Guadalupe City Council
October 13, 2026

CITY COUNCIL STAFF REPORT
Highway 1 Lift Station Replacement Project
Meeting Date: October 13, 2026
Agenda Item: 11
To: Honorable Mayor and Members of the City Council
From: Jeff van den Eikhof, City Engineer
Department: City Engineer
Subject: Highway 1 Lift Station Replacement Project

RECOMMENDED ACTION

1. Hold a public hearing to provide all present with an opportunity to speak regarding the Community Development Block Grant (CDBG).

2. Approve the completion of the Highway 1 Lift Station Project and closure of the Community Development Block Grant.

3. Approve the filing of the Notice of Completion for the Highway 1 Lift Station Replacement Project and authorize the City Clerk to file the Notice of Completion with the County Recorder immediately.

4. Thirty days after the recordation of the Notice of Completion, if subcontractors file no liens, pay WM Lyles Company the 5 percent retention payment of $73,864.15.

EXECUTIVE SUMMARY
CDBG grant requirements require a public hearing to give the public an opportunity to speak on the project. Before the public hearing, the City Engineer will provide a project summary. After the public hearing, the City Council must deem the project complete and authorize the closure of the Community Development Block Grant.

Upon project completion, a Notice of Completion (NOC) must be filed with the County Recorder.

The City is required to withhold a retention payment for 30 days after filing. The City may use the retention to pay subcontractors and suppliers if the contractor fails to pay them by the end of the 30 days.

BACKGROUND
The grant requires a public hearing to receive comments on the project. This meeting was supposed to be held before construction began. However, because of an 18-month construction delay from component procurement and changes in grant management, the meeting was not held. The HCD has agreed to allow the City to conduct the public hearing at the project closeout. The following outlines the project.

CITY OF GUADALUPE | CITY COUNCIL

The Highway 1 Lift Station is critical to the City’s sewer infrastructure. In the 2014 Wastewater Collection and Treatment Plant Master Plan, the Highway 1 Lift Station was identified as needing replacement. In January 2017, Michael K. Nunley and Associates completed the “City of Guadalupe Lift Stations and Trunk Sewer Main Replacements Preliminary Design Report” and preliminary plans for the
Highway 1 Lift Station and the Pioneer Lift Station. The work on the Highway 1 Lift Station also included securing an easement across the adjoining property and railroad tracks to the TrussPro facility.

On January 6, 2023, the City solicited bids for the Highway 1 Lift Station Project and a Request for Proposal (RFP) for inspection services for this project. The City sent both to a list of potential bidders, made them available on the City’s website, and advertised them in the Santa Maria Times.

The deadline was 2:00 to receive bids and 3:00 to receive proposals on February 7, 2023.

The City received three construction bids, ranging from $1,432,650.00 to $2,788,000.00. The lowest responsive bid was from WM Lyles Co.

The City received three inspection proposals ranging from $94,614.00 to $160,710.00. Wallace Group's proposal was comprehensive and met the City’s needs. In addition, Wallace Group had previously served as the inspector on two successful City wastewater capital projects.

On February 28, 2023, the City Council adopted Resolution No. 2023-12 approving an agreement for contractor services with WM Lyles Company for the Highway 1 Lift Station Replacement Project for $1,432,650.00 and inspection services with Wallace Group for $94,614.00, for a total project cost of $1,527,264.00.

After approving the agreements, on March 22, 2023, the City Engineer (Shannon Sweeney) received a Notice of Funding Available (NOFA) from the Department of Housing and Community Development (HCD) for the project. The City Engineer immediately suspended the project until CDBG funding was available. Shannon Sweeney resigned as the City Engineer on June 30, 2023.

On October 23, 2023, the Mayor signed an agreement with the Department of Housing and Community Development (HCD) for a Community Development Block Grant (CDBG) of up to $3,534,908 for the Highway 1 Lift Station Project. The original application included the construction of the Sewer Trunk Main Project. However, after the application was submitted, City Staff learned that CDBG funds could not be used for completed projects. This resulted in a grant amount that exceeded the actual costs for the Lift Station Project.

On January 11, 2024, the City received notification that the agreements had been signed and the funding allocated for the project.

On January 26, 2024, the City Engineer, Contractor, Construction Management Team, and other City Staff members attended a project kick-off meeting in the Council Chambers. During the meeting, the City learned that the procurement process for critical electrical switchgear was at least 16 months due to COVID-19-related material supply issues.

On February 12, 2024, the City Council approved a change order for cost escalations due to the project delay.

CITY OF GUADALUPE | CITY COUNCIL

Construction started on July 21, 2025. Despite various obstacles in starting the Highway 1 Lift Station Project, the project progressed without much incident. The project included 4 contract change orders. These change orders were for cost escalations, the removal and disposal of asbestos pipe, electrical revisions, and coating a revised portion of the manhole.

On July 31, 2026, construction on the Highway 1 Lift Station Project was completed.

The project is funded by a Community Development Block Grant. The grant covers all construction costs, including construction, design, inspection, project management, and administration. The funding and costs are outlined below:

CITY OF GUADALUPE | CITY COUNCIL

Community Development Block Grant Funding $3,534,908.00 Construction (WM Lyles)
Original Construction Agreement $1,432,650.00
Construction Contract Change Orders $44,633.63
Total Construction Contract $1,477,283.63
Construction Management and Inspection Services (Wallace Group) Original Service Agreement $94,614.00
Amendment to Service Agreement $30,957.00
Total CM and Inspection $125,571.00
Engineering Services during Construction (MKN)
Original Service Agreement $32,510.00
Amendments to Service Agreement (2) $51,928.00
Total Engineering Services during Construction $84,438.00 Project Management (City Engineer) / Grant Administration (City Staff) Approximate Costs $30,556.60
Total PM / Grant Administration $30,556.60
Total Project Expenditures $1,656,736.03
CDBG Funds to be Disencumbered $1,878,171.97
Under state law, the City withholds a percentage of the contract amount until 30 days after filing the Notice of Completion. The City Engineer has determined the retention to be 5% for this project.

The retention allows suppliers and subcontractors to file a lien with the City if they have a payment dispute with the prime contractor. It is unlikely that any subcontractors or suppliers will file a lien against the final five percent payment.

Assuming the City Clerk files the Notice of Completion with the County Recorder on or about October 15, 2026, the City can release the $73,864.15 retention (30 calendar days later) on or about November 14, 2026, if no subcontractors file liens with the City.

Key finding: Construction of the Highway 1 Lift Station Replacement Project was completed on July 31, 2026. Staff recommends approving the filing of the Notice of Completion and releasing the 5% retainage of $73,864.15 30 days after filing.

CITY OF GUADALUPE | CITY COUNCIL

FISCAL IMPACT
Current fiscal year: Release of $73,864.15 retention is included in the overall project cost and remains within the project budget and approved change orders. No additional expenditure is required.

Funding source: On October 23, 2023, the Mayor signed an agreement with the Department of Housing and Community Development (HCD) for a Community Development Block Grant (CDBG) for a maximum of $3,534,908 for the Highway 1 Lift Station Project.

Budget action: None required or requested.

Financial constraints: Release of $73,864.15 retainage must occur 30 calendar days after the filing of the Notice of Completion with the County Recorder.

ATTACHMENTS

1. Notice of Completion

2. Final Pay Estimate

3. Resolution No. 2026-48

STAFF REVIEW
Prepared by: Jeff van den Eikhof, City Engineer
Fiscal review: Eli Martinez, Finance Director
Legal review: Philip F. Sinco, City Attorney
Approved by: David Trujillo, City Administrator
RECORDING REQUEST BY:

City of Guadalupe
AND WHEN RECORDED MAIL TO:

City of Guadalupe
David Trujillo, City Administrator
PO Box 908
Guadalupe, CA 93434
APN # N/A

NOTICE OF COMPLETION

NO TRANSFER OF PROPERTY
NOTICE IS HEREBY GIVEN PURSUANT TO CIVIL CODE SECTION 3039:

1. The undersigned is a corporate officer for the City of Guadalupe, owner of property hereinafter described.

2. The FULL NAME of the owner is: CITY OF GUADALUPE

3. The FULL ADDRESS is: 918 OBISPO STREET, GUADALUPE, CA 93434

4. The NATURE OF THE INTEREST: IN FEE

5. All work of improvement on the property hereinafter described was completed on July 31, 2026.

6. THE WORK DONE was the HIGHWAY 1 LIFT STATION REPLACEMENT PROJECT NO. 2023-001.

7. THE NAME OF THE ORIGINAL CONTRACTOR, if any, for such work of improvements in the City of Guadalupe: WM Lyles Company. 525 West Alluvial Ave. Fresno, CA 93729

8. The property of which said work of improvement was completed is in the City of Guadalupe, County of Santa Barbara, State of California.

Dated: ____
(Signature of owner name in Paragraph 2)
David Trujillo, City Administrator

VERIFICATION
I, the undersigned, say:

I, Judy Wilson, City Clerk, declared the foregoing Notice of Completion; I have read said Notice of Completion and know the contents thereof; the same is true to my own knowledge. I declare under penalty of perjury that the foregoing is true and correct.

Executed on the 13th day of October 2026 at Guadalupe, California. ____, City Clerk of the City of Guadalupe
(Signature) Judy Wilson
ATTACHMENT 1
Central Division - Bakersfield Office
P.O. Box 80605
Bakersfield, CA 93308
Telephone (661) 387-1600
Fax (661) 387-1620
Owner: City of Guadalupe Project:
918 Obispo Street Location: Invoice No.:

Guadalupe, CA 93434 Billing Period Start:

Billing Period End:

ATTN: Jef van den Eikhof Today's Date:

Item Unit Price Total Quantity Total Quantity Total
1 1.1 100 PT 202.50 20,250.00 0% - 100% 20,250.00

1.2 100 PT 67.50 6,750.00 0% - 100% 6,750.00
2 2.1 100 PT 130.00 13,000.00 0% - 100% 13,000.00

2.2 100 PT 32.00 3,200.00 0% - 100% 3,200.00
3 3.1 100 PT 350.00 35,000.00 0% - 100% 35,000.00

3.2 100 PT 226.50 22,650.00 0% - 100% 22,650.00

3.3 100 PT 50.00 5,000.00 0% - 100% 5,000.00
4 4.1 100 PT 50.00 5,000.00 0% - 100% 5,000.00

4.2 100 PT 150.00 15,000.00 0% - 100% 15,000.00

4.3 100 PT 1,118.80 111,880.00 0% - 100% 111,880.00

4.4 100 PT 75.00 7,500.00 0% - 100% 7,500.00
5 5.1 100 PT 550.00 55,000.00 0% - 100% 55,000.00

5.2 100 PT 447.50 44,750.00 0% - 100% 44,750.00

5.3 100 PT 250.00 25,000.00 0% - 100% 25,000.00
6 6.1 100 PT 340.00 34,000.00 0% - 100% 34,000.00

6.2 100 PT 2,885.00 288,500.00 0% - 100% 288,500.00

6.3 100 PT 249.00 24,900.00 0% - 100% 24,900.00

6.4 100 PT 112.00 11,200.00 0% - 100% 11,200.00

6.5 100 PT 868.00 86,800.00 0% - 100% 86,800.00

6.6 100 PT 123.00 12,300.00 0% - 100% 12,300.00
7 7.1 100 PT 1,174.60 117,460.00 0% - 100% 117,460.00

7.2 100 PT 160.00 16,000.00 0% - 100% 16,000.00

7.3 100 PT 270.00 27,000.00 0% - 100% 27,000.00

7.4 100 PT 120.00 12,000.00 0% - 100% 12,000.00

7.5 100 PT 50.00 5,000.00 0% - 100% 5,000.00
8 8.1 100 PT 83.00 8,300.00 0% - 100% 8,300.00

8.2 100 PT 219.20 21,920.00 0% - 100% 21,920.00
9 9.1 100 PT 989.90 98,990.00 0% - 100% 98,990.00

9.2 100 PT 460.00 46,000.00 0% - 100% 46,000.00

9.3 100 PT 310.00 31,000.00 0% - 100% 31,000.00

9.4 100 PT 210.00 21,000.00 0% - 100% 21,000.00

9.5 100 PT 120.00 12,000.00 0% - 100% 12,000.00

9.6 100 PT 65.00 6,500.00 0% - 100% 6,500.00
10 10.1 100 PT 314.00 31,400.00 0% - 100% 31,400.00

10.2 100 PT 567.40 56,740.00 0% - 100% 56,740.00

10.3 100 PT 187.00 18,700.00 0% - 100% 18,700.00

10.4 100 PT 331.00 33,100.00 0% - 100% 33,100.00
11 11.1 100 PT 418.60 41,860.00 0% - 100% 41,860.00
Approved Change Orders
1 100 PT 386.78 38,678.00 0% - 100% 38,678.00
2 100 PT 10.20 1,020.00 0% - 100% 1,020.00
3 100 PT 26.25 2,625.00 0% - 100% 2,625.00
4 100 PT 23.10 2,310.00 0% - 100% 2,310.00
Contact Total = 1,477,283.00
Bill This Period Billed To Date
TOTAL = 0.00 1,477,283.00
LESS RETAINED (5%) = 0.00 (73,864.15)
NET AMOUNT = 0.00 1,403,418.85
LESS PREVIOUS BILLING = N/A 1,403,418.85
TOTAL = 0.00 1,403,418.85
AMOUNT DUE = $ 73,864.15

DEMOLITION
Old Lift Station Decomissioning and Demolition
CCO 1 - Cost Escalations Due to Grant Funding Delay
CCO 2 - Transite Pipe Disposal
CCO 3 - Generator Transformer
CCO 4 - Added Raven 405 Coating in New Manhole
Temp Power For Lift Station Comissioning

GRAVITY SEWER IMPROVEMENTS
Gravity SS Materials
15" SS Installation
12" SS Installation
18" SS Installation

ELECTRICAL AND CONTROLS
Electrical Materials
Underground Conduit Installation
Wire Installation and Testing
Lite Pole Installation
Power Meter Pedistal Installation
Fencing
Landscaping
Misc Site Clean-up and Punchlist

FORCE MAIN AND DISCHARGE PIPING
Force Main Piping Materials
Force Main Piping Installation
Pumps Install
Concrete Coatings
Lift Station Comissioning

SITE WORK
Site Baserock and Concrete
Sidewalk
Dewatering System Rent and Maintenance
Dewatering System Removal

LIFT STATION
Lift Station Pumps Procurment
Precast Lift Station Excavation, Install, Backfill
Valve Vault Excavation, Install, and Backfill
Traffic Control Plans
Traffic Control Set-up
Traffic Control Rent and Maintenance
Traffic Control Removal

DEWATERING
Dewatering System Install
Trench Soring

TEMPORARY BYPASSING
Bypass Set-up
Bypassing Rent and Maintenance
Bypass Removal

TRAFFIC CONTROL
Base Contract

MOBILIZATION
Mobilization
Demobilization

SHORING
Lift Station Shoring
07/31/26
Contract Totals This Period To Date
Description Quantity
Monthly Progress Invoice
City of Guadalupe Highway 1 Lift Station Replacement
Guadalupe, CA 54.9257-0014 - Retention

ATTACHMENT 2

RESOLUTION NO. 2026-48

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GUADALUPE ACCEPTING COMPLETION OF THE HIGHWAY 1 LIFT STATION PROJECT, AUTHORIZING FILING OF THE NOTICE OF COMPLETION,

AND AUTHORIZING THE CLOSURE OF THE COMMUNITY DEVELOPMENT BLOCK GRANT WHEREAS, the City of Guadalupe entered into an agreement with the California Department of Housing and Community Development on October 23, 2023, for a $3,534,908.00 Community Development Block Grant (CDBG) for the construction of the Highway 1 Lift Station Project; and WHEREAS, the City awarded a construction agreement with WM Lyles Co on February 28, 2023; and WHEREAS, the City Engineer has verified that the work was completed according to the plans and specifications; and,
WHEREAS, the final project costs, including construction, construction management and inspection, Engineering Services during Construction, Project Management, and Grant Administration, were $1,656,736.03; and,
WHEREAS, the City of Guadalupe held a public hearing on October 13, 2026, to fulfill a requirement of the grant.

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

SECTION 1. Accept the completion of the Highway 1 Lift Station Project.

