOYEE RETIREMENT PLANS
A. Plan Descriptions
All qualified permanent and probationary employees are eligible to participate in the Public Agency Cost-Sharing Multiple-Employer Defined Benefit Pension Plan (Plan) administered by the California Public Employees’ Retirement System (CalPERS). The Plan consists of individual rate plans (benefit tiers) within a safety risk pool (police and fire) and a miscellaneous risk pool (all other). Plan assets may be used to pay benefits for any employer rate plan of the safety and miscellaneous risk pools.

Accordingly, rate plans within the safety or miscellaneous pools are not separate plans under GASB Statement No. 68. Individual employers may sponsor more than one rate plan in the miscellaneous or safety risk pools. The City sponsors four rate plans (two miscellaneous and two safety). Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions, and membership information that can be found on the CalPERS website.

B. Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 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, Safety Special Death 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.
68 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

9. EMPLOYEE RETIREMENT PLANS, Continued
B. Benefits Provided
The Plans’ provisions and benefits in effect at June 30, 2021, are summarized as follows:

C. Contributions
Section 20814(C) of the California Public Employees’ Retirement Law (PERL) 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 both 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 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.

The City’s contributions to the Plan for the measurement period ended June 30, 2020 were $457,869.

D. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions
As of June 30, 2021, the City reported a net pension liability for its proportionate share of the net pension liability of the Plan of $3,782,088.

The City’s net pension liability for the Plan is measured as the proportionate share of the total net pension liability of the Plan. The net pension liability of the Plan is measured as of June 30, 2020, and the total pension liability for the Plan used to calculate the net pension liability was determined by actuarial valuations as of June 30, 2019 rolled forward to June 30, 2020 using standard update procedures. The City’s proportionate share of the net pension liability was based on the City’s plan liability and assetrelated information where available, and proportional allocations of individual plan amounts as of the valuation date where not available.

Miscellaneous Safety
PEPRA
Miscellaneous
PEPRA
Safety
Hire date
Prior to
Jan 1, 2013
Prior to
Jan 1, 2013
On or after
Jan 1, 2013
On or after
Jan 1, 2013
Benefit formula 2.0% @55 2.0% @55 2.0% @62 2.0% @57
Benefit vesting schedule 5 years service 5 years service 5 years service 5 years service Benefit payments Monthly for life Monthly for life Monthly for life Monthly for life Retirement age 55 55 62 57
Monthly benefits, as a % of eligible
compensation 2% 2% 2% 2%
Required employee contribution rates 7.000% 7.000% 6.750% 10.000% Required employer contribution rates 11.031% 14.800% 7.732% 11.114% Unfunded liability payment 144,384 $ 93,200 $ 1,652 $ 3,503 $ 69 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

9. EMPLOYEE RETIREMENT PLANS, Continued
D. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions, Continued
The City’s proportionate share of the net pension liability for the Plan as of June 30, 2019 and 2020 were as follows:

For the year ended June 30, 2021, the City recognized pension expense of $781,266.

At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
$560,980 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2022. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Deferred Outflows
of Resources
Deferred Inflows
of Resources
Pension contributions subsequent to measurement date $ 560,980 $ - Changes in assumptions - 20,837
Differences between expected and actual experience 236,906 - Changes in employer's proportion 219,787 -
Differences between the employer's contribution and the employer's proportionate share of contributions - 186,086 Net differences between projected and actual earnings on plan investments 99,480 -
Total $ 1,117,153 $ 206,923
70 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

9. EMPLOYEE RETIREMENT PLANS, Continued
E. Actuarial Assumptions
The total pension liabilities in the June 30, 2019 actuarial valuations were determined using the following actuarial assumptions:
(1) The mortality table used was developed based on CalPERS-specific data The table includes 15 years of mortality improvements using Society of Actuaries Scale 90% of scale MP 2016. For more details on this table, please refer to the December 2017 experience study report (based on CalPERS demographic data from 1997 to 2015) that can be found on the CalPERS website.

F. Discount Rate
The discount rate used to measure the total pension liability for the Plan was 7.15%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability. A detailed report testing these projections can be obtained from the CalPERS website.

The long-term expected rate of return on pension plan investments was determined using a buildingblock method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical and forecasted information for all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.
71 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

9. EMPLOYEE RETIREMENT PLANS, Continued
F. Discount Rate, Continued
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.

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

G. Payable to the Pension Plan
At June 30, 2021 the City reported a payable of $0 for outstanding amount of contributions to the pension plan required for the year ended June 30, 2021.

Assumed
asset Real return Real return
Asset Class(1) allocation years 1 - 10(2) years 11+(3)
Global equity 50.00% 4.80% 5.98%
Fixed income 28.00% 1.00% 2.62%
Inflation assets ― 0.77% 1.81%
Private equity 8.00% 6.30% 7.23%
Real assets 13.00% 3.75% 4.93%
Liquidity 1.00% ― -0.92%
Total 100.00%
(1) In the Sytem's CAFR, Fixed income is included in Global debt securities; Liquidity is included in Short-term investments;
Inflaction 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. 72 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

9. EMPLOYEE RETIREMENT PLANS, Continued
H. Deferred Compensation Plan
In addition to the CalPERS pension plan, the City also offers a deferred compensation 457 plan (457 Plan). Per GASB Statement 97, the 457 Plan is a defined contribution pension plan. It is held in trust at Empower Retirement or CalPERS which administer the 457 Plan. Participation in the plan is open to all employees and employees can chose between the two trust administrators. The City contributes a maximum amount, as shown in the table below, that depends on health insurance costs on an individual employee basis. The difference between the maximum and the actual health insurance costs for an employee is contributed to the 457 Plan. Employees who have health insurance coverage external to the City’s policies have the maximum amount contributed to the 457 Plan. The maximums for each bargaining unit are as follows:

For the fiscal year ended June 30, 2021, the City contributed $50,380 to the 457 Plan and had payables to the 457 Plan of $7,089 as of June 30, 2021 of which $2,786 were City contributions, and $4,303 were employee contributions.