SECTION 2. Authorize the City Administrator to file the Notice of Completion with the County Recorder.

SECTION 3. Direct staff to release the $73,864.15 (5%) retention 30 calendar days after the filing of the Notice of Completion (on or about November 14, 2026), if no subcontractors file liens with the City.

SECTION 4. Authorize the closure of the Community Development Block Grant.

SECTION 5. 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 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 13th day of October 2026 by the following vote:

MOTION:

AYES:

NOES:

ABSENT:

ATTACHMENT 3

ABSTAINED:

I, Judy Wilson, City Clerk of the City of Guadalupe, DO HEREBY CERTIFY that the foregoing Resolution, being Resolution No. 2026-48, has been duly signed by the Mayor and attested by the City Clerk, all at a regular meeting of the City Council, held October 13, 2026, and that same was approved and adopted.

ATTEST:
______________________________ ____________________________________ Judy Wilson, City Clerk Ariston Julian, Mayor
APPROVED AS TO FORM:
______________________________
Philip F. Sinco, City Attorney
CITY OF GUADALUPE | CITY COUNCIL

CITY COUNCIL STAFF REPORT
Fiscal Year 2022-23 Audit Completion, ARPA Compliance and Gann Limit Reports Meeting Date: October 13, 2026
Agenda Item: 12
To: Honorable Mayor and Members of the City Council
From: Eli Martinez, Finance Director
Department: Finance
Subject: Receive the FY 2022-23 audited financial statements and independent reports on ARPA compliance and the Gann appropriations limit

RECOMMENDED ACTION

1. Receive and file the FY 2022-23 audited financial statements and related independent accountant reports.

EXECUTIVE SUMMARY
The completion of the City's FY 2022-23 audited financial statements is a major milestone for Guadalupe. It moves the City forward in bringing its financial reporting up to date, gives the Council and public a clearer verified record of the City's finances, and creates a stronger base for completing the remaining audits. Badawi & Associates also completed the FY 2022-23 ARPA compliance review and Gann appropriations limit procedures. All three reports were issued September 15, 2026.

Key finding: FY 2022-23 financial reporting is now complete. Most audited opinion units received unmodified opinions. The Governmental Activities and General Fund received qualified opinions because the auditor could not obtain enough evidence for $298,352 of reported General Fund revenue. The ARPA review found compliance in all material respects, and the Gann review found no exceptions.

BACKGROUND
The FY 2022-23 audit covers the City's basic financial statements for the year ended June 30, 2023. Completing this audit is an important step in the City's work to catch up on required financial reporting. The City also received federal State and Local Fiscal Recovery Funds through ARPA, and it must calculate an annual spending limit under Article XIII-B of the California Constitution, commonly called the Gann Limit.

CITY OF GUADALUPE | CITY COUNCIL

DISCUSSION AND ANALYSIS
Summary of Results
The three reports serve different purposes. The financial statement audit reports on whether the City's financial statements are fairly presented. The ARPA report gives an opinion on compliance with the federal rules tested. The Gann report uses agreed-upon steps to check the City's calculation and records; it does not give an audit opinion on the schedule.

Report Summary
Report What was
checked Result Key number / note
Audited
Financial
Statements
Citywide
financial
statements and
major funds
Mostly unmodified;
qualified for
Governmental
Activities and General
Fund
$298,352 of General Fund
revenue lacked enough audit
evidence
ARPA /
SLFRF
Allowed
activities and
allowable costs
Complied in all
material respects
No matters were required to be
reported under Government
Auditing Standards.

Gann Limit
Council
adoption,
calculation,
factors, and
prior-year
amount
No exceptions noted in
any of the four
procedures
$3,666,051 FY 2022-23 limit;
$262,122 increase from prior
year.

Source: Badawi & Associates reports dated September 15, 2026.

FISCAL IMPACT
Current fiscal year: No direct fiscal impact from receiving these reports.

Ongoing annual impact: None from this action.

Funding source: Not applicable.

Budget action: No budget amendment or appropriation is required.

Financial constraints: None created by receiving and filing the reports.

ATTACHMENTS

1. Attachment 1 - FY 2022-23 Basic Financial Statements CITY OF GUADALUPE | CITY COUNCIL

2. Attachment 2 - FY 2023 SLFRF (ARPA) Award Examination

3. Attachment 3 - FY 2023 Agreed-Upon Procedures Report on the Appropriations Limit Schedule

STAFF REVIEW
Prepared by: Eli Martinez, Finance Director
Fiscal review: Eli Martinez, Finance Director
Legal review: Not required for receipt of the reports.

Approved by: David Trujillo, City Administrator
City of Guadalupe
Guadalupe, California
Basic Financial Statements
For the Year Ended June 30, 2023
Attachment 1

CITY OF GUADALUPE

GUADALUPE, CALIFORNIA

BASIC FINANICAL STATEMENTS
FOR THE YEAR ENDED June 30, 2023
Prepared by:

FINANCE DEPARTMENT
City of Guadalupe
Basic Financial Statements
For the year ended June 30, 2023
Table of Contents
Page

FINANCIAL SECTION
Independent Auditors’ Report ............................................................................................................................. 1 Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position ................................................................................................................................. 8 Statement of Activities..................................................................................................................................... 10 Fund Financial Statements:

Governmental Fund Financial Statements:

Balance Sheet.................................................................................................................................................. 14 Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position ........................................................................... 16 Statement of Revenues, Expenditures and Changes in Fund Balance ................................................. 18 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities ...............................................................................................................................20 Proprietary Fund Financial Statements:

Statement of Net Position ............................................................................................................................ 22 Statement of Revenues, Expenses and Changes in Fund Net Position ................................................. 24 Statement of Cash Flows .............................................................................................................................. 25 Fiduciary Fund Financial Statements:

Statement of Fiduciary Net Position........................................................................................................... 26 Statement of Changes in Fiduciary Net Position...................................................................................... 27 Notes to Basic Financial Statements................................................................................................................ 31 Required Supplementary Information (Unaudited):

Budgets and Budgetary Accounting................................................................................................................. 71 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual:

Budgetary Comparison Schedule - General Fund ...................................................................................... 72 Budgetary Comparison Schedule – Royal Theater ..................................................................................... 73 Budgetary Comparison Schedule – ARPA ....................................................................................................74 Schedule of the City’s Proportionate Share of the Net Pension Liability .................................................... 76 Schedule of Plan Contributions ......................................................................................................................... 76 City of Guadalupe
Basic Financial Statements
For the year ended June 30, 2023
Table of Contents, Continued
Page
Required Supplementary Information (Unaudited), Continued:

Actuarial Methods and Assumptions used for Pension Actuarially Determined Contributions .....................................................................................................................................................78 Schedule of Changes in Total OPEB Liability and Related Ratios................................................................ 79 Supplementary Information:

Non-Major Governmental Funds:

Combining Balance Sheet................................................................................................................................ 82 Combining Statement of Revenues, Expenditures and
Changes in Fund Balances ........................................................................................................................... 85 Other Independent Auditor’s Reports:

Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards..............................................................................................................................................89 INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of the City Council
of the City of Guadalupe
Guadalupe, California
Report on the Audit of the Financial Statements
Qualified and Unmodified Opinions
We have audited the accompanying financial statements of the governmental activities, the businesstype 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, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

Summary of Opinions
Opinion Unit Type of Opinion
Governmental Activities Qualified
Business-Type Activities Unmodified
General Fund Qualified
Royal Theater Unmodified
ARPA Unmodified
Capital Improvement Program Unmodified
Water Unmodified
Wastewater Treatment Unmodified
Transit Unmodified
Aggregate Remaining Fund Information Unmodified
Unmodified Opinions on Business-Type Activities, Royal Theater, ARPA, Capital Improvement Program, Water, Wastewater Treatment, and Transit Funds, and Aggregate Remaining Fund Information In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities, Royal Theater, ARPA, Capital Improvement Program, Water, Wastewater Treatment, and Transit Funds, and the aggregate remaining fund information of the City as of June 30, 2023, 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.

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

Qualified Opinion(s) on Governmental Activities and General Fund In our opinion, except for the effects of the matter described in the Basis for Qualified and Unmodified Opinion(s) section, the accompanying financial statements present fairly, in all material respects, the respective financial position of the Governmental Activities and General Fund of the city as of June 30, 2023, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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

Matter Giving Rise to Qualified Opinions on Governmental Activities and General Fund We were unable to obtain sufficient appropriate audit evidence for $298,352 of revenues reported in the General Fund for the year ended June 30, 2023. As a result, we were unable to determine whether these revenues were legitimate. This matter affects the Governmental Activities in the same way as the General Fund.

Responsibilities of Management for the Financial Statements The City’s 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; and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

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

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

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

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

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the budgetary comparison information for the General Fund and major special revenue funds, schedule of the City’s proportionate share of the net pension liability, schedule of plan contributions, and schedule of changes in total other post-employment benefits on pages 73-81, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Management has omitted the management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or 3 To the Honorable Mayor and Members of the City Council of the City of Guadalupe
Guadalupe, California

historical context. Our opinions on the basic financial statements are not affected by this missing information.

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining nonmajor fund financial statements on pages 84-90 are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining 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 nonmajor fund financial statements are fairly stated in all material respects in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 15, 2026, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is 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
Emeryville, California
September 15, 2026
4 5
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6 GOVERNMENT-WIDE

FINANCIAL STATEMENTS
7 City of Guadalupe
Statement of Net Position
June 30, 2023
Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:

Cash and investments 13,744,778 $ 4,950,341 $ 18,695,119 $ Accounts receivable 857,418 1,303,591 2,161,009
Prepaid expenses 419 679,975 680,394
Leases receivable 89,483 165,418 254,901
Loans receivable 32,484 - 32,484
Internal balances (219,330) 219,330 -
Total current assets 14,505,252 7,318,655 21,823,907
Noncurrent assets:

Leases 70,893 208,794 279,687
Capital assets:

Non-depreciable 1,152,516 4,728,483 5,880,999
Depreciable, net 13,840,792 5,124,438 18,965,230
Total capital assets 14,993,308 9,852,921 24,846,229
Total noncurrent assets 15,064,201 10,061,715 25,125,916 Total assets 17,380,370 29,569,453 46,949,823

DEFERRED OUTFLOWS OF RESOURCES
Pension related amounts 2,041,541 307,815 2,349,356
OPEB related amounts 326,528 - 326,528
Total deferred outflows of resources 307,815 2,368,069 2,675,884 Primary Government
8 City of Guadalupe
Statement of Net Position
June 30, 2023
Governmental Business-Type
Activities Activities Total

LIABILITIES
Current liabilities:

Accounts payable 389,983 191,641 581,624
Accrued salaries and wages payable 41,277 6,679 47,956
Interest payable - 30,341 30,341
Deposits payable 214,648 78,295 292,943
Unearned revenue 9,035,680 35,314 9,070,994
Long-term debt - due within one year - 79,673 79,673
Compensated absences - due within one year 90,208 - 90,208 OPEB - due within one year 9,213 - 9,213
Total current liabilities 9,781,009 421,943 10,202,952
Noncurrent liabilities:

Net pension liability 3,980,930 600,256 4,581,186
Total OPEB liability 667,359 - 667,359
Long-term debt - due in more than one year - 1,651,674 1,651,674 Compensated absences - due in more than one year 307,604 - 307,604 Total noncurrent liabilities 4,955,893 2,251,930 7,207,823 Total liabilities 2,673,873 14,736,902 17,410,775

DEFERRED INFLOWS OF RESOURCES
Deferred inflows - leases 160,376 374,212 534,588
Pension related amounts 288,976 43,574 332,550
OPEB related amounts 234,918 - 234,918
Total deferred inflows of resources 417,786 684,270 1,102,056

NET POSITION
Net investment in capital assets 14,993,308 8,121,574 23,114,882 Restricted for:

Street maintenance 783,682 - 783,682
Other capital projects 943,675 - 943,675
Community development - - -
Public safety 181,803 - 181,803
Utility infrastructure 815,389 - 815,389
Debt service 32,625 147,100 179,725
Lighting and landscape 1,334,455 - 1,334,455
Total restricted 4,091,629 147,100 4,238,729
Unrestricted (2,568,587) 6,327,852 3,759,265
Total net position $ 14,596,526 16,516,350 $ 31,112,876 $ Primary Government
See accompanying Notes to Basic Financial Statements.
9 City of Guadalupe
Statement of Activities
For the year ended June 30, 2023
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Primary Government:

Governmental activities:

General Government 2,229,646 $ 332,112 $ 607,410 $ - $
Public Safety 405,627 4,329,052 156,215 -
Transportation - 1,231,597 - 395,697
Leisure, cultural and social services 7,895 2,162 104,524 634,494 Community development 218,176 1,444,268 141,801 -
Interest on long-term debt 3,675 - - -
Total governmental activities 9,036,831 963,810 2,139,185 104,524 Business-type activities:

Water 1,646,412 2,545,849 - -
Wastewater Treatment 1,902,207 1,907,236 111,556 -
Transit 923,275 59,608 1,094,957 786,653
Total business-type activities 4,471,894 4,512,693 1,206,513 786,653 Total primary government $ 5,476,503 13,508,725 $ 3,345,698 $ 891,177 $ General Revenues and Transfers:

Taxes:

Property taxes
Sales taxes
Utilities Uses Tax
Other taxes
Total taxes
Investment earnings
Other
Transfers
Total general revenues and transfers
Change in net position
Net position - beginning of year, as restated
Net position - end of year
Program Revenues
10 Governmental Business-Type
Total Activities Activities Total
$ (1,290,124) 939,522 $ - $ (1,290,124) $
(3,767,210) 561,842 - (3,767,210)
835,900 1,231,597 - 835,900
(519,913) 114,581 - (519,913)
(1,084,291) 359,977 - (1,084,291)
- (3,675) - (3,675)
(5,829,312) 3,207,519 - (5,829,312)
- 899,437 899,437 2,545,849
- 116,585 116,585 2,018,792
- 1,017,943 1,017,943 1,941,218
- 2,033,965 2,033,965 6,505,859
$ (5,829,312) 9,713,378 2,033,965 (3,795,347)
- 2,094,401 2,094,401
- 1,405,544 1,405,544
- 522,566 522,566
- 606,778 606,778
- 4,629,289 4,629,289
78,606 101,816 180,422
182,000 601,733 783,733
(749,106) 749,106 -
(465,290) 6,058,734 5,593,444
1,568,675 229,422 1,798,097
13,027,851 16,286,928 29,314,779
$ 14,596,526 16,516,350 $ 31,112,876 $
$ 14,596,526
Net (Expense) Revenue
and Changes in Net Position
See accompanying Notes to Basic Financial Statements.
11 This page intentionally left blank
12 FUND

FINANCIAL STATEMENTS
Governmental Fund Financial Statements
Proprietary Fund Financial Statements
Fiduciary Fund Financial Statements
13 City of Guadalupe
Balance Sheet
Governmental Funds
June 30, 2023
Capital
Royal Improvement
General Theater ARPA Program
ASSETS
Cash and investments 1,019,321 $ 8,246,174 $ 1,105,962 $ 160,853 $ Accounts receivable 426,833 - - 1,600
Prepaid expenses 419 - - -
Interfund loans receivable 294,350 - - -
Leases receivable 160,376 - - -
Loans receivable - - - -
Total assets $ 8,246,174 1,901,299 $ 1,105,962 $ 162,453 $

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

Accounts payable 137,092 $ 9,199 $ - $ 180,848 $
Accrued salaries and wages payable 37,709 - - -
Deposits payable 214,648 - - -
Unearned revenue - 7,912,479 1,105,962 -
Interfund loans payable 359,330 - - -
Total liabilities 748,779 7,921,678 1,105,962 180,848
Deferred inflows of resources:

Deferred inflows - leases 160,376 - - -
Total deferred inflows of resources 160,376 - - -
Fund Balances:

Nonspendable:

Prepaid expenses 419 - - -
Restricted for:

Street maintenance ----
Other capital projects - 324,496 - -
Public safety ----
Utility infrastructure ----
Debt service - - - -
Lighting and landscape ----
Committed to:

Capital projects - - - -
General Reserve 165,702 - - -
Emergency Reserve 165,702 - - -
Unassigned 660,321 - - (18,395)
Total fund balances 992,144 324,496 - (18,395)
Total liabilities, deferred inflows
of resources, and fund balances $ 8,246,174 1,901,299 $ 1,105,962 $ 162,453 $ Major Funds
14 Other Total
Governmental Governmental
Funds Funds
$ 13,744,778 3,212,468 $
857,418 428,985
- 419
785,445 491,095
- 160,376
32,484 32,484
$ 15,580,920 4,165,032 $
$ 389,983 62,844 $
3,568 41,277
- 214,648
9,035,680 17,239
1,004,775 645,445
10,686,363 729,096
- 160,376
- 160,376
- 419
783,682 783,682
943,675 619,179
181,803 181,803
815,389 815,389
32,625 32,625
1,334,455 1,334,455
10,721 10,721
- 165,702
- 165,702
300,008 (341,918)
4,734,181 3,435,936
$ 15,580,920 4,165,032 $
See accompanying Notes to Basic Financial Statements.
15 Total Fund Balances - Total Governmental Funds $ 4,734,181 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 1,152,516
Depreciable, net 13,840,792
Total capital assets 14,993,308
Employer contributions for pension were recorded as expenditures in the governmental funds. However, in the Government-Wide Financial Statement these contributions are deferred. 649,855
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. 91,610
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. 1,102,710
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 (3,980,930)
Total OPEB liability - due within one year (9,213)
Total OPEB liability - due in more than one year (667,359) Compensated leaves payable - due within one year (90,208) Compensated leaves payable - due in more than one year (307,604) Total long-term liabilities (5,055,314)
Net Position of Governmental Activities $ 16,516,350
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, 2023
See accompanying Notes to Basic Financial Statements.
16 This page intentionally left blank
17 Statement of Revenues, Expenditures and Changes in Fund Balances For the year ended June 30, 2023
Capital
Royal Improvement
General Theater ARPA Program
REVENUES:

Taxes 4,072,627 $ - $- $- $
Licenses and permits 744,389 - - -
Fines and penalties 30,822 - - -
Revenues from other agencies 637,430 87,521 402,971 -
Charges for current services 181,451 - - -
Interest 6,312 4,878 - -
Other revenues 557,351 - - -
Total revenues 6,230,382 92,399 402,971 -
EXPENDITURES:

Current:

General government 1,523,128 - - -
Public safety 4,235,319 - - -
Transportation ----
Leisure, cultural and social services 427,969 7,500 - - Community development 585,092 - - -
Capital outlay 10,415 72,505 - 2,118,800
Debt service:

Interest and fiscal charges 3,675 - - -
Total expenditures 6,785,598 80,005 - 2,118,800

REVENUES OVER (UNDER)
EXPENDITURES 12,394 (555,216) 402,971 (2,118,800)
OTHER FINANCING SOURCES (USES):

Transfers in 1,227,557 - - 2,100,397
Transfers out (461,434) - (402,971) -
Total other financing sources (uses) 766,123 - (402,971) 2,100,397 Net change in fund balances 210,907 12,394 - (18,403)
FUND BALANCES:

Beginning of year, as restated 781,237 312,102 - 8
End of year 992,144 $ 324,496 $ - $ (18,395) $
City of Guadalupe
Governmental Funds
Major Funds
18 Other Total
Governmental Governmental
Funds Funds
$ 5,296,842 1,224,215 $
4,744 749,133
- 30,822
2,144,955 1,017,033
- 181,451
83,303 72,113
616,013 58,662
9,102,519 2,376,767
1,767,916 244,788
4,269,335 34,016
388,437 388,437
596,101 160,632
720,100 135,008
2,269,179 67,459
- 3,675
10,014,743 1,030,340
(912,224) 1,346,427
3,723,760 395,806
(2,974,654) (2,110,249)
749,106 (1,714,443)
(163,118) (368,016)
4,897,299 3,803,952
$ 4,734,181 3,435,936 $
See accompanying Notes to Basic Financial Statements.
19 Net Change in Fund Balances - Total Governmental Funds $ (163,118) 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. 2,011,675
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. (876,690) Accrued compensated leave payable is not recorded in the governmental funds, but the accrued payable changed in the Government-Wide Statement of Net Position causing a credit (expense) on the Statement of Activities. 6,280
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. (104,347) 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. 649,855 Pension expense is recorded as incurred in the Government-Wide Statement of Activities, however, pension expense is not recognized in the governmental funds. (708,861) 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. (585,372) Change in Net Position of Governmental Activities $ 229,422 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, 2023
See accompanying Notes to Basic Financial Statements.
20 This page intentionally left blank
21 City of Guadalupe
Statement of Net Position
Proprietary Funds
June 30, 2023
Wastewater
Water Treatment Transit Total
ASSETS
Current assets:

Cash and investments 2,273,894 $ 2,194,388 $ 482,059 $ 4,950,341 Accounts receivable, net of allowance 371,327 367,985 564,279 1,303,591 Prepaid expenses 679,975 - - 679,975
Interfund loan receivable, current portion 84,832 - - 84,832 Leases receivable, current portion - 165,418 - 165,418
Total current assets 3,410,028 2,727,791 1,046,338 7,184,157 Noncurrent assets:

Interfund loan receivable, net of
current portion - - 134,498 134,498
Leases receivable, net of current portion - 208,794 - 208,794 Capital assets:

Land 29,464 324,451 - 353,915
Work in progress 749,851 2,838,065 786,652 4,374,568
Buldings, infrastructure and improvements 5,133,448 12,052,727 84,787 17,270,962 Vehicles 68,251 113,286 1,647,520 1,829,057
Equipment 430,345 199,448 10,610 640,403
Less accumulated depreciation (3,699,976) (9,648,640) (1,267,368) (14,615,984) Total capital assets 2,711,383 5,879,337 1,262,201 9,852,921 Total noncurrent assets 2,845,881 6,088,131 1,262,201 10,196,213 Total assets 8,815,922 6,255,909 2,308,539 17,380,370

DEFERRED OUTFLOWS OF RESOURCES
Pension related amounts 132,548 175,267 - 307,815
Total deferred outflows of resources 175,267 132,548 - 307,815 Enterprise Funds
22 City of Guadalupe
Statement of Net Position
Proprietary Funds
June 30, 2023
Wastewater
Water Treatment Transit Total

LIABILITIES
Current liabilities:

Accounts payable 31,429 91,478 68,734 191,641
Deposits payable 78,295 - - 78,295
Accrued wages and benefits 2,973 3,706 - 6,679
Unearned revenue 14,790 - 20,524 35,314
Interest payable 16,792 13,549 - 30,341
Current portion of leases payable - 1,880 - 1,880
Current portion of certificates of participation 49,713 28,080 - 77,793 Total current liabilities 193,992 138,693 89,258 421,943 Noncurrent liabilities:

Leases payable, net of current portion - 101,801 - 101,801 Certificates of participation, net of current portion 694,387 - 1,549,873 855,486 Net pension liability 341,779 - 600,256 258,477
Total noncurrent liabilities 1,113,963 1,137,967 - 2,251,930 Total liabilities 1,276,660 1,307,955 89,258 2,673,873

DEFERRED INFLOWS OF RESOURCES
Deferred inflows - leases - 374,212 - 374,212
Pension related amounts 18,763 24,811 - 43,574
Total deferred inflows of resources 399,023 18,763 - 417,786

NET POSITION
Net investment in capital assets 1,806,184 5,053,189 1,262,201 8,121,574 Restricted for debt service 88,522 58,578 - 147,100
Unrestricted 3,167,033 2,203,739 957,080 6,327,852
Total net position $ 7,315,506 5,061,739 $ 2,219,281 $ 14,596,526 $ Enterprise Funds
See accompanying Notes to Basic Financial Statements.
23 City of Guadalupe
Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds
For the year ended June 30, 2023
Wastewater
Water Treatment Transit Total
OPERATING REVENUES:

Water sales 2,428,444 $ - $ - $ 2,428,444 $
Standby charges 26,184 - - 26,184
Connection fees 81,457 21,295 - 102,752
Sewer service charges - 1,855,941 - 1,855,941
Other revenues 9,764 30,000 59,608 99,372
Total operating revenues 1,907,236 2,545,849 59,608 4,512,693 OPERATING EXPENSES:

Personnel services 397,451 424,487 34,768 856,706
Maintenance and operations 1,123,759 1,023,474 791,776 2,939,009 Depreciation 86,740 416,736 96,731 600,207
Total operating expenses 1,864,697 1,607,950 923,275 4,395,922 OPERATING INCOME (LOSS) 42,539 937,899 116,771 (863,667) NONOPERATING REVENUES (EXPENSES):

Revenues from other agencies - 111,556 1,094,957 1,206,513 Interest income 43,431 41,097 17,288 101,816
Interest expense (38,462) (37,510) - (75,972)
Other income (loss) - 182,000 - 182,000
Total nonoperating revenues (expenses) 297,143 4,969 1,112,245 1,414,357

INCOME (LOSS) BEFORE CONTRIBUTIONS
AND TRANSFERS 339,682 942,868 248,578 1,531,128
Contributed capital - - 786,653 786,653
Transfers out (369,853) (301,353) (77,900) (749,106)
Total contributions and transfers (301,353) (369,853) 708,753 37,547 Change in net position 38,329 573,015 957,331 1,568,675

NET POSITION
Beginning of year 4,488,724 7,277,177 1,261,950 13,027,851 End of year 5,061,739 $ 7,315,506 $ 2,219,281 $ 14,596,526 $ Enterprise Funds
See accompanying Notes to Basic Financial Statements.
24 City of Guadalupe
Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2023
Wastewater
Water Treatment Transit Total
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers $ 1,947,752 2,418,180 $ (430,718) $ 3,935,214 $ Cash received from connection fees 21,295 81,457 - 102,752 Cash received from standby charges and other agencies - - 26,184 26,184 Cash paid to suppliers for goods and services (950,930) (1,198,692) (784,610) (2,934,232) Cash paid to employees and related benefits (434,038) (407,211) (34,768) (876,017) Net cash provided by (used in) operating activities 584,079 919,918 (1,250,096) 253,901 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Operating grants received - 111,556 1,094,957 1,206,513 Cash paid to (received from) other funds for interfund loan payments (97,498) (5,437) (116,602) (219,537) Net transfers (301,353) (77,900) (369,853) (749,106)
Net cash provided by (used in) noncapital financing activities (287,295) (486,455) 1,011,620 237,870 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Receipts in leases - 182,000 - 182,000
Principal payments on debt (28,248) - (75,865) (47,617) Interest payments on debt (38,020) - (77,301) (39,281)
Capital contributions - - 786,653 786,653
Sale (Acquisition) of capital assets (467,641) (786,652) (164,503) (1,418,796) Net cash provided by (used in) capital and related financing activities (351,909) (251,401) 1 (603,309) CASH FLOWS FROM INVESTING ACTIVITIES:

Interest on investments 41,097 43,431 17,288 101,816
Net cash provided by (used in) investing activities 41,097 43,431 17,288 101,816 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (14,028) 225,493 (221,187) (9,722) CASH AND CASH EQUIVALENTS - Beginning of year 2,208,416 2,048,401 703,246 4,960,063 CASH AND CASH EQUIVALENTS - End of year $ 2,194,388 2,273,894 $ 482,059 $ 4,950,341 $

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

Operating income (loss) $ 42,539 937,899 $ (863,667) $ 116,771 $ Adjustments to reconcile operating income (loss)
to net cash provided by (used in) operating activities:

Depreciation 416,736 86,740 96,731 600,207
Changes in assets, deferred outflows and inflows of resources, and liabilities Accounts receivable 61,811 (64,462) (510,850) (513,501) Prepaid expenses 70,489 (84,648) - (14,159)
Deferred outflows pensions (91,822) (69,442) - (161,264) Accounts payable 2,055 9,715 7,166 18,936
Deposits payable - - 29,644 29,644
Accrued wages and benefits (14,625) (13,597) - (28,222) Net pension liability 197,353 149,251 - 346,604
Deferred inflows pensions (100,457) (75,972) - (176,429) Total adjustments 541,540 (17,981) (386,429) 137,130
Net cash provided by (used in) operating activities $ 584,079 919,918 $ (1,250,096) $ 253,901 $ Enterprise Funds
See accompanying Notes to Basic Financial Statements.
25 City of Guadalupe
Statement of Fiduciary Net Position
Fiduciary Fund
June 30, 2023
Private-Purpose
Trust Fund
ASSETS
Cash and investments $ 886,658
Cash with fiscal agent 14,476
Property held for resale 105,507
Total assets 1,006,641

DEFERRED OUTFLOWS OF RESOURCES
Deferred loss on refunding 65,567
Total deferred outflows of resources 65,567

LIABILITIES
Accounts payable 9,923
Interest payable 51,383
Long-term liabilities:

Due within one year 240,000
Due after one year 3,438,526
Total liabilities 3,739,832

NET POSITION
Held in trust for other governments (2,667,624) $
See accompanying Notes to Basic Financial Statements.
26 City of Guadalupe
Statement of Changes in Fiduciary Net Position
Fiduciary Fund
For the year ended June 30, 2023
RDA Successor Agency Successor Agency
Retirement to RDA Merged to RDA Private-Purpose
Obligation Area Housing Trust Fund
ADDITIONS:

Property taxes $ 607,736
Revenue from other agencies 1
Other revenues 7,687
Total additions 615,424
DEDUCTIONS:

Program expenses 216,272
Interest on long-term liabilities 129,262
Total Deductions 345,534
Change in net position 269,890
NET POSITION:

Beginning of year, as restated (2,937,514)
End of year $ (2,667,624)
See accompanying Notes to Basic Financial Statements.
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28 NOTES TO BASIC

FINANCIAL STATEMENTS
29 30
City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

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 13 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. 31 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

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.
32 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

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:
 Charges for services
 Operating grants and contributions
 Capital grants and contributions
Certain eliminations have been made in regards to interfund activities, payables, and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal 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:
 Due to/from other funds
 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 leases are reported as other financing sources. 33 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

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 costreimbursement 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.

Royal Theater accounts for grants and expenditures related to renovating the Royal Theater in downtown Guadalupe.

Capital Improvement Program fund is used to account for projects approved by Council from various funding sources.

ARPA fund is used to account for the federal Coronavirus State & Local Fiscal Recovery Funds approved through the American Rescue Plan Act.

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. 34 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

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.

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 statements 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.
35 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

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. 36 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

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.
37 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

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 assets 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 assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. 38 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

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 thirdparties (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. 39 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

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. 40 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

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:
 Valuation Date - July 1, 2022
 Measurement Date - June 30, 2023
 Measurement Period - July 1, 2022 to June 30, 2023
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:
 GASB Statement No. 91, Conduit debt – The primary objectives of this Statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. The requirements of this statement did not apply to the City in the current fiscal year.
 GASB Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements – The primary objective of this Statement is to improve financial reporting by addressing issues related to public-private and public-public partnership arrangements (PPPs).

The requirements of this statement did not apply to the City in the current fiscal year. 41 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued P. New Pronouncements, Continued
 GASB Statement No. 96, Subscription-Based Information Technology Arrangements – This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). In implementing this statement, the City considered all software subscriptions, but none warranted recording a liability in the current fiscal year.

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, 2023:

A. Summary of Cash and Investments
Cash and investments as of June 30, 2023 consist of the following:

B. Deposits
The carrying amount of the City’s cash deposits was $9,064,637 at June 30, 2023. Bank balances before reconciling items were $9,514,525 at June 30, 2023. 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.