10. OTHER POST EMPLOYMENT BENEFITS
A. Plan Description
The City’s other post-employment benefits (OPEB) plan, an agent multiple-employer defined benefit plan, is for retiree health benefits and is administrated by the California Public Employees Retirement System (PERS) Health Benefit Program. The City entered the PERS medical insurance program in 1990 under the Public Employees Medical and Hospital Care Act (PEMHCA). The required employer contribution was $139-143 per month for each retiree, spouse or surviving spouse, and dependent during the fiscal year. The City provides post-employment health care insurance to all employees who retire from the City on or after attaining age 50 with at least 5 years of PERS credited service. For employees first covered under PERS on or after January 1, 2013, the eligibility requirements are attaining age 52 and 5 years of PERS credited service. Benefits are paid for the lifetime of the retiree, spouse or surviving spouse, and dependents up to the age of 65. The City's OPEB Plan does not issue a publicly available financial report.

B. Employees Covered
The following current and former employees were covered by the benefit terms under the OPEB plan as of the July 1, 2020 actuarial valuation:

Bargining Unit 2020 2021
Service Employee's International Union 650 $ 700$
Police Officer's Assoc. 975 975
International Assoc. of Fire Fighters 500 500
Calendar Year
73 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

10. OTHER POST EMPLOYMENT BENEFITS, Continued
C. Contributions
The City currently finances benefits on a pay-as-you-go basis, and sets its maximum monthly contribution rates for health insurance on behalf of active employees according to the PEMHCA statutory minimum. The minimum was $139 per month for calendar year 2020 and $143 per month for calendar year 2021. This amount is indexed to the rate of medical inflation and increased each year accordingly. The City also pays a 0.32% of premiums as an administrative fee on behalf of employees and retirees. For the measurement period July 1, 2020 to June 30, 2021, the City contributed $5,219 in benefit payments for retirees.

D. Total OPEB Liability
The City’s total OPEB liability was measured as of June 30, 2021, and was determined by an actuarial valuation as of July 1, 2020. Standard actuarial update procedures were used to project/discount from the valuation to measurement dates. The total OPEB liability was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:

The discount rate used the measure the total OPEB liability was 1.92%, which reflects the municipal bond 20-year high grade index rate, and assumes the net fiduciary position of the plan remains at $0. 74 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

10. OTHER POST EMPLOYMENT BENEFITS, Continued
E. Changes in the Total OPEB Liability
F. Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following presents the net OPEB liability of the City, as well as what the City’s net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (0.92 percent) or 1- percentage point higher (2.92 percent) than the current discount rate:

G. Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rate The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a healthcare cost trend rate that is 1-percentage-point lower or 1- percentage point higher than the current healthcare cost trend rate:
75 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

10. OTHER POST EMPLOYMENT BENEFITS, Continued
H. OPEB Expense and Deferred Outflows and Inflows of Resources At June 30, 2021, the City’s deferred outflows of resources and deferred inflows of resources to OPEB from the following sources were as follows:

Amounts reported as deferred outflows and deferred inflows of resources will be recognized in OPEB expense as follows:

For the fiscal year ended June 30, 2021, the City recognized OPEB expense of $78,316.

11. CONTINGENCIES AND COMMITMENTS
A. Litigation
The City is presently involved in certain matters of litigation that have arisen in the normal course of conducting City business. City management believes, based upon consultation with the City Attorney, that these cases, in the aggregate, are not expected to result in a material adverse financial impact on the City. Additionally, City management believes that the City’s insurance programs are sufficient to cover any potential losses should an unfavorable outcome materialize.

B. Grant Commitments
The City had 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. 76 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

12. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDVELOPMENT AGENCY On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (the “Bill”) that provides for the dissolution of all redevelopment agencies in the State of California. This action impacted the reporting entity of the City of Guadalupe that previously had reported the City’s Redevelopment Agency within the reporting entity as a blended component unit.

The Bill provided that upon dissolution of a redevelopment agency, either the City or another unit of local government will agree to serve as the “successor agency” to hold the assets until they are distributed to other units of state and local government. On January 9, 2012, the City Council elected to become the Successor Agency for the former Redevelopment agency in accordance with the Bill as part of City Resolution No. 2 (2012).

After enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the State of California were prohibited from entering into new projects, obligations or commitments. Subject to the control of a newly established oversight board, remaining assets could only be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments).

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

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

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

In accordance with the timeline set forth in the Bill (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, 2012. After the date of dissolution, the assets and activities of the dissolved redevelopment agency were transferred to and are reported in a fiduciary fund (private‐ purpose trust fund, the Trust Fund) in the financial statements of the City. 77 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

12. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDVELOPMENT AGENCY, Continued
A. Cash and Investments
The City maintained investments with the State of California Local Agency Investment Fund (LAIF) for all City activities, including the Trust Fund. The Trust had $1,033,508 in cash and investments as of June 30, 2021, that was held in LAIF. The City manages the Trust Fund’s cash and investments in a consistent manner with the rest of its cash and investment pool. Refer to Note 2 for additional information regarding LAIF.

B. Cash with Fiscal Agent
The Trust Fund had $306,536 in cash and investments as of June 30, 2021, held by fiscal agents pledged for the payment or security of certain bonds. The California Government code provides that these monies, in the absence of specific statutory provisions governing the issuance of bonds, certificates, or leases, may be invested in accordance with the ordinance, resolutions, or indentures specifying the types of investments its fiscal agents may make. These ordinances, resolutions, and indentures are generally more restrictive than the Trust’s general investment policy. In no instance have additional types of investments, not permitted by the Trust’s general investment policy, been authorized.

C. Property Held for Resale
At June 30, 2021, the carrying value of property held for resale was as follows:

D. Capital Assets
For the year ended June 30, 2021, capital assets activity was as follows:
78 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

12. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDVELOPMENT AGENCY, Continued
E. Long-Term Liabilities
For the year ended June 30, 2021, long term liabilities activity was as follows:

Note Payable
The Trust Fund had a note payable to a private party related to the purchase of property currently held for resale. Principal and interest payments on the note payable are due on the 16th of each month and the note matures in 2021. Interest accrues at 9.0% per annum. At June 30, 2021, the principal balance outstanding was $0.

Tax Allocation Bonds
On April 3, 2003, the former redevelopment agency issued $6,455,000 of tax allocation bonds for a refunding of Series 1997 Tax Allocation Bonds. The bonds were scheduled to mature through August 1, 2035, with interest rates from 2.0 to 5.125%.

On November 1, 2017, the Successor Agency to the Guadalupe Community Redevelopment Agency issued $4,900,000 of tax allocation bonds (Bonds) to refund the 2003 series bonds. The refunding was undertaken to reduce total future debt service payments. The refunding resulted in $1,326,400 gross debt service (principal and interest) savings over 18 years, an economic gain of $147,832, and an accounting deferred loss on refunding of $92,886.

The scheduled payment of principal of and interest on the Bonds when due is guaranteed under an insurance policy issued concurrently with the Bonds. The Bonds mature through August 1, 2035, with interest rates from 1.5% to 3.5%. Principal on the bonds is due annually on August 1 of each year, and interest on the Bonds is due semiannually on February 1 and August 1 of each year. At June 30, 2021, the total principal and interest remaining to be paid on the bonds was $5,353,023. The outstanding principal balance net of bond discounts was $4,122,529. 79 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

12. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDVELOPMENT AGENCY, Continued
E. Long-Term Liabilities, Continued
For the year ended June 30, 2021, the aggregate maturities of the tax allocation bonds were as follows:

Pollution Remediation
The Trust owns property designated by the Santa Barbara County Public Health Department as a LUFT (Leaking Underground Fuel Tank) site (#52010). The property is located at 995 Guadalupe Street in Guadalupe, which also is designated as 2424 10th Street. This environmental cleanup project has been accepted into the State Water Resources Cleanup of Underground Storage Tanks Fund (USTCF), which approved a total Letter of Commitment (LOC) in the amount of $1.5 Million. These funds are available for reimbursement of most of the costs associated with assessment and cleanup of the contamination under the site, associated with a former gasoline storage tank leak.

Between the fiscal years 2008 through June 30, 2021, the former Agency:
1) Submitted a total of $1,191,359 to the USTCF for reimbursement 2) Received a total of $1,045,870 thus far, and
3) Is waiting for the completion of an evaluation of an additional $145,444 for reimbursement by the USTCF. This amount is comprised of -
a. $113,689, in labor and costs from the environmental consulting firm for all work conducted during the 2020-21 FY, and
b. $31,755 in appeals for prior costs that were previously submitted to, but initially deemed ineligible by, the USTCF.

During the 2020-21 fiscal year the environmental consulting firm primarily continued the required site closure activities that were approved for the site as of September 2020. Physical site closure activities were completed in October 2021. Final reporting requirements were completed and a report was submitted to the regulatory agencies as of October 31, 2021. The City currently anticipates that the County will provide the City with a final closure letter sometime in March of 2022. Based on this, the City anticipates that final billings and reimbursement requests can be sent to the State by early April 2022.
80 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

12. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDVELOPMENT AGENCY, Continued
E. Long-Term Liabilities, Continued
Estimated future costs through June 30, 2022 (for the 2021-22 fiscal year) are anticipated to be approximately $66,000, and should represent the final cleanup costs for the site through obtaining final closure. Based on current expenditures and estimated future costs discussed above, the total current estimated (reimbursable) costs for cleanup activities are approximately $1,200,000-$1,300,000, which is below the $1.5 Million budget allotted this site by the State.

13. OPERATING LEASES
The City leases equipment under operating leases with lease terms in excess of one year. The agreements contain a termination clause providing for cancellation after a specified number of days written notice to lessors but it is unlikely that the City will cancel the agreements prior to the expiration date. Rent expense under operating leases was $11,661 for the year ended June 30, 2021.

At June 30, 2021, future minimum lease payments under these operating leases were as follows:

14. DEFICIT FUND BALANCES/NET POSITION
Major Funds
As of June 30, 2021, a deficit fund balance of $862,403 exists for the Community Development Fund.

This was a result of timing differences between invoices paid by the Community Development Fund and the related grant reimbursements received from the State.