Fund Financials
Fiduciary Funds
Governmental Business-Type Statement of
Activities Activities Total Net Position Total
Cash and investments 13,666,898 $ 5,028,221 $ 18,695,119 $ 886,658 $ 19,581,777 $ Restricted cash and investments - - - 14,476 14,476
Total cash and investments and
restricted cash and investments $ 5,028,221 13,666,898 $ 18,695,119 $ 901,134 $ 19,596,253 $ Government-Wide Statement of Net Position
Cash and investments:

Deposits 9,064,637 $
Petty cash 2,800
Local Agency Investment Fund (LAIF) 10,459,432
Common stock 54,908
Total cash and investments $ 19,581,777
42 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

2. CASH AND INVESTMENTS, Continued
B. Deposits, Continued
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.

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:

Maximum Maximum
Maximum Percentage of Investment in
Authorized Investment Type Maturity Portfolio One Issuer Securities of the Unites States Government, 5 years N/A N/A or its agencies
Certificates of deposit (or time deposits) 5 years N/A N/A placed with commercial banks and/or
savings and loan companies
Negotiable certificates of deposit 5 years N/A N/A
Commercial paper 5 years N/A N/A
Money market funds rated "AAAm" or "AAAm-G" 5 years N/A N/A by Standard & Poor's Corporation
Local Agency Investment Fund (State Pool) 5 years N/A N/A Repurchase agreements 5 years N/A N/A
Interest and dividend income $ 213,429
Unrealized gain (loss) in changes in fair value of investments (161, 130) Total investment income $ 52,299
43 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

2. CASH AND INVESTMENTS, Continued
C. Investments, Continued
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.

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, 2023, the City had $10,459,432 invested in LAIF, which had invested 2.78% of the pool investment funds in Structured Notes and Asset-Backed Securities as compared to 1.88% in the previous year. The LAIF fair value factor of 0.984828499 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, 2023, are shown below:

Remaining
Maturity (in
Months)
Investment 12 Months
Type Totals Or Less
LAIF 10, $ 10,459,432 459,432 $
Common stock 54,908 54,908
Total $ 10,514,340 10,514,340 $
44 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

2. CASH AND INVESTMENTS, Continued
D. Risk Disclosures, Continued
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, 2023, 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.

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, 2023 are described below:

Minimum
Legal
Investment Type Amount Rating Not Rated
State Pool 10,459,432 $ N/A 10,459,432 $
Common stock 54,908 N/A 54,908
Total $ 10,514,340 10,514,340 $
Rating as of Fiscal
Year-End
Investment Type Amount Level 1 Level 2 Level 3
Investments subject to leveling:

Common stock 54,908 $ 54,908 $ - $ - $
Total investments subject to leveling 54,908 54,908 $ - $ - $ Investments not subject to leveling:

State Pool 10,459,432
Total investments $ 10,514,340
Fair Value Measurement Using:
45 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

3. INTERFUND TRANSACTIONS
A. Interfund Loans Receivable
At June 30, 2023, the City had the following interfund loans:

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 historical negative cash balance and support continued operations. $68,333 of the loans within the non-major governmental funds is to support the library. Future development fees are slated to assist the library fund in paying down this loan. The remainder of the $351,095 within the non-major governmental funds is from the Park Development Fund to the Community Development Fund for capital projects. Grants are expected to aid the Community Development Fund in paying back these amounts.

Future minimum payments on the General Fund long-term loans as of June 30, 2023 were as follows:

The remaining loans of $294,350 from the General Fund to the non-major governmental funds are to cover negative cash in various non-major governmental funds. They are intended be paid back in the fiscal year ending June 30, 2024.

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.

General Fund
Non-Major
Governmental
Funds Water Fund Total
General Fund - $ 140,000 $ 219,330 $ 359,330 $
Non-Major Governmental Fund 294,350 351,095 - 645,445
Total 294,350 $ 491,095 $ 219,330 $ 1,004,775 $
Loans From
Loans
To
General Fund
2024 142,332 $
2025 153,998
2026 31,500
2027 31,500
$ 359,330
46 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

3. INTERFUND TRANSACTIONS, Continued
B. Transfers, Continued
At June 30, 2023 the City had the following transfers in/out which arose in the normal course of operations:

The transfers to the General Fund were to pay for overhead and operations. The transfers to the Capital Improvement Program Fund were to pay for various capital projects. The transfers out from the ARPA Fund were to pay for COVID-19 pandemic relief. Transfers to non-major governmental funds were to assist in paying for projects not covered by grants.

4. LEASES RECEIVABLE
In 2020, the City’s Wastewater Enterprise Fund entered into a lease with Clay’s Septic & Jetting, Inc. (Lessee) for the use of City land for the storage of Lessee’s equipment in exchange for monthly payments of $20,000, which the City splits between the Wastewater and General funds. The lease term runs through August 2025 and has a discount rate of 0.865%. In June 30, 2023, the Wastewater Fund and General Fund recognized revenues and interest of $168,000 and $72,000, respectively. Receivables on the lease as of June 30, 2023 were $534,588.

5. 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 in arrears. 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 $32,484 at June 30, 2023 and the business loans receivable portion was $4,666.

Capital Non-Major
General Improvement Governmental
Transfer Out Fund Program Funds Total
General Fund - $ 65,628 $ 395,806 $ 461,434 $
ARPA Fund 402,971 - - 402,971
Non-Major Governmental
Funds 138,986 1,971,263 - 2,110,249
Water Fund 338,100 31,753 - 369,853
Wastewater Fund 269,600 31,753 - 301,353
Transit Fund 77,900 - - 77,900
Total 1,227,557 $ 2,100,397 $ 395,806 $ 3,723,760 $
Transfer In
47 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

6. 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, 2023 was as follows:

Balance Retirements/ Balance
June 30, 2022 Additions Transfers June 30, 2023
Non-depreciable assets:

Land, as restated 460,106 $ - $ - $ 460,106 $
Construction in progress 330,877 1,982,488 (1,620,955) 692,410 Total non-depreciable assets, as restated 790,983 1,982,488 (1,620,955) 1,152,516 Depreciable assets:

Buildings and improvements 5,584,942 - - 5,584,942
Vehicles 957,791 27,758 - 985,549
Equipment - 742,648 - 742,648
Infrastructure 13,730,827 29,224 1,593,161 15,353,212
Total depreciable assets 21, 56,982 016,208 1,593,161 22,666,351 Less accumulated depreciation:

Buildings and improvements (2,262,770) (160,846) - (2,423,616) Vehicles (818,457) (49,501) - (867,958)
Equipment (602, (28,123) 448) - (630,571)
Infrastructure (4,265,194) (638,220) - (4,903,414)
Total accumulated depreciation, as restated (7,948,869) (876,690) - (8,825,559) Total depreciable assets, net, as restated 13, (819,708) 067,339 1,593,161 13,840,792 Total capital assets, as restated $ 1,162,780 13,858,322 $ (27,794) $ 14,993,308 $ General government $ 47,152
Public safety 59,717
Transportation 7,260
Leisure, cultural & social services 38,393
Community development 724,168
Total depreciation expense $ 876,690
48 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

6. 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, 2023 was as follows:

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.

Balance
June 30, 2022 Additions Disposals
Balance
June 30, 2023
Non-depreciable assets:

Land 248,425 $ - $ - $ 248,425 $
Right-to-use land - 105,490 - 105,490
Construction in progress 3,030,887 1,422,935 (79,254) 4,374,568 Total non-depreciable assets 3,279,312 1,528,425 (79,254) 4,728,483 Depreciable assets:

Buildings and improvements 9,981,403 - - 9,981,403
Vehicles 1,829,057 - - 1,829,057
Equipment 75,034 565,369 - 640,403
Infrastructure 7,289,559 - - 7,289,559
Total depreciable assets 19, 75,034 665,388 - 19,740,422 Less accumulated Depreciation:

Buildings and improvements (7,796,570) (128,430) - (7,925,000) Vehicles (1,317,431) (96,775) - (1,414,206)
Equipment (539, (12,964) 126) - (552,090)
Infrastructure (4,362,650) (362,038) - (4,724,688)
Total accumulated depreciation (14,015,777) (600,207) - (14,615,984) Total depreciable assets, net 5, (525,173) 649,611 - 5,124,438 Total capital assets 8,928,923 $ 1,003,252 $ (79,254) $ 9,852,921 $ Water $ 86,740
Wastewater 416,736
Transit 96,731
Total depreciation expense $ 600,207
49 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

7. LONG-TERM DEBT
A. Governmental Activities
For the year ended June 30, 2023, governmental activities long-term liabilities activity was as follows:

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, 2023, business-type activities long-term liabilities activity was as follows:

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, 2023, the net water and wastewater revenues were $1,024,639 and $459,275 respectively. The principal and interest payments for the debt during the fiscal year ended June 30, 2023 totaled $77,469. 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, 2023, the principal balance outstanding was $926,240.

Balance Balance Due Within
June 30, 2022 Additions Deletions June 30, 2023 One Year Compensated absences 404,092 $ - $ (6,280) $ 397,812 $ 90,208 $ Total $ - 404,092 $ (6,280) $ 397,812 $ 90,208 $
Balance Balance Due Within
June 30, 2022 Additions Deletions June 30, 2023 One Year Certificates of participation 1, $ - 701,803 $ (74,137) $ 1,627,666 $ 77,793 $ Lease payable - 105,490 (1,809) 103,681 1,880
Total 1,701,803 $ 105,490 $ (75,946) $ 1,731,347 $ 79,673 $ 50 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

7. LONG-TERM DEBT, Continued
B. Business-Type Activities, Continued
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, 2023, the net water revenues were $1,024,639 and the principal and interest payments for the debt during the fiscal year were $69,854. 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, 2023, the principal balance outstanding was $701,426.

The annual debt service requirements on the Certificates of Participation-2005 are as follows:

Year Ending
June 30, Principal Interest Total
2024 36,000 $ $ 77,257 41,690 $
2025 37,000 77,690 40,055
2026 39,000 38,351 77,055
2027 36,557 41,000 77,557
2028 34,672 43,000 77,672
2029-2033 246,000 141,881 387,881
2034-2038 305,000 80,196 385,196
2039-2041 179,240 22,930 202,170
Total 926,240 $ $ 1,362,478 436,332 $
Year Ending
June 30, Principal Interest Total
2024 41,793 $ 29,442 $ 71,235 $
2025 43,516 27,686 71,202
2026 45,311 25,856 71,167
2027 47,180 23,952 71,132
2028 49,126 21,968 71,094
2027-2033 277,754 77,105 354,859
2034-2036 196,746 16,676 213,422
Total 701,426 $ 222,685 $ 924,111 $
51 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

7. LONG-TERM DEBT, Continued
B. Business-Type Activities, Continued
Lease Payable
In October 2022, the City’s Wastewater fund entered into a 30-year lease for land. The City plans to use the land to operate a treated effluent spray irrigation system of sewer and waste material treated by the City’s wastewater treatment facilities. Payments are annual at $5,923 and adjusted using the July Consumer Price Index for Los Angeles-Long Beach-Anaheim, all items. The discount rate for the lease is

3.9%. The annual principal and interest payments for the lease are as follows:

8. 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.

For the Year
Ending June 30, Principal Interest Total
2024 1,880 $ 4,044 $ 5,924 $
2025 1,953 3,970 5,923
2026 2,029 3,894 5,923
2027 2,108 3,815 5,923
2028 2,191 3,733 5,924
2029-2033 12,303 17,313 29,616
2034-2038 14,897 14,720 29,617
2039-2043 18,037 11,579 29,616
2044-2048 21,840 7,777 29,617
2049-2053 26,443 3,173 29,616
Total 103,681 $ 74,018 $ 177,699 $
52 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

9. 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 $404,440 for the year ended June 30, 2023. The City’s allocation of CCWA’s operating expenses for the year ended June 30, 2023 was $128,176.

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.
53 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

9. 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 2022-23, 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. 54 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

9. 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 2022-23.

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

10. 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.
55 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

10. EMPLOYEE RETIREMENT PLANS, Continued
B. Benefits Provided, Continued
The Plans’ provisions and benefits in effect at June 30, 2023, are summarized as follows:

C. Contributions
Section 20814(C) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for 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, 2022 were $614,582.

D. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions
As of June 30, 2023, the City reported a net pension liability for its proportionate share of the net pension liability of the Plan of $4,581,186.

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, 2022, and the total pension liability for the Plan used to calculate the net pension liability was determined by actuarial valuations as of June 30, 2021 rolled forward to June 30, 2022 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 7.00% 7.00% 6.75% 10.00% Required employer contribution rates 10.87% 14.74% 7.47% 10.80% Unfunded liability payment 196,659 $ 136,295 $ 2,559 $ 4,543 $ 56 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

10. 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, 2022 and 2021 were as follows:

For the year ended June 30, 2023, the City recognized pension expense of $717,770.

At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
$649,855 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, 2024. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense (income) as follows:

Proportion - June 30, 2021 0.03579%
Proportion - June 30, 2022 0.03966%
Change - Increase (Decrease) 0.00387%
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Pension contributions subsequent to measurement date $ 649,855 $ - Changes in assumptions 466,165 -
Differences between expected and actual experience 134,496 56,449 Changes in employer's proportion 310,074 -
Differences between the employer's contribution and the employer's proportionate share of contributions - 276,101 Net differences between projected and actual earnings on plan investments 788,766 -
Total $ 332,550 2,349,356 $
Fiscal Year Pension
Ending June 30, Expense (Income)
2024 395,404 $
2025 320,436
2026 169,186
2027 481,925
57 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

10. EMPLOYEE RETIREMENT PLANS, Continued
E. Actuarial Assumptions
The total pension liabilities in the June 30, 2021 actuarial valuations were determined using the following actuarial assumptions:
(1) The mortality table used was developed based on CalPERS-specific data The rates incorporate Generational Mortality to capture ongoing mortality improvement using 80% of Scale MP 2020 published by the Society of Actuaries. For more details, please refer to the 2021 experience study report that can be found on the CalPERS website.

F. Discount Rate
The discount rate used to measure the total pension liability as of the measurement date of June 30, 2022 for the Plan was 6.90%, which differs from the discount rate used as of the measurement date of June 30, 2021, of 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.

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

Valuation Date June 30, 2021
Measurement Date June 30, 2022
Actuarial Cost Method Entry-Age Normal in accordance with the requirements of GASB 68 Actuarial Assumptions:

Discount Rate 6.90%
Inflation 2.30%
Projected Salary Increase Varies by entry age and service Mortality(1) Derived using CalPERS' membership data for all funds Post Retirement Benefit Increase Contract COLA up to 2.30% until purchasing power protection allowance floor on purchasing power applies
58 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

10. 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.

G. 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:

H. Payable to the Pension Plan
At June 30, 2023 the City reported a payable of $0 for outstanding amount of contributions to the pension plan required for the year ended June 30, 2023.

Assumed
asset
Asset Class allocation Real return (1,2)
Global equity - Cap-weighted 30.00% 4.54%
Global equity - Non-Cap-weighted 12.00% 3.84%
Private Equity 13.00% 7.28%
Treasury 5.00% 0.27%
Mortgage-backed Securities 5.00% 0.50%
Investment Grade Corporates 10.00% 1.56%
High Yield 5.00% 2.27%
Emerging Market Debt 5.00% 2.48%
Private Debt 5.00% 3.57%
Real Assets 15.00% 3.21%
Leverage -5.00% -0.59%
Total 100.00%
(1) An expected inflation of 2.30% used for this period. (2) Figures are based on the 2021 Asset Liability Management study. 1% Decrease 5.90%
Net Pension Liability $ 7,223,884
Current Discount Rate 6.90%
Net Pension Liability $ 4,581,186
1% Increase 7.90%
Net Pension Liability $ 2,413,691
59 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

11. 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 $149-151 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, 2022 actuarial valuation:

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 $149 per month for calendar year 2022 and $1519 per month for calendar year 2023. This amount is indexed to the rate of medical inflation and increased each year accordingly. The City also pays an administrative fee on behalf of employees and retirees. For the measurement period July 01, 2022 to June 30, 2023, the City contributed $9,213 in benefit payments for retirees.

Active Employees 39
Inactive employees or beneficiaries currently receiving benefits 3 42 60
City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

11. OTHER POST EMPLOYMENT BENEFITS, Continued
D. Total OPEB Liability
The City’s total OPEB liability was measured as of June 30, 2023 and was determined by an actuarial valuation as of July 1, 2022. 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 3.86%, which reflects the municipal bond 20-year high grade index rate, and assumes the net fiduciary position of the plan remains at $0.

E. Changes in the Total OPEB Liability
Actuarial cost method Entry Age, Level Percent of Pay
Discount Rate 3.86%
Salary increases 3.00%
Inflation Rate 2.50%
Healthcare cost trend rate 6.0% for 2023, 5.5% for 2024, 5.25% for 2025-2029, reducing to 4.0% for 2070 and later years; Medicare
ages: 4.5% for 2022-2029, and 4.0% for 2030 and later
years.

Pre- and Post-retirement mortality rates were based on the 2015 CalPERS Experience Study
Actuarial assumptions used in the July 1, 2022 valuation were based on a review of plan experience during the period July 1, 2020 to June 30, 2022.