Non-major Funds
The Library Fund had a deficit fund balance of $33,864 as of June 30, 2021. 81 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2021

15. GOING CONCERN
The City continues to have more expenditures than revenues in its General Fund. In order to continue operations, in prior years the General Fund borrowed from other funds. These borrowings still need to be repaid. There are doubts about the General Fund’s ability to continue to repay these interfund loans in their entirety if economic activity declines. Below is how management intends to address those issues:

The City is experiencing an increase in development related to the Pasadera residential development and other developments that are about to commence like the Escalante Meadows development. This new development will bring higher property tax revenue for the City. In addition, the new Measure N was passed in November 2020 which has brought additional sales tax revenue for the City in fiscal year 2022. Cannabis ordinances have also been approved for future cannabis retail in the City. Unfortunately, the City did see an impact in its fund balance related to the COVID pandemic. Fortunately, the City will be receiving the American Rescue Plan funds to offset revenue losses related to the Pandemic in fiscal year 2022. The General Fund’s priority is to eliminate future borrowing from other funds, payoff current inter-fund loans and be economically self-sufficient by applying cost-cutting measures in order to continue to build reserves. Inter-fund loan payment schedules will be reviewed annually and, if possible, revised in an effort to decrease balances at a faster rate. 82 REQUIRED

SUPPLEMENTARY INFORMATION
83 This page intentionally left blank
84 City of Guadalupe
Required Supplementary Information
For the year ended June 30, 2021

1. BUDGETS AND BUDGETARY ACCOUNTING
A. Budgetary Control and Budgetary Accounting
Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for all governmental funds. After adoption of the final budget, transfers of appropriations within a General Fund department, or within other funds, can be made by the City Administrator. Budget modifications between funds and increases or decreases to a fund’s overall budget, must be approved by the City Council.

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 re budgeted in the following fiscal year.

The following are the budget comparison schedules for all major Special Revenue Governmental Funds and the General Fund.

B. Excess of Expenditures over Appropriations
At June 30, 2021, expenditures exceeded appropriations in the General Fund as noted below.

Department Budget Variance
City Attorney 2,065
Police 177,790
Fire 227,193
Public Safety Subtotal 404,983
Parks & Recreation 23,787
Building Maintenance 19,612
Building and Safety; Permits; Planning 37,383
Community Development Subtotal 56,995
85 Budgetary Comparison Schedule - General Fund
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Taxes 2,376,09 $ 0 $ 2,724,600 $ 3,042,483 $ 317,883
Licenses and permits 740,418 940,830 578,659 (362,171)
Fines and penalties 29,274 12,900 6,246 (6,654)
Revenues from other agencies 491,764 586,064 642,707 56,643 Charges for current services 292,638 292,408 291,114 (1,294) Interest 108,630 129,530 118,220 (11,310)
Other revenues 181,560 155,060 135,436 (19,624)
Total revenues 4,220,374 4,841,392 4,814,865 (26,527)
EXPENDITURES:

Current:

General Government 1,118,598 1,269,019 1,232,529 36,490 Public Safety 2,934,437 3,176,198 3,581,181 (404,983)
Leisure, cultural and social services 156,858 176,082 199,869 (23,787) Community development 385,117 365,922 422,917 (56,995)
Debt service:

Principal 113,224 113,524 3,562 109,962
Interest and fiscal charges 19,055 19,055 9,742 9,313
Total expenditures 4,727,289 5,119,800 5,449,800 (330,000) REVENUES OVER (UNDER) EXPENDITURES (278,408) (506,915) (634,935) (356,527) OTHER FINANCING SOURCES (USES):

Transfers in 636,072 657,212 687,292 30,080
Transfers out (51,200) (240,980) (167,623) 73,357
Total other financing sources (uses) 584,872 416,232 519,669 103,437 Net change in fund balances 77,957 137,824 (115,266) (253,090) FUND BALANCES:

Beginning of year 485,622 485,622 485,622 -
End of year $ 563,579 $ 623,446 $ 370,356 $ (253,090)
City of Guadalupe
For the year ended June 30, 2021
Budgeted Amounts
86 Budgetary Comparison Schedule - Community Development Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Revenues from other agencies $ 3,500,000 $ 4,200,000 $ 2,261,162 $ (1,938,838) Interest - 3,050 1,890 (1,160)
Other revenues - - 15,591 15,591
Total revenues 3,500,000 4,203,050 2,278,643 (1,924,407) EXPENDITURES:

Current:

Leisure, cultural and social services 2,000 265,000 201,441 63,559 Capital outlay - - 26,831 (26,831)
Total expenditures 2,000 265,000 228,272 36,728
REVENUES OVER (UNDER) EXPENDITURES 3,498,000 3,938,050 2,050,371 (1,887,679) OTHER FINANCING SOURCES (USES):

Transfers out (3,500,000) (3,880,000) (2,948,334) 931,666 Total other financing sources (uses) (3,500,000) (3,880,000) (2,948,334) 931,666 Net change in fund balances (2,000) 58,050 (897,963) (956,013) FUND BALANCES:

Beginning of year 35,560 35,560 35,560 -
End of year $ 33,560 $ 93,610 $ (862,403) $ (956,013)
City of Guadalupe
For the year ended June 30, 2021
Budgeted Amounts
87 City of Guadalupe
Required Supplementary Information
For the year ended June 30, 2021

2. DEFINED BENEFIT PENSION PLANS
A. Schedule of the City’s Proportionate Share of the Net Pension Liability – Last 10 Years* B. Schedule of Plan Contributions – Last 10 Years*
88 City of Guadalupe
Required Supplementary Information
For the year ended June 30, 2021
C. Actuarial Methods and Assumptions used for Pension Actuarially Determined Contributions