Total OPEB
Liability
Balance at June 30, 2022 $ 403,579
Changes in the year:

Service cost 78,110
Interest 24,869
Changes of benefit terms -
Difference between expected and actual experience 221,072 Changes of assumptions (41,845)
Benefit payments (9,213)
Net changes 272,993
Balance at June 30, 2023
Increase
(Decrease)
$ 676,572
61 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

11. OTHER POST EMPLOYMENT BENEFITS, Continued
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 (2.86 percent) or 1- percentage point higher (4.86 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:

H. OPEB Expense and Deferred Outflows and Inflows of Resources At June 30, 2023, 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 (income) as follows:

For the fiscal year ended June 30, 2023, the City recognized OPEB expense of $113,560. 1% Decrease Discount Rate 1% Increase

2.86% 3.86% 4.86%
Total OPEB Liability (Asset) 789,215 $ 676,572 $ 583,887 $ 1% Decrease Trend Rate 1% Increase
Total OPEB Liability (Asset) 551,438 $ 676,572 $ 839,924 $ Deferred Outflows Deferred Inflows
of Resources of Resources
Difference between expected and actual experience $ 71,763 236,708 $ Changes in assumptions or other inputs 89,820 163,155
$ 234,918 326,528 $
Fiscal Year ending
June 30,
OPEB Expense/
(Income)
2024 10,581 $
2025 10,581
2026 10,581
2027 9,409
2028 (3,559)
Thereafter 54,017
62 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

12. 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.

13. 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. 63 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

13. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDVELOPMENT AGENCY, Continued
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.

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 $886,658 in cash and investments as of June 30, 2023, 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 $14,476 in cash and investments as of June 30, 2023, 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, 2023, the carrying value of property held for resale was as follows:

West side of Obispo Street $ 105,507
Total 105,507 $
64 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

13. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDVELOPMENT AGENCY, Continued
D. Long-Term Liabilities
For the year ended June 30, 2023, long-term liabilities activity was as follows:

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, 2023, the total principal and interest remaining to be paid on the bonds was $4,640,230. The outstanding principal balance net of bond discounts was $3,678,526.

For the year ended June 30, 2023, the aggregate maturities of the tax allocation bonds were as follows:

Balance Balance Due within
June 30, 2022 Additions Deductions June 30, 2023 One Year 2017 Tax allocation bonds $ - 3,980,000 $ (230,000) $ 3,750,000 $ 240,000 $ Discount on 2017 bonds - (76,972) 5,498 (71,474) -
Total 3,903,028 $ - $ (224,502) $ 3,678,526 $ 240,000 $ For the Year
Ending June 30, Principal Interest Total
2024 240,000 $ 120,019 $ 360,019 $
2025 245,000 113,044 358,044
2026 250,000 105,619 355,619
2027 260,000 97,969 357,969
2028 265,000 90,094 355,094
2029-2033 1,475,000 309,672 1,784,672
2034-2036 1,015,000 53,813 1,068,813
Subtotal 3,750,000 890,230 $ 4,640,230 $
Bond Discount (71,474)
$ 3,678,526
65 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

14. DEFICIT FUND BALANCES/NET POSITION
Major Funds
As of June 30, 2023, a deficit fund balance of $18,395 exists for the Capital Improvement Program Fund.

This was a result of timing differences between invoices paid by the Capital Improvement Program Fund and the related reimbursements received from other funds for capital projects.

Non-major Funds
Deficits for non-major funds are as follows for June 30, 2023:

15. PRIOR PERIOD ADJUSTMENTS
The City made the following prior period adjustments for the ending balances of the fiscal year ended June 30, 2022:
 Capital Assets held in the Successor Agency to the Redevelopment Agency – The City reviewed the long-range property management plan and determined many of the properties held by the Successor Agency were intended to be transferred to the City. This adjustment netted to $116,975 in land and $119,640 in depreciable capital assets in the Government-wide Statement of Net Position.
 Fund grouped with Successor Agency in prior years – In prior years, the Successor Agency accounted for the activity of work on the Royal Theater. This fund should have been a governmental fund once the Redevelopment Agency was dissolved. The net position of this fund was $312,102.
 Lease receivables in the Wastewater and General Funds – In fiscal year 2021-22 the City recognized a lease receivable of $765,865 and corresponding amount in deferred inflows in the Wastewater Fund, when it should have been split between both the Wastewater and General Funds. The City restated the beginning balances of the lease receivable and deferred inflows due to leases to $538,205 and $230,660 in the Wastewater and General Funds, respectively. This had a net $0 effect on beginning net position and fund balance.  Unearned revenue in the Successor Agency – The City’s prior policy was to recognize tax revenue (ROPS) for the Successor Agency in the fiscal year that matched the fiscal year on the revenue’s annual letter. However, since it is classified as a tax, the City has adjusted the beginning balance for the Successor Agency and recognized the first payment for fiscal year 2023-24 as revenue in the current fiscal year.

Fund Deficit
Library (29,127) $
Community Development (250,619)
Central Park (61,547)
Leroy II Building (625)
66 City of Guadalupe
Notes to Basic Financial Statements
For the year ended June 30, 2023

15. PRIOR PERIOD ADJUSTMENTS, CONTINUED
The changes to net position and fund balance are shown in the table below:

Net Position, as Net Position, as
Previously Reported Royal Theater Successor Agency Successor Agency Restated at at June 30, 2022 Fund Assets Unearned Revenues June 30, 2022 Government-Wide Statements
Governmental Activities $ 312,102 15,738,211 $ 236,615 $ - $ 16,286,928 $ Fund Statements
Royal Theater - $ 312,102 $ - $ - $ 312,102 $
Private-Purpose Trust Fund (2,892,290) $ (312,102) $ (236,615) $ 503,493 $ (2,937,514) $ Restatements
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68 REQUIRED

SUPPLEMENTARY INFORMATION
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70 City of Guadalupe
Required Supplementary Information
For the year ended June 30, 2023

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.
71 Budgetary Comparison Schedule - General Fund
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Taxes 3,617,283 $ 3,617,283 $ 4,072,627 $ 455,344 $
Licenses and permits 587,700 587,700 744,389 156,689
Fines and penalties 5,300 5,300 30,822 25,522
Revenues from other agencies 651,972 651,972 637,430 (14,542) Charges for current services 222,650 222,650 181,451 (41,199) Interest 118,100 118,100 6,312 (111,788)
Other revenues 131,410 131,410 557,351 425,941
Total revenues 5,334,415 5,334,415 6,230,382 895,967
EXPENDITURES:

Current:

General Government 1,521,260 1,521,260 1,523,128 (1,868) Public Safety 4,245,750 4,245,750 4,235,319 10,431
Leisure, cultural and social services 375,000 375,000 427,969 (52,969) Community development 498,181 498,181 585,092 (86,911)
Debt service:

Principal 130,666 130,666 - 130,666
Interest and fiscal charges 2,010 2,010 3,675 (1,665)
Total expenditures 6,782,867 6,782,867 6,785,598 (2,731) REVENUES OVER (UNDER) EXPENDITURES (1,448,452) (1,448,452) (555,216) 893,236 OTHER FINANCING SOURCES (USES):

Transfers in 1,476,614 1,476,614 1,227,557 (249,057)
Transfers out (127,193) (127,193) (461,434) (334,241)
Total other financing sources (uses) 1,349,421 1,349,421 766,123 (583,298) Net change in fund balances (99,031) (99,031) 210,907 309,938 FUND BALANCES:

Beginning of year 781,237 781,237 781,237 -
End of year 682,206 $ 682,206 $ 992,144 $ 309,938 $
City of Guadalupe
For the year ended June 30, 2023
Budgeted Amounts
72 Budgetary Comparison Schedule - Royal Theater
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Revenues from other agencies 5,100,000 $ 5,100,000 $ 87,521 $ (5,012,479) $ Interest - 800 4,878 4,078
Total revenues 5,100,800 5,100,000 92,399 (5,008,401)
EXPENDITURES:

Current:

Leisure, cultural and social services - - 7,500 (7,500) Capital outlay 5,459,320 - 72,505 5,386,815
Total expenditures 5,459,320 - 80,005 5,379,315
REVENUES OVER (UNDER) EXPENDITURES (358,520) 5,100,000 12,394 370,914 Net change in fund balances (358,520) 5,100,000 12,394 370,914 FUND BALANCES:

Beginning of year 312,102 312,102 312,102 -
End of year 5,412,102 $ (46,418) $ 324,496 $ 370,914 $
City of Guadalupe
For the year ended June 30, 2023
Budgeted Amounts
73 Budgetary Comparison Schedule - ARPA
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES:

Revenues from other agencies - $ - $ 402,971 $ 402,971 $ Total revenues - - 402,971 402,971
REVENUES OVER (UNDER) EXPENDITURES - - 402,971 402,971
OTHER FINANCING SOURCES (USES):

Transfers out - - (402,971) (402,971)
Total other financing sources (uses) - - (402,971) (402,971) Net change in fund balances - - - -
FUND BALANCES:

Beginning of year - - - -
End of year - $ - $ - $ - $
City of Guadalupe
For the year ended June 30, 2023
Budgeted Amounts
74 This page intentionally left blank
75 City of Guadalupe
Required Supplementary Information
For the year ended June 30, 2023

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*
Fiscal year 2023 2022 2021 2020 2019
Measurement date 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 Proportion of the net pension liability 0.03966% 0.03579% 0.03476% 0.03306% 0.03166% Proportionate share of the net
pension liability 4, $ 1,935,887 581,186 $ 3,782,088 $ 3,387,991 $ 3,050,995 $ Covered payroll 3, $ 2,926,608 125,011 $ 2,450,043 $ 2,025,580 $ 2,153,332 $ Proportionate Share of the net pension
liability as percentage of covered payroll 146.60% 66.15% 154.37% 167.26% 141.69% Plan fiduciary net position as a percentage
of the total pension liability 76.68% 88.29% 75.10% 75.26% 75.26% (continued on next page)
Notes to Schedule
*Fiscal year 2015 was the 1st year of implementation, therefore only nine years are shown.

The CalPERS mortality assumptions were adjusted in fiscal year 2019.

The CalPERS discount rate was increased from 7.5% to 7.65% in fiscal year 2016, decreased from 7.65% to 7.15% in fiscal year 2018, and then decreased from 7.15% to 6.9% in fiscal year 2023.

Fiscal Year 2023 2022 2021 2020 2019
Contractually required contribution
(actuarially determined) $ 614,582 649,855 $ 560,980 $ 457,869 $ 363,003 $ Contribution in relation to the
contractually required contributions (614,582) (649,855) (560,980) (457,869) (363,003) Contribution deficiency (excess) - $ - $ - $ - $ - $
Covered payroll 3, $ 3,125,011 110,243 $ 2,926,608 $ 2,450,043 $ 2,025,580 $ Contributions as a percentage of
covered payroll 20.89% 19.67% 19.17% 18.69% 17.92%
(continued on next page)
Notes to Schedule
*Fiscal year 2015 was the 1st year of implementation, therefore only nine years are shown. 76 City of Guadalupe
Required Supplementary Information
For the year ended June 30, 2023

2. DEFINED BENEFIT PENSION PLANS, CONTINUED
A. Schedule of the City’s Proportionate Share of the Net Pension Liability – Last 10 Years, continued* B. Schedule of Plan Contributions – Last 10 Years, Continued* 2018 2017 2016 2015
6/30/2017 6/30/2016 6/30/2015 6/30/2014

0.03091% 0.02989% 0.02666% 0.0312%
$ 2,586,229 3,065,323 $ 1,830,129 $ 1,939,137 $
$ 1,572,208 1,925,534 $ 1,479,094 $ 1,548,925 $
159.19% 164.50% 123.73% 125.19%

73.31% 74.06% 78.40% 79.82%
2018 2017 2016 2015
$ 305,064 329,839 $ 251,172 $ 211,025 $
(305,064) (329,839) (251,172) (211,025)
$ - - $ - $ - $
$ 1,925,534 2,153,332 $ 1,572,208 $ 1,479,094 $

15.32% 15.84% 15.98% 14.27%
77 City of Guadalupe
Required Supplementary Information
For the year ended June 30, 2023

2. DEFINED BENEFIT PENSION PLANS, CONTINUED
C. Actuarial Methods and Assumptions used for Pension Actuarially Determined Contributions Fiscal Year 2023 2022 2021 2020
6/30/2020 6/30/2019 6/30/2018 6/30/2017
Actuarial cost method: Entry Age Entry Age Entry Age Entry Age Amortization method: (1) (1) (1) (1)
Assets valuation method: Market Value Market Value Market Value Market Value Inflation: 2.50% 2.50% 2.50% 2.63%
Salary increases: (2) (2) (2) (2)
Investment rate of return: 7.00% 7.00% 7.00% 7.25%
Retirement age: (3) (3) (3) (3)
Mortality: (4) (4) (4) (4)
Fiscal Year 2019 2018 2017 2016 2015
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 Amortization method: (1) (1) (1) (1) (1)
Assets valuation method: Market Value Market Value Market Value Market Value 15 Year Smoothed
Market
Method
Inflation: 2.75% 2.75% 2.75% 2.75% 2.75%
Salary increases: (2) (2) (2) (2) (2)
Investment rate of return: 7.375% 7.50% 7.50% 7.50% 7.50% Retirement age: (3) (3) (3) (3) (3)
Mortality: (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.

Valuation date (for contractually
required contribution):
78 City of Guadalupe
Required Supplementary Information
For the year ended June 30, 2023

3. OTHER POST EMPLOYMENT BENEFITS (OPEB)
A. Schedule of Changes in Total OPEB Liability and Related Ratios Measurement Period 2023 2022 2021 2020 2019 20181
Total OPEB Liability
Service Cost 78,110 $ 62,656 $ 53,279 $ 25,383 $ 22,620 $ 22,060 $ Interest 24,869 10,641 10,733 12,751 11,639 11,646
Changes of benefit terms - - - - - -
Difference between expected and actual experience - 221,072 (103,422) - 72,513 - Changes of assumptions (41,845) (157,976) 68,700 53,099 31,372 - Benefit payments (9,213) (6,561) (5,219) (4,950) (4,842) (206,667) Net change in total OPEB liability (91,240) 272,993 24,071 86,283 133,302 (172,961) Total OPEB liability – beginning (a) 494,819 403,579 470,748 384,465 251,163 424,124 Total OPEB liability – ending (b) 676,572 $ 403,579 $ 494,819 $ 470,748 $ 384,465 $ 251,163 $ Covered-employee payroll 3, $ 3,833,503 814,879 $ 3,522,312 $ 2,846,031 $ 2,525,683 $ 2,267,277 $ Total OPEB liability as a percentage of covered-
employee payroll 17.7% 10.5% 14.0% 16.5% 15.2% 11.1%
1 Amount includes implicit subsidy associated with benefits paid for this year. * Implementation was in 2018, therefore only five years are shown 79 This page intentionally left blank
80 SUPPLEMENTARY INFORMATION
81 City of Guadalupe
Combining Balance Sheet
Other Governmental Funds
June 30, 2023
Guadalupe
Local Public Park Lighting and Public
Transportation Library Facilities Development Assessment Safety ASSETS
Cash and investments 240,202 $ 39,206 $ 31,783 $ 507,774 $ 1,196,156 $ 180,932 $ Accounts receivable 17,113 - - - - 4,797
Interfund loans receivable - - - 282,762 140,000 -
Loans receivable - - - - - -
Total assets $ 39,206 257,315 $ 31,783 $ 790,536 $ 1,336,156 $ 185,729 $

LIABILITIES, DEFERRED INFLOWS

OF RESOURCES AND FUND BALANCES
Liabilities:

Accounts payable - - - - 1,601 1,836
Accrued wages and benefits - - - - 100 -
Unearned revenue 7,814 - 2,730 4,200 - 2,495
Interfund loans payable - 68,333 - - - -
Total liabilities 68,333 7,814 2,730 4,200 1,701 4,331
Fund Balances:

Nonspendable:

Prepaid items - - - - - -
Restricted for:

Street maintenance 249,501 - - - - -
Other capital projects - - - - - -
Public safety - - - - - 181,398
Utility infrastructure - - 29,053 786,336 - -
Debt service - - - - - -
Lighting and landscape - - - - 1,334,455 -
Committed to:

Capital projects - - - - - -
Unassigned - (29,127) - - - -
Total fund balances (29,127) 249,501 29,053 786,336 1,334,455 181,398 Total liabilities
and fund balances $ 39,206 257,315 $ 31,783 $ 790,536 $ 1,336,156 $ 185,729 $ Special Revenue
82 Community Central Leroy II Capital
Measure A Gas Tax Development Park FEMA Building Facilities City Hall $ - 416,379 $ 5,434 $ - $ 405 $ - $ 515,560 $ 35,291 $
18,836 113,781 43,496 230,962 - - - -
- - - - - - 68,333 -
- - 32,484 - - - - -
$ 18,836 530,160 $ 81,414 $ 230,962 $ 405 $ - $ 583,893 $ 35,291 $ - 10,131 49,271 - - - 5 -
- 3,468 - - - - - -
- - - - - - - -
1,216 - 282,762 292,509 - 625 - -
1,216 13,599 332,033 292,509 - 625 5 -
- - - - - - - -
17,620 516,561 - - - - - -
- - - - - - 583,888 35,291
- - - - 405 - - -
- - - - - - - -
- - - - - - - -
- - - - - - - -
- - - - - - - -
- - (250,619) (61,547) - (625) - -
17,620 516,561 (250,619) (61,547) 405 (625) 583,888 35,291 $ 18,836 530,160 $ 81,414 $ 230,962 $ 405 $ - $ 583,893 $ 35,291 $ Special Revenue Capital Projects
83 City of Guadalupe
Combining Balance Sheet
Other Governmental Funds
June 30, 2023
Capital
Projects
Total Other
Traffic Sewer Bond Governmental
Mitigation Debt Service Funds
ASSETS
Cash and investments 10,721 $ 32,625 $ 3,212,468
Accounts receivable - - 428,985
Interfund loans receivable - - 491,095
Loans receivable - - 32,484
Total assets $ 32,625 10,721 $ 4,165,032 $

LIABILITIES, DEFERRED INFLOWS

OF RESOURCES AND FUND BALANCES
Liabilities:

Accounts payable - - 62,844
Accrued wages and benefits - - 3,568
Unearned revenue - - 17,239
Interfund loans payable - - 645,445
Total liabilities - - 729,096
Fund Balances:

Nonspendable:

Prepaid items - - -
Restricted for:

Street maintenance - - 783,682
Other capital projects - - 619,179
Public safety - - 181,803
Utility infrastructure - - 815,389
Debt service - 32,625 32,625
Lighting and landscape - - 1,334,455
Committed to:

Capital projects 10,721 - 10,721
Unassigned - - (341,918)
Total fund balances 32,625 10,721 3,435,936
Total liabilities
and fund balances $ 32,625 10,721 $ 4,165,032 $
84 City of Guadalupe
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Other Governmental Funds
For the year ended June 30, 2023
Guadalupe
Local Public Park Lighting and Public
Transportation Library Facilities Development Assessment Safety REVENUES:

Taxes - $ - $ - $ - $ 299,227 $ - $
Licenses and permits - 1,600 - - - -
Revenues from other agencies 188,112 - - - - 49,996
Charges for current services - - - - - -
Interest 8,408 597 485 700 19,006 2,893
Other revenues - 4,000 - - - -
Total revenues 6,197 196,520 485 700 318,233 52,889
EXPENDITURES:

Current:

General government - - - - - -
Public Safety - - - - - 34,016
Transportation - - - - - -
Leisure, cultural and social
services 15,000 - - - - -
Community development - - - - 104,631 -
Capital outlay - - - - - 7,737
Total expenditures 15,000 - - - 104,631 41,753

REVENUES OVER
(UNDER) EXPENDITURES 196,520 485 (8,803) 700 213,602 11,136

OTHER FINANCING
SOURCES (USES):

Transfers in - 9,483 - - - -
Transfers out (361,008) - (636) - - (12,401)
Total other financing
sources (uses) 8,847 (361,008) - - (12,401) -
Net change in fund
balances 44 (164,488) 485 700 201,201 11,136
FUND BALANCES:

Beginning of year 413,989 28,568 (29,171) 785,636 1,133,254 170,262 End of year 249,501 $ $ 29,053 (29,127) $ 786,336 $ 1,334,455 $ 181,398 $ Special Revenue
85 Community Central Leroy II Capital
Measure A Gas Tax Development Park FEMA Building Facilities City Hall $ 216,329 708,659 $ - $ - $ - $ - $ - $ - $
- - - - - - - 640
118,497 - 429,466 230,962 - - - -
- - - - - - - -
8,298 13,111 7,391 - - - 7,766 586
- - 54,662 - - - - -
343,124 721,770 491,519 230,962 - - 7,766 1,226
- - - - 244,788 - - -
- - - - - - - -
2,851 385,586 - - - - - -
- - 145,632 - - - - -
- - 30,377 - - - - -
- - - - - - 59,722 -
2,851 385,586 176,009 - 244,788 - 59,722 -
340,273 336,184 315,510 230,962 - (244,788) 1,226 (51,956) - 1,940 26,044 - 245,193 - 112,927 219
(565,319) (672,954) (33,328) - (287,479) (625) (60,774) (1,445) (672,954) (563,379) (7,284) (287,479) 245,193 (625) 52,153 (1,226) (332,681) (227,195) 308,226 (56,517) 405 (625) 197 -
350,301 743,756 (558,845) - (5,030) - 583,691 35,291
$ 17,620 516,561 $ $ (250,619) $ 405 (61,547) $ $ 583,888 (625) $ 35,291 $ Special Revenue Capital Projects
86 City of Guadalupe
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Other Governmental Funds
For the year ended June 30, 2023
Capital
Projects
Total Other
Traffic Sewer Bond Governmental
Mitigation Debt Service Funds
REVENUES:

Taxes - $ - $ 1,224,215 $
Licenses and permits 2,504 - 4,744
Revenues from other agencies - - 1,017,033
Charges for current services - - -
Interest 2,024 848 72,113
Other revenues - - 58,662
Total revenues 848 4,528 2,376,767
EXPENDITURES:

Current:

General government - - 244,788
Public Safety - - 34,016
Transportation - - 388,437
Leisure, cultural and social
services - - 160,632
Community development - - 135,008
Capital outlay - - 67,459
Total expenditures - - 1,030,340

REVENUES OVER
(UNDER) EXPENDITURES 848 4,528 1,346,427

OTHER FINANCING
SOURCES (USES):

Transfers in - - 395,806
Transfers out - (114,280) (2,110,249)
Total other financing
sources (uses) - (114,280) (1,714,443)
Net change in fund
balances 848 (109,752) (368,016)
FUND BALANCES:

Beginning of year 120,473 31,777 3,803,952
End of year 10,721 $ 32,625 $ 3,435,936 $
87 This page intentionally left blank
88 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 (Government Auditing Standards), 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, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements and have issued our report thereon dated September 15, 2026.

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

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 identified 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 City’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying schedule of findings and responses as items 2023-01, 2023-02, 2023-03, 2023-04, 2023-05, 2023-06, and 2023-07, to be material weaknesses.

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

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 as item 2023-08 to be a significant deficiency.

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

City of Guadalupe’s Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the findings identified in our audit and described in the accompanying schedule of findings and responses.

The City’s response was not subjected to other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.

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

Badawi & Associates, CPAs
Emeryville, California
September 15, 2026
90 City of Guadalupe
Schedule of Findings and Responses
For the year ended June 30, 2023
2023-01 – Internal Controls Over Journal Entries (Material Weakness) Criteria:

Internal controls over financial reporting should require certain tasks such as preparing journal entries and reviewing journal entries to be performed by separate individuals.

Supporting documentation for journal entries should be adequate so that the individual approving the journal entries, auditors, other accounting staff are able to easily verify the accuracy, legitimacy, and purpose of the journal entries.

Condition:

During our audit we noted that there was mainly one person who was responsible for preparing and posting journal entries without an independent reviewer. In addition, we also noted during our testing of journal entries:
- 18 of 60 journal entry selections were unsupported
- 6 of 60 journal entries contained errors
- 48 of 60 journal entries were not reviewed
Cause:

Responsibility for preparing complex journal entries was placed solely on the Finance Director and no other staff were trained to either prepare or review such journal entries. Due to inadequate review procedures, journal entries were posted without preparation of supporting documents and contained errors.

Effect:

Journal entry amounts may be misstated due to errors, and unauthorized entries may be posted and not be detected timely.

Recommendation:

We recommend that the City update its policies and procedures over financial reporting to:
- Ensure that journal entries are properly reviewed and reconciled independently. - There is adequate segregation of duties in place.
- Supporting documentation is maintained for all journal entries such that an individual with prudent financial knowledge is able to understand the purpose of the journal entry and it is prepared accurately.
91 City of Guadalupe
Schedule of Findings and Responses
For the year ended June 30, 2023
2023-01 – Internal Controls Over Journal Entries (Material Weakness) , Continued Management Response:

The City agrees with the recommendation. Management is implementing procedures requiring journal entries to include sufficient supporting documentation and documented independent review whenever practicable. Routine entries will be prepared by appropriate accounting staff, while complex year-end entries may be prepared or assisted by qualified outside accounting professionals. Entries prepared by staff will be reviewed by the Finance Director or another qualified individual who was not the preparer. Where staffing limitations prevent complete segregation of duties, management will employ documented compensating review controls.
92 City of Guadalupe
Schedule of Findings and Responses
For the year ended June 30, 2023
2023-02 – Delayed Audit and Annual Closing Procedures (Material Weakness) Criteria:

The City is responsible for fair presentation of the financial statements in conformity with accounting principles generally accepted in the United States of America. In addition, an effective internal control system over financial closing and reporting provides reasonable assurance for the safeguarding of assets, the reliability of financial information, and compliance with laws and regulations. Timely reporting to users of the financial statements strengthens grant applications, provides for an informed governance, and prevents lenders from having the ability to terminate debt agreements.

The City’s financial closing process should include timely preparation of reconciliations for all significant accounts to be reported on the City’s financial statements.

Condition:

The City experienced severe delays in executing its annual financial closing procedures and delivering the necessary trial balances, reconciliations, and supporting schedules for the annual financial audit. At several times, the audit had been scheduled and rescheduled due to apparent signs that the closing process was not completed that included but not limited to the following examples:
- Accounts payable balances held balances in the reverse direction (debit balances instead of credit balances). - Interfund transfers in and out were out of balance by a material amount. - Interfund receivables and payables were out of balance by a material amount. - Unusual fluctuations from prior year that were later identified to be due to errors in the implementation of the new financial system.
- Unrecorded audit adjusting journal entries related to the fiscal year ended June 30, 2022. - Unsupported deposits payable.

Subsequently, newer versions of the trial balance were provided for audit followed by additional closing entries.

Cause:

The City does not have a formalized annual closing process that sufficiently captures all necessary transactions in the accounting records for the fiscal year in a timely manner. Other factors that added to the delay were:
- The implementation of a new financial system that increased workload of the Finance Director. - The City experienced turnover in the Finance Director and City Manager positions.

Effect:

Inadequate policies and procedures over the City’s annual closing process and annual audit can result inaccurate financial reporting, higher risk of fraud and errors, regulatory findings, poor decision making, and the inability to track performance.
93 City of Guadalupe
Schedule of Findings and Responses
For the year ended June 30, 2023
2023-02 – Delayed Audit and Annual Closing Procedures (Material Weakness), Continued Recommendation:

We recommend that the City update and formalize its annual closing procedures to encompass reviewing all accounts and preparing supporting reconciliation workpapers when necessary, including other accounting staff members and cross-training, and setting milestones or due dates to ensure timely financial reporting.

Management Response:

Management agrees with the recommendation. The City is developing a more formal year-end closing process that includes account reconciliations, interfund balancing, review of unusual balances, documentation of closing entries, assigned responsibilities, and audit preparation milestones. Staff will be cross-trained where feasible, and outside accounting assistance may be used for specialized closing and audit schedules. The objective is to establish a repeatable closing process that will improve the timeliness and reliability of future financial reporting.
94 City of Guadalupe
Schedule of Findings and Responses
For the year ended June 30, 2023
2023-03 – Enterprise Resource Planning (ERP) Implementation (Material Weakness) Criteria:

The City is responsible for fair presentation of the financial statements in conformity with accounting principles generally accepted in the United States of America. This includes capturing, recording, processing, and tracking applicable transactions in the City’s general ledger.

Industry frameworks (such as Control Objectives for Information and Related Technologies) require formal user acceptance testing, configuration verification, and data reconciliation. These steps ensure data integrity and system accuracy before pushing an ERP system into production.

Condition:

The City implemented a new financial software system during the fiscal year ended June 30, 2023. During the audit, we noted that the City had recorded amounts in the new accounting software in the middle of the fiscal year that represented year-to-date information in the prior accounting software, in addition to transferring data for specific accounts. Subsequently, we noted that the City had not reviewed nor verified the accuracy between the systems, resulting in errors in the new system.

During testing of utility billings performed in the City’s newly implemented financial software, we noted that commercial entities were not charged consumption charges for sewer and instead were charged the flat rate used by residential customers. This resulted in approximately $250 in undercharges to each commercial account for the fiscal year.

In addition, we also noted that data – such as revenues received during the implementation process – was incomplete. The data migration errors were not identified as part of the implementation process.

Cause:

The Finance Director who started the ERP implementation left the City part-way through the process. Once this occurred, the City did not adequately update its implementation plan.. As a result, the City did not perform sufficient testing and training for the new system.

Effect:

The poor implementation of the accounting software exposes the City to the following risks:
- Financial Misstatement: Unreconciled data migration increases the risk of inaccurate balances, leading to distorted financial reporting.
- Operational Inefficiencies: Inadequate user training has caused significant delays in routine financial processing (e.g., procurement, invoicing, and payroll), leading to a backlog of transactions or bypassing of controls.
- Increased Costs: Bypassing standard procedures results in higher post-implementation troubleshooting costs and potential reliance on expensive external consultants to fix system errors. 95 City of Guadalupe
Schedule of Findings and Responses
For the year ended June 30, 2023
2023-03 – Enterprise Resource Planning (ERP) Implementation (Material Weakness), Continued Recommendation:

In the implementation of a new ERP, it is advised to reconcile the old and the new systems monthly with each other.

Management Response:

Management agrees with the recommendation. The ERP implementation referenced in the finding occurred during FY 2022-23 and is no longer an implementation in progress. Current management is focused on improving use of the existing system through staff training, reconciliation of applicable subsidiary information to the general ledger, review of system configurations when issues are identified, and stronger documentation of corrections. The City does not presently anticipate replacing its ERP system; however, any future significant system implementation or conversion would include documented testing, data validation, reconciliation, and user acceptance procedures. 96 City of Guadalupe
Schedule of Findings and Responses
For the year ended June 30, 2023
2023-04 – Grant Management (Material Weakness)
Criteria:

The City is responsible for fair presentation of the financial statements in conformity with accounting principles generally accepted in the United States of America. In addition, the City is responsible for compliance with terms and conditions for related grants received and expended by the City, which includes:
- Recording and tracking expenditures that are intended to be reimbursed by the grant - Filing grant reports and reimbursement requests timely - Overseeing the services of 3rd parties handling the day-to-day grant activities Condition:

During performance of the audit, there were difficulties encountered by City staff in obtaining information for federal grants, such as status of billings, amounts expended during the year, and who in the City was assigned responsibility for various grants.

Cause:

The City does not have formal written policies and procedures for grants. The City does not assign an employee the responsibility to oversee and track grant activities.

Effect:

Many grant reimbursement requests were not sent to the grantors timely, resulting in delayed funding to the City. Additionally, lack of written policies and procedures in combination with turnover in personnel may result in noncompliance with grant terms and conditions, and hence increases the risk of related noncompliance financial contingencies.

Recommendation:

We recommend the City update policies and procedures over grants to improve internal controls over grant reporting and compliance. Such policies may include maintenance of a central inventory documenting all grants received by the City, responsible staff or consultant, and developing procedures for grant application, billing, reconciliation and closing.

Management Response:

Management agrees with the recommendation. The City is strengthening centralized oversight of grants, including identification of funding sources, responsible departments or consultants, reimbursement requirements, expenditures, receivables, deadlines, and grant closeout requirements. Finance will also continue working toward improved project-level accounting and reconciliation so reimbursable expenditures and related grant revenues can be more readily identified and supported. Written procedures will be developed commensurate with the City's staffing and grant portfolio. 97 City of Guadalupe
Schedule of Findings and Responses
For the year ended June 30, 2023
2023-05 – Capital Asset Accounting (Material Weakness)
Criteria:

The City is responsible for fair presentation of the financial statements in conformity with accounting principles generally accepted in the United States of America. The City should maintain accurate records of capital assets and related depreciation for financial reporting and operations.

Condition:

The following matters were noted during the audit:
- The capital asset roll-forward analysis prepared by the City was missing several current year capital asset acquisitions.
- Errors were noted in the supporting inventory/depreciation schedules including asset duplication or missing updates for activity that occurred during the year - Depreciation expense and accumulated depreciation reported in the capital asset detailed listing were not reconciled to balances reported in the general ledger.

Cause:

Capital asset schedules were not independently reviewed nor reconciled to the general ledger prior to the audit.

Effect:

Without regular reconciliations, errors, omissions, or misstatements in capital asset balances (including acquisition costs, accumulated depreciation, and depreciation expense) may occur and remain undetected for extended periods. This increases the risk of material misstatements in the financial statements, inaccurate budgeting, and potential loss or misappropriation of physical assets.

Recommendation:

We recommend that management update its accounting policies and procedures over capital assets which may include the following:
- Designate accounting personnel to perform monthly reconciliations between the capital asset subsidiary ledger and the general ledger.
- Require a supervisor or manager independent of the preparation process to review and formally sign off on all capital asset reconciliations monthly.
- Schedule and perform a comprehensive physical inventory of all capital assets, and update the subsidiary ledger for any missing, obsolete, or damaged items. - Ensure that responsible staff receive adequate training on accounting policies governing capitalization thresholds, disposals, and depreciation calculations.
98 City of Guadalupe
Schedule of Findings and Responses
For the year ended June 30, 2023
2023-05 – Capital Asset Accounting (Material Weakness), Continued Management Response:

Management agrees that capital asset records should be reconciled to the general ledger and independently reviewed. Given the size of the City and the volume of capital asset activity, management intends to perform formal capital asset reconciliation at least annually as part of the fiscal year-end closing process, with interim review when significant acquisitions, disposals, or completed capital projects occur. The City also intends to make greater use of the ERP capital asset functionality and maintain supporting documentation for additions, disposals, depreciation, and construction-in-progress transfers. 99 City of Guadalupe
Schedule of Findings and Responses
For the year ended June 30, 2023
2023-06 – Payroll Master File Maintenance and Payroll Processing (Material Weakness) Criteria:

Proper internal controls and standard accounting frameworks (such as COSO) require a strict segregation of duties between personnel who maintain master data and personnel who process transactions. No single employee should have the ability to initiate, authorize, and execute transactions without independent oversight. Changes to the payroll master file should require dual authorization (a maker-checker process), where one person inputs the change and a supervisor or separate department (such as Human Resources) reviews and approves it.

In absence of this, the City should have adequate review procedures in place to ensure all changes made to the payroll master file are appropriate.

Condition:

During the review of the payroll process, it was noted that the same individual possesses the system access rights to create and modify employee records in the payroll master file (e.g., changing salary rates, adding new employees, updating bank details) and is also responsible for processing the periodic payroll execution and distributing pay. Previously the Finance Director reviewed all changes made to the payroll master file, however we noted this was not performed for majority of pay periods in the fiscal year ended June 30, 2023 or review was not documented.

In addition, our testing of payroll identified errors in overtime and special pays.

Cause:

The City has limited staffing to adequately segregate duties. Resources were further strained during the implementation of the City’s new accounting software so that policies and procedures over payroll were not performed.

Effect:

There is an elevated risk of undetected errors or fraudulent activity. A single individual could create fictitious employees ("ghost employees") or unauthorized salary increases, and alter banking information.

This could lead to significant financial loss, inaccurate financial reporting, and non-compliance with tax and labor regulations.

Recommendation:

We recommend the City update its policies and procedures to ensure that all changes made to the payroll master file are appropriate, the payroll calculated each pay period is reviewed independently prior to finalizing and processing, and implement monitoring procedures to make certain that policies and procedures over accounting processes are followed.
100
City of Guadalupe
Schedule of Findings and Responses
For the year ended June 30, 2023
2023-06 – Payroll Master File Maintenance and Payroll Processing (Material Weakness), Continued Management Response:

Management agrees with the recommendation. Because the Finance Department has limited staffing, complete segregation of every payroll function may not always be feasible. The City will therefore use segregation where practicable together with compensating controls, including documented review of payroll master-file changes, review of payroll registers and significant or unusual pay changes prior to payroll completion, and appropriate supervisory review. Cross-training will also be used to reduce reliance on a single employee for critical payroll functions.
101
City of Guadalupe
Schedule of Findings and Responses
For the year ended June 30, 2023
2023-07 – Bank Reconciliation Procedures (Material Weakness) Criteria:

Internal controls over cash and investment accounts should require timely reconciliation of all transactions to the accounting records. In addition, bank reconciliations should be independently reviewed.

Condition:

During the audit, we noted that the bank reconciliations for key operating and disbursement accounts were not prepared in a timely manner. The City did not complete the June 2023 bank reconciliations until more than one year after the fiscal year end. In addition, majority of the bank reconciliations prepared for the fiscal year were not independently reviewed.

Cause:

Management attributed the delays to staffing shortages within the accounting department and the recent implementation of a new ERP system.

Effect:

When bank reconciliations are delayed, the City faces several heightened risks:
- Unrecorded bank fees, bounced checks (NSF), or timing differences remain unadjusted, leading to inaccurate monthly financial reporting to stakeholders. - Unauthorized withdrawals, altered checks, or fraudulent electronic fund transfers (EFTs) may go unnoticed past the bank's liability notification window (typically 30 to 60 days), preventing the City from recovering lost funds.
- Management lacks real-time visibility into available cash balances for each fund, increasing the risk of informal borrowings from restricted funds.

Recommendation:

We recommend that the City update its policies and procedures over cash management to ensure that bank reconciliations are prepared timely after the end of each calendar month and implement independent review procedures.

Management Response:

Management agrees with the recommendation. The City has engaged outside assistance to address historical reconciliation backlogs and is working toward bringing reconciliations current. Once the backlog is resolved, management's objective is to establish a sustainable recurring reconciliation process with documented preparation and independent review. Given current staffing limitations, the City may continue to use outside professional support when necessary rather than allowing reconciliation backlogs to accumulate. 102
City of Guadalupe
Schedule of Findings and Responses
For the year ended June 30, 2023
2023-08 – Adequacy of Documentation for Cost Allocation Charges (Significant Deficiency) Criteria:

Charges to other funds, especially funds accounting for legally restricted monies, such as Transportation Development Act and grants, should be adequately supported. Salaries charged to such restricted funds should be substantiated by time studies or functional timecards.

Condition:

The City uses a cost allocation plan worksheet which utilizes percentages to calculate the amounts to be charged as overhead to other funds. We were unable to obtain supporting documentation to support the basis for some of the percentages used for cost allocation charges during the audit.

Cause:

The City did not adequately document the methodology used to determine allocated payroll amounts and some of the cost allocation charges and, and did not maintain supporting documentation for how allocation percentages were determined for the purpose of allocating overhead to other funds.

Effect:

Overhead and allocated payroll expenditures charged to other funds may be misstated and noncompliant with requirements of restricted funds.

Recommendation:

We recommend that the City adequately document the basis for its cost allocation plan and maintain documentation appropriately to support the amounts allocated to other funds. We also recommend that the City either directly charges grants for hours worked on the grant, or performs a time study on an employee’s hours for allocating a percentage of that employee’s salary.

Management Response:

Management agrees with the recommendation. The City intends to maintain documentation supporting the methodology and allocation bases used for charges to other funds and restricted programs. The City's cost allocation methodology will be periodically reviewed and updated, and direct charging or documented time records will be used where required by applicable grant or restricted-funding requirements. 103
City of
Guadalupe
SLFRF Award Examination
Guadalupe, California
Independent Accountants’ Report on
Compliance
For the fiscal year ended June 30, 2023
Attachment 2

Independent Accountant’s Report
To the Honorable Mayor and Members of the City Council
of the City of Guadalupe
Guadalupe, California
We have examined the City of Guadalupe, California’s (City) compliance with the compliance requirements “activities allowed or unallowed” and “allowable cost/cost principles” (the specified requirements) as described in Part IV “Requirements for an Alternative Compliance Examination Engagement for Recipients That Would Otherwise be Required to Undergo a Single Audit or Program-Specific Audit as a Result of Receiving SLFRF Awards” of the CSLFRF section of the 2024 OMB Compliance Supplement (referred to herein as “Requirements for an Alternative CSLFRF Compliance Examination Engagement”) during the year ended June 30, 2023. Management of the City is responsible for the City’s compliance with the specified requirements. Our responsibility is to express an opinion on the City’s compliance with the specified requirements based on our examination.

Our examination was conducted in accordance with attestation standards established by the AICPA; the standards applicable to attestation engagements contained in Government Auditing Standards, issued by the Comptroller General of the United States; and in the “Requirements for an Alternative CSLFRF Compliance Examination Engagement.” Those standards and requirements require that we plan and perform the examination to obtain reasonable assurance about whether the City complied, in all material respects, with the specified requirements referenced above. An examination involves performing procedures to obtain evidence about whether the City complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.

We are required to be independent and meet our other ethical responsibilities in accordance with relevant ethical requirements relating to the engagement.

Our examination does not provide a legal determination on the City’s compliance with specified requirements.

In our opinion, the City complied, in all material respects, with the specified requirements referenced above during the year ended June 30, 2023.

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

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we are required to report all deficiencies that are considered to be significant deficiencies or material weaknesses in internal control; fraud, and noncompliance with provisions of laws, regulations, contracts, or grant agreements that have a material effect on the City’s compliance with the specified requirements and any other instances that warrant the attention of those charged with governance. We are also required to obtain and report the views of responsible officials concerning the findings, conclusions, and recommendations, as well as any planned corrective actions. We performed our examination to express an opinion on the City’s compliance with the specified requirements and not for the purpose of expressing an opinion on the internal control over the specified requirements or on compliance and other matters; accordingly, we express no such opinions. The results of our tests disclosed no matters that are required to be reported under Government Auditing Standards.

Intended Purpose
The purpose of this examination report is solely to express an opinion on whether the City complied, in all material respects with the specified requirements referenced above during the year ended June 30, 2023. Accordingly, this report is not suitable for any other purpose.

Badawi & Associates, CPAs
Emeryville, California
September 15, 2026
City of
Guadalupe
Guadalupe, California
Independent Accountants’ Report on
Agreed-Upon Procedures Applied to
Appropriations Limit Schedule
For the year ended June 30, 2023
Attachment 3
INDEPENDENT ACCOUNTANTS’ REPORT
To the Honorable Mayor and City Council
of the City of Guadalupe
Guadalupe, California
We have performed the procedures enumerated below on the accompanying Appropriations Limit Schedule of the City of Guadalupe (City) for the fiscal year ended June 30, 2023. The City’s management is responsible for the accompanying Appropriations Limit Schedule.

The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of the requirements of Section 1.5 of Article XIII-B of the California Constitution. Additionally, the League of California Cities (as presented in the publication entitled Agreed-upon Procedures Applied to the Appropriations Limitation Prescribed by Article XIII-B of the California Constitution) has agreed to and acknowledged that the procedures performed are appropriate for their purposes. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.

The procedures performed and our findings are described below:

1. We obtained the completed worksheets used by the City to calculate its appropriations limit for the fiscal year ended June 30, 2023, and determined that the limit and annual calculation factors were adopted by resolution of City Council. We also determined that the population and inflation options were selected by a recorded vote of City Council.

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

2. For the accompanying Appropriations Limit Schedule, we added the prior year’s limit to the total adjustments, and agreed the resulting amount to the current year’s limit.

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

3. We agreed the current year information presented in the accompanying Appropriations Limit Schedule to corresponding information in worksheets used by the City.

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

4. We agreed the prior year appropriations limit presented in the accompanying Appropriations Limit Schedule to the prior year appropriations limit adopted by the City Council during the prior year.

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

To the Honorable Mayor and Members of City Council
of the City of Guadalupe
Guadalupe, California
We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the AICPA. We were not engaged to and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively, on the accompanying Appropriation Limit Schedule. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

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

This report is intended solely for the information and use of the City Council and management of the City and is not intended to be and should not be used by anyone other than these specified parties. However, this report is a matter of public record, and its distribution is not limited.

Badawi & Associates, CPAs
Emeryville, California
September 15, 2026
2 City of Guadalupe
Appropriations Limit Schedule
For the year ended June 30, 2023
Amount Source
A. Appropriations limit for the year ended June 30, 2022 $ 3,403,929 Prior year schedule B. Calculation factors:

1. Population increase ratio 1.0755 State Department of Finance

2. Inflation increase ratio 1.0014 State Department of Finance

3. Total adjustment factor ratio 1.0770 B1 * B2
C. Annual adjustment increase 262,122 [(B3-1)*A)]
D. Other adjustments:

Loss responsibility (-) - N/A
Transfers to private (-) - N/A
Transfers to fees (-) - N/A
Assumed responsibility (+) - N/A
E. Total adjustments 262,122 (C+D)
F. Appropriations limit for the year ended June 30, 2023 $ 3,666,051 (A+E) 3 City of Guadalupe
Notes to Appropriations Limit Schedule
For the year ended June 30, 2023

1. PURPOSE OF LIMITED PROCEDURES REVIEW
Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), California governmental agencies are restricted as to the amount of annual appropriations from proceeds of taxes.

Effective for years beginning on or after July 1, 1990, under Section 1.5 of Article XIIIB, the annual calculation of the appropriations limit is subject to this agreed upon procedures engagement.

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

3. INFLATION FACTORS
A California governmental agency may use as its inflation factor either the annual percentage change in the 4th quarter per capita personal income (which percentage is supplied by the State Department of Finance), or the percentage change in the local assessment roll from the preceding year due to the change of local nonresidential construction. The factor adopted by the City of Guadalupe for the fiscal year 2022- 2023 represents the percentage growth in the State of California per capita personal income.

4. POPULATION FACTORS
A California governmental agency may use as its population factor either the annual percentage change of the jurisdiction’s own population, or the annual percentage change in population in the County where the jurisdiction is located. The factor adopted by the City of Guadalupe for fiscal year 2022-2023 represents the annual population change for the County.

5. OTHER ADJUSTMENTS
A California government agency may be required to adjust its appropriations limit when certain events occur, such as the transfer of responsibility for municipal services to, or from, another government agency or private entity. There were no adjustments made for the fiscal year ended June 30, 2023. 4 City of Guadalupe
Presentation to the City Council
October 13, 2026
2023 Audit of the
City of Guadalupe
Agenda
3 Our Firm and the Engagement Team
Deliverables and Scope of the Audit
Audit Methodology
Areas of Primary Audit Risk
Auditor’s Report and Financial Statements
Required Communications
New Accounting Standards
Our Firm and the
Engagement Team
5 Years of Experience
Government Audit Clients
City Audit Clients
Employees
Lawsuits, Legal or Disciplinary Actions
25 44
30 0
65 Our Firm – By the Numbers
Audit Manager
Samantha "Samo"
Michel, CPA
Engagement Team
6 Quality Control
Reviewer
Ahmed Badawi, CPA
Engagement
Partner
Mitesh Desai, CPA
IT Specialist
Omar Rahman, CPA,
CISA
Audit Staff
Angel Lim-Glasser, CPA
Audit Staff
Ahmed Elkateb
Deliverables and
Scope of the Audit
Deliverables and Scope of the Audit
8 Report on the Annual Financial Report (AFR)
Report on Internal Control Over Financial Reporting and on Compliance
ARPA Examination Report
Agreed-upon Procedures on Appropriation Limit Schedule (GANN) Communications With Those Charged With Governance
Audit Methodology
Gather information and
Finalize Timing.

Review Systems, Processes
and Assess Risk.

Test and Validate Significant
Account Balances.

Prepare Necessary
Reports.