3. OTHER POST EMPLOYMENT BENEFITS (OPEB)
Schedule of Changes in Total OPEB Liability and Related Ratios Fiscal Year 2021 2020 2019 2018 2017 2016 2015
6/30/2018 6/30/2017 6/30/2016 6/30/2015 6/30/2014 6/30/2013 6/30/2012 Actuarial cost method: Entry Age Entry Age Entry Age Entry Age Entry Age Entry Age Entry Age Amortization method: (1) (1) (1) (1) (1) (1) (1)
Assets valuation method: Market Value Market Value Market Value Market Value Market Value Market Value 15 Year Smoothed
Market
Method
Inflation: 2.50% 2.63% 2.75% 2.75% 2.75% 2.75% 2.75%
Salary increases: (2) (2) (2) (2) (2) (2) (2)
Investment rate of return: 7.00% 7.25% 7.375% 7.50% 7.50% 7.50% 7.50% Retirement age: (3)(3) (3)(3) (3) (3) (3)
Mortality: (4) (4) (4) (4) (4) (4) (4)
(1) Level percentage of payroll, closed
(2) Depending on age, service, and type of employment
(3) 50 for all plans, with the exception of 52 for Miscellaneous PEPRA 2%@62 (4)
Valuation date (for contractually
required contribution):

Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board.
1 1
89 This page intentionally left blank
90 91
City of Guadalupe
Combining Balance Sheet
Other Governmental Funds
June 30, 2021
Guadalupe
Local Public Park Lighting and
Transportation Library Facilities Development Assessment ASSETS
Cash and investments $ 334,149 $ 34,444 $ 15,778 $ 25,511 $ 728,438 Accounts receivable 14,835 25 11 18 517
Prepaid items - - - - 1,875
Interfund loans receivable - - 744,736 - 240,000
Total assets $ 348,984 $ 34,469 $ 15,789 $ 770,265 $ 970,830

LIABILITIES, DEFERRED INFLOWS

OF RESOURCES AND FUND BALANCES
Liabilities:

Accounts payable - - - 18,331 -
Accrued wages and benefits - - - - -
Interfund loans payable 68,333 - - - -
Total liabilities 68,333 - - 18,331 -
Deferred inflows of resources:

Unavailable revenue - - - - -
Total deferred inflows of
resources - - - - -
Fund Balances:

Nonspendable:

Prepaid items - - - - 1,875
Restricted for:

Street maintenance 348,984 - - - -
Other capital projects - - - - -
Community development - - - - -
Public safety - - - - -
Utility infrastructure - 15,789 - 770,265 -
Debt service - - - - -
Lighting and landscape - - - 950,624 -
Committed to:

Capital projects - - - - -
Unassigned (33,864) - - - -
Total fund balances 348,984 (33,864) 15,789 770,265 952,499 Total liabilities
and fund balances $ 348,984 $ 34,469 $ 15,789 $ 770,265 $ 970,830 Special Revenue
92 Total Other
Public Capital Traffic Sewer Bond Governmental
Safety Measure A Gas Tax Facilities City Hall Mitigation Debt Service Funds $ 950,218 182,917 $ 494,336 $ 648,613 $ 29,513 $ 141,764 $ 31,980 $ 3,617,661 115,224 6,386 387 468 21 102 23 138,017
15,596 - - - - - - 17,471
- - - 68,333 - - - 1,053,069
$ 1,081,038 189,303 $ 494,723 $ 717,414 $ 29,534 $ 141,866 $ 32,003 $ 4,826,218 $ 2,483 - - - - - - 20,814
7,570 - - - - - - 7,570
11,766 - 6,061 - - - - 86,160
21,819 - 6,061 - - - - 114,544
57,462 3,804 - - - - - 61,266
57,462 3,804 - - - - - 61,266
15,596 - - - - - 17,471 -
986,161 - 488,662 - - - 1,823,807 -
- - 717,414 - 29,534 - 746,948 -
- - - - - - - -
185,499 - - - - - 185,499 -
- - - - - - 786,054 -
- - - - - 32,003 - 32,003
- - - - - - 950,624 -
- - - - 141,866 - 141,866 -
- - - - - - (33,864) -
185,499 1,001,757 488,662 717,414 29,534 141,866 32,003 4,650,408 $ 189,303 $ 1,081,038 $ 494,723 $ 717,414 $ 29,534 $ 141,866 $ 32,003 $ 4,826,218 Special Revenue Capital Projects
93 City of Guadalupe
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Other Governmental Funds
For the year ended June 30, 2021
Guadalupe
Local Public Park Lighting and
Transportation Library Facilities Development Assessment REVENUES:

Taxes - $ - $ - $ - $ 265,861 $
Licenses and permits - 13,600 ---
Revenues from other agencies 154,749 ----
Charges for current services - - - 4,256 -
Interest 1,563 170 84 129 6,940
Other revenues -----
Total revenues 156,312 13,770 84 4,385 272,801
EXPENDITURES:

Current:

Public Safety - - - - -
Transportation - - - - -
Leisure, cultural and social
services 14,000 - - - -
Community development - - - 81,537 -
Capital outlay -----
Debt service:

Principal -----
Total expenditures - 14,000 - - 81,537

REVENUES OVER
(UNDER) EXPENDITURES 156,312 (230) 84 4,385 191,264

OTHER FINANCING SOURCES
(USES):

Proceeds from sale of assets - - - - -
Transfers in -----
Transfers out (109,371) --- (10,300)
Total other financing sources
(uses) (109,371) - - (10,300) -
Net change in fund balances 46,941 (230) 84 4,385 180,964 FUND BALANCES:

Beginning of year 302,043 (33,634) 15,705 765,880 771,535 End of year $ 348,984 $ (33,864) $ 15,789 $ 770,265 $ 952,499 Special Revenue
94 Total Other
Public Capital Traffic Sewer Bond Governmental
Safety Measure A Gas Tax Facilities City Hall Mitigation Debt Service Funds $ 559,062 - $ $ 178,320 $ - $ - $ - $ 1,003,24 - $ 3
---- 5,440 21,283 - 40,323
37,720 - 108,678 - - - -301,147
------- 4,256
938 4,146 2,149 3,832 143 698 170 20,962
- 40,814 - 3,500 - - - 44,314
38,658 604,022 289,147 7,332 5,583 21,981 170 1,414,245 - 16,749 - - - - - 16,749
279,538 - 3,000 - - - - 282,538
- - - 5,480 - - - 19,480
- - - 518 - - 82,055 -
2,076 - - 124,359 - - - 126,435
- - 12,840 ---- 12,840
18,825 279,538 15,840 130,357 - - - 540,097
19,833 324,484 273,307 (123,025) 5,583 21,981 170 874,148 --------
--------
- (118,336) (82,208) (1,060) --- (321,275)
(118,336) - (82,208) (1,060) - - - (321,275)
206,148 19,833 191,099 (124,085) 5,583 21,981 170 552,873 165,666 795,609 297,563 841,499 23,951 119,885 31,833 4,097,535 $ 185,499 $ 1,001,757 $ 488,662 $ 717,414 $ 29,534 $ 141,866 $ 32,003 $ 4,650,408 Special Revenue Capital Projects
95 Guadalupe, California
Single Audit Reports
For the year ended June 30, 2021
ATTACHMENT 2
City of Guadalupe
Single Audit Reports
For the year ended June 30, 2021
Table of Contents
Page
Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ........................................................... 1 Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance and on the Schedule of Expenditures of Federal Awards ................................................................................................................... 3 Schedule of Expenditures of Federal Awards ..................................................................................................... 6 Notes to the Schedule of Expenditures of Federal Awards ............................................................................... 7 Schedule of Findings and Questioned Costs ....................................................................................................... 8

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE

AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED

IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of the City Council
of the City of Guadalupe
Guadalupe, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Guadalupe, California (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 and have issued our report thereon dated March 31, 2022.

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

Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. However, as described in the accompanying schedule of findings and responses, we did identify certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiency described in the accompanying schedule of findings and questioned costs as item 2021-01 to be a material weakness. We consider the deficiency described in the accompanying schedule of findings and questioned costs as item 2021-002, to be a significant deficiency.

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

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

City of Guadalupe’s Response to Findings
City’s response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. The City’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

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

Badawi & Associates, CPAs
Berkeley, California
March 31, 2022
2 REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON

INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH THE UNIFORM GUIDANCE

AND ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of the City Council
of the City of Guadalupe
Guadalupe, California
Report on Compliance for Each Major Federal Program
We have audited the City of Guadalupe, California (City)’s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2021. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

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

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

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City’s compliance. 3 To the Honorable Mayor and Members of the City Council of the City of Guadalupe
Guadalupe, California

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

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

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

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

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. 4 To the Honorable Mayor and Members of the City Council of the City of Guadalupe
Guadalupe, California

Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, 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. We issued our report thereon dated March 31, 2022, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements.

The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements.

The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.

Badawi & Associates, CPAs
Berkeley, California
March 31, 2022
5 City of Guadalupe
Schedule of Expenditures of Federal Awards
For the year ended June 30, 2021
Federal
Catalog Pass-through Program Subrecipient
Grantor Agency and Grant Title Number Number Expenditures Payment U.S. Department of Transportation:

Formula Grants for Rural Areas and Tribal Transit Program COVID19 - Passed through State of California for CARES Act 20.509 64VO20-01062 133,739 $ - $ Passed through State of California 20.509 64B019‐00886 66,992 - Subtotal Formula Grants for Rural Areas 200,731 -
Total U.S. Department of Transportation 200,731 -
Department of Housing and Urban Development:

Passed through State of California
Community Development Block Grants/State's program and
Non-Entitlement Grants in Hawaii 14.228 17CDBG12099 3,108,958 111,187 COVID19 - Community Development Block Grants/State's
program and Non-Entitlement Grants in Hawaii 14.228 20CDBGCV100085 38,156 10,166 Total Department of Housing and Urban Development 3,147,114 121,353 Department of the Treasury:

Passed through State of California
COVID19 - Coronavirus Relief Fund 21.019 n/a 99,777 -
Total Department of the Treasury 99,777 -
Total Expenditures of Federal Awards $ 3,447,622 $ 121,353 See accompanying Notes to Schedule of Expenditures of Federal Awards. 6 City of Guadalupe
Notes to the Schedule of Expenditures of Federal Awards For the year ended June 30, 2021
A. Reporting Entity
The financial reporting entity consists of (a) the primary government, City of Guadalupe, California (City), (b) organizations for which the primary government is financially accountable, and (c) other organizations for which the primary government is not accountable, but for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The component unit discussed below is included in the reporting entity because of its operational or financial relationships with the City.
x Guadalupe Public Financing Authority
Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. In addition, component units can be other organizations for which the primary government’s exclusion would cause the reporting entity’s financial statements to be misleading or incomplete.

Separate financial statements for the Guadalupe Financing Authority are not prepared. There are currently no reportable financial transactions of the Authority.

B. Basis of Accounting
Funds received under the various grant programs have been recorded within the general, special revenue, and capital projects funds of the City. The City utilizes the modified accrual basis of accounting for the general, special revenue, and capital projects funds. Expenditures of federal awards reported on the Schedule of Expenditures of Federal Awards (Schedule) are recognized when incurred.

C. Relationship of Schedule of Expenditures of Federal Awards to Financial Statements The accompanying Schedule presents the activity of all federal financial assistance programs of the City.

Federal financial assistance received directly from federal agencies as well as federal financial assistance passed through the State of California is included in the Schedule.

The Schedule was prepared only from the accounts of various grant programs and, therefore, does not present the financial position or results of operations of the City.

D. Pass-Through Entities’ Identifying Number
When federal awards were received from a pass-through entity, the Schedule shows, if available, the identifying number assigned by the pass-through entity. When no identifying number is shown, the City determined that no identifying number is assigned for the program or the City was unable to obtain an identifying number from the pass-through entity.

E. Indirect Costs
The City did not elect to use the 10% de minimis indirect cost rate. 7 City of Guadalupe
Schedule of Findings and Questioned Costs
For the year ended June 30, 2021
Section I – Summary of Auditor’s Results
Financial Statements
Types of auditors’ report issued on whether financial statements audited were prepared in accordance with GAAP: Unmodified Internal control over financial reporting:
x Material weakness(es) identified? Yes
x Significant deficiency(ies) identified? Yes
Any noncompliance material to the financial statements noted No Federal Awards
Internal control over major programs:
x Material weakness(es) identified? No
x Significant deficiency(ies) identified? None noted
Type of auditor’s report issued on compliance for major programs Unmodified Any audit findings disclosed that are required to be reported in accordance with section 200.516(a) No
Identification of major programs:

Dollar threshold used to distinguish between type A and type B program $750,000 Auditee qualified as low-risk auditee under
section 200.520? No
8 City of Guadalupe
Schedule of Findings and Questioned Costs, Continued
For the year ended June 30, 2021
Section II – Current Year Findings
A. Financial Statement Audit
2021-001 – Insufficient Fund Balance in the General Fund and the Ability of the City to Continue As a Going Concern (Material Weakness)
Criteria:

General-purpose local governments, regardless of size, at a minimum should maintain an unrestricted budgetary fund balance in the general fund no less than 2 months of regular general fund operating revenues or regular general fund operating expenditures.

Condition:

The General Fund did not maintain a sufficient or adequate fund balance level to ensure continuity of operations as of June 30, 2021. The General Fund finished the year with a fund balance of $370,356 compared to a fund balance of $485,622 in the prior fiscal year. This balance represents 28 days of operating revenues and 25 days of operating expenditures. The fund balance in spendable form is $27,757. As of June 30, 2021 the General Fund owed internally to the Lighting and Assessment Fund and the Water Fund the amounts of $240,000 and $368,996, respectively. These interfund loans were made so that the General Fund could sustain its basic operations.

The aforementioned conditions have raised doubt about the City’s ability to continue as a going concern, as described further in Note 15 of the Basic Financial Statements.

Cause:

The City has either overspent its budget in the past or the budget was not balanced which led to overspending and the insufficient fund balance situation.

Effect:

Insufficient fund balances and decrease in revenues in the past have created a budget shortfall that requires continued cost cutting measures to reach a budget that will increase the fund balance to an acceptable level as well as provide the necessary revenues and financing for continued operations of the City. In addition, an insufficient General Fund balance puts the City in a vulnerable position in times of economic stress.

Recommendation:

We recommend the City continue to analyze all potential cost cutting measures and revenue sources, and review options to adhere to a budget plan for the General Fund and other funds to increase the fund balance, as well as provide continued financing for City operations.

Management Response:

In fiscal year 2019-20, the General fund increased from prior year’s negative fund balance, ending the year at $485,622, from a negative $15,325. In fiscal year 2020-21, the fund balance decreased about $115,000. The primary goal is to preserve reserves and accumulate reserves. The City’s revenue continues to increase as the Pasadera Development adds additional homes this fiscal year. The Escalante Meadows Development is also expected to increase Building Permit and related construction fee revenues by fiscal year 2022. Other revenues showing steady increases are Sales Tax with the new Measure N that was passed with the November 2020 election, Property Tax with new development, 9 City of Guadalupe
Schedule of Findings and Questioned Costs, Continued
For the year ended June 30, 2021
Section II – Current Year Findings, continued
A. Financial Statement Audit, continued
2021-001 – Insufficient Fund Balance in the General Fund and the Ability of the City to Continue As a Going Concern (Material Weakness), Continued
Management Response (continued):

Business License, Utility Users Tax and Franchise Fees. In addition, City Council is currently working on bringing Cannabis to the City in the near future. The City has received $99,777 from the CARES Act in fiscal year 2021 and will receive American Rescue Plan funds in fiscal year 2022. Amid the pandemic, the City still needs to look at finding alternatives to sustain recurring revenue streams for the future in order to build strong reserves and to continue to provide residents with current services. 2021-002 – Control Over Journal Entries and Financial Reporting (Significant Deficiency) Criteria:

A good internal control system over financial reporting requires that certain tasks such as creating journal entries and reviewing journal entries be segregated and not performed by the same individual.

Condition:

During our audit we noted that there was mainly one person who was responsible for creating journal entries with no independent review of those entries by an independent person. We also noted multiple journal entry errors that were both corrected and uncorrected.

Cause:

Duties in the financial reporting system are not properly segregated to ensure good checks and balances are in place.

Effect:

Journal entries amounts may be misstated due to errors not detected during the self-review process. In addition, unauthorized entries may be posted and not detected timely.