Planning Interim Year-End Reporting
10 Audit Methodology
Areas of Primary
Audit Risk
Areas of Primary Audit Risk
12 • Assigned staff based on consideration of audit risk. • Incorporated an element of unpredictability in the audit. • Considered the selection and application of significant accounting principles. • Examined journal entries prepared by management.
• Reviewed accounting estimates for bias.
• Evaluated the business rationale for unusual transactions. • Evaluated the appropriateness of fraud-related inquiries.

Risk of Management Override of Controls – The risk of management override of controls was addressed by the following procedures:

Areas of Primary Audit Risk
13 • Increased professional skepticism
• Performance of additional testing when considered necessary Institutional Knowledge Risk – New employees may not have knowledge of intricate unique City processes or accounting practices:
• Increased professional skepticism
• Assignment of more experienced audit staff to areas of higher audit risk Skills, Knowledge and Experience Risk – Skills, knowledge, and experience may not be adequate to perform financial closing accurately and timely:

Areas of Primary Audit Risk
14 • Governmental Funds: Confirmed and validated property taxes, sales taxes, and other significant revenues and receivables
• Proprietary Funds: Performed substantive analytics and agreed other significant revenues to backup
Revenue and Receivables (Taxes, Grants, Notes, etc.) – Improper Revenue Recognitions:
• Investment fair value estimates
• Allowance for uncollectible accounts receivable
• Capital assets useful lives
• Pension and Other Post-Employment Benefits (OPEB) estimates Estimates – Review of Significant Accounting Estimates:

Areas of Primary Audit Risk
15 • Performance of payroll testing
Segregation of Duties – Risk related to lack of segregation of duties between payroll processing and master files maintenance:
• Performance of journal entry testing
• Expanded sample size for testing journals
Journal Entries Posting – Risk related to journal entries not being independently reviewed:

Auditor’s Report
and Financial
Statements
Auditor’s Report
17 • Audit performed in accordance with Generally Accepted Auditing Standards • Audit performed in accordance with Government Auditing Standards Auditing Standards
• Qualified Opinion on Governmental Activities and General Fund revenues • Except for above, financial statements are fairly presented in all material respects • Significant accounting policies have been consistently applied • Estimates are reasonable
• Disclosures are properly reflected in the financial statements Qualified Opinion
18 Government-Wide Financial Statements
Cash & Investments Receivables Prepaids & Other
Assets Capital Assets Deferred Outflows of
Resources
2021 $9,083,730 $2,806,343 $1,259,897 $19,155,554 $1,288,460 2022 $10,155,066 $2,791,824 $1,117,315 $22,550,631 $1,264,935 2023 $18,695,119 $2,728,081 $680,394 $24,846,229 $2,675,884 $-
$5
$10
$15
$20
$25
$30
Millions
Assets and Deferred Outflows of Resources
Government-Wide Financial Statements
19 Accounts
Payable &
Accrued
Expenses
Unearned
Revenues
Compensated
Absences
Long-Term
Debt
Net Pension
Liability
Total OPEB
Liability
Deferred
Inflows of
Resources
2021 $1,355,694 $246,536 $372,580 $1,780,923 $3,782,088 $494,819 $299,792 2022 $1,411,719 $585,217 $404,092 $1,701,803 $1,935,887 $403,579 $2,671,412 2023 $952,864 $9,070,994 $397,812 $1,731,347 $4,581,186 $676,572 $1,102,056 $-
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
Millions
Liabilities and Deferred Inflows of Resources
Government-Wide Financial Statements
20 Net Investment in
Capital Assets Restricted Unrestricted
2021 $17,374,631 $4,671,968 $3,214,953
2022 $20,848,828 $4,421,892 $3,495,342
2023 $23,114,882 $4,238,729 $3,759,265
$-
$5
$10
$15
$20
$25
Millions
Net Position
Government-Wide Financial Statements
21 2021 2022 2023
Net Cost of Service $1,330,646 $2,532,504 $5,829,312
Tax Revenue $3,576,504 $4,335,104 $4,629,289
$-
$1
$2
$3
$4
$5
$6
$7
Millions
Net Cost of Service to Tax Revenue - Governmental Activities General Fund
22 2021 2022 2023
Unrestricted Fund Balance $27,757 $331,404 $991,725
Total Expenditures $5,449,800 $6,350,537 $6,785,598
As % of Total Expenditures 1% 5% 15%
Number of Months* 0 1 2
$-
$1
$2
$3
$4
$5
$6
$7
$8
Millions
Expenditure Coverage
* Measure of the City's ability to operate with no revenues using available fund balance. GFOA recommendation no less than 2 months.

Pension Plans
23 2021 2022 2023
1% Decrease $5,923,735 $4,244,232 $7,223,884
Current Rate $3,782,088 $1,935,887 $4,581,186
1% Increase $2,017,951 $33,268 $2,413,691
$-
$1
$2
$3
$4
$5
$6
$7
$8
Millions
Net Pension Liability
Sensitivity to Discount Rate
Other Postemployment Benefits Plans
24 2021 2022 2023
1% Decrease $606,968 $484,189 $789,215
Current Rate $494,819 $403,579 $676,572
1% Increase $408,208 $340,244 $583,887
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
Total OPEB Liability
Sensitivity to Discount Rate
Required
Communications
Required Communications
26 Auditor’s Responsibilities
Provide an opinion on whether financial statements
are fairly stated in accordance with U.S. GAAP
Evaluate internal control over financial reporting
including tone at the top
Evaluate compliance with laws, contracts, and grants.

Ensure financial statements are clear and transparent
Communicate with the governing body
Management’s Responsibilities
Take responsibility for the financial statements
Establish and maintain internal control over
financial reporting
Make all financial records available to us
Establish internal control to prevent and detect fraud
Inform us of all known and suspected fraud
Comply with laws and regulations
Take corrective action on audit findings
Required Communications
27 • It is our responsibility to maintain independence
• We maintained our independence by strict adherence to the AICPA and the Board of Accountancy rules and regulations
• Other than preparing the financial statements, no services performed that could affect our independence.

Independence
• Not within the time frame originally communicated to the City in our engagement letters.

Timing of the Audit
• The City adopted the following new pronouncements during the year:
• GASB Statement No. 91 – Conduit Debt
• GASB Statement No. 94 – Public-Private and Public-Public Partnerships and Availability Payment Arrangements
• GASB Statement No. 96 – Subscription-based Information Technology Arrangements Significant Accounting Policies and Unusual Transactions Required Communications
28 • No difficulties encountered.

Difficulties Encountered Performing the Audit
• There were adjustments and reclassifying entries during the course of the audit.

Management has posted all proposed audit adjustments.

Significant Audit Adjustments and Unadjusted Differences • We identified material weaknesses and significant deficiencies for:
• Internal Controls over Journal Entries (Material Weakness) • Delayed Audit and Annual Closing Procedures (Material Weakness) • Enterprise Resource Planning (ERP) Implementation (Material Weakness) • Grant Management (Material Weakness)
• Capital Asset Accounting (Material Weakness)
• Payroll Master File Maintenance and Payroll Processing (Material Weakness) • Bank Reconciliation (Material Weakness)
• Adequacy of Documentation for Cost Allocation Charges (Significant Deficiency) Deficiencies in Internal Control over Financial Reporting New Accounting Standards
29 • GASB Statement No. 100 – Accounting Changes and Error Corrections 2024
• GASB Statement No. 101 – Compensated Absences
• GASB Statement No. 102 – Certain Risk Disclosures
2025
• GASB Statement No. 103 – Financial Reporting Model Improvements • GASB Statement No. 104 – Disclosure of Certain Capital Assets 2026
• GASB Statement No. 105 – Subsequent Events
2027
Thank You for Allowing
us to Provide Audit
Services to the City.

CITY OF GUADALUPE | CITY COUNCIL

CITY COUNCIL STAFF REPORT
Reduction of Salaries for Elected Officials
Meeting Date: October 13, 2026
Agenda Item: 13
To: Honorable Mayor and Members of the City Council
From: Philip F. Sinco
Department: City Attorney
Subject: Reduction of Salaries for Elected Officials

RECOMMENDED ACTION

1. Introduce by title only and waive the first reading of Ordinance No. 2026-533 reducing the monthly salaries for all of the City’s elected officials to $150 per month.

2. Continue Ordinance No. 2026-533, for second reading and adoption, to the City Council meeting on October 27, 2026.

EXECUTIVE SUMMARY
Key finding: Introduction and adoption of Ordinance No. 2026-533 will save the City approximately $32,400 annually beginning in or around January 2027.

BACKGROUND
Government Code section 36516 provides that for cities with populations up to 35,000 residents, a city council member’s salary can be up to $950 per month. When the City Council last raised salaries for elected officials in March 2024, the Council voted to provide each of the City’s elected officials a salary of $500 per month, except for the Mayor, who would receive $750 per month. The extra $250 per month received by the Mayor was intended to compensate for the additional duties required by this position compared to the other City Council members. When the Council voted for this increase, salaries for elected officials were $150 per month and had not been increased since that amount was set in the 1986.

In light of the City’s current budget deficit, the City Council considered authorizing staff to take action to reduce the salaries of elected officials at the Council meeting held on September 8, 2026. After its deliberations, the Council approved a motion directing staff to take the necessary action to reduce the salaries of all of the City’s elected officials to $150 per month.

DISCUSSION AND ANALYSIS
City Council Salaries: Pursuant to the Council’s direction, an ordinance has been prepared to reduce the salaries of all of the City’s elected officials to $150 per month. (Attachment 1). For CITY OF GUADALUPE | CITY COUNCIL

the Council’s information, any amounts contributed for retirement or health insurance are not considered as part of an elected official’s salary, and reimbursed expenses are also excluded from the definition of “salary.”
Pursuant to Government Code section 36516.5, any salary adjustment for a city council member may only take effect only when at least one member of the city council commences a new term. Thus, the earliest that the salary reduction may take place will not be until mid-to-late December 2026, when new councilmembers join the City Council after the election in November.

Salaries of Other Elected Officials: Currently, the City Clerk and the City Treasurer receive the same monthly $500 per month salary as the City Council members (other than the Mayor).

Pursuant to Resolution No. 97-24, the monthly salaries of the City Clerk and the City Treasurer are fixed at the same amount as that of a member of the City Council (as set forth in Guadalupe Municipal Code §2.08.030). A copy of Resolution No. 97-24 is attached. (Attachment 2).

Accordingly, the City Council does not need to take any additional or separate action to reduce the salaries of these two offices other than adoption of the proposed ordinance; however, the law prohibiting a salary adjustment for councilmembers (Government Code § 36516.5) does not apply to other elected officials, and therefore, if the Council wishes to adjust the current salaries for the City Clerk and City Treasurer at this time, it may do so. In that case, staff will prepare a resolution for the next meeting for the Council to implement this.

FISCAL IMPACT
Current fiscal year: None.

Ongoing annual impact: Beginning in approximately January 2027, the City will realize annual savings to the general fund in the amount of $32,400.

Budget action: Not required at this time.

CITY OF GUADALUPE | CITY COUNCIL

OPTIONS FOR COUNCIL CONSIDERATION
Option 1 - Staff recommendation. Staff’s recommendation is for the Council to introduce by title only and waive the first reading of Ordinance No. 2026-533 reducing the monthly salaries for all of the City’s elected officials to $150 per month, and continue Ordinance No. 2026-533, for second reading and adoption, to the City Council meeting on October 27, 2026.

Option 2 - Modified action. The Council can, in addition to Option 1, direct staff to prepare a resolution for the Council meeting on October 27, 2026, to reduce the salaries of the City Clerk and the City Treasurer to $150 per month that would take effect at the next regular pay period.

Option 3 - Alternative action. The Council can decline to introduce Ordinance No. 2026- 533 and direct staff not to bring it back at a future meeting.

Option 4 - Defer action. The Council can defer action to a future meeting and, may provide direction as to when to bring the item back to the Council for action.

ENVIRONMENTAL REVIEW
This Ordinance amendment has been reviewed for compliance with the California Environmental Quality Act (CEQA), and the CEQA guidelines, and has been found not to be subject to CEQA because it is not a project as contemplated by 14. C.C.R. § 15378.

ATTACHMENTS
Attachment 1 – Ordinance No. 2026-533
Attachment 2 – Resolution 97-24

STAFF REVIEW
Prepared by: Philip F. Sinco, City Attorney
Fiscal Review: Eli Martinez, Finance Director
Approved by: David Trujillo, City Administrator
ORDINANCE NO. 2026-533
AN ORDINANCE OF THE CITY OF GUADALUPE AMENDING SECTIONS 2.08.030 AND

2.08.035 OF CHAPTER 2.08 OF TITLE 2 OF THE GUADALUPE MUNICIPAL CODE

REGARDING SALARIES OF CITY COUNCIL MEMBERS
WHEREAS, prior to March 2024, the City Council of the City of Guadalupe had not taken action to adjust the salaries for members of the City Council since 1986 when a monthly salary of $150 was established; and
WHEREAS, the City Council acted in March 2024 to increase salaries because the responsibilities of the members of the City Council of the City of Guadalupe had increased along with a significant increase in the cost of living since 1986; and
WHEREAS, in March 2024, the City Council raised councilmember salaries as well as those of the City Clerk and City Treasurer from $150 per month to $500 per month (as permitted by Government Code section 36516, which authorizes a maximum salary up to $950 per month for city council members in cities with population up to 35,000); and WHEREAS, at that time, the City Council also authorized an additional $250 per month for the Mayor’s salary in light of the additional duties required by this position; and WHEREAS, this salary increase did not take effect until last December 2024; and WHEREAS, in or about April 2026, the City Council became aware of a large structural budget deficit and approved a budget for FY 2026-27 with significant reductions; and WHEREAS, in acknowledgment of the large structural budget deficit, the City Council directed staff at its meeting on September 8, 2026, to take appropriate action to reduce the salaries of all City elected officials to $150 per month.

NOW, THEREFORE, the City Council of the City of Guadalupe does hereby ordain as follows:

SECTION 1. Section 2.08.030 of Chapter 2.08 of Title 2 of the Guadalupe Municipal Code is hereby amended to read as follows:

2.08.030 Council Salaries—Amount designated.

Each member of the Council shall receive, as salary, the sum of $500.00 $150 per month, as provided for in Section 36516 of the Government Code for cities up to and including 35,000, which shall be payable from and after December 31, 2024, at the same time and in the same manner as the salaries are paid to other officers and employees of the City.

SECTION 2. Section 2.08.035 of Chapter 2.08 of Title 2 of the Guadalupe Municipal Code is hereby amended to read as follows:

ATTACHMENT 1

2.08.035 Mayor’s Salary—Amount designated.

The Mayor shall not receive, in any amount in addition to the salary set forth in Section

2.08.030 of this Chapter, the sum of $250 per month. This sum shall only be payable after December 31, 2024.

SECTION 3. The City Council declares that each section, subsection, paragraph, subparagraph, sentence, clause, and phrase of this Ordinance is severable and independent of every other section, subsection, paragraph, subparagraph, sentence, clause, and phrase of this Ordinance. If any section, subsection, paragraph, subparagraph, sentence, clause, or phrase of this Ordinance is held invalid, the City Council declares it would have adopted the remaining provisions of this Ordinance irrespective of the portion held invalid, and further declares its express intent that the remaining portions of this Ordinance should remain in effect after the invalid portion has been eliminated.

SECTION 4. The City Council has reviewed this ordinance for compliance with the California Environmental Quality Act (CEQA), and the CEQA guidelines, and has been found the ordinance not to be subject to CEQA because it is not a project as contemplated by 14. C.C.R. § 15378.

SECTION 5. 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 Clerk shall consult with the City Administrator and City Attorney concerning any changes deemed necessary.

INTRODUCED at a regular meeting of the City Council on the 13th day of October 2026, by the following roll call vote:

MOTION:

AYES:

NOES:

ABSENT:

ABSTAINED:

PASSED AND ADOPTED at a regular meeting of the City Council on the 27th day of October 2026, by the following roll call vote:

MOTION:

AYES:

NOES:

ABSENT:

ABSTAINED:

ATTEST:

Judy Wilson, City Clerk Ariston Julian, Mayor
APPROVED AS TO FORM:
_________________________________
Phillip F. Sinco, City Attorney
ATTACHMENT 2