Recommendation:

We recommend that the City improve and strengthen its procedures for review and reconciliation to ensure that journal entries are properly reviewed and reconciled by an independent person and there is adequate segregation of duties in place.

Management Response:

Finance Director proposes journal entries and Business Manager reviews and enters the journal entries.

The City will review and set up controls to ensure approval controls of journal entries takes place for all changes to the accounting records. City Staff is hopeful that the new accounting software will accommodate workflow and authorization parameters to improve our controls and segregation of duties. In addition, the finance department will propose that the City Administrator review journal entries prior to posting.
10 City of Guadalupe
Schedule of Findings and Questioned Costs, Continued
For the year ended June 30, 2021
Section II – Current Year Findings, continued
B. Federal Award Program Audit
No current year federal award program audit findings.

Section III- Prior Year Findings
A. Financial Statement Audit
2020-001 – Insufficient Fund Balance in the General Fund and the Ability of the City to Continue As a Going Concern (Material Weakness)
Criteria:

General-purpose local governments, regardless of size, at a minimum should maintain an unrestricted budgetary fund balance in the general fund no less than 2 months of regular general fund operating revenues or regular general fund operating expenditures.

Condition:

The General Fund did not maintain a sufficient or adequate fund balance level to ensure continuity of operations as of June 30, 2020. The General Fund finished the year with a fund balance of $485,622 compared to a fund balance of $15,325 in the prior fiscal year. This balance represents 38 days of operating revenues and 38 days of operating expenditures. The fund balance in spendable form is $343,261. As of June 30, 2020 the General Fund owed internally to the Lighting and Assessment Fund and the Water Fund the amounts of $282,500 and $433,830, respectively. These interfund loans were made so that the General Fund could sustain its basic operations.

The aforementioned conditions have raised doubt about the City’s ability to continue as a going concern, as described further in Note 14.

Cause:

The City has either overspent its budget in the past or the budget was not balanced which led to overspending and the insufficient fund balance situation.

Effect:

Insufficient fund balances and decrease in revenues in the past have created a budget shortfall that requires continued cost cutting measures to reach a budget that will increase the fund balance to an acceptable level as well as provide the necessary revenues and financing for continued operations of the City. In addition, an insufficient General Fund balance puts the City in a vulnerable position in times of economic stress.

Recommendation:

We recommend the City continue to analyze all potential cost cutting measures and revenue sources, and review options to adhere to a budget plan for the General Fund and other funds to increase the fund balance, as well as provide continued financing for City operations. 11 City of Guadalupe
Schedule of Findings and Questioned Costs, Continued
For the year ended June 30, 2021
Section III – Prior Year Findings, continued
A. Financial Statement Audit, continued
2020-001 – Insufficient Fund Balance in the General Fund and the Ability of the City to Continue As a Going Concern (Material Weakness), Continued
Management Response:

General Fund: The City has a positive fund balance currently as of November 2020. The City’s goal is to maintain a positive fund balance and the preservation of future reserves. The City adopted Financial Policies with its 2019-2021 Budget that target the establishment of reserve funds at optimum levels.

However, the City of Guadalupe declared a local state of Emergency in March 2020 due to the COVID19 pandemic. Although the pandemic brings much uncertainty, the City expects sales tax revenue, along with business licenses, property tax and local streets and roads funding to not be significantly impacted. City staff will monitor the financial situation and impact of the pandemic on amonthly basis for the remainder of fiscal year 2021 and into fiscal year 2022. Amid the pandemic, building Permit and related construction fee revenues have helped the City’s cash flow as the Pasadera development continues construction. Other development projects are expected at the end of fiscal year 2021. The City is also working with FEMA to obtain reimbursement for COVID19 related expenses. The City received $99,777 from the CARES Act to offset the impact of the pandemic. The City is looking to sustain recurring revenue streams for the future including a new sales tax measure effective April 2021 and continuation of increase of water and wastewater rates. In addition, Users Tax, Franchise Fees and Property taxes are expected to rise over time as a positive long-term outcome of the new development. 2020-002 – Control Over Journal Entries and Financial Reporting (Significant Deficiency) Criteria:

A good internal control system over financial reporting requires that certain tasks such as creating journal entries and reviewing journal entries be segregated and not performed by the same individual.

Condition:

During our audit we noted that there was mainly one person who was responsible for creating journal entries with no independent review of those entries by an independent person. We also noted multiple journal entry errors that were both corrected and uncorrected.

Cause:

Duties in the financial reporting system are not properly segregated to ensure good checks and balances are in place.

Effect:

Journal entries amounts may be misstated due to errors not detected during the self-review process. In addition, unauthorized entries may be posted and not detected timely.

Recommendation:

We recommend that the City improve and strengthen its procedures for review and reconciliation to ensure that journal entries are properly reviewed and reconciled by an independent person and there is adequate segregation of duties in place.
12 City of Guadalupe
Schedule of Findings and Questioned Costs, Continued
For the year ended June 30, 2021
Section III – Prior Year Findings, continued
A. Financial Statement Audit, continued
2020-002 – Control Over Journal Entries and Financial Reporting (Significant Deficiency), Continued
Management Response:

Finance Director proposes journal entries and Business Manager reviews and enters the journal entries.

The City will review and set up controls to ensure approval controls of journal entries takes place for all changes to the accounting records. City Staff is hopeful that the new accounting software will accommodate workflow and authorization parameters to improve our controls and segregation of duties. In addition, the finance department will propose that the City Administrator review journal entries prior to posting.

B. Federal Award Program Audit
No prior year federal award program audit findings.
13